INTRODUCTION

Electronic commerce (e-commerce) refers to companies and individuals that buy and sell goods and
services over the internet. E-commerce operates in different types of market segments and can be
conducted over computers, tablets, smartphones, and other smart devices. Nearly every imaginable
product and service is available through e-commerce transactions, including books, music, plane tickets,
and financial services such as stock investing and online banking. As such, it is considered a very
disruptive technology.

Understanding E-commerce

As noted above, e-commerce is the process of buying and selling tangible products and services online.
It involves more than one party along with the exchange of data or currency to process a transaction. It
is part of the greater industry that is known as electronic business (e-business), which involves all of the
processes required to run a company online. E-commerce has helped businesses (especially those with a
narrow reach like small businesses) gain access to and establish a wider market presence by providing
cheaper and more efficient distribution channels for their products or services. Target (TGT)
supplemented its brick-and-mortar presence with an online store that allows customers to purchase
everything from clothes and coffeemakers to toothpaste and action figures right from their homes.

Providing goods and services isn't as easy as it may seem. It requires a lot of research about the products
and services you wish to sell, the market, audience, competition, as well as expected business costs.
Once that's determined, you need to come up with a name and set up a legal structure, such as a
corporation. Next, set up an e-commerce site with a payment gateway. For instance, a small business
owner who runs a dress shop can set up a website promoting their clothing and other related products
online and allow customers to make payments with a credit card or through a payment processing
service, such as PayPal. E-commerce may be thought of as a digital version of mail-order catalog
shopping. Also called online commerce, e-commerce is the transaction between a buyer and a seller
that leverages technology.

Special Considerations

E-commerce has changed the way people shop and consume products and services. More people are
turning to their computers and smart devices to order goods, which can easily be delivered to their
homes. As such, it has disrupted the retail landscape. Amazon and Alibaba have gained considerable
popularity, forcing traditional retailers to make changes to the way they do business. But that's not all.
Not to be outdone, individual sellers have increasingly engaged in e-commerce transactions via their
own personal websites. And digital marketplaces such as eBay or Etsy serve as exchanges where
multitudes of buyers and sellers come together to conduct business. The U.S. Department of Commerce
recognizes e-commerce businesses such as transactional sites, static content sites, online marketplaces,
and auction sites.

History of E-commerce

Most of us have shopped online for something at some point, which means we've taken part in e-
commerce. So it goes without saying that e-commerce is everywhere. But very few people may know
that e-commerce has a history that goes back to before the internet began. E-commerce actually goes
back to the 1960s when companies used an electronic system called the Electronic Data Interchange to
facilitate the transfer of documents. It wasn't until 1994 that the very first transaction. took place. This
involved the sale of a CD between friends through an online retail website called NetMarket.

The industry has gone through so many changes since then, resulting in a great deal of evolution.
Traditional brick-and-mortar retailers were forced to embrace new technology in order to stay afloat as
companies like Alibaba, Amazon, eBay, and Etsy became household names. These companies created a
virtual marketplace for goods and services that consumers can easily access.bm New technology
continues to make it easier for people to do their online shopping. People can connect with businesses
through smartphones and other devices and by downloading apps to make purchases. The introduction
of free shipping, which reduces costs for consumers, has also helped increase the popularity of the e-
commerce industry.

Advantages and Disadvantages of E-commerce

Convenience: E-commerce can occur 24 hours a day, seven days a week. Although eCommerce may take
a lot of work, it is still possible to generate sales as you sleep or earn revenue while you are away from
your store.

Increased Selection: Many stores offer a wider array of products online than they carry in their brick-
and-mortar counterparts. And many stores that solely exist online may offer consumers exclusive
inventory that is unavailable elsewhere.

Potentially Lower Start-up Cost: E-commerce companies may require a warehouse or manufacturing
site, but they usually don't need a physical storefront. The cost to operate digitally is often less
expensive than needing to pay rent, insurance, building maintenance, and property taxes.

International Sales: As long as an e-commerce store can ship to the customer, an e-commerce company
can sell to anyone in the world and isn't limited by physical geography.
Easier to Retarget Customers: As customers browse a digital storefront, it is easier to entice their
attention towards placed advertisements, directed marketing campaigns, or pop-ups specifically aimed
at a purpose.

Disadvantages

There are certain drawbacks that come with e-commerce sites, too. The disadvantages include:

Limited Customer Service: If you shop online for a computer, you cannot simply ask an employee to
demonstrate a particular model's features in person. And although some websites let you chat online
with a staff member, this is not a typical practice.

Lack of Instant Gratification: When you buy an item online, you must wait for it to be shipped to your
home or office. However, e-tailers like Amazon make the waiting game a little bit less painful by offering
same-day delivery as a premium option for select products.

Inability to Touch Products: Online images do not necessarily convey the whole story about an item, and
so e-commerce purchases can be unsatisfying when the products received do not match consumer
expectations. Case in point: an item of clothing may be made from shoddier fabric than its online image
indicates.

Reliance on Technology: If your website crashes, garners an overwhelming amount of traffic, or must be
temporarily taken down for any reason, your business is effectively closed until the e-commerce
storefront is back.

Higher Competition: Although the low barrier to entry regarding low cost is an advantage, this means
other competitors can easily enter the market. E-commerce companies must have mindful marketing
strategies and remain diligent on SEO optimization to ensure they maintain a digital presence.

Pros

Owners can generate revenue semi-passively

Consumers can easily browse for specific products

Greater earning potential as there are no limitations on physical location as long you can ship there

Reduced costs assuming digital presence costs less than building, insurance, taxes, and repairs.

Greater marketing control, including data extraction from customers, targeted ads, and pop-up
placement
Cons

Limited customer service opportunities as there is little to no face-to-face opportunities

Lacks instant gratification as customers must believe in a product before seeing it in person

Products can't been seen or handled until delivered (can't try before they buy)

Loss of revenue or income when websites go down

High reliance on shipping constraints

Higher competition due to lower barriers of entry and greater customer potential

Types of E-commerce

Depending on the goods, services, and organization of an ecommerce company, the business can opt to
operate several different ways. Here are several of the popular business models.

Business-to-Consumer (B2C)

B2C e-commerce companies sell directly to the product end-user. Instead of distributing goods to an
intermediary, a B2C company performs transactions with the consumer that will ultimately use the
good. This type of business model may be used to sell products (like your local sporting goods store's
website) or services (such as a lawn care mobile app to reserve landscaping services). This is the most
common business model and is likely the concept most people think about when they hear the term e-
commerce.

Business-to-Business (B2B)

Similar to B2C, an e-commerce business can directly sell goods to a user. However, instead of being a
consumer, that user may be another company. B2B transactions often entail larger quantities, greater
specifications, and longer lead times. The company placing the order may also have a need to set
recurring goods if the purchase is for recurring manufacturing processes.

Business-to-Government (B2G)

Some entities specialize as government contractors providing goods or services to agencies or

administrations. Similar to a B2B relationship, the business produces items of value and remits those
items to an entity. B2G e-commerce companies must often meet government requests for proposal
requirements, solicit bids for projects, and meet very specific product or service criteria. In addition,
there may be joint government endeavors to solicit a single contract through a government-wide
acquisition contract.

Consumer-to-Consumer (C2C)
Established companies are the only entities that can sell things. E-commerce platforms such as digital
marketplaces connect consumers with other consumers who can list their own products and execute
their own sales. These C2C platforms may be auction-style listings (i.e. eBay auctions) or may warrant
further discussion regarding the item or service being provided (i.e. Craigslist postings). Enabled by
technology, C2C e-commerce platforms empower consumers to both buy and sell without the need for
companies.

Consumer-to-Business (C2B)

Modern platforms have allowed consumers to more easily engage with companies and offer their
services, especially related to short-term contracts, gigs, or freelance opportunities. For example,
consider listings on Upwork. A consumer may solicit bids or interact with companies that need particular
jobs done. In this way, the e-commerce platform connects businesses with freelancers to enable
consumers greater power to achieve pricing, scheduling, and employment demands.

Consumer-to-Government (C2G)

Less of a traditional e-commerce relationship, consumers can interact with administrations, agencies, or
governments through C2G partnerships. These partnerships are often not in the exchange of service but
rather, the transaction of obligation. For example, uploading your federal tax return to the Internal
Revenue Service (IRS) digital website is an e-commerce transaction regarding an exchange of
information. Alternatively, you may pay your tuition to your university online or remit property tax
assessments to your county assessor.

Types of Commerce

The U.S. Census Bureau conducts estimates of retail e-commerce sales in the United States. In the first
quarter of 2023, retail e-commerce accounted for 15.1% of total sales in the country, totaling roughly
$272.6 billion. These figures are adjusted for seasonal variation.

Types of E-commerce Revenue Models

In addition to crafting what type of e-commerce company a business wants to be, the business must
decide how it wants to make money. Due to the unique nature of e-commerce, the business has a few
options on how it wants to process orders, carry inventory, and ship products.

Dropshipping

Often considered one of the easier forms of e-commerce, dropshipping allows a company to create a
digital storefront, generate sales, then rely on a supplier to provide the good. When generating the sale,
the e-commerce company collects payment via credit card, PayPal, cryptocurrency, or other means of
digital currency. Then, the e-commerce store passes the order to the dropship supplier. This supplier
manages inventory, oversees the warehouse of goods, packages the goods, and delivers the product to
the purchaser.

White Labeling

White-label e-commerce companies leverage already successful products sold by another company.
After a customer places an order, the e-commerce company receives the existing product, repackages
the product with its own package and label, and distributes the product to the customer. Although the
e-commerce company has little to no say in the product they receive, the company usually faces little to
no in-house manufacturing constraints.

Wholesaling

A more capital-intensive approach to e-commerce, wholesaling entails maintaining quantities of

inventory, keeping track of customer orders, maintaining customer shipping information, and typically
having ownership of the warehouse space to house products. Wholesalers may charge bulk pricing to
retailers or unit prices for consumers. However, the broad approach to wholesaling is to connect to
buyers of large quantities or many smaller buyers of a similar, standardized product.

Private Labeling

Private labeling is a more appropriate e-commerce approach for companies that may not have large
upfront capital or do not have their own factory space to manufacture goods. Private label e-commerce
companies send plans to a contracted manufacturer who makes the product. The manufacturer may
also have the ability to ship directly to a customer or ship directly to the company receiving the order.
This method of e-commerce is best suited for companies that may receive on-demand orders with short
turnaround times but are unable to handle the capital expenditure requirements.

Subscription

E-commerce companies can also leverage repeating orders or loyal customers by implementing
subscription services. For a fixed price, the e-commerce company will assemble a package, introduce
new products, and incentivize locking to a long-term agreement at a lower monthly price. The consumer
only places an order once and receives their subscription order at a fixed cadence. Common subscription
e-commerce products include meal prep services, agriculture boxes, fashion boxes, or health and
grooming products.

Example of E-commerce

Amazon is a behemoth in the e-commerce space. In fact, it is the world's largest online retailer and
continues to grow. As such, it is a huge disrupter in the retail industry, forcing some major retailers to
rethink their strategies and shift their focus.The company launched its business with an e-commerce-
based model of online sales and product delivery. It was founded by Jeff Bezos in 1994 as an online
bookstore but has since expanded to include everything from clothing to housewares, power tools to
food and drinks, and electronics. Company sales increased by 9% in 2022 from the previous year,
totaling $513.98 billion compared to $469.82 billion in 2021. Amazon's operating income dropped from
$24.88 billion in 2021 to $$12.25 billion in 2022. The company posted a net loss of $2.72 billion in 2022,
compared to net income of $33.36 billion in 2021.

What Is an E-commerce Website?

An e-commerce website is any site that allows you to buy and sell products and services online.
Companies like Amazon and Alibaba are examples of e-commerce websites.

What Is the Difference Between E-commerce and E-business?

E-commerce involves the purchase and sale of goods and services online and is actually just one part of
e-business. An e-business involves the entire process of running a company online. Put simply, it's all of
the activity that takes place with an online business.

What Is an Example of E-commerce?

Dollar Shave Club offers customers personal grooming, health, and beauty products. Customers can opt
for what product(s) they want shipped to them and can sign up for long-term memberships to have
products sent to them on a recurring basis. Dollar Shave Club procures goods in bulk from other
companies, then bundles those products, maintains membership subscriptions, and markets the
products. An e-commerce company can sell to customers, businesses, or agencies such as the
government. E-commerce can also be performed by customers who sell to businesses, other customers,
or governments.

E-commerce is just one part of running an e-business. While the latter involves the entire process of
running a business online, e-commerce simply refers to the sale of goods and services via the internet.
E-commerce companies like Amazon, Alibaba, and eBay have changed the way the retail industry works,
forcing major, traditional retailers to change the way they do business. If starting an e-commerce site is
something you're considering, make sure you do your research before you start. And make sure you
start with a small, narrow focus to ensure that you have room to grow.

What Is Electronic Retailing (E-tailing)?

Electronic retailing (E-tailing) is the sale of goods and services through the internet. E-tailing can include
business-to-business (B2B) and business-to-consumer (B2C) sales of products and services. E-tailing
requires companies to tailor their business models to capture internet sales, which can include building
out distribution channels such as warehouses, internet webpages, and product shipping centers.
Notably, strong distribution channels are critical to electronic retailing as these are the avenues that
move the product to the customer.
How Electronic Retailing (E-tailing) Works

Electronic retailing includes a broad range of companies and industries. However, there are similarities
between most e-tailing companies that include an engaging website, online marketing strategy, efficient
distribution of products or services, and customer data analytics. Successful e-tailing requires strong
branding. Websites must be engaging, easily navigable, and regularly updated to meet consumers'
changing demands. Products and services need to stand out from competitors' offerings and add value
to consumers' lives. Also, a company's offerings must be competitively priced so that consumers do not
favor one business over another just for price reasons.

E-tailers need distribution networks that are prompt and efficient. Consumers cannot wait for long
periods for the delivery of products or services. Transparency in business practices is also important, so
consumers trust and stay loyal to a company. There are many ways companies can earn revenue online.
Of course, the first income source is through the sales of their product to consumers or businesses. Both
B2C and B2B companies can earn revenue by selling their services through a subscription-based model
such as Netflix (NFLX), which charges a monthly fee for access to media content. Revenue can also be
earned through online advertising. For example, Meta (META), formerly Facebook Inc., earns money
mainly from ads placed on its Facebook website by companies looking to sell to the millions who are "on
Facebook," regularly checking their pages.

Types of Electronic Retailing (E-tailing)

Business-to-Consumer (B2C) E-Tailing

Business-to-consumer retailing is the most common of all e-commerce companies and the most familiar
to most Internet users. This group of retailers includes companies selling finished goods or products to
consumers online directly through their websites. The products could be shipped and delivered from the
company's warehouse or directly from the manufacturer. One of the primary requirements of a
successful B2C retailer is maintaining good customer relations.

Business-to-Business (B2B) E-tailing

Business-to-business retailing involves companies that sell to other companies. Such retailers include
consultants, software developers, freelancers, and wholesalers. Wholesalers sell their products in bulk
from their manufacturing plants to businesses. These businesses, in turn, sell those products to
consumers. In other words, a B2B company such as a wholesaler might sell products to a B2C company.
Advantages and Disadvantages of Electronic Retailing (E-tailing)

E-tailing includes more than just e-commerce-only companies. More and more traditional brick-and-
mortar stores are investing in e-tailing. Infrastructure costs are lower with electronic retailing versus
operating brick-and-mortar stores.nCompanies can move products faster and reach a larger customer
base online than with traditional physical locations. E-tailing also allows companies to close unprofitable
stores and maintain the profitable ones.

Automated sales and checkout cut down on the need for staff and sales personnel. Also, websites cost
less than physical stores to open, staff, and maintain. E-tailing reduces advertising and marketing
expenses as customers can find the stores through search engines or social media. Data analytics is like
gold for e-tailers. Consumer shopping behavior can be tracked to determine spending habits, page
views, and length of engagement with a product, service, or website page. Effective data analytics can
decrease lost sales and boost client engagement, which can lead to increased revenue. There are
disadvantages to running an e-tailing operation, though. Creating and maintaining an e-tailing website,
while less expensive than a traditional retail location, can be expensive. Infrastructure costs can be
substantial if warehouses and distribution centers need to be built to store and ship the products. Also,
adequate resources are necessary to handle online returns and customer disputes.

Also, e-tailing does not provide the immersive, emotional experience that physical stores can offer. E-
tailing does not give the consumer a chance to smell, feel, or try on products before purchasing them—
sensory experiences that often result in a decision to buy; browsing is also more pleasurable in person,
and lends to increased spending. Personalized customer service and interaction can also be an
advantage to brick-and-mortar stores.

Real World Examples of E-Tailing

Amazon.com (AMZN) is the world's largest online retailer, providing consumer products and
subscriptions through its website. Amazon's website shows the company generated more than $280
billion in revenue in 2019 while posting more than $11.6 billion in profit or net income. Other e-tailers
that operate exclusively online and compete with Amazon include Overstock.com and JD.com. Alibaba
Group (BABA) is China's largest e-tailer, which operates an online commerce business throughout China
and internationally. Alibaba has adopted a business model that not only includes both B2C and B2B
commerce, but it also connects Chinese exporters to companies around the world looking to buy their
products. The company's rural Taobao program helps rural consumers and companies in China sell
agricultural products to those living in urban areas. For the fiscal year 2020, Alibaba generated nearly
$72 billion in annual revenue while posting just under $19.8 billion in profit.

Marketing Strategy: What It Is, How It Works, How To Create One

A marketing strategy refers to a business’s overall game plan for reaching prospective consumers and
turning them into customers of their products or services. A marketing strategy contains the company’s
value proposition, key brand messaging, data on target customer demographics, and other high-level
elements. A thorough marketing strategy covers

Understanding Marketing Strategies

A clear marketing strategy should revolve around the company’s value proposition, which
communicates to consumers what the company stands for, how it operates, and why it deserves their
business. This provides marketing teams with a template that should inform their initiatives across all of
the company’s products and services. For example, Walmart (WMT) is widely known as a discount
retailer with “everyday low prices,” whose business operations and marketing efforts are rooted in that
idea.

Marketing Strategies vs. Marketing Plans

The marketing strategy is outlined in the marketing plan—a document that details the specific types of
marketing activities that a company conducts and contains timetables for rolling out various marketing
initiatives. Marketing strategies should ideally have longer life spans than individual marketing plans
because they contain value propositions and other key elements of a company’s brand, which generally
hold constant over the long haul. In other words, marketing strategies cover big-picture messaging,
while marketing plans delineate the logistical details of specific campaigns. For example, a marketing
strategy might say that a company aims to increase authority in niche circles where their clients visit.
The marketing plan puts that in action by commissioning thought leadership pieces on LinkedIn.

Benefits of a Marketing Strategy

The ultimate goal of a marketing strategy is to achieve and communicate a sustainable competitive
advantage over rival companies by understanding the needs and wants of its consumers. Whether it’s a
print ad design, mass customization, or a social media campaign, a marketing asset can be judged based
on how effectively it communicates a company’s core value proposition. Market research can help chart
the efficacy of a given campaign and can help identify untapped audiences to achieve bottom-line goals
and increase sales.

How to Create a Marketing Strategy

Creating a marketing strategy requires a few steps. HubSpot, a digital marketing resource, offers insight
into how to create your strategy. Identify your goals: While sales are the ultimate goal for every
company, you should have more short-term goals such as establishing authority, increasing customer
engagement, or generating leads. These smaller goals offer measurable benchmarks for the progress of
your marketing plan. Think of strategy as the high-level ideology and planning as how you accomplish
your goals.

Know your clients: Every product or service has an ideal customer, and you should know who they are
and where they hang out. If you sell power tools, you’ll choose marketing channels where general
contractors may see your messaging. Establish who your client is and how your product will improve
their lives.

Create your message: Now that you know your goals and who you’re pitching to, it’s time to create your
messaging. This is your opportunity to show your potential clients how your product or service will
benefit them and why you’re the only company that can provide it.

Define your budget: How you disperse your messaging may depend on how much you can afford. Will
you be purchasing advertising? Hoping for a viral moment on social media organically? Sending out
press releases to the media to try to gain coverage? Your budget will dictate what you can afford to do.

Determine your channels: Even the best message needs the appropriate venue. Some companies may
find more value in creating blog posts for their website. Others may find success with paid ads on social
media channels. Find the most appropriate venue for your content.

Measure your success: To target your marketing, you need to know whether it is reaching its audience.
Determine your metrics and how you’ll judge the success of your marketing efforts.

Why does my company need a marketing strategy?

A marketing strategy helps a company direct its advertising dollars to where it will have the most
impact. Compared with the data from 2018, the correlation between organization and success in
marketers jumped from being almost four times more likely to almost seven times more likely in 2022.

What do the four Ps mean in a marketing strategy?

The four Ps are product, price, promotion, and place. These are the key factors that are involved in the
marketing of a good or service. The four Ps can be used when planning a new business venture,
evaluating an existing offer, or trying to optimize sales with a target audience. It also can be used to test
a current marketing strategy on a new audience.

A marketing strategy will detail the advertising, outreach, and public relations campaigns to be carried
out by a firm, including how the company will measure the effect of these initiatives. They will typically
follow the four Ps. The functions and components of a marketing plan include market research to
support pricing decisions and new market entries, tailored messaging that targets certain demographics
and geographic areas, and platform selection for product and service promotion—digital, radio, internet,
trade magazines, and the mix of those platforms for each campaign, and metrics that measure the
results of marketing efforts and their reporting timelines The terms “marketing plan” and “marketing
strategy” are often used interchangeably because a marketing plan is developed based on an
overarching strategic framework. In some cases, the strategy and the plan may be incorporated into one
document, particularly for smaller companies that may only run one or two major campaigns in a year.
The plan outlines marketing activities on a monthly, quarterly, or annual basis, while the marketing
strategy outlines the overall value proposition.

The Power of Branding

A brand is more than a name—it is the sum total of a consumer's experiences with a recognizable
product—and it is powerful, often leading to a competitive advantage. It is also frustratingly hard for
investors to value.

How to Value a Brand

Although we can see brands are valuable to a company, brands are still considered among the intangible
assets. Investors have tried many ways to separate the brand from the balance sheet to come up with a
number. There are three main approaches that have gained traction.

1. Stripping Out Assets

The easiest way to put a value on a brand is to calculate the brand equity of a company. This is a simple
calculation where you take a firm's enterprise value and subtract the tangible assets and intangible
assets that can be identified, such as patents. The number you are left with is the value of the company's
brand equity. The obvious flaw is that it doesn't take revenue growth into account, but it can provide a
nice snapshot of how much of a company's value is goodwill.

2. Product to Product

Another way investors try to account for a brand is to focus on the pricing power of a company. Simply
put, they want to know how much of a premium the company can charge above its competitor's
product. This premium can then be multiplied by the units sold to give the annual figure for how much
the brand is worth.

3. The Intensive Approach

Although too time-consuming to be practical for individual investors, the methodology behind
Interbrand's ranking is the most complete. By incorporating similar approaches to the ones above and
combining them with proprietary measures of brand strength and the role of the brand in consumer
decisions, Interbrand provides a holistic measure of brand equity for the companies it measures.
Unfortunately, Interbrand doesn't offer a free analysis of all the companies investors want to know
about.

Double-Edged Intangibles

Whether you ballpark it or dig down to a more specific number, most investors are happy to have brand
equity on their side. Surely the branding edge of Coca-Cola was one of the economic moats Warren
Buffett talks about.

However, brands can cut both ways.Although it is intangible, it is more than possible for a company to
destroy or tarnish its brand equity. By jokingly calling his company's jewelry "total crap," CEO Gerald
Ratner badly damaged the image of Ratners. In addition to losing market value, the company renamed
itself Signet to distance itself from the disgraced Ratner brand.

Ratner's is a tale of caution for investors who are already paying a premium because of brand equity.
Brands are fickle beasts that can be hard to nurture and easy to kill. That said, a solid brand and the
pricing premium it brings can be very attractive to investors, and with good reason. The power of
branding can help a company triumph in a price war, thrive in a recession, or simply grow operating
margins and create shareholder value. Like the brand itself, the premium investors are willing to pay for
the stock with a branding edge is almost entirely a psychological choice. A stock with a large amount of
brand equity is, of course, always "worth" whatever someone is willing to buy it for.

Subscription Business Model Defined, How It Works, Examples

Subscription business models are based on the idea of selling a product or service to receive monthly or
yearly recurring subscription revenue. They focus on customer retention over customer acquisition. In
essence, subscription business models focus on the way revenue is made so that a single customer pays
multiple payments for prolonged access to a good or service instead of a large upfront one-time price.
Now, the economy is trending toward more subscriptions instead of ownership for cars, software,
entertainment, and shopping. This increases the lifetime value (LTV) of the customer.

How Subscription Business Models Work

Subscription business models were first introduced in the 1600s by newspaper and book publishers.
With the rise of technology and software as a service (SaaS) products, many companies are moving from
a business revenue model where revenue is made from a customer's one-time purchase to a
subscription model where revenue is made on a recurring basis in return for consistent access to the
delivery of a good or service. The subscriptions are generally renewed and activated automatically with
a pre-authorized credit card or checking account. The benefit of subscription business models is the
recurring revenue, which also helps create strong customer relationships.

Types of Subscription Business Models

Subscription business models can include a variety of companies and industries. Those industries include
cable television, satellite radio, websites, gyms, lawn care, storage units, and many more. In addition,
there are newer-aged businesses that operate subscription models, such as subscription boxes.
Subscription box businesses include meal delivery services and meal delivery kits. As well, there are
subscription business models for accessing online storage for documents and photos, such as the Apple
iCloud. Beyond that, there are products that are shipped directly to your home, such as personal care
products. Companies in this area include Dollar Shave Club and Birchbox.

Car subscription services provide you with access to a vehicle in exchange for a monthly fee. Vehicle
subscriptions may include registration, maintenance, roadside assistance, and liability insurance. Unlike
a lease, which requires a two- to four-year term, you can subscribe to a car service for a shorter time
frame, and you can swap out your car for a new one every month.

Example of a Subscription Business Model

The easiest subscription business model to understand is that of a magazine company. Instead of selling
a magazine as a standalone product where a customer makes a one-time purchase, magazine companies
offer a subscription service for the delivery of a weekly or monthly magazine. In this model, instead of
having customers make single purchases, magazine companies offer monthly payments for a yearly
subscription to access their monthly magazines. If a magazine company offers a monthly magazine
service, instead of as a single magazine purchase, it offers its service as a 12-month service comprising
12 purchases. This makes the revenue model of the company stronger because it guarantees itself sales
over a 12-month period rather than a single purchase. This makes revenue forecasting and business
planning easier since a company can project its sales farther out with more accuracy.

Magazine companies are not the only model that uses a subscription business model. With technology,
almost any product or service can now be a subscription model.

Commerce: What It Is, How It Differs From Business and Trade

Commerce is the exchange of goods or services among two or more parties. It is the subset of business
that focuses on the sale of finished or unfinished products rather than their sourcing, manufacturing,
transportation, or marketing. Generally, commerce can refer to an exchange of goods or services for
money or something of equal value. From the broadest perspective, governments are tasked with
managing the commerce of their nations in a way that meets the needs of their citizens by providing
jobs and producing beneficial goods and services.

Commerce has existed from the moment humans started exchanging goods and services with one
another. From the early days of bartering to the creation of currencies and the establishment of trade
routes, humans have sought ways to facilitate the exchange of goods and services by building a
distribution process to bring together sellers and buyers. Today, the term commerce normally refers to
large-scale purchases and sales. The sale or purchase of a single item by a consumer is defined as a
transaction, while commerce may refer to all transactions related to the purchase and sale of that item.
Most commerce in modern times is conducted internationally and represents the buying and selling of
goods between nations.

Commerce is not synonymous with business but is a subset of it. Commerce does not relate to the
sourcing, manufacturing, or production processes but only to the distribution of goods and services.
That alone encompasses a number of roles, such as logistical, political, regulatory, legal, social, and
economic.

Commerce vs. Business vs. Trade

These words are often used interchangeably but they are not the same.

Business

Business is any endeavor undertaken for the purpose of making a profit. It includes selling goods and
services, but everyone else involved in the process of creating the product and getting it to a consumer
is engaged in business activity When you fill up your gas tank at a service station, you are completing a
process that started with an oil exploration company locating an oil deposit, continued with a drilling
company extracting crude oil, and then went through many stages of transportation, refining, and
distribution before it got to your gas tank. A number of people conducted business to get it there.

Commerce

Commerce refers specifically to the exchange of products or services between two or more parties. In
the above example, you engaged in commerce when you paid to fill up your gas tank.

Along the way, there were other examples of commercial activity. For example, the crude oil was sold in
bulk to one or more oil companies. That was a commercial transaction as well.

Trade
The distinction between commerce and trade is pretty fine. Both are the direct exchange of goods and
services for something of value between two parties. (In modern times, "something of value" means
money.) However, there are some differences in their usage:

Commerce, as in the above example, implies a series of commercial transactions for the purpose of
producing a product. The last stage of the commercial process is the sale of a finished product to its
consumer.

Trade suggests only the final transaction in which a seller provides a finished product and a consumer
pays for it. In this sense, trade is a subset of commerce as commerce is a subset of business.

Regulating Commerce

When properly managed, commercial activity enhances the standard of living of a nation's citizens and
increases its standing in the world. However, when commerce is allowed to run unregulated, large
businesses can become too powerful and impose negative externalities on citizens for the benefit of the
business owners. Most nations have established government agencies responsible for promoting and
managing commerce, such as the Department of Commerce in the United States.

Large multinational organizations regulate commerce across borders. For example, the World Trade
Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade (GATT),
established rules for tariffs relating to the import and export of goods between countries. The rules are
meant to facilitate commerce and establish a level playing field for member countries.

The Rise of E-commerce

The idea of commerce has expanded to include electronic commerce in the 21st century. Electronic
commerce, or e-commerce, is defined as any business or commercial transaction that includes the
transfer of financial information over the Internet. E-commerce changed how commerce is conducted.
In the past, imports and exports posed logistical hurdles for both the buyer and the seller. Only larger
companies with scale in their favor could benefit from export customers. With the rise of e-commerce,
small business owners have a chance to market to international customers and fulfill their orders.

Export management companies help domestic small businesses with the logistics of selling
internationally. Export trading companies help small businesses by identifying international buyers and
domestic sourcing companies that can fulfill the demand. Import/export merchants purchase goods
directly from a domestic or foreign manufacturer, and then they package the goods and resell them on
their own as an individual entity, assuming the risk but taking higher profits. The word commerce is not
interchangeable with business, but is rather a subset of business. Business includes sourcing,
manufacturing, production, and marketing whereas commerce pertains to the distribution side of the
business, specifically the distribution of goods and services.

What Are the Different Types of E-commerce?

There are three distinct types of e-commerce:

Business-to-business (B2B) is the direct sale of goods and services between businesses.

Retail is the sale of goods and services directly to consumers.

Consumer to consumer is the sale of goods and services between individuals, as on eBay or Facebook
Marketplace.

What Is E-commerce?

E-commerce is any sale of goods and services that is finalized in a transaction on the Internet. E-
commerce is an alternative to transactions that take place in brick-and-mortar stores. Today, many
companies offer their customers the choice of online or in-store purchasing.

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Mobile Commerce: Definition, Benefits, Examples, and Trends

Mobile commerce is a large subset of electronic commerce, a model where firms or individuals conduct
business over the Internet. As of 2023, nearly 97% of Americans own a cell phone, and 85% of them
owned a smartphone. This is up from 35% in 2011. Many products and services can be transacted via m-
commerce, including banking, investing, and purchases of books, plane tickets, and digital music. The
rapid growth of mobile commerce has been driven by several factors, including increased wireless
handheld device computing power, a proliferation of m-commerce applications, and the resolution of
security issues.

M-Commerce vs. E-Commerce

Electronic commerce (e-commerce) refers to buying and selling goods and services over the Internet. E-
commerce can be conducted via a desktop computer, laptop, smartphone, or tablet, but it's typically
associated with a computer in which a user has to find a location with an Internet connection.
Conversely, m-commerce specifically refers to transactions done via a smartphone or mobile device. M-
commerce users can transact anywhere provided that there's a wireless Internet provider available in
that area. M-commerce transactions tend to be accomplished with a few clicks. E-commerce is done via
a tablet, laptop, or desktop and might involve more time and exploring a company's website.
Benefits of Mobile Commerce

The range of devices capable of mobile commerce has grown. Digital wallets like Apple Pay and Google
Pay let customers make in-store purchases without the inconvenience of swiping cards. Social media
platforms such as Facebook, X (formerly Twitter), Pinterest, and Instagram, launched "buy buttons" on
their mobile platforms during the mid- to late-2010s. This enabled users to conveniently make purchases
from other retailers directly from these social media sites.

M-commerce apps allow for location tracking via GPS to offer customers help finding items in stores.
Personalized shopping experiences can also connect retailers with their clients.

Digital commerce transactions are likely to continue climbing as content delivery over wireless devices
becomes more streamlined, secure, and scalable.

Ways to Improve Mobile Commerce

Quick-loading web pages are likely to win more sales because consumers can be impatient and demand
instant gratification. Mobile checkouts must let buyers easily enter payment information, preferably
with mobile wallets that eliminate the use of manual entry, thereby reducing human error and
facilitating a smoother checkout experience.

Mobile Commerce Videos and Marketing

Mobile applications that use video to demonstrate a product's key features are likely to generate more
revenue. An online foreign exchange broker who sends video links illustrating its new mobile trading
application will likely win more clients.

Mobile Web and Mobile Applications

Consumers typically use Google or social media promotions to initiate online shopping searches.
Browsers tend to drive more transactions than mobile applications as a result. Consumers often pair the
use of mobile applications with mobile websites for this reason, to enhance their overall shopping
experience.

M-commerce has streamlined the processes of shopping, banking, and bill payment. Many consumers
can easily manage their financial lives on their phones. Digital wallets are also a common convenience.
Mobile commerce sales in the United States were an estimated $431 billion in 2022, according to the
market research company Statista.

Are There Risks Associated With M-Commerce?

Anyone who owns a cell phone can tell you that they're easy enough to misplace and lose. You might
think your phone is safe in your pocket and break into a jog in the park, only to realize 10 minutes later
that it fell out somewhere along the way. The phone's contents, including your personal financial
information, passcodes and links, might be easily accessed by anyone who finds it. This could have
disastrous results if you haven't taken safety precautions. But security can be enhanced by setting up
multi-factor authentication, including biometrics such as fingerprints and retina scans.

M-commerce provides numerous benefits to both businesses and consumers. It's a rare individual who
doesn't own some type of mobile device and businesses can reach them more easily with the advent of
mobile commerce. Consumers can access coupons and discounts directly on their devices and
accomplish banking tasks with ease. It's a win/win for both sides and advantages should continue to
grow as new technology is discovered and advanced.

CONCLUSION

Make sure you do your research before you start your business. Figure out what products and services
you're going to sell and look into the market, target audience, competition, and expected costs. Next,
come up with a name, choose a business structure, and get the necessary documentation (taxpayer
numbers, licenses, and permits if they apply). Before you start selling, decide on a platform and design
your website (or have someone do it for you). Remember to keep everything simple at the beginning
and make sure you use as many channels as you can to market your business so it can grow.