E-commerce Business Models and How To Start One

When you are asked: what are the top e-commerce websites in the Philippines? Undeniably, either Lazada or Shopee will pop into your head. The convenience of online stores has tickled our guilty shopping pleasures for years, and in times of pandemic, it becomes a need.

Many people saw this need and convenience as a perfect opportunity to earn, and perhaps you also want it. Better read this one of the articles about e-commerce in the Philippines that will make you acquainted with how it works.

What are the types of e-commerce business models?

The top e-commerce businesses can be classified according to these types:

C2C e-commerce

Customer-to-customer (C2C) electronic commerce pertains to the direct selling or buying of goods and services among individuals. Transactions are done online through various platforms such as FB Marketplace, eBay, or Kimstore.

C2B e-commerce

Customer-to-business (C2B) electronic commerce is a business model where consumer sells products or services valuable to a business. Examples of these are new product proposals or customer reviews.

B2C e-commerce

Business-to-customer (B2C) electronic commerce refers to the traditional retail business model where individual customers buy or avail of the products and services. These goods are usually for the customer’s personal use.

B2B e-commerce

Business-to-business (B2B) electronic commerce, on the other hand, describes the online purchase transactions among businesses. The products and services purchased by the companies help to improve their productivity or profit generation.

Mixed Models

Mixed business modes are the combination of B2C and B2B, where products and services are sold to both businesses and customers. For better illustration, you have a business that supplies a company with wholesale or bulk orders and directly sells retail goods to individuals.

How do you start an e-commerce business?

Here are five steps to do if you want to start a business on e-commerce:

1. Know your market and match your products

You came up with a business idea and, wanting to make that dream come true, decided to go for it immediately. However, this is not how it works. There should be a plan, especially an understanding of the demands of your target market. Those who possess business acumen knows what is still profitable and what will be.

2. Create a series of business plans and a concrete financial plan

It is necessary to have foresight on that big project. By defining the target market through research and consultation, you get to understand how will your products and services fare once set up. How long before your investment returns to you? What do the economy and the market indicate? What are the risks involved and possible pitfalls to prepare for in the future?

Starting a business requires a series of plans: Plan A, B, C, and so on. It is a common measure that never fails to save the day.

A business owner should know not only about the products, but also how these are produced or executed, promoted, or consumed. By doing this you prevent your funds from being wasted to processes that are either trivial or useless. It also emphasizes the importance of having a clear financial plan to control the inflows and outflows of the business.

3. Connect with suppliers and other related business entities

Your goods may either be produced by your own business or supplied by another. Nevertheless, it’s wise to look for suppliers and build rapport with them for smoother transactions such as the delivery of sellable goods or materials for your production.

It also pays well to connect with other businesses that can provide brand exposure. If you run a cake business, you must find restaurants that can put your cakes in their menu or event organizers who can refer your cakes for their booked weddings or birthdays.

4. Register your online business

Don’t forget to have your business registered under DTI or SEC, (depending on the industry and size of the assets). It comes as a priority when your business blueprint is made to avoid future issues that may tarnish your starting brand and deplete your finances. Also, consumers have become smarter in verifying the legalities of entities through the use of the internet.

5. Build your business website and social media presence

An official website for your brand is ideal, but if you think it’s a bit forward to your business plan, you should establish a verifiable social media account (FB, Instagram). The goal is to build a strong presence online where most people spend their time every day. By engaging well with the existing and potential customers, the level of brand recognition grows and will eventually convert to sales.