Ecommerce Business Models: Choose a Suitable One for Your Ecommerce Business
Do You Remember? How often we all were used to go and shop the routine goods in brick and mortar shops! And now, the innovative eCommerce business models have changed the way we shop. eCommerce contributes 6% to retail sales of a business. As a seller, if you want to innovate and exceed expectations, you must learn about these revolutionary business models.
What are the Types of Ecommerce Business Models?
Ecommerce business models depend on who is selling and who is buying. Customers don’t have to be only individual consumers. Companies or government administrations can also be your customers. This also applies to sellers. Since sellers aren’t necessarily a business and they sell items to each other all the time. Some businesses may use more than one eCommerce model to thrive in the competitive marketplace. For an instance, a model that sells products/services simultaneously to both B2C and B2B consumers. However, you must carefully select an eCommerce platform to sell, as their services can make or break your brand identity and customer satisfaction.
B2C Ecommerce
B2C stands for Business to Consumer, this is the most popular type of business that involves a retailer and a customer. In both offline and online models, B2C is the most common business model. All kinds of retailers engage in this model, subsequently, B2C eCommerce has witnessed exponential growth over the last decade. Businesses can easily build their stores online and sell their products to a much larger audience. Online shopping also allows local brands to easily grow and expand their potential beyond boundaries.
The greatest advantage of B2C eCommerce is that there is room for growth, for any industry. With the right brand content targeted at the right audience, businesses can expand globally in a shorter time frame. Hence, identifying your audience or cohort groups before engaging with them is critical to your business/brand success.
B2B Ecommerce
B2B is a short form of Business to Business. A B2B seller provides its products/services to other businesses. B2B products can be industrial in nature like raw materials for a manufacturing industry or software for banking. However, B2B eCommerce services also include wholesale suppliers who sell their products to other retailers and suppliers. Products could range from office supplies to branded employee clothing.
The B2B sales model is popular among companies, unlike B2C. A single B2B business can supply a plethora of customer-facing retailers, limited only by the inventory which it can produce. B2B commerce also provides the largest revenue generation opportunity because it focuses on a market in constant need of products due to high customer demand.
The main disadvantage of a B2B sales model is that the prospective market is much smaller and larger the scale the more complex operations there are.
Similar to B2B, Business to Administration (B2A) provides services and products to not another business but to a government agency. For instance, software that offers effortless interaction between consumers and government agencies or assists seamless information exchange among government agencies is the backbone of this model.
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C2C Ecommerce
C2C means Consumer to Consumer. This instance of eCommerce involves individuals who sell their products directly to other consumers. A garage sale is a good example of such a business. Large marketplaces like eBay are online garage sales. Sites like eBay streamline the C2C business process for a large number of sellers.
C2C is the initial gateway to an eCommerce business. Using this method consumers can sell off unwanted items and they can also learn how to grow their business properly. C2C helps a lot in understanding how to list a product and how to direct it towards the correct market. People also develop a lot of logistical help as C2C helps you to understand how to properly pack and ship a product. A person can do C2C business and test the waters to see if proper eCommerce businesses are for them. Most of the large eCommerce companies began as a C2C business handled by a single individual.
An inherent disadvantage of C2C is that it is not scalable. This is the reason why successful C2C sellers often start and then grow their business into a B2C model. C2C sellers are also confined in the rules and regulations of the marketplace they are using to sell their products. These rules can include strict returns or industries to meet or pay the listing or selling fees of the platform being used.
You cannot build a brand selling C2C since you don’t even have a brand at that point. C2C is done by individual sellers and not a brand. C2C can be a good way to earn some reputation and recognition however that is not a substitute for business.
C2B Ecommerce
C2B stands for Consumer to Business. This business model involves an individual consumer providing services or goods to an organization. Any freelance work comes under this model. Freelance artists, writers, designers and software developers all follow the C2B business module. Even bloggers who sell advertising real estate on their website also engage in a C2B transaction.
C2B business modules can be unreliable since many freelancers can have difficulty finding work. Manufacturers who follow this module may not have been able to provide the quantity of the products needed by their business customers. This is why most C2B businesses are service-oriented.
C2A or Consumer to Administration is similar to C2B except that the consumer is selling their service or product to a government agency.
Mixed Business Models
The massive technological advancement of eCommerce has streamlined almost all types of business management tasks. This also helps businesses to follow multiple business models at the same time. They can combine B2C and B2B sales on a single site. It’s very possible for an online store to offer an end-consumer shopping experience for general customers and offer bulk wholesale services or goods in a different section of the site. All factors of both models can be different but they come under the same umbrella. B2B and B2C can have completely different pricing, options, and even products but such a module relies heavily on the functionality of the eCommerce software used by the seller. Here, we have covered all the eCommerce business models, you can continue reading to explore eCommerce Business Revenue models …
