Choose the right eCommerce business model

In part two of our series on eCommerce, we look at the diverse types of business models available to help you decide which one is best for your store.

(If you missed the part one, you can find it here https://www.b2bcentral.co.za/how-to-get-started-in-ecommerce/ )

When it comes to eCommerce, South Africa’s total retail sales more than triple to around 5% from 2019 to 2021, according to Euromonitor International, which clearly indicates it’s an option every company should be considering. While still the leader of the local pack, Takealot is coming under pressure for its market share from other retailers such as Massmart (Game, Makro, and Builders), JD Group (Everyshop), and TFG (Bash.com).

With global giant Amazon entering the local market this year, competition will become even fiercer, and brick and mortar stores will be under pressure to offer more value and convenience.

The eCommerce business model that best suits your business will be based on what you are selling and your type of customer.

THESE ARE THE THREE MOST COMMON MODELS BUSINESS TO CONSUMER (B2C):
This type of business sells products or services directly to the individual consumer. B2C eCommerce is the most common online business type and covers a broad array of products, from clothing to entertainment.

Examples of B2C eCommerce stores include Takealot, Amazon, Netflix and Suberbalist.

BUSINESS TO BUSINESS:

When a business sells products or services to another business online, it is considered B2B eCommerce. These businesses might sell items such as office supplies, furniture and
equipment. They also provide online business solutions, such as document-signing software
and other cloud-based services. Typically, these will be hardware stores selling to contractors or
hardware stores replenishing their stocks.

MARKETPLACES:

Pioneered by eBay but overtaken by Amazon, eCommerce marketplaces are websites where third-party merchants can sell their products or services to consumers. For a cut of your sale, you
can list your products on their platforms and access their customer bases. Many online marketplaces will handle your payment processing, logistics and even social media marketing for a fee.

EXAMPLES OF ECOMMERCE BUSINESSES

• ONLINE RETAIL: While Takealot heads the pack locally, Amazon is the global champion of retail in the eCommerce world, but you don’t have to be the next Amazon to succeed in this space. You can use resources like Amazon and Shopify partnerships to get an online store off the ground
• WHOLESALE: One of the best-known wholesale eCommerce sites is Alibaba. While Alibaba does get into B2C sales as well, they are established as a global giant in the B2B space. Businesses all over the world get their goods from Alibaba
• DROPSHIPPING: Dropshipping is where another company handles your product for you. You create the online space where customers can browse and place orders, but the dropshipping company takes care of
the logistics of delivering the goods to the customer. While Amazon does cross into this space, the No 1 dropshipping company right now is Shopify. You can have a working storefront on Shopify in a matter of hours
• SUBSCRIPTION: Subscription companies come in many shapes and sizes. The subscription can be for automated replenishment of goods (as offered by certain health food online retailers), or they can be for curation, like with a wine of the month club. The subscription can also grant access to a service. Netflix is a notable example of this type of subscription model
• DIGITAL PRODUCTS: Digital product stores do not offer physical, tangible goods. They offer digital products, with the most common digital product being software. Microsoft is one of the most prolific digital product companies. Digital products can be art, online courses and other ‘objects’ that can be purchased, even though they only exist on a computer
• PHYSICAL PRODUCTS: On Etsy, people make physical objects that they then sell and personally ship. You can see how this is different from retail or dropshipping. A physical products eCommerce business will
make the things they sell
• SERVICES: Services are some of the easiest things to sell online. ECommerce services include tax and accounting, healthcare, legal services, and about anything else imaginable.

MARKETPLACE OR WEBSITE?

You have two choices for how you set up your eCommerce store: You can start your own website, or you can join an online marketplace like Takealot. The best choice depends on which makes the most sense for your specific business – a large factor being whether your business is established or just starting up. For brick-and-mortar stores, the best thing is to create your own store, but if you aren’t ready to own an online store, selling goods on Takealot and other marketplaces is a great first step. It just depends on your goals and what you are trying to achieve.

JOIN eCOMMERCE COMMUNITIES
Take a closer look at what’s happening in the local market by joining these communities, where you’ll find lots of free information to help you on your journey, as well as keep you up to date with trends and news.
www.insaka.co.za/community https://www.insaka.co.za/free
Get access to a community store solution here www.Rapidtrade.com

Sources: Bizcommunity; mybroadband.co.za