The Different Types of E-commerce Solutions

Below is a brief write up of the e-commerce solutions market. E-commerce is similar to web hosting, but requires an additional layer of complexity because of the transaction between merchant and user.

Listings

Paid listings are not really an e-commerce solution per se, but do allow individuals/businesses the ability to sell goods via a marketplace. Ebay dominates in offering paid listings in return for fees and a percentage of the transaction which tends to be 10% to 20% of the final purchase price; payment is generally enabled through Paypal. For more sophisticated sellers, Ebay is just another sales channel, and their high fees cause them to migrate to hosted or dedicated e-commerce solutions.

Shopping Cart Providers

A shopping cart system allows an online shopper to collect items and then, when the user is ready, to purchase the chosen items. Shopping cart solutions are generally shared solutions which are "bolted" on to traditional web sites to enable users to select and purchase goods. They are usually for companies and businesses that want a simple, secure order and payment solution that they can quickly add to their sites; shopping carts tend to appeal to aspirational and low online sales sites because of its ease of use and higher fee rates for payment processing. Paypal is the dominant shopping cart provider, but competitors also include Miva and Google Checkout.

Hosted E-commerce

Hosted E-commerce is a solution that provides a wider range of e-commerce functionality in an on-demand environment. Not only will they physically host the site, but they also offer authoring tools, product catalog, shopping cart, transaction processing, and order management. Providers include Yahoo! Merchant Solutions, Ebay Pro Stores, Monster Commerce, and Lagarde Store Front.

Dedicated E-Commerce

Dedicated e-commerce are enterprise e-commerce solutions that are generally custom built from a wide array of e-commerce packages. They require a substantial investment of upfront capital, time, and ongoing maintenance and are typically sold as enterprise solutions by large service providers and software companies. Companies need to generate at least $10M per year and have dedicated staff for this solution to make financial sense.

Top providers include IBM Websphere, Microsoft Commerce, ATG, and Intershop. These companies usually make more money selling their consulting services than the actual software itself.

Outsourced E-commerce

Outsourced e-commerce are providers who offer a total Do-It-For-Me e-commerce solution for companies and firms. Outsourcers not only build, create, and host the solution, but also provide online marketing, customer support, and fulfillment. In exchange for this, the providers take a 20% to 30% revenue share from all online sales. Companies that use this solution tend to sell high margin good such as software or branded consumer goods, where selling online is ancillary to their current business. Since outsourcers take a cut of total sales, they focus on companies who already have a large critical mass of online sales; at least several million dollars. Providers include Digital River (DRIV), GSI Commerce (GSIC), and MMLive.