E-Commerce Rising – Business Models and Strategies for Success

More and more stores are going online with their businesses, from your local grocer to multi-national retail giants. With people having less time to spend wandering through aisles of merchandise, e-commerce is going to see a lot of new players in the coming years. So what is driving this growth? How can new entrants and prospective entrants make an impact?

E-commerce is mostly consumer driven, and as the consumer is empowered by innovations in various fields, the businesses catering to them need to evolve. Some of the factors that drive this growth are:

Mobile devices enhance convenience
Choice of products make customers happy
Product information is easily available
Businesses and customers save money

However, not everything about e-commerce is rosy. With customer loyalty getting more and more fickle by the year, online businesses have to stay on their toes to make a difference in the customer’s perception of their store. Businesses are complementing their pricing strategies with coupons, discounts, sales, offers and more. They are modifying shipping by reducing the time, or by offering delivery time slots. All of this is going a long way in making customers more open and willing to participate in the e-commerce wave.

E-commerce has diversified over the past few years and it has created markets that cater to many needs. Some of the business models of e-commerce that are in practice today include:

B2C
B2B
C2C

While other business models are common place, C2B is one that is relatively new and unique. In C2B the customers, i. e. individuals, offer their services or expertise to businesses in exchange for payment. PeoplePerHour is an example of such a site, where a business can find and hire freelance writers, designers, developers and more.

There are other models that are gaining popularity, such as the G2C (Government-to-Citizen) model where the local or national government offers its services through an online portal.

The variety of e-commerce businesses is made further varied by the type of strategy they adopt in their business dealings. Here are a few strategies that businesses use to generate revenue:

Brick-and-click: Here the e-commerce store is the online endeavor of a physical store or chain of stores. Ex: Wal-Mart

Purely online: In this case the business is completely online, with its physical presence limited to corporate offices, warehouses, and if the business manufactures products, production centers. Ex: Blue Nile

Marketplace: The strategy that the largest e-commerce stores follow; they sell their own products, and at the same time allow other sellers to sell through them. Ex: Amazon

Auction: This strategy is one where the customers place bids on the product on offer and the seller decides which customer to sell to. Ex: eBay

Bargaining: This strategy is the reverse of the auction strategy, it is one where the customer places his willingness to pay a certain amount, the sellers then compete to make the best offer on the product/service that the customer is looking to obtain. This strategy is seeing a rise due to the heavy competition among various vendors. Ex: Priceline

Individuals and businesses looking to enter the e-commerce industry are going to have to choose the right business model and strategy to be successful. They will also need to make sure that the path they choose is one that complements their product with an appropriate pricing strategy, a friendly shipping policy and a responsive website.

Like every good business, entrants to and stalwarts of the e-commerce industry must ensure a constant review of their business model and strategy, to ensure its suitability for their organization’s objectives and goals. They must be willing to change or adapt as the situation may demand. A great example for this is Amazon, which started out as a ‘Purely online’ B2C vendor, became a ‘Marketplace’ and now with Amazon Supply has forayed into the B2B world as well.

An organization that learns to handle this part of their endeavor is already half way to success.

Unilog is a global technology and services company specializing in ‘Big Data Analytics’ and ‘Product Data Management for e-commerce’. Our focus is on empowering you with timely and relevant insights across the business. http://www.unilogcorp.com

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