Successfully executing an eCommerce venture is the most challenging task for any entrepreneur. Each day thousands of online stores are emerging on the market but very few were able to survive.
Have you ever wondered about the reason behind the success of any leading eCommerce platform? The real and unrevealed reason is those platforms have wisely selected their eCommerce Business models and also their delivery models.
Choosing one of the best eCommerce business models is a crucial aspect and every entrepreneur who is new to digital transformation should put more focus. Here we will explain all leading business models for your online store along with examples.
What is an e-commerce business model?
An eCommerce Business model is a structure that determines how the online business sells goods or services to its customers. Before we finalize the business model, we need to first identify two main aspects.
First, you need to be sure about what you are going to sell. You can sell either physical products or digital products or any type of service. This will help you to set the business model accordingly.
The next will be the delivery method which is followed to deliver the product or the service to the end-users. Once you are set with these main aspects you can proceed with analyzing 0 best eCommerce business models
What are the 6 most popular forms or models of e-commerce?
B2B stands for Business-to-Business where the exchange of products, services, or information is done between two Businesses. B2B companies operate in several sectors like manufacturing, technology, construction, retail, telecommunication, food and beverage, real estate, and many more.
B2B is considered to be one of the best eCommerce business models as the global revenue of B2B has reached $20.9 trillion. All purchases made through this business model are huge in numbers and so the returns are also huge.
Example – Alibaba is a perfect example of a B2B eCommerce business model
Benefits of B2B eCommerce business model
- Large deal sizes can be experienced as the customer will not be an individual but a company or a store.
- Easy customer retention as the customer will be an organization and they will not easily switch their brand unless they are not satisfied with the quality and price.
- Ordering bulk products would be easy if there is a dedicated B2B eCommerce platform.
- Delivery can be faster as the B2B eCommerce tools will effectively automate fulfillment, and can easily manage complicated orders.
- The built-in order management system will connect orders with the back-end system and the B2B sellers can easily synchronize their inventory with orders.
Challenges of B2B eCommerce business model
- Satisfying companies is more difficult than satisfying individual customers. You need to give quality as well as economical solutions to your customers.
- The market is very limited as B2B can focus only on companies, and organizations in all industries. This is very risky for any small or medium-sized companies.
- The decision-making is a lengthy process as the order will be in bulk quantity so more attention is needed in finalizing the order.
B2C stands for Business-to-Consumers and as the term defines, this eCommerce Business model will directly sell products or services to the end-user who will be an individual consumer. B2C sales can be seen in day-to-day transactions. Users may buy phones, clothes, or even order food and all these come under the B2C business model.
Consumers’ buying behavior is the primary driving tool for any B2C company. Maintaining a good rapport with the consumers is very essential for the business to run.
Example – Amazon is the leading and successful eCommerce platform that sells products directly to consumers.
Benefits of B2C eCommerce business model
- The unlimited marketplace is the main benefit where you can have a huge audience for your products or services.
- 24-hour online B2C stores will let consumers purchase products at their convenient time and this ends in better sales and revenue.
- No third party is entertained to sell products to your customers. As there is no intermediary, there is no need to spend commission on any third party.
- B2C eCommerce supports business administration as the seller finds it easy to maintain his inventory, shipments, and other back-end processes.
Challenges of the B2C eCommerce business model
- Cut-throat competition is the greatest threat to any budding entrepreneur. As the market size is huge, the competition is also heavy.
- There is a limitation in exposing products on an eCommerce store and you may not be able to display your entire product section.
- Shipping charges are the real headache. Whether you sell a single product or a bulk product, you need to spend on shipping. With B2C, most consumers order a single product and you need to bear the shipping cost.
C2B stands for Consumer-to-Business where the consumer who used to buy products from businesses will create their product or service and sell them to companies. This model is gaining more responses in recent days due to the usage of the internet.
This is a reverse model of B2C and social media has a crucial role in developing the C2B eCommerce business model. The key aspect of C2B eCommerce is the market research and audience engagement.
Example – Google AdSense and Shutterstock are real-time examples of this business model.
Benefits of C2B eCommerce business model
- This creates more employment opportunities as youngsters can make use of their skills and can offer services to companies by staying remote.
- Companies also get more options as thousands of individuals are available for services and they can select the one that is affordable for their business.
- Multiple incomes are possible as an individual can offer services to multiple companies.
Challenges of C2B eCommerce business model
- Delay in delivery is one of the major threats that this model faces. Being an individual, the seller may not spend more on fulfillment which affects the delivery.
- Setting a price will be the toughest part as there is no particular standard of price fixing with this model.
- Breach of information also happens as individuals may leak the company’s business details to others.
C2C stands for Consumer-to-Consumer where the buyer and the seller are considered to be a consumer by the C2C eCommerce platform. This model is relatively a new model where the seller is also a buyer. There will not be any business practicing on both ends.
This is one of the old and best eCommerce business models where it was carried out through Newspaper classified and live auctions before the invention of the internet. This business model is booming in recent days and making use of technology to the core to gain better returns.
Example – eBay, and OLX are a few examples of C2C marketplace platforms.
Benefits of C2C eCommerce business model
- Higher margins and lower prices are the main benefits of this model as there won’t be any middleman to sell.
- Consumers can find second-hand items on the platform with affordable pricing which cannot be found in traditional businesses.
- Very convenient for both parties as they can directly get in touch with each other and can finish the deal without any confusion.
Challenges of C2B eCommerce business model
- The quality of the product cannot be guaranteed as the platform cannot take responsibility for the product.
- A hassle payment process is carried out and there will be an additional transfer fee charged to both parties by the platform.
- It is difficult to find genuine sellers as many frauds make use of the platform to scam people.
B2G stands for Business-to-Government which implies a relationship between a company and a government agency. The term may be new to many of us as it has less exposure in the market. Some enterprises will be specialized in selling products or services to the state and some may also terminate this model B2A (Business-to-Administration).
Unlike other business models, this needs to have strict compliance with business laws and it is quite complex. The government will announce its tenders through this platform and businesses should strictly meet the requirement and conditions mentioned by the government and can apply for the tender and take orders.
Example – online business tax-paying platforms are an example of this model.
Benefits of B2G eCommerce business model
- High-profit margins and longevity are enjoyed by both parties.
- Additional tax benefits can be availed by businesses that work under B2G.
- Government can complete their tasks and operation in a shorter time.
Challenges of B2G eCommerce business model
- A change in government could highly affect the work and also the business.
- Huge capital is required to complete the work as the government will pay only after completion of the task.
- Although eCommerce is known for borderless transactions, this model will have geographical restrictions.
C2G stands for Consumer-to-Government which is the reverse of B2G. In this model, consumers who are the public will offer products or services to the government or public administrative agency. The process will be initiated by the government and transactions will be carried out by the public administration agency.
In this model, the consumer is protected from unexpected losses. The consumer will not bear any responsibility whenever the C2G platform faces any technical issues. This model mainly builds a perfect and friendly relationship between the citizen and the government.
Example – all e-tax filling portals are the perfect example for this model where the public will use the portal to pay taxes to the government.
Benefits of the C2G eCommerce business model
- Public administration can become more flexible and easier to operate.
- It encourages the public to be aware of technology and internet usage.
Challenges of C2G eCommerce business model
- More awareness should be given to the public as many in rural areas are not used to the internet.
- Perfect internet connection should be given to all regions of the state otherwise there is no point in having these portals.