The Business of E-Commerce

Ecommerce includes any commerce which happens on the internet, be it buying and selling of any products and services. This includes a host of online business industries like online travel, retail, business/consumer services etc. Also the business can be conducted between 2 businesses (B2B), a business and an individual consumer (B2C) or between 2 individuals (C2C).

During my work in Beveragewala, I have seen multiple models of ecommerce existing in the market.

Inventory Model: The seller buys and maintains inventory and sells it online. The benefit is that the seller controls product/service quality and all logistics around it. On the other hand, it also means a higher capital infusion required to buy inventory. Private labels of goods/services, online travel tend to work on this model.

Marketplace Model: The seller simply acts as a platform for commerce between buyers and vendors registered on it. It provides all logistics and payment support around the sales which happen on it’s platform. The benefit is lower capital required as no inventory is maintained. Big ecommerce companies like Amazon, Flipkart etc. tend to work on this model.

Drop Shipment Model: The seller takes an order and passes it onto the vendor. The vendor directly ships the product directly to the buyer. The benefit to the seller is no inventory and logistics required. However, the buyer’s experience, and hence the seller’s brand, is totally dependent on the vendor. This model has not found much acceptance and has been replaced by the Marketplace Model in most cases.