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E-Commerce Business Models: Here is the Guide to 4 Types

E-Commerce Business Models: Here is the Guide to 4 Types

Consider how you used to shop 10 years ago. What store did you go to get your clothes from? What method did you use to get your groceries? When it was time to get a new mattress, what did you do? E-Commerce Business Models and Innovative E-Commerce enterprises have redefined what is possible and changed the way we shop today.

It is now easier than ever for creative entrepreneurs to turn their ideas into reality. Every year, new firms dethrone the monoliths of “the way we’ve always done it.” While many of the tools are new and evolving rapidly, the rules have remained constant. You must understand your business model and identify how you will innovate if you wish to innovate and defy expectations.

In this post, we’ll discuss the most important E-Commerce business models and the principles of E-Commerce innovation.

There are four types of Traditional E-Commerce business Models

It is almost certain that you will fall into one of these four categories of E-Commerce Models if you are launching an E-Commerce business.

Each has its own set of advantages and disadvantages, and many businesses operate in multiple categories simultaneously. You can think of your possibilities and threats in a more imaginative way if you know into which bucket your big idea belongs.

E-Commerce Business Models

1. Business-to-Consumer / B2C

The first among E-Commerce Business Models are B2C. Businesses that sell to consumers are known as B2C. Because the B2C model is the most frequent business model, it encompasses a wide range of options. Any purchase you make as a consumer at an online business – think clothing, household necessities, and entertainment — is a B2C transaction.

A B2C purchase has a lot shorter decision-making process than a B2B buy, especially for lower-value items.

Consider this: deciding on a new pair of tennis shoes is a lot easier than vetting and purchasing a new email service provider or food caterer for your organization.

Because of the shorter sales cycle, B2C companies spend less money on marketing to generate a sale, but they also have a lower average order value and fewer recurring purchases than B2B companies.

B2C doesn’t just refer to items; it also refers to services.

B2C innovators have taken advantage of technologies such as mobile apps, native advertising, and retargeting to promote directly to their customers while also making their lives easier.

2. Business-to-Business / B2B

A firm that sells its product or service to another business is the B2B E-Commerce Business model. The buyer is sometimes the ultimate user, although most of the time the buyer resells to the consumer.

B2B transactions have a longer sales cycle, but greater order values and more repeat orders.

Recent B2B innovators have carved out a niche for themselves by eschewing catalogs and order sheets in favor of E-Commerce storefronts and better niche market targeting.

Millennials will account for over half of B2B buyers in 2020, nearly double the number in 2012. B2B selling in the online realm is becoming increasingly significant as younger generations enter the age of completing business transactions.

3. Consumer-to-Business / C2B

Individuals can sell goods and services to businesses through C2B firms. This is the third among the E-Commerce Business Models.

In this E-Commerce approach, a website may allow clients to post work they need done and have businesses compete for the job. Affiliate marketing services are also classified as B2B.

The competitive advantage of the C2B E-Commerce business lies in the price of goods and services.

This strategy allows customers the opportunity to choose their own price or have businesses compete directly for their business.

Recently, this approach has been creatively used to connect businesses with social media influencers to sell their products.

4. Consumer-to-Consumer / C2C

A consumer-to-consumer (C2C) business in the E-Commerce Business model, is often known as an online marketplace, connects customers to exchange goods and services and makes money by charging transaction or listing fees.

In the early days of the internet, companies like Craigslist and eBay pioneered this concept.

C2C firms gain from the self-propelled expansion of motivated buyers and sellers, but quality control and technology maintenance are significant challenges.

E-Commerce Innovation: Five Value Delivery Methods

Your value delivery mechanism is the engine if your business concept is the car.

This is where you find your edge, and it’s a lot of fun. How will you compete and build a shareable E-Commerce business?

Here are some of the most common strategies used by industry leaders and market disruptors.

1. Direct-to-Consumer / D2C

A new breed of consumer companies has created devoted followings with quick development by bypassing the middlemen.

A new breed of consumer companies has created devoted followings with quick development by bypassing the middlemen.

Vertical disruption has been set by online retailers like Warby Parker and Casper, but businesses like Glossier are demonstrating how D2C can continue to be a source of innovation and growth.

2. White Label and Private Label

Applying your name and brand on a generic product acquired from a distributor is known as “white labeling.”

A merchant engages a manufacturer to develop a one-of-a-kind product that they will sell exclusively. With private labeling and white labeling, you may save money on design and production while gaining a competitive advantage in technology and marketing.

3. Wholesaling

A retailer uses a wholesaling strategy to sell its product in volume at a discount.

Although wholesale is usually a B2B activity, several businesses have begun to provide it to budget-conscious customers in a B2C setting.

4. Drop-Shipping

Drop-Shipping is one of the most popular E-Commerce methods.

Drop shippers usually market and sell things that are fulfilled by a third-party vendor. Drop shippers connect buyers with manufacturers, acting as a middleman.

5. Subscription Service

Publishing houses in England used a subscription strategy to supply books to their devoted clients as early as the 1600s. Businesses are moving beyond magazines and fruit of the month clubs thanks to E-Commerce. Subscription services are now available in almost every industry to provide clients with convenience and savings.

We’ve gone over the most prevalent E-Commerce Business Models and a few E-Commerce innovation strategies. We’ve gone over the questions you’ll need to answer to establish a niche in which your new business can thrive. While planning is essential, creativity does not occur in a vacuum. It’s time to put your answer out there and start fine-tuning your business depending on what you learn.

You can do it.

Also check out our Blog about improving E-Commerce Operations:

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