This article is part of a series educating sellers about the basics of e-commerce.
Electronic commerce, commonly known as e-commerce, is the buying and selling of products and services through the internet.
In this article, we provide an introduction to the different types of e-commerce models, the benefits and drawbacks, as well as a beginner’s guide to starting an e-commerce store on Amazon.
Types of e-commerce models
1. Business to business (B2B)
This e-commerce model involves transactions made between two businesses. For example, a legal firm may purchase office supplies from an online wholesaler.
Did you know?
* offers a range of products for sale to businesses including office supplies, IT products and even medical supplies!
*Only available in selected countries such as the United States (US), India and the United Kingdom (UK).
2. Business to consumer (B2C)
B2C e-commerce involves transactions between a business and a consumer. For example, when a business sells kitchen appliances from a home and lifestyle store on Amazon.sg
to a consumer.
3. Consumer to consumer (C2C)
This e-commerce model involves consumers selling to other consumers in the market. An example of this is the sale of second-hand clothing on Amazon.com
4. Consumer to business (C2B)
C2B e-commerce is the sale of goods and services from a consumer to a business. A common example of this is when a blogger offers to promote the goods sold on Amazon via an affiliate programme
E-commerce has significantly changed the way consumers shop for products, bringing about numerous advantages to both businesses and consumers, leading to an increased demand for e-commerce stores and major growth in the industry.
E-commerce sites are open around the clock, making it convenient for customers to shop from anywhere at any time.
By analyzing visitors’ search and buying patterns, e-commerce stores are able to provide personalized product or service recommendations to customers.
The ‘Frequently bought together’ and ‘What other items do customers buy after viewing this item?’ sections on Amazon are common examples of personalized recommendations.
The internet has expanded the reach of e-commerce businesses to the entire world. Consumers can now shop in any country with a few clicks on their devices and have items delivered right to their doorsteps.
Did you know?
There are a total of 20 Amazon stores across Asia-Pacific, America
, Europe and the Middle East. If you are a seller in Singapore, you can easily sell on any Amazon store worldwide
such as Amazon US or Canada. On the other hand, you can also sell on Amazon Singapore even if you are a seller based in the Middle East!
Launching a business on e-commerce sites such as Amazon may help reduce the costs associated with owning a physical store. This includes rent, utilities and labor costs.
Disadvantages of e-commerce
Despite the many benefits of e-commerce, there are also some areas to consider before starting an e-commerce business.
The experience of online shopping is different from shopping in-store — customers have to wait for items to be shipped, which can take a couple of days.
Lack of personalized customer service
Customers may find online shopping to be less personalized, which means business owners have to come up with innovative ways to create a more humanized shopping experience for customers.
Check out some tips on how to create a personalized customer experience
Inability to check item before purchase
Customers are not able to physically see and feel an item before purchasing it. As such, some products may fail to meet their expectations, resulting in product returns and refunds.
Did you know?
Fulfillment By Amazon (FBA)
can help to create a more efficient and effective customer return process by carrying out the following on behalf of sellers:
- Evaluating the condition of returned items
- Assessing if the customer is eligible for a refund
- Assessing if the seller is eligible for a reimbursement
- Processing customer refunds and seller reimbursements
- Disposing of dangerous items
E-commerce businesses have the added task of safeguarding their customer’s data online, to ensure a safe and secure shopping experience.
At Amazon, we constantly improve our website to promote a secure shopping experience
How to start an e-commerce business
So, how do you set up an e-commerce business? Here are some steps to help you get started.
Step 1: Come up with a business idea
The first step to building your e-commerce store is coming up with a business idea
. This includes identifying potential pain points faced by customers and opportunities.
Identify customers' needs
Identifying customers’ needs and coming up with a unique solution to solve the issue can be a great way to start thinking about your business idea.
For example, a customer could be experiencing pain in their lower back when doing home workouts due to a thin exercise mat. As such, addressing this issue with a new product idea can be the starting point for your business.
How to identify customers' needs:
● Look at the challenges or issues you or your friends and family face
● Observe your surroundings to identify common issues faced by others
Identify potential opportunities
Another way of coming up with a product idea is to identify potential opportunities in the market. This can be done by looking at general trends or customers’ interests.
Online analytical tools such as Amazon’s brand analytics for sellers
may be helpful in highlighting such trends and opportunities. Additionally, you can refer to top-selling products on e-commerce websites
to find out customers’ top picks for the year.
Step 2: Evaluate your business idea
After coming up with a business idea, the next step is to evaluate its feasibility and profitability. This can be done by speaking to your potential customers and analyzing the factors related to the product and product market.
Speak to your potential customers
You can gather feedback by finding a group of individuals who meet the profile of your target market and discussing the challenges they face. This might allow you to better understand if the pain point is worth solving and if it can be profitable.
Evaluate the environmental and product-related factors
It is also important to look at the environmental and product-related factors when evaluating your business idea. Some aspects to consider during the evaluation include but are not limited to the following:
- Barriers to entry
- Market trends
- Market size
- Legal regulations or restrictions related to your product or brand
- Ability to meet the pain points of customers
- Nature of the product
- Product life cycle
- Selling price
- Profit margin
- Ease of fulfillment
Step 3: Source for your products
Once you have determined that your business idea is feasible and profitable, it is time to start sourcing for your product. These are some common methods you can consider:
Reselling existing products can be a cost-efficient way for you to start your e-commerce business as you can save on manufacturing.
This method involves ordering products from the supplier and storing them in your own facility until your customer places an order. Once an order is received, you will ship the goods from your own storage facility.
Creating your own products
Another method is to build your own products from scratch or engage the help of a manufacturer to produce your goods in bulk.
● Build your own products
As you are the one overseeing and carrying out the entire creation process, you tend to enjoy greater control over the cost and quality. However, this may not be effective for scaling your business.
● Engage a manufacturer
On the other hand, engaging a manufacturer can be helpful in scaling your business. However, finding the right manufacturer may require some time and effort. You also tend to have less control over the creation processes.
Step 4: Set up your online store
After deciding how to source for your products, the next step is to set up your online store. Start by deciding on a brand name before choosing your preferred selling channel.
Choose a brand name
Choosing a brand name is one of the most crucial yet challenging steps in your e-commerce journey. It can set the tone for your business and help customers identify you among other competitors.
In general, your brand name should ideally be eye-catching, memorable and most importantly, unique!
Pro tip: Protect your brand with Amazon
You can protect your brand against intellectual property infringement by enrolling your brand in the Amazon Brand Registry
Choose a selling channel
Before setting up your online store, you will have to choose your preferred selling channel. Depending on your needs and preferences, you can either create your own website and domain name, sell on an e-commerce website or do both as an omnichannel
approach!● Sell on an e-commerce website
Selling on an e-commerce site like Amazon
can be a great way for first-time sellers to start. It may also be the preferred method for those who do not wish to spend a massive amount of time and effort setting up their online store.
With Amazon, you can get immediate access to a large, steady customer base of at least 300 million users worldwide. Additionally, you can leverage established, comprehensive programmes such as Fulfillment by Amazon (FBA) that can help you store, pick, pack and ship inventory, all on your behalf!● Create your own website
Creating your own website allows for greater customisation where you can choose a unique domain name and design your own website.
However, it may require more time, effort and knowledge to set up. You may also have to build your customer base from scratch, which can make it more challenging for your target market to find you.
Step 5: Attract your target customers
The last step to fulfilling your e-commerce dream is to get your brand out there! You can market your brand and products through social media, pay-per-click advertising, influencers
If you are selling on Amazon
, we can help you navigate the complex marketing landscape. Amazon Advertising
offers a range of easy-to-understand advertising solutions including marketing for products, brands and stores. We even offer educational materials that can help you better understand various marketing jargon and metrics.
Case study of Pristine Aroma: Transforming a local brand into a successful global business
began as a homegrown brand offering a range of aromatherapy products in Singapore. This includes aroma concentrates, reed diffusers and scented soy wax candles.
In 2020, Pristine Aroma decided to leverage Amazon’s massive customer base and launched their brand on Amazon. With the help of Fulfillment by Amazon (FBA), they were able to expand to international markets such as the United States, United Kingdom and Canada.
Since their venture into selling on Amazon, Pristine Aroma has seen a 20% growth in revenue within 9 months. Furthermore, the sales generated from Amazon contributes to approximately 30% of their total business revenue!
Today, Pristine Aroma is a renowned brand for home aromatherapy products in both Singapore and around the world. As they look to further tap on the potential of the international market, the brand also plans to enter the European, Mexican and Japanese market with the help of Amazon.
Learn more about their story
Tips for starting an e-commerce business on Amazon
Tip #1: Prepare the necessary registration and product information
To get started on Amazon
, you will need to prepare some registration and product information:
- Bank account details
- Credit card number
- National ID issued by the government
- Tax information
- Phone number
- Product name
- Product description
- Product images
- Search terms and keywords
Preparing this information beforehand can help speed up your set-up process!
Tip #2: Use the Amazon Seller mobile app
The Amazon Seller mobile app allows you to manage your online store from anywhere, even while you are on the go. You can track and fulfill orders, address customer enquiries, create new product listings and do so much more through this user-friendly application.
Ready to manage your business on the go?
Download the Amazon Seller app for iPhone on the Apple Store or for Android on Google Play.
Tip #3: Create accurate, concise and detailed product listings
You may not be the only seller offering a particular product. Thus, it can be beneficial to differentiate your listing by providing accurate, concise and detailed information on your product detail page.
One way to do this is to think like a customer. This means taking into account the types of questions they may ask and the kind of information they seek. You can also consider their purchase journey to understand how you can better position your product.
Tip #4: Explore your order fulfillment options
At Amazon, you can choose between merchant fulfillment and FBA
Merchant fulfillment allows you to enjoy greater control over your logistical choices and inventory. However, it may require more time and effort, especially as your business grows.
On the other hand, FBA allows you to leverage our extensive logistics network and professional team. We will assist you with the storage, packing, labeling, shipping of goods and even customer returns so you can focus on your store and product listings!
What is the difference between e-commerce and dropshipping?
is part of e-commerce and is one of the common e-commerce fulfillment methods. While drop shippers are responsible for marketing the products and liaising with customers, they do not manufacture the products or handle the shipping.
What is the difference between e-commerce and e-business?
E-commerce refers to the specific action of buying and selling products and services online. On the other hand, e-business refers to any process or operations that an online business carries out.