Traditional Types of Ecommerce Business Models
If you want to launch your ecommerce business, odds are that you will fall into one of the below-mentioned categories of business models:1. B2C – Business to Consumer
In a B2C ecommerce business model, a company sells products/services to the end-user (consumer). It is one of the most common business models and has many unique approaches. Anything that you buy from a business’s online store is a B2C transaction. For a B2C purchase, the decision-making process is much shorter than B2B (business-to-business purchase), especially for low value items. For example, it will be easier for you to decide on a pair of new shoes than researching and deciding to purchase a new email service provider for a company.2. B2B- Business to Business
In a B2B ecommerce business model, a business sells its product/service to another business. Sometimes, the business buying the product(s) is the end-user, but often, the buyer resells the product to the consumer. Generally, B2B transactions have a longer sales cycle, but more recurring purchases and higher-order value. B2B innovators have made a place for themselves by replacing order sheets and catalogues with ecommerce storefronts and improved targeting in niche markets.3. C2B – Consumer to Business
In a C2B ecommerce business model, individuals sell products and services to companies. Herein, a website might allow customers to post the task they want to get done and have the businesses bid for the opportunity. Majorly, the competitive edge of the C2B ecommerce model is its pricing for goods and services. Like, affiliate marketing services fall into the C2B category. Elance, which is Upwork now, was an early innovator of this model and helped businesses hire freelancers.4. C2C – Consumer to Consumer
The C2C ecommerce business model, which is also known as an online marketplace, connects consumers from different locations to exchange goods and services and make money by charging listing or transaction fees. Online businesses like eBay pioneered the C2C model in the early days of the internet. Ideally, C2C businesses benefit from the self-propelled growth of motivated sellers and buyers but sometimes face a challenge in technology maintenance and quality control.Value Delivery Methods for Ecommerce Innovation
Simply put – if your ecommerce business model is the car, your value delivery method is the engine. A value delivery method is how a product is designed to bring maximum value to the customers using it. So, you need to think about a few things, like – how will you compete in the market and build an ecommerce business worth sharing? What is your USP (Unique Selling Proposition)? Below, we have listed a few popular approaches taken by the market disruptors and market leaders:- Direct to Consumer (D2C) – By eliminating the middlemen and selling products/services directly to consumers, a new generation of consumer brands have built a loyal following with rapid growth.
- Wholesaling – In this method, a retailer offers its products, in bulk, at a discounted price. Ideally, it is a B2B model, but many retailers offer it to budget-conscious retailers in a B2C context.
- Dropshipping – Typically, in the dropshipping model, the dropshippers market and sell the items that are fulfilled by a third-party supplier like AliExpress. They act as a middleman by connecting buyers to manufacturers.
- Subscription services – It is a business model that allows the consumers to subscribe to the products/services of a business that they need on a recurring basis.
How to Select the Right Business Model ?
Now that we have broadly talked about the different types of ecommerce business models, let’s look at the specifics. Here are a few questions, answering which will help you choose your ecommerce business model and create a robust business plan.- Who are your buyers – businesses or consumersFor example, if your buyers are businesses, you can choose B2B, and if your buyers are consumers, you need to choose models like B2C or C2C.
- What are you selling – digital products, physical goods or servicesFor example, while you won’t need physical storage and shipping to sell digital products, you’ll need both the things to sell physical products to businesses or consumers. And, when it comes to services, you might happen to sell them offline or online.
- Which product model will you use (mainly relates to physical goods) – manufacturing your product, buying wholesale, working with dropshipping partners or any otherWhile choosing the product model, it is important to think – how will you make or obtain the product you offer? For example, wholesaling can be the lowest-risk ecommerce business model as you would obtain goods from other brands
- What’s your competitive advantage – price (cost-effectiveness), vast selection, excellent service or qualityFor example, if providing a vast selection of products is your advantage, dropshipping can be the right ecommerce business model for you as you just need to take orders from your online store and forward them to your dropshipping partner.
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