E-Commerce Business Model: Top Tips To Start Your Online Store

by Staff

The Internet has become an integral part of our lives, and online business has taken on many forms. Online business allows you to earn additional income without abandoning your main job and sometimes even make serious profits.

The tips we are going to give you in this article will be especially helpful for the entrepreneurs who are going to start an e-commerce business and open an online store. It should be noted that a successful start isn’t enough. It’s necessary to maintain the pace of development, to concentrate your efforts in the right direction. 

What is e-commerce?

Before we start, let’s find out what e-commerce is and what formats exist.

At present, e-commerce is a commercial activity carried out through financial transactions conducted via the Internet. It is important to emphasize that e-commerce now includes e-commerce, e-marketing, and online banking. In addition, e-commerce also includes post-sale service and customer support, as well as the creation and distribution of advertising aimed at increasing demand for a particular product or product.

It is extremely difficult to try to dispute the benefits of e-commerce, both for the manufacturer and the buyer. The primary benefits of e-commerce for organizations are its breadth of reach to potential target audiences and a global reduction in financial costs. In turn, the benefits of e-commerce for the consumer lie in the ubiquity of commerce, its cheapness, and anonymity.

These days, there are three main models of e-commerce. The first one (B2B) describes trade between businesses. The second model (B2C) describes trade between an organization and a customer. The third (C2C) involves a transaction between two consumers, neither of whom is an entrepreneur in the full sense of the word. It is important to emphasize that competition in the segment of electronic commerce is increasing, which means that in this area there is a constant search for new constructive ideas and solutions.

Photo by Daily Nouri.

There is also B2G (Business-to-Government) — this is the relationship between business, that is, companies, on the one hand, and the government, that is, municipal authorities and government agencies, on the other. As an example, we can take the portal of public procurement of the Russian Federation. Transactions in the B2G niche are made on the basis of tenders and tenders. Since in this area of e-commerce participants deal with large transactions, it is not surprising that the requirements for companies are very strict. A legal entity participating in a tender must have high status and an untainted reputation.

The e-commerce business model is for businesses that want to sell goods and products (whether it’s physical or info products). This means that you have to deal with marketing and direct sales, which take time and costs.


Retail is the process of meeting demand by creating a supply chain that provides buyers with the goods they need.

Retailers are valued because they are the ones looking for quality products and ensuring their availability in a convenient place for the customer and at the right time. This type of commerce involves both B2B and B2C transactions.

Retailing can be a challenge, especially online. You will have to face a lot of competitors in your niche. And to stay on track, try to invest more money in advertising and marketing. Furthermore, this business model has been tested over the years and proven by a large number of successful businesses.

Trading Platforms (Marketplaces)

If you want to do business without a complex supply chain, the concept of marketplaces is for you.

Photo by KOBU Agency.

Marketplaces are platforms through which sellers and buyers can find each other. You, as the owner of the site, earn commissions from the transactions made on the platform. Trading platforms can be either completely virtual or have representative offices.

Vertically Integrated Commerce

This type of commerce is carried out directly — from manufacturer to consumer, without the participation of intermediaries. It combines manufacturing, branding, and distribution in one place, eliminating middlemen and unnecessary loss. This business model also enables you to create a product that best meets the customers’ needs.

Vertically integrated companies are distinguished by unique goods, high quality, fast customization, and strong branding.

Flash Sales

The essence of flash selling is to create continuous sales that encourage consumers to buy now in order to get a big discount. This business model benefits from creating a constant sense of shortage.

Photo by Tamanna Rumee.

Stores contact manufacturers directly and offer 1-day and weekly Flash Sale, offering customers 60-80% discount on items that are usually quite expensive.

The store places an offer with its markup and sends out newsletters.

People buy goods in a hurry to take advantage of the discount.

The store receives a commission on sales, and the manufacturer gets rid of old collections or simply increases turnover.

Top Tips for Running an Online Business

As you’ve already understood, the online business can be different. But we will focus on the classic version of the online store. So how do you start e-commerce with minimum investment and maximum profit? Let’s figure it out.

# Minimize investments

It’s necessary to start up with small investments in the technical part and infrastructure and direct the main budget to the promo campaign and advertising. In this case, you can get your first sales pretty quickly. This will allow you to expand the online store functionality to solve specific problems in the future.

Photo by krakenimages.

# Improve regularly

Continuous analytics during the online store development will help to understand your customers and what prompts them to purchase. This allows you to improve your business strategy, to work on the strengths of your store. It makes it easier to understand how you can differentiate from your closest competitors.

This applies to the technical aspect as well. It’s much more convenient to add new features later than initially launching an online store with wide functionality. These features need to be added as demanded. Since in the absence of relevant analytical data, it’s unknown what exactly needs to be improved.

# Be different 

To succeed in a highly competitive environment, you need to contrast from competitors not only in design. Dumping isn’t an option as well, especially in niches where the markup is already minimal. Therefore, it’s worth considering other opportunities to stand out. For instance, interesting promos, a loyalty program, a discount on the second item, an extended warranty from the store, etc.

Photo by Randy Fath.

# Evaluate the possibilities

At the start, it’s better to focus on a specific product segment. This is also true for promotion. Even if you know ten types of client campaigns, start working with two or three, achieve continuous sales, and only then move on to other channels. Otherwise, by wasting the budget and efforts, you can quickly spend available time and money, and as a result, you won’t achieve the desired effect.

Each of the internet marketing channels has a different payback time. For instance, SEO promotion is time-consuming, but ultimately it’s one of the most profitable ways to attract customers. But contextual advertising (PPC) allows you to get clients quickly. However, if the campaign is run by an inexperienced specialist, you can easily spend huge budgets without earning anything. Therefore, special attention should be paid to marketers, the content quality, a video editor Mac or Windows, in which layouts will be made.

Photo by Campaign Creators.

# Interact with your audience

Conduct surveys, polls, collect reviews — this will help you interact with prospective buyers and understand their needs and wants. Listen to your users, and it will be more effortless for you to realize your next move. Customers are always loyal to businesses that are open to criticism and communication.

# Be independent

This is both about concentration on a too narrow goods segment and one or two key suppliers. Changes in the terms of purchase from the same suppliers or the decline in your key product demand can bring down your entire business.

Photo by Nadya Spetnitskaya.

Diversify risks as much as possible at this stage of work. This is the key to the successful development and further existence of the business. Be flexible. As history shows, even world-famous brands went bankrupt due to a lack of flexibility and the inability or unwillingness to adjust the system of work to the changing market realities.

# Analyze everything

If traffic increases and sales are constant, you shouldn’t relax. It’s possible to increase your profit at any time. To do this, you need to collect and analyze data on transactions, items, and search for methods to boost conversion rates. Conversion is understood as the ratio of all users who came to the online store website and those who made a purchase. Accordingly, the higher the conversion rate and the average check are, the more efficient the online store is.

Photo by Kaitlyn Baker.

Remember that competitors are on the alert. Even after a successful launch and with a stable sales flow, your business requires to steadily improve and expand its market share. Oppositely, your competitors will do it.

E-commerce, an online store, in particular, is a serious business that requires an appropriate, clear, and consistent approach. But you can be sure that after several months of hard work your efforts will be rewarded in the form of stable sales and satisfied customers. Good luck!

Main Photo by Mike Petrucci.

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The New Jersey Digest is a new jersey magazine that has chronicled daily life in the Garden State for over 10 years.

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