Ecom Katay 1

E-commerce

is the buying and selling of goods and services, or the transmitting of funds or data, over electronic networks, primarily the internet

operates through online storefronts where customers browse products or services, place orders, and make payments via secure gateways such as PayPal or credit card processors.

Traditional Commerce

involves physical transactions conducted in brick-and-mortar stores, where buyers and sellers interact face-to-face. It requires a physical location, has limited operating hours, and usually serves a local or regional customer base.

Types of E-commerce Models

B2C, B2B, C2C, C2B, P2P, subscription based, B2B2C

Business-to-Consumer (B2C)

Businesses sell products or services directly to individual consumers. This is the most common and recognizable form of e-commerce, exemplified by companies like Amazon and Shopify. It offers consumers convenience, variety, and personalized shopping experience

Business-to-Business (B2B)

Transactions occur between businesses, such as manufacturers selling to wholesalers or retailers. Platforms like Alibaba and Thomas net facilitate these bulk and long-term partnership transactions. This e-commerce often involves larger order volumes and negotiated contracts.

Consumer-to-Consumer (C2C)

Consumers sell directly to other consumers via online marketplaces such as eBay, Craigslist, or Facebook Marketplace. These platforms provide a virtual marketplace where individuals can list and sell goods or
services without intermediaries.

Consumer-to-Business (C2B)

Individuals offer products or services to businesses. This model is common in freelancing and gig economy platforms like Upwork and Fiverr, where consumers provide skills or content to companies seeking specific expertise

Peer to Peer (P2P)

A decentralized model where individuals interact directly with each other to buy or sell goods or services, typically facilitated by a third-party platform.

Subscription Based Model

A model where customers pay a recurring fee (monthly or annually) for continued access to a product or service rather than a one-time purchase.

Business to Business to Consumer

A model where a business sells its product/service to another business with the specific intent of reaching the end consumer through that partner's channel.

Niche Retailing

Selling specialized products to targeted customer segments globally

Dropshipping

Managing sales and marketing while suppliers handle inventory and shipping

Digital Products and Services

Offering downloadable content, software, or online courses.

Subscription Models

Providing recurring access to products or services, such as streaming or curated boxes.

Freelancing and Gig Platforms

Offering skills and services directly to businesses or consumers.

Marketplace Selling

Leveraging established platforms like Amazon or eBay to reach large audiences.

Direct Sales Model

involves selling products or services directly to the consumer online without going through a retailer, wholesalers, or stores.

Example: Avon, Facebook Sellers, Modern Blooms

Advantages of Direct Sales

• More interaction to customers

• The business has control over the price

• Immediate revenue from transactions

Disadvantages of Direct Sales

• Limited reach

• Requires strong marketing strategy

Subscription Model / Subscription-Based Model

requires customers to pay a charge to access their products or services. Customers may pay these fees on a monthly or annual basis to ensure continuous access to the product or service.

Types of Subscription

Replenishment, curation, Access/Membership Model

Replenishment

This type of subscription is used for recurring product delivery which are usually essentials like razor, shampoo, condiments, and more.

Example: Dollar Shave Club, Amazon Subscribe and Save, Society Socks, Yardstick

Curation

Businesses with this subscription model offer personalized or themed products like beauty boxes or meal kits that contain randomized items delivered to the customer’s home.

Example: Birchbox, Barkbox

Access or Membership Model

This model allows users to access the product or service by paying arecurring fee.

Example: Netflix, Viva One, Disney+

Advantages of Subscription Based Model

• It has a recurring revenue which ensures financial stability and steady income

• The price offered by the business results a predictable income

• Convenience

Disadvantages of Subscription Based Model

• High customer acquisition costs

• Commitment and pricing perception

• Retention management issue

Freemium Model

businesses provide a limited-featured free version of their product or service along with a premium, paid version that improves the product or service's functionality. Customers can use the "free trial" to access this paid version for a limited period of time, allowing them to explore the premium features that may persuade them to buy.

Example: Canva, Spotify, ChatGPT, CapCut

Advantages of Freemium

• Attracts large user base

• Low acquisition cost

• Brand Loyalty

Disadvantages of Freemium Model

• Strain of resources

• User may get tired of a free version

Advertising Model

The product or service is supported by revenue from showing advertisementsand interactions with these ads.

Example: Block Blast, Facebook, Instagram, Piano Tiles

Advantages of Advertising Model

• Easy to attract users

• Low acquisition cost

Disadvantages of Advertising Model

• Ads can be annoying users and reduce satisfaction

• Requires massive user base

Marketplace Model

This model involves a platform that connects buyers and sellers, generating profit by collecting commissions from seller sales, listing fees, or advertising.

Example: Shopee, Lazada, eBay, Etsy

Advantages of Marketplace Model

• Low inventory risk

• Scalability

• Diverse offerings attract broad audiences.

Disadvantages of Marketplace Model

• Intense competition for sellers

• High commission fees

• Limited brand control

Affiliate Marketing Model

A model where a business uses a third party to promote its products or services. This third party is known as “Affiliates.” They gain commissions for every video they create for the business and use referral links.

Advantages of Affiliate Marketing Model

• Low upfront cost

• Flexible working schedule

• Convenience

Disadvantages of Affiliate Marketing Model

• Unstable commission based

• High competition in specific niches

E-Commerce Ecosystem

Is an interconnected network of digital platforms , businesses, and service providers that work together to enable digital shopping.

Site Search

is the specialized search engine integrated to every online store allowing the customers to find products, content or information by just typing the keywords into the search bar.

Ex: Search bar on Amazon , Shein, & Zalora

Merchandising

is a strategic process of displaying, organizing, promoting products on digital storefront to maximize sales and enhance the customer experience. It acts as a matchmaker that connects shoppers to the right products through optimized navigation.

Ex: Trending Shoes on Nike Website , New releases product on Apple Online Store

Content Creation

is a process of developing and managing , and distributing assets through text, image, videos and interactive media —- designed for showcasing the products, engage customers to drive sales . It serves as a vital bridge between the product and consumer that offers information, inspiration, and entertainment to guide buyers to purchasing.

Ex: Product video promotions on TikTok.

Checkout

It is the final stage of the online buying process where the customers confirm their

items, it is also where they input shipping information and payment method.

Payment

Any digital internet enabled financial transaction between the buyer & seller , allowing for the secure transfer of funds.

Ex: Gcash, Maya Paypal, Debit/Credit Cards.

Fulfillment

The end-to-end process of Receiving the order, Shipping it to the customer, Delivery it to their address.

Customer Service

the assistance an organization offers to its customers before or after they buy or use products or services

Ex: Shopee Live Chat & Help Center

SMS ( Short Message Service)

Automated messages sent for operational updates, such as order confirmations, shipping notifications, and delivery alerts.

Email

Used for promotions, receipts, and follow-ups.

Ex: Lalamove- sending delivery receipt

Customer Reviews

are feedback left by buyers about products or services they purchased online. Reviews often include ratings (stars), comments, or photos.

Marketplace

is an online platform where multiple sellers can list and sell their products or services to buyers. The platform usually handles product listing, payment processing, order management, and customer support.

Ex: Facebook Marketplace

Price Optimization

the practice of analyzing customer and market data to find the most optimal price point for a product or service. The goal of price optimization is to determine the best price that will help attract customers, maximize sales, and increase profits

Ad Platforms

are tools or services that allow e-commerce businesses to promote their products or services online. They help sellers reach a wider audience and target specific customers based on interests, location, or behavior.

Ex: Facebook Ads

Internationalization

the process of increasing involvement in international operations, which includes the proactive expansion of a business entity's activities into foreign markets and the
establishment of a network of business relationships across national borders.

Syndication

The automated process of distributing, managing, and synchronizing a brand's product information—such as descriptions, images, videos, and specifications—across multiple sales channels, marketplaces, and retailers to reach a broader audience.

8 Key Elements of E-Commerce Business Models

• Value Proposition, revenue model, market opportunity, competitive environment, competitive advantage, marketing strategy, organizational development, management team

Value Proposition

It answers the question: “Why should customers buy from us instead of competitors?” This defines how your product or service fulfills a customer’s needs. It refers to the unique benefit or solution that your business offers.

Revenue Model

It answers the question: “Where does the income come from?” This model explains how the business earns money. In e-commerce, revenue can come from different sources such as product sales, subscription services, advertising, or commissions.

Market Opportunity

It answers: “Who are the customers, and is there enough demand?” This refers to the potential of the market the business serves. It includes identifying the size of the target audience and the demand for the products.

Competitive Environment

This describes who the competitors are and what they offer. It means identifying other businesses selling similar products or services, and understanding their strengths, pricing, and strategies.

Marketing Strategy

This is the plan you put together to detail exactly how you intend to enter a new market and attract new customers. It includes marketing, advertising, promotions, pricing, and brand positioning.

Organizational development

Organizational development is how the business is organized internally so everything runs smoothly. It answers: “Who does what, and how does the business run?”. It describes how the work needs to be accomplished.

Management Team

This refers to the key people who run and lead the business. Their skills, experience, and leadership directly affect how well the business operates and grows.

Hosted Platforms

are services that use an application that deals with almost all technical and managing jobs. In this setup, businesses do not need to build or maintain the system since the selected platform provides hosting, security, updates and system maintenance.

Self Hosted Platforms

are made for entrepreneurs who want a full control on the platform. In this model, the business is responsible for setting up and managing the hosting, security, updates, and technical support of their platform.

Payment Gateways

this act as secure intermediaries between customers, merchants, banks, and financial networks. They ensure that online payments are processed safely, efficiently, and accurately.

Without this, e-commerce platforms would be unable to handle transactions or gain customer trust.

Role of Payment Gateways

• Encrypting Sensitive Payment Information

• Authorizing Transactions

• Supporting Multiple Payment Methods

• Ensuring Security Compliance

Encrypting Sensitive Payment Information

Protecting sensitive customerdata such as credit card numbers, banking details, and personal information. They use advanced security technologies such as encryption and tokenization to prevent data breaches, identity theft, and fraud.

Authorizing Transactions

It communicatea with the issuing bank and card network to verify the transaction. This step checks whether the payment method is valid and whether sufficient funds are available. Authorization happens in real time, usually within seconds. The transaction is either approved or declined, providing a seamless experience for customers.

Supporting Multiple Payment Methods

This allows businesses to accept credit and debit cards, bank transfers, and digital wallets, increasing convenience and reducing cart abandonment.

It allow businesses to accept various payment methods, including: Debit/Credit Cards, bank transfer, mobile wallets, buy now pay later

Ensuring Security Compliance

It complies with international security standards, such as PCI-DSS (Payment Card Industry Data Security Standard), which sets strict guidelines for handling cardholder data. Compliance increases customer trust and reduces the risk of financial penalties.

Payment Processors

provide the technical infrastructure that enables online transactions to move between banks and merchants.

Examples:

● Stripe – Global online payment infrastructure for businesses of all sizes.

Acquiring Banks (Merchant Banks)

receive the payment on behalf of merchants and deposit funds into their accounts.

Examples in the Philippines:

• BDO Unibank

• Bank of the Philippine Islands (BPI)

Card Networks

provide the infrastructure (payment rails) that connect issuing banks and acquiring banks. They facilitate the authorization and settlement of card transactions.

Examples:

• Visa

• Mastercard

• American Express

• JCB

Fraud Detection and Security Companies

These companies help payment gateways detect fraudulent transactions and reduce chargebacks using AI and machine learning.

Examples:

• Kount

• Riskified

• Forter

• Signifyd

How Payment Gateways and Supporting Companies Work Together

1. The customer initiates a payment on an e-commerce platform.

2. The payment gateway encrypts the payment data.

3. The gateway sends the transaction to the payment processor.

4. The card network routes the request to the issuing bank.

5. The issuing bank approves or declines the transaction.

6. The acquiring bank receives the approved funds.

7. Fraud detection systems monitor transactions in real time

Mobile Commerce (M-Commerce)

refers to the buying and selling of goods and services
through mobile devices such as smartphones and tablets. It is a subset of e-commerce that
utilizes wireless networks, mobile applications, and responsive websites to facilitate
transactions.

Benefits of Mobile Commerce

• Convenience

• Personalization

• Increased Engagement

• Higher Conversion Rates

Cloud Computing

refers to the delivery of computing services—including servers, storage, databases, networking, software, and analytics—over the internet (“the cloud”).

Major Cloud Service Providers

• Amazon Web Services (AWS)

• Microsoft Azure

• Google Cloud

Cloud Service Models in E-Commerce

1. Infrastructure as a Service (IaaS)

2. Platform as a Service (PaaS)

3. Software as a Service (SaaS)