E-Commerce Business Models

Electronic commerce (ecommerce) refers to companies and individuals that buy and sell goods and services over the Internet. Ecommerce operates in different types of market segments and can be conducted over computers, tablets, smartphones, and other smart devices. Nearly every imaginable product and service is available through ecommerce transactions, including books, music, plane tickets, and financial services such as stock investing and online banking. As such, it is considered a very disruptive technology.

Ecommerce has changed the way people shop and consume products and services. More and more people are turning to their computers and smart devices to order goods, which can easily be delivered to their homes. As such, it has disrupted the retail landscape. Amazon and Alibaba have gained considerable popularity, forcing traditional retailers to make changes to the way they do business.

But that’s not all. Not to be outdone, individual sellers have increasingly engaged in ecommerce transactions via their own personal websites. And digital marketplaces such as eBay or Etsy serve as exchanges where multitudes of buyers and sellers come together to conduct business.

E-Commerce Business Models Categorization

Developing a successful eCommerce business requires many factors to be considered and a lot of factors that must be well thought out. This is a timely and detailed process that involves a lot of research and much consideration.

All online commercial transactions between a customer and a seller in an online marketplace are a part of e-commerce. Businesses need to centralize their operations according to a workable architecture, which is called an E-Commerce Administration Model:

A clear understanding of your eCommerce business model puts you ahead of the competition. Your marketing efforts and business model can be fine-tuned to maximize revenue once you have identified your target market and the suitable business model you need.

Business-to-Business (B2B):

Transactions between two companies e.g: If a customer places an order on the Amazon app, later forwards that query to the concerned seller. The retailer ships the order to the consumer. Amazon receives a commission for every successful order delivery.

Business-to-Consumer (B2C):

Transactions between a business and a consumer where they sell all kinds of consumer goods from electronics, to Plant delivery. Any other utility item and consumers shop directly from the portal. Example: Shoppers Stop which sells items with its own branding.

Consumer to Consumer (C2C):

It is when two consumers transact via a third-party online portal. Like selling and buying residential property, selling and buying a motor vehicle, selling and buying a used vehicle, renting a room or staycation venue.

Consumer-to-Business (C2B):

It is when individual freelance designers sell their proposals and only one of them is finally selected. Also, it can be when models/photographers sell photographs, images, media, and design elements and site owners purchase them with copyrights.

Business-to-Administration (B2A) or Business-to-Government (B2G):

When government seeks help from local officials/non-government officials for third-party activities like acquiring social security rights, legal documents, registers, stamp duty, licenses or any other variant, used by the government to exchange information with business organizations.

Government-To-Business (G2B):

It is when the government delegates some tasks to trusted private business organizations to support tenders, application submission, auctions, etc.

Government-To-Citizen (G2C):

It refers to auctions of vehicles, machinery, artworks, valuables, and antiques by the government to common people. It is also when such websites offer registration of birth, death, marriage etc. They work towards reducing the usual time to fulfill citizens’ requests for various government services.

Consumer-to-Administration (C2A):

It refers to all electronic transactions between consumers and public administration e.g. education, social security, taxes, health. It eases tasks and supports essential communication and flow of information.

Conclusion

Developing a successful eCommerce business requires many factors to be considered and a lot of factors that must be well thought out. This is a timely and detailed process that involves a lot of research and much consideration. A clear understanding of your eCommerce business model puts you ahead of the competition. Your marketing efforts and business model can be fine-tuned to maximize revenue once you have identified your target market and the suitable business model you need.

We hope that you will be able to learn from all the above models listed and make the best decision for your company. This is the only way you will find a model that is tailored to your company’s needs and not a generic, cookie-cutter approach.

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