Ecommerce Business Models of many kinds are thriving. It is easy to get caught up in the latest eCommerce fads, but if you do not understand the fundamentals, you will unwittingly hit a profit ceiling.
If you want to ease your way into an eCommerce monster, start a hybrid eCommerce affiliate store.
You should familiarize yourself with each type of business plan before starting your eCommerce firm. You’ll also need to pick an eCommerce platform that fulfills the specifications of your chosen business plan.
Ecommerce’s Major Business Classifications
The type of business deal you want to create is the first item to think about. When you think about the business you want to establish, who do you picture yourself selling to? Is your company B2B, B2C, C2C, or C2B?
Do you have an idea for an eCommerce business that you’ve been thinking about for a while? Is your mind spinning from all of those abbreviations? Let’s take a look at the most common ways to pay for things online.
Types of E commerce Business Models
There are six types of business models for e-commerce which are given below.
- Business-to-Business (B2B) eCommerce.
- Business to Consumer (B2C) eCommerce.
- Consumer to Consumer (C2C) eCommerce
- Consumer to Business (C2B) eCommerce
- Business to Business and Consumer (B2B2C)
- Government / Public Administration Ecommerce
Ecommerce B2C Business Models
Selling items from one firm to another is the focus of a business-to-business (B2B) approach.
While many of the organizations in this category are service providers, it also includes software companies, office furniture, and supply companies, document hosting sites, and a range of other eCommerce businesses.
B2B eCommerce methodologies are divided into two categories: vertical and horizontal.
Vertically oriented businesses cater to customers in a certain industry. If you employ a horizontal approach, you can sell to clients from a range of industries.
Each technique has its own set of benefits and drawbacks, such as industry knowledge and market depth (vertical) vs. broad market coverage and variety (horizontal) (horizontal).
Both can be profitable, but your products and customers dictate your strategy, so carefully consider your options.
B2B enterprises have generally lagged behind their direct-to-consumer competitors in terms of commerce innovation and digital sales. Many companies were accustomed to depending on salespeople as their primary source of revenue. Therefore the issue was one of pricing negotiation and coordination.
ExxonMobil Corporation and Chevron Corporation and Boeing, and Archer Daniel Midlands are examples of B2B eCommerce.
These businesses have created their corporate eCommerce systems, which allow them to work with other businesses in a secure atmosphere. Greater initial investment is normally required for a B2B eCommerce operation.
The B2C market is what most people think of when they think of an eCommerce company. It is the most liquid market, and you’ll notice that many of the names you see here are also well-known offline.
The traditional retail paradigm, in which a firm sells to individuals over the internet rather than in a physical store, is known as B2c eCommerce sales.
The five important B2C types in eCommerce include direct sellers, online intermediaries, ad campaigns, society, and fee-based.
- Direct selling is the most popular model. When clients buy things from online stores, this happens.
- Online intermediaries connect buyers and sellers through the internet in exchange for a cut of the sale.
- The ad-supported model supplies information for free and revenue is made through site advertising.
- Facebook is an example of a community-based website that generates revenue by customizing adverts to users based on demographics and location.
- Finally, fee-based enterprises, such as Netflix or subscription-based newspapers, charge customers for information or amusement.
There are many examples of B2C businesses. Staples, Wal-Mart, Target, REI, and Gap are just a handful of the major B2C shops that have gone online.
Consumer To Consumer (C2C) E-Commerce
Consumer-to-customer eCommerce is when a consumer buys something from another consumer.
B2B and B2C are straightforward concepts for most of us, but C2C is a little more complicated. What does it take to run an eCommerce firm that sells directly to consumers?
Clients can trade, buy, and sell things on these eCommerce websites, which evolved from the expansion of the eCommerce sector and improved customer confidence in online business. The launch of a C2C site demands careful planning.
In C2C eCommerce, customers sell goods or services to other consumers directly.
The most typical way for this to happen is through third-party websites (like the ones we just covered) or marketplaces that conduct transactions on behalf of buyers and sellers.
These eCommerce marketplaces allow small firms and even amateurs to sell their products at their pricing without maintaining their web presence.
Despite platforms like eBay and Craigslist’s obvious success, a flood of other auction and classified sites (the main arenas for C2C) have opened and closed due to unsustainable business practices.
Consumer to Business (C2B) eCommerce
Most people are not familiar with the C2B model, although it’s growing more popular nowadays. It permits consumers to sell goods or services to businesses, so this online commerce company is akin to a sole proprietorship supplying a larger company.
Individual people produce products and services directly to businesses inside this C2B leading e-commerce business strategy. It is particularly common on platforms that allow people (contractors or freelancers) to trade work or services.
Businesses will frequently request or bid for that person’s time, which will be compensated through that platform.
One of the most well-known instances of a C2B company is Upwork, a freelancing platform that connects employers with talent directly.
It advertises itself as a “platform for work” allowing companies to find and employ project help for everything from software development and content creation to UX design and even financial needs such as bookkeeping and tax filing.
Another interesting, newer example is influencer marketing networks like Upfluence or GRIN. In a similar way to Upwork, both of these sites connect businesses with individuals who provide services.
In this case, people are selling to expand a brand’s reach and visibility by sharing throughout their social media networks.
One of the key benefits of this business model is that it allows customers to choose their rates. In many circumstances, it may also assist them in expanding their reach by improving their visibility.
Business to Business and Consumer to Consumer (B2B2C)
In B2B2C eCommerce, a company sells products to another company, which then sells them to consumers.
A B2B2C relationship is when a wholesale distributor sells things to retail stores, subsequently selling the merchandise to end consumers.
The B2B2C model includes the original business (product origin), a middleman, and the final user.
In eCommerce applications, the B2B2C paradigm can be used in a variety of ways. For example, a corporation could partner with another to sell its products and services, paying the partner a commission on each sale.
The major benefit of the B2B2C business model for eCommerce enterprises is the acquisition of new clients. It is a crucial consideration for new eCommerce businesses aiming to expand their customer base swiftly.
6. Government / Public Administration Ecommerce
Although they aren’t the only ones, the eCommerce retail models listed above are the most frequent. In other cases, the government or public administration is involved in commercial or consumer interactions.
Business to the public is when a company sells its products and services directly to a government agency (B2G). This organization may be municipal, county, state, or federal.
A B2G relationship occurs when an ammunition firm sells ammunition to the United States Army. A local B2G link occurs when a private engineering firm sells its engineering services to a county government to construct the municipality’s new water and sewer infrastructure.
When governments publish Requests for Proposals (RFPs) in B2G, companies frequently bid on projects (RFPs).
Dealing with government agencies differs from dealing with other businesses or clients. Due to the requirement to deal with bureaucracy, business transactions are much slower than in other areas.
Ecommerce companies, like any other company, are entitled to compete on government contracts. Unlike numerous B2C acquire, numerous government businesses will not place an order directly on an eCommerce website.
Of course, there seem to be exceptions to this based on the duration.
A local government agency, for example, could place an order with an eCommerce company for a part to repair a piece of equipment.
It is decided by several factors, including the size of the agency and the need.
B2G (also well known as B2A) is used by organizations whose individual customers are governments or other sorts of public administration.
Synergetics Inc., based in Ft. Collins, Colorado, is an example of a corporation that provides government agencies with contractors and services.
Persons who pay taxes or university fees to the government are C2G (also known as C2A).
Government sales to private enterprises (G2B) and government sales to the general public (G2C) are two areas closed to entrepreneur owners yet growing.