6 Types of e-Commerce Business Models in 2021
The technological revolution has empowered entrepreneurs to take their businesses to a global market with limited investments. According to a study by 99Firms e-commerce Statistics, 97% of businesses will conduct operations via e-commerce business models by 2040.
If you’re one of the people who want to use this time to boost your business, the first thing to consider is the most suitable e-commerce business model for you.
What are the common types of e-commerce business models?
Let’s look at the common e-commerce business models, and what their pros and cons are in 2021
- B2B: Business to business e-commerce
A B2B e-commerce business model focuses on one business providing goods and services to another business.
Examples: Marketing consultancies, web development firms, financial software companies, etc.
- Better Markets: B2B businesses are more likely to sell their products in bulk, or generate orders that have higher profits.
- Well-defined Sales: B2B e-commerce sells for a unique niche which makes it more likely to complete a sale. This makes it easier to build a loyal customer base.
- Lower Operating Costs: After the initial cost involved with setup, operating costs are lower because we automate most processes.
- Difficult Learning Curve: Business owners need high amounts of knowledge and business experience, as the industry is competitive.
- High Setup Cost: It requires large capital investments for business registration, setup, production, and resources.
- B2C: Business to consumer e-commerce
A B2C e-commerce business model is one where the individual business is an online version of a store. B2C, as the name suggests, is when a business caters to the needs of consumers by selling products and services.
Examples: Myntra, Nykaa, Netflix, etc.
- Self-Driven: Anyone can set up a B2C business, all they need is an idea and an internet connection.
- Larger Audiences: Products are easier to sell as your target audience can be anyone using the internet, with ample market research available to help you succeed.
- More Control: Easier to influence your potential customers to make a buy on impulse by setting up various attractive discounts and offers.
- Competitive: Many firms and companies offer audiences similar products, making it difficult for any single competitor to stand out.
- Frequent Upgrades: The market is evolving and you need to stay on top of your game to succeed.
- C2C: Consumer to consumer e-commerce
With the increase in e-commerce businesses, the C2C business model developed as a way for consumers to buy, sell, and trade goods and services with other individuals for a small commission paid to the host website.
Examples: eBay, Craigslist, Quikr, OLX, etc.
- Unlimited potential: Different consumers selling a wide range of products across niches.
- Sustainable: Supports the sale of used products, encouraging sustainability.
- No middle-men: Consumers can interact with each other to buy, sell, or trade products without engaging brokers or any other expensive middlemen.
- High Risk: There is no guarantee of the quality or authenticity of the product that is being purchased/sold.
- No Transparency: Consumers may end up purchasing products at a much higher price than their actual worth.
- C2B: Consumer to business e-commerce
The C2B e-commerce business model involves consumers offering products or services to businesses- it is therefore sometimes called a ‘reverse business’ model.
Examples: Influencer marketing, Upwork, and reverse auctions
- Equal Opportunity: Gives all companies the chance to find and hire a variety of talents, services, and experts globally.
- Knowledge Exchange: Allows consumers to work for industry leaders and hone their skills.
- Flexibility: Great for freelancers to gain additional income, or make a living on a project-to-project basis.
- Breach of contract: Transactions may be withheld after the service or product has been received.
- Communication requirements: High levels of communication are required to convey the intention or idea behind projects.
- B2A: Business to Administration e-commerce
B2A defines a business transaction taking place between a business and the public administration/the government.
Examples: In India, various lakes and roads are maintained through such a business arrangement. Other examples include- e-storage, employment services, fiscal measures, and so on.
- High Profits: Working for a public administration or government comes with its own set of perks and has a high-profit margin.
- Improved quality: Hiring a business that excels in a certain field will ensure the outcome of the project to be of superior quality.
- Better public facilities: Increases efficiency of the administration and delights the users.
- Unstable: If there is a change in policy or governing body, it could harm the project.
- Expensive: Usually requires a very large capital investment.
- C2A: Consumer to Administration e-commerce
C2A businesses involve a transaction between an individual and the public administration/government. It is an easy way to establish a connection between the government and the consumers.
Examples: Circulation of information, distance education, payment for health services, etc.
- Better Public Facilities: Increases efficiency of the administration and delights the users.
- Promotes Public Involvement: Increased public participation in government-funded programs and projects.
- Opportunity: Higher opportunity to make profits and receive associated benefits.
- Lack of Accessibility: Accessibility to certain projects or programs could be limited by geography, nationality, or availability of internet services.
- Lack of Awareness: There’s a huge possibility that there is a general lack of awareness about the project itself.
The e-commerce business has become increasingly important in the post-pandemic world as it provides more flexibility and safety than any physical store could. It is important to note that no matter what type of business you choose, you need to be able to deliver on your promises and provide excellent service to be successful.
Faster, reliable, and cost-effective methods of shipping will change the way your customers view your brand. It is therefore imperative to your business to choose the right logistics aggregator. The only foreseeable future in business is the e-commerce model, prepare your business for success with Shyplite.
Try Shyplite for Free!
Increase shipping efficiency and automate your logistic with pay-as-you-go model.Get Started for Free