E-commerce businesses are very popular. Everyone finds it very convenient to get a job done online. Whether it be selling clothes, groceries, or any other product. But do you know how E-commerce works? But do you know how does Ecommerce work? No? do not get worried this article contains everything you need to know and thus, will be helpful for you to find out the working of Ecommerce businesses.
Let us start with the discussion.
1. How Does Ecommerce Work?
Before we see how e-commerce works, we need to know what exactly E-commerce is. We all have heard of the term “e-commerce” but are not sure what it is used for and what is working. First, let us find out about e-commerce and e-commerce business.
1.1. What Is Ecommerce?
E-commerce as the name suggests, is electronic commerce, that is, commercial work done using electronic devices like mobile phones, laptops, PCs, and more. Here, commercial work stands for anything that is done for earning or revenue purposes such as online shopping.
E-commerce works over www, which is a world wide web server. Which means over the internet. So, in short, buying or selling products, goods, services, or any data over a network. Their websites or applications are accessible via electronic devices like mobile devices, laptops, PCs, and more.
Now, let us combine this term with business to see what it gives us. That is, what is an E-commerce business?
1.2. What Is E-commerce Business?
An e-commerce business involves e-commerce transactions for revenue. In simple words, the companies that are earning their revenue through online marketplaces like e-commerce sites for shopping online.
There are lots and lots of small businesses in the market at this time. Also, these small businesses are usually online stores only. E-commerce has taken a big role in the business community. That is why every platform, be it any social media platform like Instagram, has provided a space for business people. That is why, e-commerce business has become somehow easy to start and manage on a small scale.
It is clear what e-commerce is, in this section. We shall move forward to the models, that is, types of e-commerce business models. This will tell us the basic step of how e-commerce works. So, let’s start!
2. Types of E-commerce Business Models
So, to know the fundamentals of any e-commerce business we shall know its business model. This will tell us the basics of how e-commerce works. It is important to know about these models so that it becomes easy for us to decide which business model to go with. If in the first place, you got the wrong business model for any business, it might directly lead to its failure.
Let us start!
The “Business-to-Consumer” business model is known as B2C in the short term. This business model involves the business and customer communication direct. The exchanges of goods and services were directly among consumers and businesses with the help of any online retailer or middlemen. It is meant for direct interaction of the customers with the business they are putting their money in.
Famous platforms like Netflix, Amazon, Shopify, and Flipkart, are working on this business model.
Here, the B2B business model stands for “Business-to-Business”. Sometimes, businesses share their services to fulfill their requirements. That is when this model comes in handy. When one business becomes the customer of another business. Such as salesforce is a CRM (Customer Relationship Management) platform that provides its tools and services to other businesses to grow. So, in this case, one business is taking services from another business bringing the B2B business model alive.
We can see examples of these e-commerce business models in the market place such as Alibaba, eWorldTrade, Salesforce, and more.
C2B is an acronym for “Customer-to-Business”. It is almost the inverse of the B2C business model. Because the transaction is between the customer and the business directly but service is provided by the customer to the business. The selling and buying of the products and services are all directly via the customer or end user to any business. This can mean anything like sharing data, filling up paid surveys, referral programs, and more by customers for any company or business.
We can see these types of e-commerce businesses are Google AdSense, food bloggers, tech bloggers, commission junction, and more.
D2C stands for “Direct-to-Consumer”. In this type of e-commerce business, the transaction is between the business and the consumer directly. The selling and buying of the products, goods, and services are all directly through business to consumers or end users.
But not similar to the B2C business model. Although, the contrast is there between B2C and D2C business models. In D2C the services produced by the business or any company are directly provided to the consumers without any middlemen. Whereas at the same time, in B2C the services and goods are sent to consumers via any medium such as retailer or wholesaler.
Some examples of these types of e-commerce businesses are Sugar, Mamaearth, Plum, Wakefit, and more.
C2C stands for “Customer-to-Customer”. In this type of e-commerce business, the transaction is between one customer to another customer. The selling and buying of the products, goods, and services are all directly from one customer to another. All this is possible through a third-party e-commerce platform that facilitates the smooth transaction and purchasing between the customer.
Some examples of these types of e-commerce businesses are Etsy, eBay, Ali Express, Flipkart, and more.
So, we are good to go with the next section of the article after gaining knowledge of various types of business models. Owning an e-commerce business takes the knowledge of how e-commerce works. For this, we are going to learn how e-commerce works in the next section discussing each stage one by one.
3. Own E-commerce Business – How Does E-commerce Work?
To own an E-commerce business the first thing needed is to know how e-commerce works. Without this knowledge, you can not have a successful e-commerce business. Because the strategy to build is the foremost step. Every other thing comes later.
The e-commerce process includes various requirements to be fulfilled by the online business. Which includes online sales, online stores, online retailers, online marketplaces, and much more. We will be discussing all of these briefly in each step to know how e-commerce works.
A fresh start is always with “planning”. Without the planning and plotting of your business idea, you can not think of a business in the first place. The foremost need is to have an idea of what business you want. What should be its business model? Things you gonna need? What is the consumer ratio in the following business? Amount of revenue can be generated? What amount will be needed to invest? and much more.
So, without answering these questions and finding the solution to them you can’t move forward. You will need to have perfect planning. Otherwise, the reports say that almost 20% of startups get shut down within their first year. Moreover, 30% to 45% of businesses fail in their 3rd or 5th year respectively. All this happens due to poor planning and calculations.
That is the reason for being very careful while planning for a successful e-commerce business.
You saw the foremost requirement of how e-commerce works. After the first step of planning and plotting the ideas and strategies. The next step is to build a website where customers can interact with you and your business.
3.2. E-commerce website
The second step is to build an attractive, approachable, easy-to-use e-commerce website for your business. This would be the first platform that will bring your business into focus to the customers’ eyes. The e-commerce website must have its landing page perfect. Most attractive and filled with all the small one or two-liner descriptions of your business with all its achievements so far. Along with its purposes or goals and the services it provides. Then comes other parts of the websites.
Also, for more reach and zero obstructions, you will need to have a separate mobile app too. Mobile e-commerce is very important as it is the most accessible device which can be found in any household now. So, not missing any customer mobile applications are vital.
You will have to hire a web developer and an android developer for the website and mobile application developments, respectively. The UI/UX designers are also important to have a user-friendly and intriguing design for your websites and applications. This helps increase the user interface and experience so that they visit again.
So, you see how to get an e-commerce website along with the mobile application too. Because mobile devices are more available to customers than other electronic devices. Now what you need is correct analysis to know every time what is next thing you need. The points you need to consider. And then, find the strategies accordingly to keep the business growing. Let us see how to achieve it in the next step.
3.3. Search Engine Optimization
The most important part nowadays is played by SEO tools. That is search engine optimization which is a strong tool to make your business grow faster. It researches and picks out the points on which more work is needed. It works in different phases that include research, finding competitors analysis, stating the current position and status of the business, keywords that customers use on search engines, and more. All these phases help in picking out the best.
Such as google analytics provides the tools for SEO and other analysis required by any business. This is done by collecting customer data through cookies and all on various e-commerce platforms. It is a vital and strong tool that must be used and you can hire an SEO specialist for it.
It also helps predict future sales by analyzing the data and company records so far. This is how nowadays businesses are working on their strategies to build a strong customer base.
This is how you can achieve your motive of becoming first in the market. Also, this is how you reach out to the maximum number of customers. But to maximise the accessibility of your services and products you need to have an online retailer too. This is what we are going to discuss in the next section on how e-commerce works.
3.4. Online Retailers
We all know about retailers and their importance. In simple words, the retailer is the link that connects a business to its customers. It fills the communication gap between a business and its customers. By playing the role of trusted middlemen. Similarly, an e-commerce business requires an online retailer too.
Recently, Amazon is the biggest online retailer in the world. Because of its high revenue earned from e-commerce retail sales. It provides an e-commerce store and online marketplaces for online businesses. Even small businesses find it accessible to register themselves on these online platforms.
Similarly, there are lots of online marketplaces that are providing the services of online retailers. It is a really important step to bring your business to every doorstep. To do so, you need to be available at every most visited website or online store for sure. This can only, make your business grow big and can help you increase your brand value with maximum customers.
You see the vital role played by these online retailers in your business. They provide places to showcase your business to customers on their online platforms such as websites. Next is, commercial transactions.
3.5. Commercial Transactions
Business requires transaction systems too. So, the e-commerce transaction system is also required to maintain an accurate, smooth, and secure transaction between businesses and customers. For making online transactions possible e-commerce transactions are made through the payment gateway. For this, businesses need to partner with payment companies to facilitate their customer with every possible transactions ways. A few examples are Paytm, Gpay, Razorpay, and more are some companies that provide transaction facilities to businesses for safe and secure money transfers.
E-commerce sales are only possible with these secured and trustable payment gateways. They make the online payment process easy to use. For example, Amazon provides various payment options for their customers such as UPI (Unified Payments Interface), credit cards, debit cards, e-wallets, net banking, and even COD (Cash on Delivery).
It needs to be very strong and secure because the returns and exchanges require refund reimbursements which can be a bit complex sometimes. So, to make sure that the transactions get done in a particular limited time and without any complications the retailer must have information of both business and customer transaction data. Learning the maintenance of these commercial transactions becomes vital while learning how e-commerce work.
Now, it is time for you to look into one of the most important steps of owning an e-commerce business and along with its working. That is the maintenance of the record of stock availability.
3.6. Stock Database System
What is needed to maintain the information related to the availability of products? A solid stock database system, right? Without such a system any online business can not work at all. If you can not provide correct information to the customer how would you gain their trust? It is required to make sure that customers could see what goods and services are available at the time and what are not. So that they can make their purchases accordingly.
Customer purchases, returns, replacements, transactions, and not only these. But also, product availability too is the responsibility of the stock database system to manage. For this, work to be done properly and on time you need a database manager who can maintain and record all the data in a database system. The handling of a central computer with all the stock database records is not something that can be managed by anyone around. It requires professional hands to work with.
So, to own a business online, you must have a strong stock database system that can store a large amount of information. Which requires a fully-developed technical system. If you want to go on with your business without complications you will need to invest in this particular system for sure. Without any doubt.
This is not where it ends. How does e-commerce work? More steps play an equally vital role as the above. Without a marketing strategy, you can not grow your business network and can not get your hands on customers. This will be our next discussion.
3.7. Social Media Marketing
For the establishment of an e-commerce business, you need a strong digital marketing team. Along with a social media marketing team. Social media marketing comes under digital marketing but is only a part of it. Which has become crucial for many years. That is why, different teams are hired for the same.
To bring your brand to the notice, you need to bring the attention of everyone to it. This is possible with digital marketing, which includes email, content, video marketing, and many more. Similarly, it includes social media marketing which includes showing your products and services on the social media platforms such as Instagram, Snapchat, Twitter, and more. This brings youngsters to notice your brand more and get involved in it.
Companies like GoogleAds provide these services for marketing your brand on big platforms, especially to targeted customers. This is done by collecting customer data from cookies and third parties to decide which is the targeted audience for the particular product. The proper digital marketing and social media marketing teams are hired for this task by big brands. So, that they do not miss any customers and increase repeat customers.
You see how marketing plays a vital role in gaining more and more customers. Without digital or social media marketing, bringing your business into the limelight is impossible. The last and most important step of how e-commerce work is its security layer.
3.8. Secure Sockets Layer
A security layer is set up between the business and customers to have secured and authentic communication. SSL (Secure Sockets Layer) is responsible for the authentication of the server and the client to ensure no other party is getting involved without authentication.
SSL is a protocol that secures the connection between providers and consumers by verifying symmetric as well as asymmetric cryptography. E-commerce companies make sure that while providing service online to the customers all the communication remains secure. Without security, you are gonna lose everything. So, make sure to fulfill this requirement at its best.
The secure sockets layer record protocol also exists which works to bring confidentiality and message integrity to your system. Customers connect with secured and trusted brands only. So, be sure.
Here, it ends. Now you know how e-commerce works. These steps need to be followed to own a successful e-commerce business. These steps are an e-commerce business’s fundamentals and must be worked upon without compromising. So, do your best!
4. Final Note
You have gained pretty much knowledge of how e-commerce works and got all the phases or key steps needed. Now, these are the requirements of e-commerce businesses. They will make your business successful only if these requirements are fulfilled at their best. Any loopholes will bring down your empire in seconds.
So, you need to make sure that all these phases are working properly without any delays and latency. Any latency in providing the services from the business end will not bring out the best outcome. It will only lose customers which are like god for any business. Business is a failure without its customers. So, make sure your customer support and services are great.
It is important to have trusted and devoted teams at each level to maintain the proper functioning of the business. All the lacking must be served immediately with a solution and trust-building activities like on-time services and support must be performed. As said earlier also, no customer is interested in getting involved in any company that is neither secure nor trustable. So, be the BEST!