There are several types of eCommerce business models, and they are prospering. Online retail sales proceeds to grow year after year. Still, not every eCommerce business model is equally suitable for your company. Even though the traditional types of eCommerce businesses still have numerous perks, the customers’ needs uninterruptedly evolve. These shifts and new customers’ needs require eCommerce businesses to adapt and enhance their marketing strategies. Responding adequately to markets’ needs influences turning new customers into loyal consumers.
What is eCommerce? (simple definition)
Electronic commerce, e-commerce, or eCommerce are the variants of one and the same business-related term. It stands for firms and individuals buying and selling things over the internet.
How many types of eCommerce are there?
If you intend to start your very own eCommerce business, you’ll need to do some research. Looking into the different types of eCommerce business models and websites before choosing your path is obligatory.
Learning about eCommerce will enable you to run your online store and monetize your business properly.
The six types of eCommerce business models include:
- Business to business (B2B)
- Business to consumer (B2C)
- Consumer to consumer (C2C)
- Consumer to business (C2B)
- Business-to-Administration (B2A)
- Consumer-to-Administration (C2A)
eCommerce businesses can offer different physical goods, digital products, or services to their customers.
What can consumers get?
Selling physical goods entails facing both advantages and disadvantages of eCommerce. The most typical struggles related to the sales process of physical goods include matters of storage, shipping, breakage, and insurance.
Digital goods and online products imply everything that doesn’t require physical shipping and is quickly attainable. Customers frequently purchase online courses, e-books, and much more.
Selling services through an eCommerce business can happen online or offline. Companies and individuals can find all types of services – from software development to locksmith and electrician services.
All types of eCommerce businesses evolve by following their customers’ footsteps and complying with their necessities. High-quality products and services are mandatory. Still, they aren’t sufficient to efficiently acquire and retain customers. Customers pay close attention to the way they felt throughout the entire process. Excellent customer service is a competitive advantage. Customer attraction and increased customer loyalty, lower labor costs, and time-saving are the primary reasons eCommerce businesses choose customer service outsourcing.
6 Types of Ecommerce Business Models
B2B – Business to business eCommerce
A B2B eCommerce business model primarily concentrates on providing products from one business to another. Still, many companies in this niche are service providers. You can find a software development company, call center, HR firm, accounting and bookkeeping services, etc.
B2B one of the most favored types of eCommerce business models. In B2B, the buyer can be the end-user. Still, the buyer often resells the purchased goods to another consumer.
B2B transactions typically imply a longer sales cycle but drive the higher-order value and more repetitive purchases.
According to some research, in 2020, close to half of B2B buyers are millennials, which is nearly double the amount from 2012.
Choosing B2B rather than other types of eCommerce business models largely depends on your target audience and planned results. However, you should keep in mind that B2B initially requires investing more cash into your eCommerce business.
5 main benefits of B2B eCommerce
- More customers
- More efficiency
- A B2B eCommerce platform enables your business to grow and scale successfully
- Improved brand awareness
- Excellent customer service
B2C – Business to consumer eCommerce
What is meant by B2C eCommerce? The B2C domain is what most people think of when they imagine an eCommerce business. It represents the most in-depth market. B2C sales are the traditional retail model, where a company sells to individuals. In the eCommerce case, the business is settled in the online world instead of in a physical store.
What are the benefits of B2C eCommerce?
- Transactions take place online, which is an efficient cost-cutting method
- You can acquire valuable data from your customers and visitors
- Since a location doesn’t bind your eCommerce business, you will have more business opportunities
4 Key differences between B2B and B2C eCommerce platforms
- Homepage and its aims
- Customer support requirements & call center services: B2C eCommerce requires better customer service and more interactions with consumers
- Target audience and the means to reach out to them is different
- Pricing: B2C retains more consistency when presenting its catalog
Pro Tip for B2C business owners:
Customer service outsourcing often turns out to be the best solution to attract, engage, and retain customers. When turning to a third-party service provider to take care of your customer experience, you get to save a significant amount of time, obtain more coverage, access more skills, cut your costs, and focus on other core business areas. Finding the right outsourcing company gives you a competitive edge and helps your eCommerce business stand out.
C2C – Consumer to Consumer eCommerce
While B2B and B2C types of eCommerce business models are pretty intuitive concepts for most, C2C is a bit different. Consumer to consumer represents a business model that enables commerce between private individuals.
The ultimate goal of C2C eCommerce is to bring buyers and sellers closer and ease their commerce.
Benefits of C2C eCommerce
- Sellers can reach a large audience easily
- Lower costs and price flexibility
- Additional comfort for buyers
C2B – Consumer to Business eCommerce
Although C2B is increasing in prevalence, it still represents one of the types of eCommerce businesses people don’t immediately think of when exploring this topic and market. C2B means that a consumer is selling goods or services to businesses. C2B is different from traditional eCommerce business models.
One of the best examples of C2B eCommerce is Upwork. This platform enables individuals specialized in specific areas to offer their services to companies. Since numerous businesses worldwide use outsourcing services to boost their results or find a collaboration with freelancers beneficial, the C2B eCommerce type of business will keep on gaining popularity.
3 Key benefits of C2B eCommerce
- Increased market reach
- A better understanding of consumers and their needs
- A more friendly and approachable tone that influences the sales process positively
B2A – Business to Administration eCommerce
Business to Administration eCommerce is also referred to as the business to government (B2G) eCommerce. The other types of eCommerce business models represent the essential and most frequently used eCommerce retail structures. However, B2A (or B2G) also implies transactions with businesses or consumers, even being a bit different.
B2G (also called B2A) is an eCommerce business model for companies whose only clients are governments or public administration.
- Some software companies (outsourcing development) that provide services directly to the government
- Legal and employment information distribution
- Logistic data
C2A – Consumer to Administration eCommerce
B2A and C2A represent similar types of eCommerce business models. Both are directed toward cooperation with governments or public administration. C2A is short for Consumer to Administration, but it can also be called C2G, which stands for Consumer to Government commerce.
C2A encompasses online electronic transactions between individuals and public administration. It simplifies communication between consumers and the government/administration.
- Electronic tax filing
- Health services payments
- Online learning
- Social security information
Different types of eCommerce business revenue models
Before choosing an eCommerce revenue model that suits you, you should explore each option and look into what it implies. The different types of eCommerce revenue models include:
- Wholesaling and warehousing
- Private labeling
- White labeling
- Subscription model
Dropshipping is the simplest type of eCommerce. It frees the seller from managing inventory, warehousing stock, and dealing with packaging. These tasks are up to the supplier.
Even though these are the major advantages of dropshipping, there could be some downsides to this eCommerce business revenue model.
If a slowdown occurs or there’s a lack of quality, the bad reviews will directly affect the business owner.
So, while dropshipping is one of the most popular types of eCommerce business models, there are certain aspects you must be extra careful with.
Wholesaling and warehousing
Wholesaling and warehousing types of eCommerce businesses require a lot of investment at the beginning. Besides investing in a physical warehouse itself, there are some responsibilities regarding the customers, their shipping details, inventory management, and more.
Wholesale and warehousing eCommerce businesses are all about volume. You should push your products to eBay, Amazon, Google, etc.
Private labeling and manufacturing
You might have the vision of an ideal product. Still, the idea itself doesn’t bring you the amount of cash to build your factory. If that’s the case, you should pick private labeling over other types of eCommerce business models.
Companies that build products offsite send the prototypes to a contracted manufacturer who fabricates the product. On-demand manufacturing is one of the key benefits of the private labeling eCommerce business revenue model.
White labeling and private labeling represent two very similar types of eCommerce business revenue models. It is most frequently used in selling beauty products and cosmetics. So, how does white labeling work?
You can pick a product that is already successfully sold by another company that offers white-label options. They design your package and label and then sell the product.
White labeling is possibly the most tricky one among these types of eCommerce. If the market doesn’t highly demand your product, you can easily get stuck. Before choosing this form of business revenue, double-check the market and your target consumers.
Some types of eCommerce businesses rely on a subscription-based model and deliver customers a box of products at regular intervals. The main advantages of subscription-based eCommerce are related to the stability of incomes.
However, there are some drawbacks to this eCommerce revenue type. It can be difficult to pick a prosperous niche. Your choices can be quite narrow, since most subscription-based eCommerce businesses are from the beauty and fashion industries.
Get familiar with the types of eCommerce business models
Like we said – before jump-starting a business, make sure you know the pros and cons of all the types of eCommerce.
Growing and scaling your eCommerce business will most likely require some external funding. You might also need some assistance with specific areas. Outsourcing can be the ideal solution for your sustainable growth and increased revenue.
Finding a suitable BPO company can improve the quality of your products or services, grant you a faster time to market, and substantially increase your customer lifetime value.
Still, before you pick this option, you should learn about all the pros and cons of outsourcing. Keep in mind that not all types of eCommerce match your needs and goals. Take your time to explore the evolving world of online businesses, and you will find your place and pace.