What Is E-Commerce?: A Comprehensive Introduction
The type of product sold can profoundly impact how e-commerce works. For example, while physical retail products simply need to be paid for and shipped, wholesale e-commerce products mean sellers must also deal with site access controls, custom pricing and tracking wholesale tax certificates.
When you are researching the best e-commerce business ideas, it’s important to keep the requirements of each product in mind.
Physical Products
Physical products make up the bulk of e-commerce. From cars to sublimated tumblers to landscape rock sold by the ton, there is a huge variety of items that fall into this product type, and they fall into one of two categories: retail and wholesale.
Retail covers items sold to anyone who wants to purchase, regardless of sales tax status. Wholesale products are generally sold B2B, where the buyer has a sales tax exemption and buys in larger quantities.
Private Labeling
Private-label products are usually physical products, but they are often broken out because they are a sort of hybrid between reselling something you bought and selling your own brand. Private-label products are made by another supplier but labeled with your branding.
Store-brand canned foods and Amazon Basics products are common examples of private labeling. The most common private-label e-commerce products from small businesses are coffee, cosmetics and clothing.
Digital Downloads
Digital downloads are products delivered in digital formats. Music and movie downloads, PDF sewing patterns, tutorials and e-books are digital download examples. Unlike physical products, digital downloads are susceptible to copying, sellers should invest in rights management or non-duplication security software.
However, even with that extra cost, digital downloads are often cost-effective, as there is no physical inventory to manage when selling digital products.
Streaming
Similar to digital downloads, streaming products are digital products consumed directly from the internet in real time instead of downloaded onto a personal device. Netflix and YouTube are two popular streaming service examples.
Services and Events
Selling services using e-commerce can sometimes become a hybrid between e-commerce and physical POS. Services such as home inspections, hair salon appointments and restaurant reservations are often set online, but payment is collected in person at the time of service.
This is a great entry into e-commerce for traditional companies, as it gives customers the convenience of seeing schedules and setting appointments without having to take time out of their day for a phone call.
Some services and events, such as photography sessions or workshops, may require payment or a deposit to be paid online. Still, other services such as online banking are conveniences that collect set fees automatically.
Rentals
Hotels, Airbnb and Vrbo are popular examples of rental e-commerce, but companies also rent cars, RVs, ice shacks and even puppies. Rental e-commerce is one of the more complex e-commerce products because of the sheer number of moving parts to set up the booking system.
Subscriptions
E-commerce subscriptions are automatically recurring purchases of any other category. For example, Hulu, Peloton or your weekly ready-to-make meal delivery. For small businesses, popular subscription products include themed boxes such as snack samplers, coffee, tea and craft-of-the-month tutorials.
