Define the eCommerce Model

The Internet has become a central part of how we communicate with others and how we transact business. The speed and convenience of the online experience makes it a perfect medium for buyers and sellers. The e-commerce model is an innovative way for businesses to make money and expand their customer base.

Identification

E-commerce involves the buying and selling of products or services using an electronic payment processor. It can be either a business-to-business (B2B) or business-to-consumer transaction. Business activities takes place on the Internet, or more specifically, the Web. It's the newest form of business transaction and has grown exponentially since the start of the 21st century.

Features

E-commerce has made it possible for customers to contact a business at any time of the day at the customer's convenience. It makes use of the Internet's communication capabilities through product displays, sales presentations and order processing and delivery. Using a website as the storefront, a business carries out the same interactions and transactions as occur within a physical storefront, minus the face-to-face interaction. Products are selected and placed in shopping carts, then customers purchase their selected items through an order form or payment page. These pages are typically set up through a merchant account provider and provide security encryptions that protect the customer's payment information.

Function

The actual e-commerce transaction is where the sale is made. This is where the customer provides her financial information--credit card information, e-check data and shipping information (if applicable), in exchange for delivery of the product. In the case of electronic products, such as e-books or software applications, product delivery is immediate. The seller has set up some form of automated delivery by which customers are redirected to a download page or sent an email with the download link. With physical products, retail sites typically go through a third party distributor that handles the shipping and delivery process

Types

The e-commerce model can be carried out within a number different contexts, all of which fall into the business-to-business or business-to-customer formats. E-commerce business models come in the forms of brokers, advertisers, subscription sites, affiliates, merchants and manufacturers.

Brokers bring buyers and sellers together, earning commissions each time a sales transaction is made. Advertisers provide other businesses exposure to customers. These are often free resource sites that provide information the customer needs. The advertiser makes money whenever a customer clicks on an ad or makes a purchase after clicking on an ad. Subscription sites offer valuable information or services for a fee. Customers have the option of continuing or dropping their subscription.

Affiliates set up sites that sell other businesses' products. A commission is made from each sale. Merchants sell or auction products from a site storefront. They can either be wholesalers or retailers. Manufacturer sites provide a direct connection between product manufacturers and their customers, giving customers direct access to the company's customer service division should problems arise and allowing for a more direct product delivery process.

Considerations

Not unlike the "brick-and-mortar" storefronts, e-commerce sites have to let customers know where they are and what they have to offer. As new as the e-commerce model is, new methods for marketing are popping up everyday. Some of the most popular methods include email marketing, banner exchanges, classified ads, pay-per-click advertising and article marketing.

Online businesses are increasingly becoming aware of the importance of building a relationship of trust with potential and current customers. A common practice is to offer free products, services or information as a way to get customers interested in a business's products. The built-in speed and convenience of the Internet has become a new business world in which marketing, product display, customer relations and product purchase can all happen at one virtual site.

Resources

• Ecommerce - How to Set Up Shop
• Free Ecommerce Business Software