One of the biggest misconceptions with Types of e-commerce business models is that most people view all e-commerce businesses as strictly Business to Consumer (B2C).
However, the reality is that there are different types of ecommerce models, and all are thriving. According to estimates by Statista, e-commerce sales will jump to $6.388 billion per year by 2024.
If you are looking for useful information on the fundamentals of innovative e-commerce business models, you’ve come to the right place. In this blog, we will decode everything you need to know about the types and benefits of e-commerce models, along with real-life examples for some serious inspiration. Let’s get going.
Five Types of E-Commerce Business Models that Work in 2022
The first thing you need to make a note of is that every e-commerce business model differs from the other based on the type of online transaction that occurs between the buyer and the seller online.
1. B2B: Business to Business E-Commerce Model
Focuses on: Offering products/services from one business to another.
- Typically, in this model, the buyer is generally the end-user, or they may resell the product/service to the consumer.
- Most B2B businesses comprise service providers such as software companies, office supply companies, document hosting companies, etc.
- The decision-making and, by extension, sales cycle for this model is typically longer, with end customers demanding a free trial or demo of the service/product in question. Plus, the average order value is higher, and the number of recurring customers is greater than in the B2C model.
- Real-life examples of B2B e-commerce brands include ExxonMobil Corporation, Chevron Corporation, Boeing, etc.
- All B2B brands leverage a customized e-commerce platform to engage with other businesses in a close environment.
2. B2C: Business to Consumer E-Commerce Model
Focuses on: Providing products/services from the business owner directly to the end customer.
- Think of the business to consumer e-commerce model as the online version of a traditional e-commerce retail store. Anything that you buy online – from your clothes to electronics – is all a part of the B2C transaction.
- The decision-making and sales cycle for this model type is shorter as most items are typically within the lower value range. Plus, the average order value is lower than the B2B counterpart, with fewer recurring customers.
- Real-life examples of B2C e-commerce brands include H&M, Zara, Target, etc.
- This is one of the most popular e-commerce business models within the e-commerce sector. Most e-commerce innovators leverage innovative technology such as mobile apps to provide customers with a stellar online shopping experience.
3. C2C: Consumer-to-Consumer E-Commerce Model
Focuses on: Allowing customers to buy, trade, or sell products/services in exchange for a small commission (transaction or listing fees), which is paid to the website.
- This model type requires extensive research and careful planning.
- Real-life examples of C2C e-commerce brands include eBay, Alibaba, and Craigslist.
- The business owners of this model type benefit from a ready base of motivated buyers and sellers. This propels their growth. However, ensuring quality control and driving technology maintenance are big issues that need attention.
4. D2C: Direct-to-Consumer E-Commerce Model
Focuses on: Allowing D2C businesses to sell their products directly to end customers without the help of third-party online retailers.
- There’s no middleman operating between the consumer and the business in this model.
- Real-life examples of D2C e-commerce brands include Warby Parker, Dollar Shave Club, Glossier, etc.
5. C2B: Consumer to Business E-Commerce Model
Focuses on: Enabling consumers to sell goods/services to businesses; the consumer engages in a sole proprietorship serving a larger business.
- The C2B e-commerce model is one of the fastest-growing e-commerce models. In this model, the website enables customers to post their work that needs to be completed online. Then, businesses bid for the opportunity.
- The biggest advantage of this model is competitive pricing for goods/services. It allows customers to name their prices. Alternatively, businesses can compete with each other to fulfill their needs.
- Real-life examples of C2B e-commerce brands include UpWork, Google AdSense, etc. Affiliate marketing services would be an example of the C2B e-commerce business model. Another excellent example of this model would be companies reaching out to social media influencers to market their products/services.
The Bottom Line
The recipe for success for any e-commerce business lies in using the right knowledge to build your e-commerce brand right. Add your intuition, market knowledge, and strategic business plan to the mix, and you’ve got a winning e-commerce model at hand.
So, take a cue from the tips outlined above, familiarize yourself with the e-commerce fundamentals, select the right e-commerce platform (like the Aasaan app) that suits your specific needs, and kick-start your e-commerce journey on the right (and productive) note!
If you have questions about aasaan please feel free to get in touch with our customer support on firstname.lastname@example.org