The rapid growth of eCommerce businesses provides various opportunities for business owners. E-commerce is the process of buying and selling products through the internet. It has become a popular way of doing business over the last few years.
Types of eCommerce business models are all growing. If you want to start an eCommerce business first you need to select which type of business you want to do. Once you selected an eCommerce business model then you need to build an eCommerce website.
In this article, we’ll cover the different types of eCommerce businesses model and how you can make an informed decision when starting an online store.
Different types of eCommerce business models
The eCommerce business model is a plan of how eCommerce business works, selling products or services online. There are many types of eCommerce business models like selling products directly to consumers, other businesses, etc.
Here we will discuss 7 types of eCommerce business models.
B2B (business to business)
B2B business refers to businesses selling products or services from one company to another business. Like any other type of business, it comes in a variety of sizes, and forms. In b2b businesses sell to other businesses.
B2B eCommerce business provides services or products to other companies. Usually the products and services for other companies like office accessories, HR firms, software firms, etc.
In b2b business order sizes are large and they get repeated orders. Like a software company that sells accounting software. Another company purchased this software for their company. This is how b2b business works.
B2C (business to consumer)
B2C eCommerce businesses sell products directly to customers or individuals through eCommerce platforms. They sell products for daily use, clothing, groceries, etc. It’s a very popular eCommerce business model. Consumers visit the eCommerce website and select the product they want to purchase. Companies like Amazon, E-bay, and Etsy are b2c businesses.
C2C ( consumer to consumer)
C2C is a business model where a customer purchases a product from another customer through a third party. C2C eCommerce business also known as an online marketplace connects consumers to purchase products from another consumer in exchange for money.
C2C platforms allow their users to buy and sell products. For every sale, the platform receives a small amount of commission. The C2C business model is more complex and risky than any other business model. Because of legal issues many platforms break down. There are some frauds and scams that try to take advantage of these platforms. Purchasers must be careful of these types of people.
C2B (consumer to business)
C2B eCommerce business is very well-known nowadays. Here any individual offers his service to any company to organization. Like freelancing, and affiliate marketing. One of the best examples of this eCommerce model is Upwork. Where a person posts or offer his or her job. This method gives consumers the ability to name their prices to businesses directly to fulfill their demands.
B2A (business to administration)
B2A eCommerce business is a type where a business sells services or goods online to administrations or government agencies. These types of eCommerce businesses are normally beneficial and long-term contracts.
For example, a government agency or administration office hires a software company to develop a system for them to maintain their budget, accounts, license, official records, etc.
C2G (consumer to government)
In this eCommerce business model individuals provides something of value to the government online. These proceedings are normally payments for public administration costs, taxes, health services, social security, etc.
Different types of eCommerce business revenue models
Before you get started with an eCommerce business revenue model you should know each option. The different types of eCommerce business revenue models include:
- White labeling
- Private labeling
Dropshipping is a simple and popular form of an eCommerce website. It’s a type of business where you don’t need to manage inventory, production, or shipping. It’s a resale business where you sell goods that are delivered directly to consumers from the supplier.
You must work with a third-party wholesaler and promote their products on your eCommerce website. For each sale, you will receive a share of the net profit. This startup procedure has low investment. Starting it requires a website and a dealership with a wholesaler.
White labeling is a model where a company purchases a product from a purchaser and then applies its own branding. One of the main benefits of this business is that you can choose any profitable product that offers white-label options.
A wholesaler purchases a large number of products from the manufacturer and resells them to retailers. It’s a kind of retail eCommerce sales. It requires a large amount of investment for startups. You need to manage the inventory, stock, and keep track of orders, and shipping information. You also need a warehouse to stock products. For starting you need a warehouse and an eCommerce website.
It’s a type of business model which works with a manufacturer for creating its products with its brand name. The company will take control of the product’s materials, functions, packaging, etc. The advantage of private labeling is when a company takes control of the products it becomes unique from the rest of the market. First, you need to find out if the manufacturer is ready to meet your demands or not.
Subscription is a type of eCommerce business that delivers products on a regular or monthly basis. The subscription model delivers customers’ products scheduled meantime. One of the well-known subscription eCommerce brands is Dollar Shave Club. It delivers razors and shaving accessories to its customers on a monthly basis.
This type of eCommerce business model is more successful than any other model. Once you have built a customer relationship there’s a high chance that they will subscribe for a long time. It would be best if you kept it easy sign-up process for customers.
How to choose an eCommerce business model
Now you know all the types of eCommerce business models. Which one is suitable for you? Here we will discuss how you can choose an eCommerce business model.
Know the pros and cons of each model
Every eCommerce business model has its own features. Not all models are beneficial or suitable for you. Before you get started in an eCommerce business research market. Know its pros and cons. People are accepting these businesses or not. Know the limitations.
Know your value proposition
When you are about to start a business ask yourself why consumers will purchase products from you. What makes your products best than others? Analyze your competitors and make it clear why your products are best. Be honest with your potential customers. This is how you can achieve customer loyalty.
Who is your target audience
Getting started as a business find out who are your target audiences. Know the expectations of your customers. Understanding customers’ behavior and improving them is one step ahead of choosing the right eCommerce business model.
What are you selling
When you are about to start an online store you need to find out which product you need to select. Do market research properly. Which product has demand online? Digital products or physical products.
Physical products are the most commonly sold products online which achieve the best sales. On the other hand selling, digital products are often more challenging than physical products. You can sell services through an online marketplace.
Wrapping up: types of eCommerce business models
E-commerce business models come in many forms and offer opportunities for entrepreneurs. Any model you consider for business carefully chooses the one. Know its pros and cons, its market demand, investment, etc.
With proper planning and preparation, the right eCommerce business model has the potential to be successful. Identifying the right model for your eCommerce store can get more sales.