Four Traditional Types Of Ecommerce Business Models With Examples
Over the last few years, eCommerce has exploded and it still is growing at the pace of a skyrocket. According to research, global commerce sales increased about 25.7% to 4.213 trillion in the year 2020 and since then the figure is continuously growing. It’s true that this industry is quite profitable but still, it’s not simple to start your own online store and stand out from the crowd.
To be successful, it is of utmost importance that you first set your business goals, study your audience, know their likes and dislikes, and then work on your products accordingly. Speaking of success, most big e-commerce stores still require the help of a brand value accelerator to ensure long-term growth and an increase in sales. In a nutshell, once you start your online store, there’s going to be a lot on your plate that you’ll have to work on.
To get started, you first need to know about the main types of e-Commerce business models and that’s exactly what we’ll be talking about today.
Most Common And Traditional e-commerce Business Models That Still Work
Ecommerce business models are basically monetization plans of companies that determine how they’ll be selling their products and services online. It’s about determining whether you’ll sell your products directly to your customers, you’ll sell them to other businesses, or opt for third parties.
1-B2C-Business To Consumer
One of the most popular business models right now is B2C-Business To Consumer. As the name implies, in this model, you’ll be selling your products and services directly to your consumers online. Often businesses use digital marketing to spread the word about their services/products to their customers and that’s what leads them to success.
Example Of The B2C Model
Household or entertainment supply retailers like Walmart sell their products directly to the consumers. The main advantage of the B2C model is that you’ll never have a limited customer base and if you keep working on it, your customers will keep growing. Secondly, there’s a greater potential for sales and profit here. On the other hand, the downside of this model is that you’ll be facing some really tough competition in the market and it’ll take some time for you to build your brand. Also, dealing with returns and shipments can be difficult sometimes.
2-C2B-Consumer To Business
The Consumer to business strategy is less effective but it still is working. In this model, it’s simply that a consumer provides his/her services or products to a business in exchange for money or other perks. This model is best suitable for people who do not want to involve any middleman like a wholesaler or manufacturer.
Example Of The C2B Model
Online review websites like Yelp are one of the best examples of the C2B model where customers leave reviews, fill out surveys or share their content on social media as an influencer in exchange for some perks, a prize, or discounts. The advantage of this model is that it comes with unlimited brand awareness and the best part is that you don’t need to make an initial investment here. The downside however is that there’s a potential for negative responses here and you can never be sure of what the outcome will be.
3-B2B-Business To Business
The B2B model is specifically for high-end or high-priced products or services. Especially due to the high price, businesses here sell their products or services to other businesses instead of selling them to customers. The model includes bulk orders. However, the model still ends at the purchase stage when one business sells its products to another business and that business then sells them to the customers.
Example Of The B2B Model
Amazon as an online retailer follows the B2B model where it sells software, books and e-books, and even electronics to other businesses. The model is quite profitable and some people even opt for FBA aggregators for their brand to grow here because Amazon really is one big profitable giant. Now as far as the advantage of the B2B model is concerned, it comes with larger orders. Also, fewer transactions are involved here and there are shorter cycle times. The downside here is that sometimes it’s difficult to deal with potentially larger orders and customer demands like the pricing or customization. Also, the customer base here is quite limited.
4-C2C-Consumer To Consumer
The C2c model is quite easy to understand as here one customer sells its products or services directly to another customer without involving any third party. The reason why this model is growing in popularity with each passing day is that here businesses have the chance to broaden their customer base and they can easily reach a larger audience without any hassle.
Example Of The C2C Model
Freelancing is one of the best examples we can quote here for you to understand C2C easily. For example, one customer who knows how to write content for websites and social media platforms offers his/her writing skills to another customer in exchange for money and other perks. The main advantage of this model is that it involves no manufacturing costs and on top of that, there are high chances of higher potential margins here. The downside to C2C is that there’s a high potential for scams here and that the market is highly competitive.
These are some of the main traditional eCommerce business models working right now. There are more models but if you want to know the basics first before getting started with your own online store then you first need to determine the model that you’ll be working on. There’s no one model that fits all businesses. In fact, it all depends on you, your services/products, and your audience. However, you need to decide on one model carefully because your sales, your profit, and the future of your business depend on it.