What is an e-commerce: types and requirements to create one
Did you know that, according to the CNMC, e-commerce in Spain has increased its turnover by 25.3% in the first quarter of 2022, compared to the previous year? If you want to set up an online shop, you must be clear about what an e-commerce is, what types exist and what requirements you must meet to have one. Find out the details in this post.
What is an e-commerce and what types are there?
E-commerce is the name given to virtual shops that sell their products via the Internet.
There are three different types of e-commerce:
- B2C (Business to consumer). These are online shops that sell to the end consumer.
- B2B (Business to Business). It is an online business whose target audience is other companies.
- C2C (Consumer to Consumer). In this case we are talking about consumers who sell to other consumers, for example, people who sell to others through platforms such as Wallapop.
Advantages and disadvantages of an e-commerce business model
Online shops boomed during the confinement and have been growing steadily. They have advantages and disadvantages that you should be aware of if you want to create a business of this type and sell online. These are the following:
Advantages:
- They do not require a large investment. Creating online shops does not require opening a store, paying rent or hiring employees. It is enough to pay for an e-commerce platform and web hosting. If, in addition, you apply dropshipping you will not need to have products in stock.
- You can generate business at any time. The sale of products or services in an online shop can take place 24 hours a day, every day of the year.
- They have a global reach. With an online shop you can sell anywhere in the world, which allows smaller shops to have a wider reach.
Disadvantages:
- There are certain sectors of the population that are still reticent about the internet and do not shop online. This is the case of older people or people who are not familiar with technology, for example.
- There is a lot of competition. In certain e-commerce sectors there are many companies competing with similar products or services.
- Products cannot be tested. This is particularly true for clothing, but this can be overcome by providing photos and detailed descriptions.
Requirements for setting up an e-commerce company in Spain
In Spain, a number of requirements must be met in order to set up an e-commerce and sell online. These are as follows:
- Comply with the law depending on the form of the business. If you are going to operate as a self-employed person, you must register with the RETA (Special Regime for Self-Employed Workers). You also have the possibility of creating a commercial company, which involves more formalities such as the execution of a deed of incorporation before a notary and registration in the commercial register, among others.
- Adapt to the regulations of the Organization on Retail Trade, Information Society Services and Electronic Commerce. To comply with these regulations, you must:
- Include on your website certain information such as the company name or name, address, contact details, company registration details, NIF or DNI.
- Indicate whether the prices include taxes, what the order preparation time is, what delivery times you have, how returns are made, what payment methods are available, how the purchase receipt or invoice can be consulted, what the purchasing process is like and what the rights and duties of users are.
- Comply with the Data Protection Law. In an online sale, the buyer provides personal data, so you must have a customer file and register it with the Data Protection Agency. In addition, on your website you must explain the data protection policy that you apply and, in the forms, you will have to include a box for each user to accept or not this policy. Finally, if your website uses cookies, you must give users the option of accepting them or not.
Online sales offer a multitude of possibilities for entrepreneurs who want to set up a business. In order to comply with the law, it is advisable to have the help of a business consultancy that will carry out all the procedures quickly and in compliance with the law.
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