Before starting your eCommerce business, you must first go through the process of figuring out your business model identity before you can do anything like selling and advertising your eCommerce site. The very first thing an eCommerce business needs to decide is which of the 4 key eCommerce business models do they fit into:
The 4 Business Models of eCommerce
1. B2C – Business to Consumer
A concept where businesses sell directly to their consumers, the B2C model is definitely the most common and popular eCommerce business model, with unlimited amounts of unique and interesting potential approaches that can be undertaken under this particular umbrella.
This is when the consumer receives goods or services from things like retail stores and restaurants for goods and spas or barbershops for services. B2C is usually used in online e-commerce businesses, which use online platforms and marketplaces to connect their products with consumers.
A B2C purchase no doubt requires less thought and decision making than a B2B (business to business) transaction, with B2C transactions usually being less expensive, simpler, and much, much quicker. To simply put it, buying a new t-shirt doesn’t rack your brain as much as your company needing to vet and purchase a new email service provider or food caterer.
B2C businesses often spend less money in marketing to make a sale because of the shorter sales cycle, but they also have a lower average order value and less recurring orders compared to their B2B counterparts.
B2C innovators have leveraged technology like mobile apps, native advertising, and remarketing to market directly to their customers and make their lives easier in the process. For example, using an app like ‘Trust-A-Trader’ allows consumers to easily connect with local tradesmen services.
2. B2B – Business to Business
B2B is when a business sells its product or service to another business. Sometimes the buyer is the end user, but often the buyer resells to the consumer. An example of this would be hotels buying beds for their rooms, as it is a business dealing with another business.
Generally, B2B transactions have a longer sales cycle, but higher-order value and more recurring purchases, with businesses, usually picking a certain supplier of something they need and sticking with that supplier for a long time
B2B innovators are making this business model more modern, replacing traditional catalogues and order sheets with eCommerce webpages and online advertising.
Almost half of B2B buyers since 2020 have been millennials, double the amount from 2012. With the younger generations entering the age of making business transactions, B2B selling in the online space is becoming more important.
3. C2B – Consumer to Business
Probably one of the lesser common forms of eCommerce business models, the C2B business model enables the consumer to sell goods and services to companies.
This model allows customers to post the work onto websites that they want to be completed and have businesses bid for the opportunity. Affiliate marketing services would also be considered C2B. Online marketing websites such as Google Adsense, Commission Junction, and Amazon are good examples of C2B models.
Helping businesses hire freelancers, websites like Fiverr and Upwork have been growing rapidly in popularity in the 2020’s so far. Although this is still a less common form of eCommerce business model, this is no doubt a growing concept that many are getting on board with.
It is unique as it hands consumers the power to name their price or have businesses directly compete to meet their needs, a very modern business concept and style.
People have creatively used this model in a way to connect companies to social media influencers, getting them to market their products, making eCommerce more and more integrated with social media.
4. C2C – Consumer to Consumer
Commonly called an online marketplace, a C2C business model links consumers to exchange goods and services, generating earnings by charging things such as transaction or listing fees, as seen on websites like eBay and Vinted or in the Yellow Pages.
These transactions, although not exclusively, are often over second-hand goods like vintage clothes and toys, or typically more basic services such as cleaning windows and entertaining at birthday parties.
Author: Henry Whiting, XT4.io
