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Revenue streams from an e-commerce perspective

There are three main digital selling channels within the e-commerce arena

I WILL always remember being in a well known nationwide sports retailer store off Belfast's Boucher Road and asking a member of the sales team for some advice on stock availability.

I was advised to “go on our web-site – you'll find more options there”. I also find it a very common story, to hear of retailers who go “online” with a full transition plan in place, end up seeing over 50 per cent of their business coming from internet sales, within a 12 month period.

But there are three main digital selling channels within the e-commerce arena. The first and most commonly known channel is Business to Consumer (B2C). That's companies like Sports Direct or Amazon (the business) selling online to you and me (the consumer). In business terms, the B2C sector is mature and highly competitive, with well-established best practices, and technology platforms available to support the sector.

The second e-commerce channel is Business to Business (B2B) and, in absolute sales numbers, more than twice the size of B2C e-commerce. This is often in the form of what's called a customer or business partner portal.

Commonly used to replenish stock levels of bought-in parts or consumables. The more complex of these have specified pricing for specific customers, often based on historical levels of purchasing from previous business periods.

Many buyers only want to purchase stock or parts as efficiently as they can. These buyers don't want to spend too much time in idle conversation with a chatty telesales account manager. B2B e-commerce is a fast growing and still-maturing sector of e-commerce.

The third e-commerce channel that believe it or not has been around for a while, and is growing at a faster rate than the others, is “online marketplaces”. The most commonly known of these is “Amazon Marketplace” which last year, accounted for well over a third of online sales in the United States alone.

An online marketplace is were products and /or services are provided for sale by third parties and the actual sales transaction with the customer is carried out by the marketplace organiser.

In other words, the customer's order is transacted by the marketplace organiser (like Amazon) and then fulfilled or dispatched to the purchaser by the participating third party retailer or wholesaler. There are cases though, were Amazon will also fulfil the order for the third party company – no doubt for an additional fee.

As a result of the e-commerce “Marketplace” being made up of multiple providers and not just one online retailer, the range of products can be vast in number.

According to some recent surveys, more customers now begin their buying journeys at Amazon Marketplace and similar platforms, than perform Google searches, social media searches, or searches on their favourite retailer's website. This trend is expected to grow, as online marketplaces are growing by 22 per cent a year.

There are however, even within the realm of e-commerce, niche marketplaces that have developed. Prime examples of these include clothing marketplaces Lyst, ShopStyle, Tradesy, 5Miles, and Farfetch, among others or the US “do-it-yourselfers” marketplace - BuildDirect.

The evidence is building up very quickly, so if you're already online and want your e-commerce game to reach its full potential, it is critical that you implement an online marketplace strategy.

:: Trevor Bingham (editorial@itfuel.com) is business relationship manager at ItFuel in Craigavon. Follow them on Twitter @itfuel.

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