New Season, New Look

Retail markets have existed since ancient times. However, there is a new sector that has recently emerged in this industry — E-commerce. Through E-commerce, retail has expanded its consumer reach and allows for a fair playing field for producers. However, the same technological innovation that is growing the retail industry into a new, larger marketplace is wiping out older companies that refuse to adapt and change, such as Sears. On the other hand, H&M is a prime example of a retailer that has shifted and progressively found more success through E-commerce as it better suits their fast-fashion business model. Through H&M’s adaptability with E-commerce, they’re able to open up new streams of revenue and maximize their profits. Growing with the market, finding balance for your business, and reaping as many benefits as possible will be a key to success.

re·tail·er /ˈrētālər/ noun:

In any business, there’s a producer creating a product and a consumer that is using that product. However, there is a middle step that is often forgotten- the retailer. Retailers are the individuals who sell products for producers. In some cases, retailers may also create their own products. In simple terms, the retail industry is made up of people or companies selling products directly to a final consumer. That’s it!

E-commerce is essentially retail digitized. The recent boom technological innovation with a new Internet age and the dissemination of computers is what allowed the E-commerce industry to grow. New producers can now showcase their brand and products on a global level without the additional costs that come from running a physical business. Despite how glamorous it seems, there are many new types of facets needed to run a successful online business. Website hosting, inventory, shipping, taxes, and customer support, are just a few that play an important role in establishing a strong e-commerce platform for any business.

E-commerce/Retail Business Models

If you’ve been considering getting into E-commerce or Retail, you need to figure out your business model. It will determine how your business will operate and provide value to customers. Each model has its own advantages and disadvantages that will impact your business, so it’s important to pick something that works with your product and consumer. Sometimes people make the mistake of only focusing only on the ‘what’ they’re selling and forget the ‘how’. This type of thinking is a recipe for disaster in a diversified market with many products and competitors. So here’s a condensed list of common business models that you’ll come across in the retail and E-commerce world.

B2C Model

In the Business-to-Consumer Model, businesses sell their products directly to individual consumers. Apple is an example of a B2C E-commerce business, they make and sell their iPhones directly to consumers who will use it. B2C transactions typically do best with products of low consumer involvement. These products are characterized by low risk and low cost. B2C purchases involve a lot less effort and intricacies in comparison to a B2B model.

B2B Model

In the Business-to-Business Model, businesses sell their products and/or services to other businesses. Due to the corporate layers of bureaucracy, this model makes the purchase decision process slower and has high consumer involvement. However, when a company wants to buy, the B2B model can reap large orders and recurring purchases. An example of a B2B Company is IBM. Forbes says “IBM assigns each customer a team of specialists to help them integrate IBM Cloud Storage into their existing processes by training them on the best applications for their business. When customers truly understand the product, they are more engaged. IBM regularly asks for feedback from its B2B customers to improve its products, which contributes to the company’s high customer retention rate.”

Dropshipping

Another E-commerce model that has become popular among younger sellers is Dropshipping. In a dropshipping business, a seller will become a middleman for transactions. When a consumer purchases an order from a seller, the wholesale manufacturer will have it shipped straight to the consumer and the seller will earn profit from their price markup. This model eliminates additional fees and can be highly profitable when done correctly. Alibaba is an example of a successful dropshipping company. They partner with manufacturers to display and sell products on their site, earning profit through a selling fee.

Two Other Types of E-commerce Models

C2B

In the Consumer-to Business model, consumers can sell their products or services to businesses. Affiliate Marketing can be considered a C2B model.

C2C

In the Consumer-to-Consumer model, consumers can sell directly to other consumers. eBay, Etsy, and Craigslist are some of the biggest companies with this model.

Tips to Decide a Model

Something to consider when picking a business model is estimating the impact and reach of your product to your target consumer. This will help you gauge sales estimates and means of marketing. Also, ensure your target market has the means and desire to pay for your product or service. Aside from estimates, get advice from industry experts and then conduct selling simulations to see if your model actually produces results. Also consider the skills and attributes of the business operators and the company itself. This is important because it is the skills and work of the team that will develop and grow the business beyond its current capabilities.

Important Skills for E-commerce

Data Analysis

Data analysis examines consumer data and general business statistics to make it more digestible and find trends. Data analysis is beneficial to any business as it can highlight new worthwhile opportunities and support decision-making for any situation, such as investments or understanding consumers. These are critical aspects of business functionality. Understanding consumer behaviors through data helps retailers better market and reach more customers within a crowded global market. Market segmentation and positioning practices can improve through a better consumer understanding. An improvement in symbolic and functional positioning will aid actual sales conversions. Data analysis also helps businesses operate more efficiently because it gives quantifiable evidence to make any specific decision. In turn, using and optimizing data analysis can help businesses net more profit.

Digital Marketing and Advertising

Digital marketing and advertising is another major component as it is the optimal medium for producers to connect and communicate with their potential or current consumers. Advertising helps reinforce consumer’s knowledge of the product, spread product awareness, and help assure newer consumers of making the right choice when buying. Advertising shapes how a product is perceived, so make sure to give a good impression!

SEO — Search Engine Optimization

Search Engine Optimization is all about making your business’ content, whether it be advertising or products, more accessible to the worldwide web. If your E-commerce site or content is optimized to work with its platform’s engine and formula, the content will have a higher chance of being promoted to your target customers. Simple hashtags and keywords can make a world of difference for online brand awareness.

Writing

Descriptions are key to online selling. Aside from pictures, it is the main way for a customer to gauge the use and capabilities of a product. All other senses are deprived, so it’s crucial to provide enough imagery and information to trigger a purchase decision by the customer. This works together with the web and product design too.

Design

Website and graphic design are major points of assessment for a purchase decision as it reflects on the credibility of the producer and the product. Presenting an interface that is consistent with branding and content has a significant effect on how a product is perceived. Furthermore, it can visually assure and create trust with the customer. Good design and branding will help contribute to a larger, more positive image of your company.

Resources

There are many great online resources where you can learn about all these topics and skills. YouTube is an video platform that gives you access to all types of content for free, it is one of the best options for beginners. If you are looking more into a course and certification, Udemy, Coursera, and LinkedIn Learning are all great options. For a fee, you’ll get access to comprehensive courses in several different fields. A couple of additional platforms include Skillshare, Masterclass, Edx, and Udacity.

Dallas E-commerce/Retail Startups

Now that we’ve traversed through many details regarding the retail and E-commerce industry, I wanted to focus on one of the US’s newest hub for business development, Dallas. Within Dallas, there are many innovative tech startups sprouting up, but there are also many retail companies that have originated in Dallas and are spiking interest.

RewardStyle

To address marketing needs created by the E-commerce boom, RewardStyle has focused on monetizing influencer marketing through growth consulting and consumer distribution. They expand the reach of retail influencers and aid the purchase decision process for consumers worldwide. On their website, RewardStyle has reported that they have a “global community of more than 250 team members, 100,000+ top-tier influencers, and 1 million brand partners across more than 100 countries.”

Neighborhood Goods

Another great company within the Dallas E-commerce space is the department store Neighborhood Goods. This retailer combines and sells a variety of brands and products to their consumers, their business model being similar to Home Depot. On their website, Neighborhood Goods says “At our stores, you can discover dozens of exciting new brands, attend thoughtful events, and experience restaurants with amazing food and drinks, and more.” Neighborhood Goods provides their unique in-store catalog to be purchased on their website, allowing a broad range of accessibility to any of their consumers.

Final Thoughts

Aside from retail startups within the DFW community, you can find many right within UTD. The University of Texas at Dallas is filled with innovative students and has been a breeding ground for new thoughts and ideas. In fact, many UTD Entrepreneurship Club members have started various businesses. Sarah Yousuf, our Marketing Officer, runs her own Desi and Arab Streetwear E-commerce business called Kismat. She will be featured next in the Up and Coming Podcast, so make sure to listen in and catch insightful information from one of our very own rising student entrepreneurs.