Types of eCommerce Businesses

The eCommerce Business is booming around the globe. Global eCommerce is now a 4 trillion dollar business. In the U.S., the eCommerce business has 6 percent of retail sales, but experts say it will rise to 22 percent by 2025. eCommerce business connects direct customers to businesses. This model allows businesses and customers to buy and sell goods and services online. An eCommerce business has six most common business models. Each business model has its significance, and each has a different role for that purpose, what model you will take up and what type of business it will deliver. This article will find the different types of eCommerce businesses and their examples.

Types of eCommerce Business Models

1. Business-to-Consumer (B2C)

Business-to-consumer is the most common business model used worldwide. This Business Model lets businesses sell products directly to consumers. Every time you buy any product directly from the store is a Business-to-consumer transaction. Example: When you buy chocolate from a grocery store, have food at a restaurant, booking tickets at a theatre. All the mentioned above is a Business-to-consumer type of model. The B2C has five different eCommerce business models, which are mentioned below.

Direct Sellers: This is when a consumer buys directly from online retailers.

Online Intermediaries: This platform brings consumers and sellers together and takes a specific amount of commission after each transaction.

Advertising-based: As the name suggests, the information is given away for no cost, and the revenue is generated through advertisement on the site.

Community-based: A common community-based site makes money by sending specific ads to consumers based on location. Example – Facebook

Fee-based: Fee-based model charges some amount for the information or content they opt for. Example – Netflix.

2. Business-to-Business (B2B)

Business-to-Business is a direct service from one business to another. This business model is common among wholesalers and producers. These have longer sale cycles, recurring purchases, and higher order value. There are two methodologies in B2B Business, Vertical, and Horizontal. The Vertical Business sells to a specific industry, while the Horizontal sells to various industries.

3. Consumer-to-Consumer (C2C)

The C2C model allows the consumer to sell directly to another consumer through the marketplace. The most common example of the C2C model is eBay and Facebook Marketplace. The transactions are done through a third party which takes a commission. Handling a C2C business model needs cautious planning to execute perfectly.

4. Consumer-to-Business (C2B)

The business approaches the consumer about software, UI/UX Design, content creation, or any financial needs like creating a ledger book and maintaining the balance sheet. This business model is very common among crowdfunding-based projects. Many individuals make their services available to companies looking for a specific product. The most common example globally for this type of C2B model is Freelancer.

5. Business-to-Government (B2G)

This B2G model focuses on selling and marketing their products to the government. These models rely on successful bidding of government contracts. The government requests a proposal (RFP), and the ecommerce businesses must bid on it. The lowest amount bidder gets the contract. The bureaucratic nature of government leads to the slow release of funds, affecting the revenue stream of the businesses.

6. Business-to-Business-to-Customer (B2B2C)

This model has three stages: The Business (The origin of the product), an Intermediary (the middleman), and the end user (customer). As the name suggests here, the business sells its products to another business. Then that business sells the product to the customer. This business model has an advantage as it can be useful for acquiring customers for the original business and growing rapidly.

Some Examples of eCommerce Business Models

Traditional Retailing Model

Traditional Retailing reflects on selling various brands to customers. Its purpose is to provide extra value to the product the customer purchases. The retailer may source products from a wholesaler or small business. The most common traditional retailers in the U.S. are Walmart and Target.

Single Brand Retailing Model

As the name suggests, single-brand retailing sells only one brand. These brands usually stick to their niche market, growing rapidly through time with countless opportunities. The most common examples of Single Brand Retailing are Pendleton, Lululemon, Zara, Gucci, and H&M.

Subscription Services Model

Various types of subscription models offer different benefits. The subscription servicing model works on flexibility and scalability. The subscription model enables the business to evaluate returns and change the subscription models accordingly. The Most common examples of subscription model services are Netflix and Hulu.

Wholesale Service Model

The wholesale service model requires access to a large quantity of a specific good. Wholesalers sell products in bulk to retailers or individuals that reflect a discount on the purchase price. The best example of a successful eCommerce wholesaler is Alibaba, which widens the doors for numerous distributors of all types of products.

Digital Products Service Model

The Digital products service model business deals with Software, Instruction courses, and music products. These products do not need any brick-and-mortar store to function. The only problem with the digital products service model is the production. You don’t need any physical space to run your business. The physical space requirement will be minimal, but capital is needed upfront.

Points to Consider Before Choosing an eCommerce Business Model

What is the Product that I want to Sell?

Clarifying the product you want to sell to the customer will enhance your business capability. You know everything about that specific product. How delicate is it? How to handle it? Source of production, quality, etc. All these inputs will let you get into your comfort zone and attain more customers.

Who is the Ideal Customer?

Before knowing the ideal customer, building an Ideal Customer Profile (ICP) is important. With ICP, one can understand the right business model that suits you. Now coming to the customer, it’s important to know who they are and their purchasing behavior. All these points help you find the ideal customer for your business model.

What Should be the Pricing to Attract More Potential Customers?

Pricing plays a much more influential role in building a specific business model. Good competitive pricing is always a plus. Keeping your profit margin low at the initial stages of your business can help you acquire more potential customers. Providing them with the best quality product will build trust and loyalty.

What are the Services that will Help my Business?

Based on your business model, having the right services at the right time will boost the business. Services like a good delivery partner and supplier help the business the most. For instance, consider a subscription service or a wholesale model if you are a manufacturer. But if you are a seller, building your brand name and attaining more potential customers and brand loyalty is important.

Start Selling Today

Each eCommerce business model has its specialty. It all depends on what your product is and who is your potential customer. Every model can be profitable, but how to execute these business models? If you want to start an eCommerce business and have questions on what model suits your business? At AYATAS TECHNOLOGIES, we have excellent eCommerce website developers and consultants who can understand your business idea and let you build a robust online store or eCommerce website that brings success. Contact us at (916)836-8099 for more details or Request a FREE Consultation here.