According to Wikipedia, “E-commerce is the activity of electronically buying or selling products or online services over the Internet.” This is a pretty straightforward definition to the question of “What is the meaning of e-commerce?” but let’s take a deeper look into this shopping model. Electronic commerce or e-commerce (also written as e-commerce) most commonly operates in two of the following major market segments: business to business (B2B) and business to consumer (B2C). I will discuss the four types of e-commerce below and will cover examples of each.
Four Types of E-Commerce Business Models
If you’re starting an e-commerce business, you’ll most likely fall into at least one of these four types. Each category has its own benefits and challenges, and some companies may even operate in multiple categories simultaneously. Let’s see which type of e-commerce your business fits!
1. B2C – Business to Consumer
B2C (Business-to-Customer) e-commerce exchanges goods or services over the internet between online stores and individual customers. Anything you buy from an online store as a consumer is considered B2C – think of websites where you buy clothing, household supplies, pet food, etc. This is the most common business model, so there is a wide variety of strategies and approaches when it comes to marketing your e-commerce business. Consumer preference for ease and convenience of online shopping has made e-commerce one of our economy’s fastest-growing sectors. E-commerce sales in the third quarter of 2020 accounted for 14.3 percent of total sales, which increased 37.1% percent from the third quarter of 2019.
B2C e-commerce stores require a shorter decision-making process and typically focus on the price, reviews, and shipping speed of the product(s) the consumer is purchasing. On the business’s promotion side, marketing dollars are typically less, but the average order value is also less than B2B. If you think about it, buying something like a new pair of sunglasses for $59.99 is much easier and less expensive than a restaurant buying a walk-in cooler. There are fewer steps in consumer purchase behavior, and marketing requires a completely different approach.
Don’t Forget About Services.
Now, B2C does not just include products, but services as well. This can be seen in websites that sell technology like mobile apps or software directly to their customers to make their lives easier. You typically see low prices, but the option for product add-ons and subscription models. This is where software companies earn the majority of their profits. After all, what business wouldn’t like to have a customer who pays a monthly subscription for a service that has minimal upkeep and management costs?
Examples of B2C E-Commerce Websites
There are literally too many websites to list for examples, but I’m sharing my top examples of B2C e-commerce sites that provide great inspiration. Let’s take a look!
2. B2B – Business to Business
B2B (Business-to-Business) e-commerce is a business that sells its product or service to another business. Sometimes the buyer is the end-user but often resells to consumers. An example of this is Alibaba.com, where the end-user purchases wholesale goods from a business and resells the goods through their own e-commerce business. This will lead to further discussion about the world of dropshipping. So, keep reading!
B2B innovators have made a splash in the market by creating unique services and products that provide efficient solutions to business owners’ problems. A software company such as Slack is another great example of B2B e-commerce, focusing on teamwork, communication, and technology for business owners.
Examples of B2B E-Commerce Websites
3. C2B – Customer to Business
C2B (Consumer-to-Business) e-commerce allows individuals to sell goods and services to companies. This model will find websites that let customers post work they need completed and have businesses/freelancers provide the requested work. Upwork and Fiverr are great examples of C2B models that provide goods and services to consumers online. Affiliate marketing and social media influencer marketing would also be considered C2B. This model allows companies to quickly and easily connect with influencers who can market their products to a specific audience.
This new and growing segment in e-commerce is providing entrepreneurs with great money-making opportunities, right from the comfort of their home!
Examples of C2B E-Commerce Websites
- a blogger or social media influencer offering marketing services
- a photographer offering stock images to businesses
- Freelance websites like Upwork, Fiverr, and Guru.
4. C2C – Consumer to Consumer
C2C (Consumer-to-Consumer) e-commerce, also known as an online marketplace, connects consumers to sell goods and services. The business typically makes its money by charging the consumer transaction or listing fees. Websites like Craigslist and eBay are both great examples of the C2C business model. Both online businesses provide easy solutions for buying, selling, and trading products or services. This business model’s growth heavily relies on motivated buyers and sellers and needs to be closely monitored for quality control and technology maintenance.
Examples of C2C E-Commerce Websites
8 Examples of E-Commerce Operations
There are a few ways for an e-commerce business to handle transactions, and these depend on the business model being served to consumers.
Here are the eight primary types of transactional e-commerce operations:
- Retail: The sale of a product by a business directly to a customer without any intermediary.
- Wholesale: The sale of products in bulk, often to a retailer, sells them directly to consumers.
- Dropshipping: The sale of a product manufactured and shipped to the consumer by a third party.
- Crowdfunding: The collection of money from consumers in advance of a product being available to raise the startup capital necessary to bring it to market.
- Subscription: The automatic recurring purchase of a product or service regularly until the subscriber chooses to cancel.
- Physical products: Any tangible good that requires inventory to be replenished and orders to be physically shipped to customers as sales are made.
- Digital products: Downloadable digital goods, templates, and courses, or media that must be purchased for consumption or licensed for use.
- Services: A skill or set of skills provided in exchange for compensation. The service provider’s time can be purchased for a fee.
Which Type of E-Commerce Is Best For Your Business?
Before you decide which type of e-commerce business model is best for you, take some time to learn the market you’re targeting. Learn more about your consumer audience and the competition within your space.
Ask yourself a few questions:
- Who are you trying to sell to?
- What makes your business unique?
- Which e-commerce business model would best fit your product or service?
- How does your competition use their website to generate sales?
Take lots of notes, write down some goals, and begin building an e-commerce marketing strategy. A well-planned marketing strategy will be your roadmap to building a successful online business. Being successful has a different meaning for every business owner and entrepreneur. It could mean more sales, brand awareness, an awesome customer experience, living a better life, helping others better themselves, or something completely different. We all have our own version of success, and no answer is wrong.
Define what success means to you, and then create a plan to achieve it! If you need help creating a plan for your e-commerce business, let’s chat about it!