The 5 Different Types of E-commerce Solutions
Looking to start an e-commerce site? Or just trying to accept credit cards on yout existing website? Below is a summary of the 5 different types of solutions in the e-commerce market ranging from paid listing services all the way to outsourced ecommerce. This article was updated on 4/26/2013.
Paid listings are not really an e-commerce solution per se, but do allow individuals/businesses the ability to sell goods via a marketplace such as Ebay, Amazon, or comparison shopping engines. Ebay and Amazon offer merchants paid listings in return for fees and a percentage of the transaction which tends to be a 10%- 20% commission or referral fee. Shopping engines charge a pay per click model as advertising fees.
For more sophisticated sellers, paid listings is just another sales channel and not an ecommerce solution but need to be addressed. Most full service e-commerce platforms will allow you to feed your products into these marketplaces.
Summary - Not really an e-commerce solution, but important enough to mention.
A shopping cart system allows an online shopper to collect items and then, when the user is ready, to purchase the chosen items with a credit card Shopping cart solutions are generally shared solutions which are "bolted" on to traditional web sites to enable users to select and purchase goods.
They are usually for companies and businesses that want a simple, secure order and payment solution that they can quickly add to their sites; shopping carts tend to appeal to aspirational and low online sales sites because of its ease of use and set up but limited functionality outside of taking orders and credit cards. Paypal is the dominant shopping cart provider, but competitors also include Shopify and Google Checkout.Summary - Decent and easy solution if you just want to accept payments on your existing site.
Hosted E-commerce is a solution that provides a wider range of e-commerce functionality in an on-demand environment. This a fancy way of saying its similar to basic web hosting, but with built in ecommerce functionality. Not only will the company physically host the site, but they also offer authoring tools, product catalog, shopping cart, transaction processing, and order management.
E-commerce hosting is for people who need more functionality than just a shopping cart but do not have the time,budget, expertise, or appetite to build a custom solution. Yahoo Merchant Solutions is the largest ecommerce hosting platform in the world, but also the most expensive at $30 - $300 per month, plus transaction fees. There are also numerous less branded providers such as Volusion and Big Commerce.Summary - Excellent solution, especially for those just starting out to small-medium sized businesses. You may outgrow this solution if you get to million of dollars of sales
Custom E-Commerce Solutions
Custom e-commerce solutions are enterprise or custom built e-commerce solutions that are built from a wide array of e-commerce packages (like Magento),content management systems like Drupal, or totally from scratch They can require substantial investment of upfront capital, time, and ongoing maintenance and resources. Companies need to generate enough revenue to cover the costs required for this solution.
Also, plan for at least 6-12 months to scope and find an acceptable solution and for a firm to build it for you.
Summary - For those who have the budget, expertise, and appetite to build from the ground up. Many choose to customize existing hosted e-commerce platforms as well.
Outsourced e-commerce are providers who offer a total Do-It-For-Me e-commerce solution for companies and firms. Outsourcers not only build, create, and host the solution, but also provide online marketing, customer support, and fulfillment. In exchange for this, the providers take a 20% to 30% revenue share from all online sales.
Companies that use this solution tend to sell high margin good such as software or branded consumer goods, where selling online is ancillary to their current business. Since outsourcers take a cut of total sales, they focus on companies who already have a large critical mass of online sales; at least several million dollars.
Providers include Digital River (DRIV) and GSI Commerce, which was acquired by Ebay.
Most, if not all, e-commerce solutions will fit into one or a combination of the 5 classifications listed above. The solution you choose will depend on your budget, required functionality, and timeline.
by Spencer Yao
Updated April 26, 2013