Traditional Types of E-commerce Business Models
In recent times e-commerce has become the fastest-growing retail market. It has redefined the way we buy and sell. Ever since the use of the internet and smart devices, e-commerce has increased and has expanded the market.
E-commerce business means electronic commerce or internet commerce, which refers to any form of a transaction of goods and services, transaction of money, fund, and data online through the internet network. Examples of e-commerce businesses include online shopping, online ticketing, online auctions, payment gateway, and internet banking.
E-commerce has made small businesses, large corporations, and independent freelancers sell their products and services on a larger scale. E-commerce enables products and services to be easily discovered and purchased from retailers, wholesalers, and manufacturers.
For those new in the industry, selecting and using the right e-commerce business model might be a huge challenge. However, to be successful and defy expectations, you need to know which e-commerce business model best suits your target market, capabilities, and resources.
Traditional types of e-commerce business models are categorized based on the type of participants involved. Many companies use several of these types at the same time. They include as follows:
Business to business (B2B): In this model, a business sells its goods and services to another business. The companies do business with each other without involving the final consumer. For example, a business sells software as a service to another industry. It can be large business to small business or large business to large business transactions. The manufacturers, wholesalers, and retailers are involved in these online transactions. B2B has high order value, more consistent purchases, and longer sales cycles.
Business to consumer (B2C): This is the most popular e-commerce business model. Here, companies sell products and services directly to end-users or consumers. Consumers decide and select products or services they want from online stores, place orders, and deliver the products or services directly to consumers. For example, a consumer can buy a pair of shoes from an online store such as Amazon. B2C has a shorter sales cycle, lower-order value, and less consistent orders than the B2B business model.
Consumer to consumer (C2C): These are also known as online marketplaces. In this model, motivated buyers and sellers connect to buy and sell products and services. There is no company involved; instead, consumers are directly in contact with each other. A consumer sells his or her old personal items and assets to any interested consumer. Things such as cars, furniture, electronics, bikes, and phones are traded in C2C e-commerce. Some examples of the online marketplace are eBay, OLX, Craig list, Amazon, and so on.
Consumer to business (C2B): In this e-commerce business model, a consumer or an individual sells products and services to companies. This is the reverse of B2C. For example, a graphic designer sells his designs or portfolio to a company, an influencer sells his online audience to a business for a fee, an IT freelancer sells his software to a business via Upwork or Fiverr.