Diverse types of ecommerce businesses have changed the way we shop today. According to Commerce Department data, the total sales of different types of ecommerce models hit $257.62 billion in Q4 of 2021. This number went up 9.2% from $235.96 billion for the same period in the prior year.
For entrepreneurs who want to invest their money into the ecommerce world but are not sure which business model is right for them, Techosquare decided to come up with this blog! Read to learn about different types of ecommerce business models with their examples.
But before we talk about different types of electronic ecommerce businesses, let's learn its meaning first!
As the name suggests, ecommerce is the ability to buy or sell goods or services via electronic means. While there are many electronic means out there, we usually mean the internet when we say ecommerce. Also called electronic commerce or internet commerce, it can be conducted over computers, tablets, smartphones, and other smart devices.
Unlike retail businesses that ask sellers and buyers to meet in person in a physical location for the sale of goods or services, ecommerce doesn’t require stepping out of your home. You can literally make transactions by sitting on your sofa.
Nearly every imaginable product and service is available through ecommerce nowadays, including books, clothes, music, plane tickets, and even consulting services.
Now that all of us understand the meaning of ecommerce, let’s learn about the different types of eCommerce. Yes, you read it right! Just like there are different retail models, several ecommerce business models also exist.
The following are types of electronic commerce models:
The Business-to-Business (B2B) is a type of ecommerce model that involve the exchange of products, services, or information between businesses via online channels. Instead of taking orders through traditional methods like paper sale orders or retrieving products from shelves at a distribution center, businesses carry transactions digitally.
Unlike the traditional B2B model, B2B ecommerce helps both sides in eliminating plenty of overhead costs. It also embellishes the purchasing efficiency for wholesalers, manufacturers, distributors, and other types of B2B ecommerce sellers.
The following are some of the best examples of this type of ecommerce model:
A popular global B2B ecommerce platform, Alibaba let manufacturers and retailers represent and supply their products to other businesses. It serves around 18 million buyers and sellers across 240 countries and territories.
Another B2B bulk selling ecommerce platform with a global network of sellers and buyers.
Everything you need to know about B2B ecommerce
One of the highly valued and fastest-growing ecommerce types of all time. Business-to-Consumer ecommerce (B2C) is the exchange of goods or services between online stores and individual customers. With this type of ecommerce model, businesses don’t have to pay for brick-and-mortar stores since transactions take place online.
With B2C ecommerce, entrepreneurs can easily avail themselves of more business opportunities since they are not tethered to a specific location or business opening times. Business-to-Consumer ecommerce also lets businesses track their performance and gather data from customers and visitors.
Sellers or manufacturers that sell directly to consumers are some typical examples of B2C ecommerce. Even online retailers like clothing stores or grocery stores also follow this type of ecommerce business model.
Here's a popular example of the B2C ecommerce model:
Okay, we all have shopped from Amazon. But do you know it falls under the B2C ecommerce category? Yes, Amazon is the world's largest online retailer that sells its products directly to consumers. The company sells consumers goods like books, clothing, furniture, electronics, jewelry, and games.
As the name suggests, consumer-to-consumer (C2C) ecommerce is a commerce model in which one consumer sells his goods or services to other consumers, typically in an online environment. Their transactions are led by a third-party business or platform like online auction, classified advertisements, social media websites, or ecommerce websites.
The third party looks after the transaction, payments, and other ecommerce aspects. It helps sellers, as well as buyers, find each other by imposing a small fee or commission.
Here are some examples of this type of ecommerce business model:
A well-known C2C ecommerce platform, Etsy allows customers (especially those who are independent artists and crafters) to create their eCommerce shop and sell their products to other customers. If you are a huge fan of handmade or vintage products as well as unique factory products, this C2C website is made for you!
A comprehensive guide on starting C2C ecommerce store .
Another popular type of ecommerce business model. Consumer-to-Business ecommerce (C2B) lets businesses and consumers build a fruitful relationship in conjunction. It’s exactly the reverse of the B2C ecommerce model. C2B electronic commerce model let the end consumers sell their products/services to companies.
Consumers create value that organization uses to engage in an online business process or gain upper hand over competitors. This type of ecommerce business model is often used in crowdsourcing-based projects.
Here is an example of the C2B ecommerce model:
Shutterstock is a popular example of a C2B ecommerce business model. It is a vibrant community of creatives that hosts images and videos on the website. You will earn a percentage of the sale price after your content gets licensed by Shutterstock.
Choosing the right type of ecommerce business model is challenging, especially for entrepreneurs who are completely new to the ecommerce world. However, there are some tips that can help you select the right ecommerce business model and create a plan to set your company apart.
The following are those tips:
First things first. Figure out what kind of customers you want to serve. Do you want to sell your products to businesses or customers? Or do you simply want to provide a platform where people can sell goods or services to each other?
Since everyone isn’t a potential buyer, so it’s important to have a clear understanding of your target customers early on. You’ll be wasting useful resources if you aim too broad, or find out too late that there aren’t many customers for your product or service.
Identifying your customers will make the online store development easy and let you reach your customers and generate business effortlessly.
One of the most important tips to consider while choosing the right type of ecommerce model for your business. Capabilities, when put adjacent to multiple parameters to run eCommerce business can provide vision to make informed and intelligent decisions.
Ask yourself this question - what you can do better than anyone else? Be honest about what fundamentals you can cover by yourself and for what elements you will need help. We know that it is really challenging to know your limitations. So, take your time.
By learning about your limitations, you will be able to take better long-term business decisions.
Build your online store using best ecommerce site builder .
Another important tip to consider while figuring out the right type of ecommerce model for your online business. Since you want to start an ecommerce store, it is pretty obvious you have already decided on your products. But do you know that different models tend to fill the bill for different product categories?
Okay, let’s take an example! If you are thinking of producing your own products, you should pore over wholesaling or subscriptions and create B2B ecommerce store. It will help you cover production costs and break-even more quickly.
Similarly, if you are a distributor like Amazon, you should be investing more heavily into developing a B2C ecommerce store.
There you go!
We told you about the most common types of ecommerce models; tips to choose the right model for your online business, and businesses that have forged their own paths to set examples in different ecommerce models. Choosing the accurate road for your ecommerce store isn’t easy but planning and patience are really important.
So take a deep breath, and do thorough research on your audience's taste and competitors. We are certain you will successfully launch your online store one day!
Got any queries to ask? Send them to email@example.com and have them answered by our ecommerce experts.