Earlier, people used to purchase many things from brick & mortar stores. With the introduction of eCommerce, various people have taken their business online by building eCommerce stores. People are now addicted to purchasing most essentials and non-essential things from online stores.
All the businesses that have become successful online have their own eCommerce business model. By following a suitable eCommerce business model, they can reach a wider audience and generate good revenue.
If you want to leverage this growing industry, you should take your business online with the help of an eCommerce store. While jumping out excited about starting a store, you shouldn’t forget one of essential things, i.e., the eCommerce business model.
We have been delivering some of the best eCommerce stores to businesses worldwide. Hence, we are familiar with eCommerce businesses.
Here, we will provide you with the most common types of ecommerce business models and how to choose a suitable one for your business.
Before we move on, let’s start with the basics.
Table of Contents
- What is an eCommerce Business Model?
- 6 Main Types of eCommerce Business Models
- Choosing the Right eCommerce Business Model
- Final Words
What is an eCommerce Business Model?
It is a business model in which companies and businesses buy and sell goods & services on the online world. Companies use different types of eCommerce business models to reach their target audience and grow their business.
If you want to find the proper eCommerce business model, you need to consider two things. In the first step, decide the audience you want to sell to and strategy you use to sell. Secondly, choose a suitable business plan. It includes a method to gain customers and engage them with your product.
6 Main Types of eCommerce Business Models
Here we will understand in brief the common eCommerce business models worldwide.
1. Business to Business(B2B)
The B2B model of e-commerce involves businesses selling products and offering services to other businesses. In this model, a business needs to conduct network marketing to reach a wider audience. Moreover, you need the required strength to showcase your product or service is worth consumers’ needs.
The main benefit of the B2B model is a longer sales cycle, higher-order value, and recurring orders. This B2B model in various eCommerce businesses like software, office furniture, and more.
Some successful businesses following this model of eCommerce could be Samsung, Alibaba, General Electric, etc.
If you have the necessary budget and think that your product can satisfy the needs of the business, go for this model.
2. Business to Consumer(B2C)
As the name suggests, the B2C model involves a business and a customer. It is the most popular business model where a business sells products or services directly to the customers.
Any product or service that a customer purchases online can be considered under the B2B transaction.
In this model, the decision-making process of a customer is short compared to B2B purchase as the price is low. Secondly, a business following this model has a shorter sales cycle, lower-order value, and fewer recurring orders.
If your product or service is meant to target a specific audience, you should adopt the B2C model for your business. In this model, you need to do good marketing to reach the audience. A customer discovers your website and checks whether the product fulfills the core needs.
The customer can browse the entire website and then decide whether to buy from your store. Examples of B2C are Amazon, Target, etc.
3. Consumer to Consumer(C2C)
Unlike B2C and B2B business models, the C2C model is somewhat different. It has been in discussion with the increase in consumer confidence in eCommerce.
As the name suggests, the C2C model connects consumers via an eCommerce marketplace and allows them to buy, sell, or trade their products or services in exchange for some commission.
Some of the most successful sites following the C2C model of eCommerce are eBay and Craigslist. Other than these, there are a lot of eCommerce sites that have failed miserably in this model. It is because businesses following the C2C model fail to plan well. Secondly, they have to invest heavily in quality control and maintaining the technology to offer a smooth experience to customers.
4. Consumer to Business(C2B)
C2B is not as well-known as other types of eCommerce business models. However, it is gaining a lot of attention from consumers and growing progressively. In this model, the consumer sells goods or services to the businesses. In other words, C2B is a sole proprietorship serving a range of businesses.
The consumer has complete control over the price and audience he wants to sell the products or services.
Elance(now freelancer) is one of the first platforms that adopted the C2B model. The model serves all the needs of freelancers. Besides this, reverse auction sites and affiliate networks fall under the C2B model.
5. Business to Government(B2G)
Business to Government or Business to Administration is a model in which businesses sell products or services, or information to the government for a specific period of time.
It is an eCommerce business model where a business needs to bid on government projects or products that the government may buy for their organization. There is a possibility that public sector organizations can place bids on the platform. These bids happen on the web via real-time bidding.
One of the famous examples could be a SaaS company that maintains the entire data of the government for a specific time. Likewise, any startups that have a product or service beneficial to the government can opt for this model.
6. Consumer to Government(C2G)
Consumer to Government is also referred to as the Consumer to Administration model. This eCommerce business model is somewhat like B2A.
In this eCommerce business model, the consumer carries out a direct transaction with the government by sharing a specific detail on the website. It could be anything like paying bills like water or electricity. Other than this, we could be just that a consumer is offering feedback to the government about a specific service.
Choosing the Right eCommerce Business Model
We have already looked at the most well-known eCommerce business model. Now we will provide you with the steps to choose the best one.
You need to conduct thorough research to understand the problems of the target audience and think of a way to provide you more value through your product or service.
Here are the primary questions you need to answer to find a suitable eCommerce business model.
1. Who is your customer?
Which audience are you catering to?
It is essential to go inside the mind of customers and know what their expectations are from your product. Here, you can make your business successful by becoming aware of the behaviors and habits of customers and effectively fulfilling them.
You can also consider some of the latest eCommerce trends to understand what customers want from the online stores. Also, you can make a list of challenges customers face with the current product or service. Then, you can integrate something special into your business that can be a gamechanger.
2. What is your capability?
What are you more familiar with than any other player in the market?
Know all of our strengths and put your whole effort in that direction. You should take calculated risks to carry out most tasks and ask for help from experts wherever needed.
Besides this, you should go deep and list all of your limitations. With this, you will have a plan to overcome your limitations. You will also make effective decisions for your business.
3. Which model works well for your product or service?
Based on the product or service, different eCommerce models will be applicable.
For instance, if you have your product or service, you would consider a subscription-based model to generate a sufficient amount of money.
If you are selling products to other people, you should consider integrating some of the best eCommerce features in your store to offer a better experience. Then you should invest heavily in marketing to obtain a suitable customer base.
4. What is your position in the market?
You know your product well. However, your customer doesn’t.
You should dig deeper into the competition and make a checklist of the things that ensure your product is exceptional.
On what terms, your product is best? Price, quality, convenience, or anything else.
In every step of the product, beginning with warehousing to product marketing to shopping experience to shipping, your unique value proposition should be clearly visible to the customers.
So far, we have looked at the most popular eCommerce business models along with examples. Besides this, we have also looked at the 4-step process to choose the suitable eCommerce business model.
Now, it’s your turn to choose a suitable eCommerce business model. If you still have any doubt about eCommerce business models, don’t hesitate to reach out to us.
Webdesk Solution is a professional eCommerce website development company. We have a highly talented team of developers who have created small to big eCommerce sites for clients worldwide. Hence, we can understand your idea well and help you choose the best eCommerce model and integrate it into your website to reach a wider audience and become successful.