The Two Types of E-Commerce Websites

By DoItYourself.com Staff

There are basically two types of e-commerce sites and Internet stores are available on the Internet: service companies and product companies. This article compares these two major divisions, giving the website owner a fair chance to understand them in totality.

Web Based Service Companies

A service company's fulfillment process will likely to involve a great deal of human interaction. Ultimately, it's people who deliver the services that customers purchase. Make sure your website integrates with whatever systems you use to deliver those services, including scheduling applications, a dispatch center's database, and so on.

Web Based Product Companies

Product companies, on the other hand, have the opportunity for significant automation in their fulfillment process. There are three basic types of product oriented e-commerce companies: the virtual warehouse, the traditional warehouse, and a combination of the two.

The first type of product oriented e-commerce company uses a virtual warehouse, which means that the company itself does not maintain any inventory or stock. Instead, orders are passed to one or more distributors, who fulfill the order and ship it directly to the consumer. This is a popular model for smaller e-commerce companies, since they do not have to bear the cost of maintaining and paying taxes on an inventory.

The second type of product oriented e-commerce company follows a traditional warehousing model and maintains a warehouse or distribution center for its entire inventory. If an item isn't available in inventory, it is back-ordered until more stock arrives. While this model is more expensive, it offers the advantage of better control. For example, a virtual warehouse does not usually enable you to post inventory information on your site, and you may even continue taking orders for products that your distributors have actually sold out of. In a traditional warehousing model, you know exactly what you have in stock and you can update that inventory dynamically as orders are placed against it.

The third product oriented e-commerce company model is a hybrid, where some portion of the company's inventory is maintained in a traditional warehouse, and some items are virtually warehoused.

Now that you know the two major divisions of the industry, apply and integrate essential attributes into your e-commerce or Internet store. Using the points in this article can give your online customers the opportunity for significant automation in the fulfillment process.

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