How Does An eCommerce Platform Work in 2021? Getting Started!

2021 has been a nightmare, work from home schemes abound not only in Singapore but around the world, meaning people are at home, browsing the internet, and buying things. This leaves a gap open for you to enter the fray and starting your online selling business. But, how does an eCommerce platform work, and is it better to have your own site, maybe a Shopify store, or perhaps use a marketplace instead? Let’s find out…

how does an ecommerce platform work in singapore

Amazon, Alibaba, eBay, Lazada, Shoppee, and many other online selling platforms are already making an impact and setting a trend in Singapore but they are definitely not the only ones to look at.

If you have ever shopped on any of those websites, then it’s great because that’s what eCommerce is! But while they are marketplaces, they aren’t an eCommerce platform right for the entrepreneur or small business person in Singapore, in the true sense of the word.

  1. You create your own store on an ecommerce platform (like Shopify),
  2. You sign up to an ecom platform provider and create your own ecommerce online store,
  3. You don’t use someone like Lazada or Amazon – they are marketplaces,
  4. You control your platform or website, adding your own branding, design, logos and products,
  5. You set up payments so all the income you product goes into your payment gateways,
  6. You sell whatever products you want,

To give you a deeper understanding of what it really is, let me explain it a bit further. 

What Does An eCommerce Platform Do? 

The world is connected together because of one thing, ease of communication over the internet. Your new eStore can take 1) Your local offline store to an online international store (if you have one already), and 2) Your idea for a new online shop to a mass audience not only inside of Singapore but also, regionally throughout Southeast Asia and even globally.

To be more precise, here’s what does an eCommerce platform do: 

  • Takes your local business from offline to online,
  • Allows you to sell your own, or products you source to a global audience,
  • Opens up new market opportunities for your business,
  • Allows you to automate work effectively by systemizing the sales process, 
  • Customers can get access 24/7 to your store,
  • Low startup cost Vs a physical shop,
  • Allows you to expand your brand image, 
  • Enables you to take multiple forms of payments.

So that is what an online selling platform actually does, how does it work?

How Does An eCommerce Platform Work To Make Money?

The myth of an eCommerce store is that you can only make money by selling a multitude of products, when in reality there are a far greater number of 1 product stores online, selling a simple product, that people really need.

But, an eCommerce company isn’t stuck to just these two types of business, there are so many more to explore. I’ve noted a few down here that potentially might get your brain juices flowing.

Normal Online Store Model – Single and Multiple Products

You understand how a normal store works, well selling online is like that, but in the digital world. So first you need to:

  1. Decide the product you are going to sell (products), and prices,
  2. Put the products on your online store,
  3. Advertise to your target market,
  4. Make the sale and automatically collect payment which gets delivered into your payment provider/gateway,
  5. Pack the product/products you are selling,
  6. Use your method of delivery (your choice),
  7. Customer gets product.

That is the normal online store model, but there are some other great ones that you can get involved with also.

Drop Shipping and Online Stores

This is a business model that has exploded over the last 10 years. Here is how it works:

  1. Locate a supplier for a product you are interested in to sell,
  2. Contact the supplier and set up an agreement, or do it automatically using the likes of Shopify, Oberlo and AliExpress,
  3. Place the products on your store (at increased price) and start to market them to your target audience,
  4. Make the sale (collect the cash online) and then order that product from your supplier,
  5. Make payment to the supplier from the sale of the product,
  6. Enter the delivery details of the buyer and the supplier will deliver the product to the buyer,
  7. Keep the profit difference between sale and cost of goods from supplier.

Set Up A Subscription Model eCommerce Store

To put products on eCommerce websites like eBay and Amazon, many sellers pay a fixed sum, but sometimes, an eCommerce company may also charge extra fees, and even monthly subscriptions.

On one side, if you chose a platform like Shopify to sell your goods on (which is great for startups and growing ecom stores) you will have to pay a monthly fee to use their platform – from $29 Per Month.

But how can you profit in the same way?

If you are looking to sell consumable goods this business model is perfect. One of my favorite examples is the Dollar Shave Club, it hooks people in with low-cost razor blades (which always need replenishing) and gets them into a monthly club where you pay a subscription fee and get your blades mailed out to you, so clever.

Love the video they do, marketing at its finest.

You can set up this type of model within the Shopify admin section and when a person buys your initial product (offering at a lower cost is a great way to hook them in), they can put it onto a subscription model payment, where they get charged each month and your products get delivered to them each month or however often is necessary.

It is used by a lot of organic farmers also, supplement makers (which you can white label products with), etc, delivering new goods each and every week or month.

Free Plus Shipping Offers

I’m sure you have come across these offers in the past. The idea is this – you find a relatively cheap product that has a high perceived value within your target market’s eyes. You then give this product away for free, but you charge a shipping and handling fee of the likes of $10.

This has been used in so many different markets and is a great way to get buyers onto your new com store email list so you can upsell them into the future, while also covering your costs and making a profit.

The maths works like this:

  • Cost of product: $1
  • Cost of advertising to get customer $3
  • Cost of S&H: $6
  • Profit: $2

Now while that is a very simple example of it, and there are many other ways that you can upsell people once they have gotten your free plus shipping offer (which will increase sales), by placing upsell pages of related products in-between the free offer and the checkout.

But Free Plus Shipping is a good way to dip your toe into e-commerce, without spending a lot of cash. But, it does take a lot of research. A good place to locate low-priced products to sell is AliExpress.

Affiliate Marketing and eCommerce

Affiliate marketing is simply the selling of other company’s goods or services for a commission percentage of the sale.

Using the Dollar Shave Club idea, if I sold a subscription to a person and I was an affiliate for DSC then they would give me a percentage of the price of whatever was the sale amount.

These percentages can range from very low around 1% for physical products, all the way up to nearly 100% for digital products.

Many bloggers, influencers, YouTubers time and again review products and place a link to the product page of these eCommerce sites.

Now while there are many other ways that you can make money with your own digital stores and selling online, the 4 first business models (not affiliate marketing) are easy to start. But in our experience:

  1. If you have your own product to sell,
  2. Find a product that you can sell as a dropshipper,
  3. Find a supplement company you can white label, and prmote a subscription,

These are the best models.

How Profitable Can An Online Store Be?

Considering the COVID-19 pandemic, and the work from home movement that is overtaking Singapore, it appears that the eCommerce industry will continue to boom in 2022, and it’s about time you took the time to learn more about the benefits of creating your own online store.

And why not? Singaporeans spend on average $1,456 per year shopping online, and this is only going to grow, meaning that you have the opportunity to get started and make a real go of eCommerce. Big-ticket items are also sold online and if you can find the right one, then you could be onto a very lucrative business altogether.

Simon Tang

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