What Model Fits Your Idea Best?
Now that you know what types of eCommerce businesses, product options, platforms, and business classifications exist, you’re ready to get started. Take a look at your business plan.
What Is B2C eCommerce?
Among websites and mobile apps, new online sales channels like messengers and chatbots are emerging today. Retailers are also trying tech innovations to drive B2C sales, such as smart glasses and smart mirrors. Smart mirrors and smart glasses have been designed to merge aspects of online shopping with real store visits.
The mirrors can take a 360-degree image of an outfit, which customers can view using hand gestures. Customers could also see a side-by-side comparison, email friends for feedback, or post images on social media.
Similar smart technologies are also used in online shopping. For example, you can try a lipstick color if you turn on your laptop/phone camera (Loreal, Maybelline, and other brands); also, Walmart and other large retailers have virtual try-on clothing on their websites.
B2C storefronts to internet retailers
Over a millennium of trading, many manufacturers have sold their products to retailers who display the products on their shelves and counters. Retailers’ profits came from the margin they added to the price paid to the manufacturer.
With the invention of B2C ecommerce, some businesses began to sell products directly to consumers. Prices in online stores became lower due to the exclusion of an intermediary retailer. POS (point-of-sale) retailers first felt this competition during the dot-com boom in 1999-2001. Then many retail companies began to quickly adjust their trading strategy and ensure their presence on the internet.
More than 20 years after the dot-com revolution, B2C companies operating on the internet continue to dominate in the pace of sales. Amazon, Priceline, and eBay were part of the successful early dot-com boom, then they expanded their businesses and became giants of the online trading industry.
What is the difference between B2C and B2B?
The formulas defining the model of online businesses consisting of two participants, such as B2C, B2B, B2G, or P2P, are easy to understand. Just substitute Business for “B,” Consumer for “C,” Government for “G,” and Person for “P.”
Consider changes between B2B and B2C in the processes of client registration, verification, personalization, cataloging, and transaction volumes and payments. There are specific processes when a company buys from a company (B2B), like contracting, invoicing, order processing, shipping, handling complaints, and transaction records, as well as some others.
B2B2C marketplaces and ai-personalized stores
Any company that sells in the B2C sector knows how important the market size is. Of course, there are niche markets for luxury brands, but they don’t make the weather.
The fact is that many B2C companies are now using marketplaces to reach a larger audience of potential customers. And it makes sense: marketplaces offer a ready-made audience of buyers, as well as easy listing and marketing tools.
There are a few reasons why B2C companies are increasingly turning to marketplaces. First, as we mentioned, marketplaces offer a larger audience of potential customers. Second, marketplaces can be a great way to reach new markets and expand into new geographic areas. And third, marketplaces provide an easy way for B2C brands to list and promote their products.
The marketplace business model is called B2B2C because it consists of two business participants. The supplier (first B) collaborates with the owner of the online marketplace (second B) as an independent merchant to sell their goods to a larger audience. According to the marketplace model, Amazon, Expedia, and Travelocity are good examples of selling goods and services from businesses to consumers.
So, it’s clear that marketplaces are playing an increasingly important role in the B2C sector. And we’ll likely see even more B2C brands migrate to marketplaces in the future.
Multi Vendor Marketplace vs. Single Vendor Marketplace: What’s Best for Your Business?
Advantages of B2C ecommerce
Almost 30 years have passed since the first successful B2C projects, so millions of words and web pages have already been spoken and written about the advantages of B2C ecommerce. This is truly a world of borderless trade and the convenience of shopping from home.
The value of B2C ecommerce became especially evident during the pandemic when billions of people lost the ability to go to brick-and-mortar stores, and online shopping became the only way to provide themselves with food, medicine, and other essential goods. Importantly, online shopping habits have remained with consumers after lockdowns worldwide ended.
For example, according to Reuters, 70% of Britons say buying online and on mobile phones have become their main and preferred shopping methods, up from less than 50% before the pandemic.
The benefits of B2C are a win-win for consumers and suppliers alike. Let’s talk about them briefly.
B2C ecommerce advantages for consumers
There are several reasons for the growing popularity of B2C ecommerce for consumers.
- In most cases, it is simply more convenient for consumers to shop online than to go to brick-and-mortar stores. This is especially true when the consumer buys a familiar product, or that product does not require trying it on in a fitting room or other evaluation before purchase.
- Consumers can buy from a global market, whereas brick-and-mortar businesses are limited to their local area.
- B2C ecommerce businesses like marketplaces can offer a wider range of products and services than brick-and-mortar businesses.
- Sometimes, consumers can find a more personalized shopping experience than brick-and-mortar businesses offer.
B2C ecommerce advantages for businesses
B2C ecommerce also has many advantages for businesses.
- It is generally less expensive to set up and operate a B2C ecommerce business than a brick-and-mortar retail.
- B2C ecommerce businesses can reach a larger market of consumers than with offline trade.
- B2C ecommerce businesses have the potential to generate more sales and profits when combined with many ecommerce business models like B2C, B2B2C, and frontend technologies (websites, mobile apps).
- B2C ecommerce businesses can provide a higher level of personalized customer service than brick-and-mortar businesses.
Disadvantages of B2C ecommerce
The world is not ideal, and even such a progressive type of trading business as B2C ecommerce has its challenges and disadvantages.
- SEO dependence. One drawback of B2C ecommerce is the strong dependence of sales volume on the visibility of the store in the search engines. If it is enough to place offline retail in a location with good traffic in order to provide it with enough buyers, then the online store should spend a lot on context ads, ordering SEO optimization, and having perfect textual content like blogs to get better indexing in Google, Bing, and other search engines.
- Marketplace dominance. Another difficulty for small businesses is the need to join large marketplaces such as Amazon, Alibaba, and eBay. Yes, ecommerce sales to consumers through online marketplaces are an effective way to solve the problem of access to millions of buyers for a small business, and this is called the B2B2C model (business-to-business-to-consumer). However, marketplaces typically charge hefty commissions that kill small business sellers’ margins.
- Delivery contractor dependence. Dependence on delivery service contractors is another disadvantage of B2C commerce. Customer purchase satisfaction largely depends on prompt, convenient, and damage-free delivery. There is a big contrast here with a brick-and-mortar store, where people can come and pick up the purchased goods themselves, except for heavy and oversized things.
- App stores monopoly. Moreover, if a seller would like to create their own mobile application to sell online, they have to bow to Apple or Google to place the application in the App Store and Google Play, then pay commissions there.
B2C commerce challenges
What is an eCommerce business?
In simple terms, eCommerce or electronic commerce business refers to selling, buying or making a transaction over the internet in the digital marketplace. The products or services are showcased through a website or mobile application through digital signage systems that are integrated with a secured payment gateway facilitating product purchase and financial transactions.
Now let’s move ahead with segregating the eCommerce business model based on their revenue model.
The e-commerce revenue model is usually considered in classifying an eCommerce business as revenues denote the total amount of money that is being received by the company after trading its products or service with its customers. There is a range of options from which revenues can be generated including advertising, affiliate marketing, subscription and a lot more.
The industry never restricts the upcoming of any new way of generating revenue. Though we will stick to explaining the basic five eCommerce Revenue Models with possible variations to the approach.
Post Launch Essentials
Setting up your ecommerce store is still comparatively easier than scaling your online business after its launch. There are a few factors you need to understand in order to scale up. These factors include:
Importance of SEO
It is significant for entrepreneurs to understand ecommerce SEO strategies. A solid ecommerce SEO strategy will allow your online business to rank higher on SERPs and garner organic traffic with ease.
Moreover, you need to understand that people today are more tech-savvy than ever, and they prefer shopping from their mobile phones. It is important to ensure your ecommerce SEO strategies are mobile-friendly as well.
SEO for ecommerce is something where many entrepreneurs fail because they are unable to fully exploit the power of organic marketing.
To ensure you don’t repeat the same mistakes, we have developed a detailed guide on ecommerce SEO so that you can scale your online business effectively.
Once you’re done going through the ecommerce SEO guide, also take a look at this ecommerce SEO checklist in order to ensure maximum effectiveness of your ecommerce SEO strategy.
Marketing Your Products
Amazing things will happen when you actually listen to your customers instead of enforcing your version of the perfect product. Marketing your products without customer data is like driving a car with your eyes shut. Your marketing strategies should be simple, memorable, inviting to look at and fun to read. Do remember, a good marketing strategy will make your brand look smart but a great marketing strategy like Luxury PR makes the customer feel smart. When that happens, you get sales!
Without further ado, let’s dig deeper into how to come up with an effective marketing strategy for your ecommerce business.
Iii. Content Marketing
I’m sure you must’ve heard of the fact that Content is King! Unless you live under a rock, you must be aware of what ecommerce content marketing is all about.
According to Content Marketing Institute, “Content marketing is a strategic marketing approach focused on creating and distributing valuable, relevant, and consistent content to attract and retain a clearly defined audience — and, ultimately, to drive profitable customer action.”
There are various content marketing strategies that will allow you to boost organic traffic, improve conversions, and most importantly, increase sales. Feel free to produce content in any format as long as you are helping your customers. Your content gives you the chance to make your customers understand how your product can resolve their pain points and make their lives easier.
With that being said, take a look at the best ecommerce content marketing practices in order to give your customers what they need.
According to a research study, email marketing offers an ROI that is four times greater than any other medium. This makes it a highly efficient practice to derive more sales and profits. To keep things simple, we have curated a list of ecommerce email marketing tips that will allow you to ensure that your marketing game is nothing but strong.
They say in this day and age, it’s easier than ever to start an ecommerce business. With the help of the internet, you can reach millions around the globe right from day one.
But truth be told, that rarely ever happens. The internet is a competitive place. It’s becoming difficult for entrepreneurs to stand out, especially the newbies who are just starting afresh.
To generate and maintain a steady traffic on your ecommerce website is not a piece of cake. Therefore, we have curated a list of ways to increase your website’s traffic effectively.
Optimizing for Higher Conversions
You must optimize your ecommerce store for higher conversions. You need to putt the most important things first so that you can hold your visitors’ attention for longer which ultimately increases your chances of conversion.
It’s a tough world out there but you are not alone. Only 22% of businesses are satisfied with their conversion rate. Now, what can you do to boost your conversion rate and take your sales off the roof?
There are a few tried and tested optimization techniques that allow you to enjoy higher conversions. Take a look at these ecommerce conversion rate optimization techniques and allow your business to stand out from the crowd by growing immensely.
Vii. Using Analytics to Gain Deeper Insights
The more data you have, the more competitive advantage you can enjoy. The expectations of customers are high and competition is never fading. Entrepreneurs are under constant pressure to increase business efficiency and gain desired results.
By using analytical tools, you can not only gain deeper insights about business but also your customers. This data provides entrepreneurs with a competitive advantage by allowing them to see where they stand, what improvements are needed, whether the trends in sales have increased or decreased, and what are potential gaps in the market that can be capitalized.
On the other hand, data has become a lot more accessible. Gone are the days when only data scientists or analysts were able to comprehend it. Now, it can be used by anyone to increase productivity and improve decision-making.
Viii. Scaling Your Store with KPIs
Keeping a track of performance is an important challenge for all ecommerce entrepreneurs. It’s not simply a matter of measuring few key parameters, instead, you need to make sure that your ecommerce business is moving forward in the right direction. Tracking performance on different social platforms is important to know what works and what doesn’t.
Advantages of E-commerce Business Model
Unlike a typical shop that you need to open and shut time and again, an e-commerce store is always open! Because you don’t have to be physically present to guard or attend to the store. All you need is for your website to be up and running. Consumers have developed the habit of working all day and unwinding later on an e-commerce website and shop their hearts out. Being able to shop from the comfort of their homes at odd hours enables them to make a better buying decision and sometimes even a bulkier one. After all, waking up to 300 new orders received overnight while you were sleeping sounds like a great way for a business owner to start the day!
Low operating cost
Maintaining a website in most cases is less costly than maintaining a store. From electricity to rent to staff, your cost of operation can range from minimal to zero. Even the hassle of setting up a store is eliminated. Because you may not get the best-selling window store in the street, but there’s always ample space on the world wide web for your store. So finding an ‘appropriate spot’ will never be a problem.
How often have you noticed customers walk into your store, stare at a few products and leave without any explanation? Many times to say that it’s very annoying. Ever wondered what went wrong? Well, that is something you won’t have to wonder about when you’re running an e-commerce business. Once a customer comes on your website, you can easily see exactly what they typed in the search bar, how much time they spent on your product’s page, what they added to their wishlist and what it made to their cart. The best part is that you can use the customer’s wishlist to remarket the same products to them until you make a sale. Based on customers’ buying decisions and testimonials, you can upscale the listing of particular products and downsize the listing of underperforming ones.
Yes, we said that. The very first cost that eats into your margin is always the cost of the shop. With a physical shop completely out of the picture, your margin is automatically expanded. Additionally, an e-commerce website is fairly easy to maintain unless it’s a mammoth marketplace like Amazon. As a business owner, multiple platforms will help you make and maintain your e-commerce website for a far less fee. The best part is that you can encourage online pre-payment, enabling you to get your hands on the cash even before the order has been shipped.
The advantages are lovely. However, one must not turn their backs on the disadvantages.
Examples of successful B2C companies
Walmart is considered a B2C company because most of its products are sold and marketed to consumers. To achieve high sales volumes in B2C, Walmart capitalizes on a customer’s emotional attention when shopping offline. At the same time, like the other largest retailers, Walmart uses its IT platform to address both B2B and B2C markets.
Many people think Alibaba is the Chinese version of Amazon or eBay. In fact, it is not equivalent to Amazon or eBay, although there are some similarities. Consider a huge holding company with many business areas. Imagine someone merging Amazon, AWS, eBay, Shopify, Netflix, PayPal, and Citigroup into a single business empire, and then you have something similar to Alibaba.
eBay is one of the oldest and largest online marketplaces for buying and selling new and used goods. The online trading platform operates both in the B2C market and in the C2C market (sales from one consumer to another). By providing a platform for online trading, eBay receives a fee from the seller for listing items and a commission for selling the item.
Types Of eCommerce Business Revenue Models
Now that you have your eCommerce platform all set, the next most important thing to think about is how you want to handle inventory management, shipping, deliveries, and sourcing products.
Some business owners like the idea of making their own products, packing the boxes and using drop shipping for the final process. While some depend upon shipping carriers and let them manage everything. So in order to understand each and every part, we should be able to figure out the eCommerce.
So now let’s explore each and every one the models.
B2B and B2C are fairly intuitive concepts for most of us, but the idea of C2C is different. Created by the rise of the eCommerce sector and growing consumer confidence in online sales, these sites allow customers to trade, buy, and sell items in exchange for a small commission paid to the site. Opening a C2C site takes careful planning.
Despite the obvious success of platforms like eBay and Craigslist, numerous other auction and classified sites (the main arenas for C2C) have opened and quickly closed due to unsustainable models.
Business-to-Consumer (B2C) Ecommerce
With the help of the B2C model, the customers can view and purchase the desired products from the retailer’s online store. Once the online retailer receives an order, he processes the order and then sends the goods directly to the customer. For instance, Amazon is an excellent example of B2C ecommerce model as they sell individual goods to individual customers. There are many B2C companies that have taken the market by storm, such as Expedia, Inc., IKEA, and Netflix.
Consumer-to-Consumer (C2C) Ecommerce
Another ecommerce business model is the C2C model. It allows the customer to sell the goods or services to other customers with the help of the internet. It makes perfect sense in today’s digital landscape. In simpler terms, this is mobile ecommerce!
The C2C ecommerce model allows an individual to sell their assets online for e.g. a car, a house or a bike to other individuals. The seller can publish an ad containing all the product details. Interested customers can view the details of the product and contact the seller to pursue the transaction. Ebay or OLX is a great example of the C2C ecommerce model that is running successfully.
Consumer-to-Business (C2B) Ecommerce
The C2B ecommerce model allows individual customers to sell goods or services to businesses that are willing to purchase from them. For instance, if you are a software architect, then you can showcase your skills set to potential businesses on platforms like Fiverr or Upwork. If the business is enticed by your software skills then they will purchase the software from you, and might as well, hire you for future services.
Product Revenue Models
Once you’ve identified who you are selling to and where, you need to think about what you want to sell. Some businesses sell a single white-label product, while others offer a full selection of niche-specific products. Yet another model depends on affiliate programs across a wide swath of categories.
Before opening your store, you need to decide the type and number of products. Depending on your niche, you may also need to evaluate production practices and regulations regarding what you can and can’t say (organic, for instance).
White labeling is similar. You choose a product that is already successfully sold by another company, but offers white label options, design your package and label, and sell the product. This is common in the beauty and wellness industries, but more difficult to encounter in other niches.
One problem with white labeling is demand. You’re stuck with whatever you order, and most of these companies set a minimum production quantity. If you can’t sell it, you’ll have to live with it. Consider this option when you’re willing to work full time on your business and know your product is in demand.
Future of Ecommerce
The Harvard Business Review says, “No industry is failing faster than the traditional retail.” The ecommerce industry will continue to grow as brick-and-mortar retail stores are establishing their online presence to increase revenue and grab larger profits.
The rising trend of ecommerce is surely going to have an impact on consumer demand and will impact global sales. It’s only going to go upwards from here!
People are frustrated of finding a parking spot and dealing with queues. The convenience of purchasing products online with just a few clicks from your comfort zone has become a trend that is not going to fade away anytime soon. The ecommerce industry represented only 13% of the retail sales in 2017 which means that there is plenty of room for it to climb up the ladder.
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Reza Merchant is a Foodie by passion and a Digital Marketer by profession. He enjoys creating digital content for various platforms and aspires to be the change he wants to see in this world.
Examples of eCommerce Business Models
The ecommerce market is enormous, and many examples of ecommerce business models exist. For example, popular e-stores like Amazon, Aliexpress, and Walmart can be either wholesalers or dropshippers. We can also name streaming platforms like Netflix, Spotify, and YouTube.
Furthermore, some e-businesses serve as marketplaces for connecting freelancers and companies such as Upwork and Fiverr. Lastly, there are tech giants like Microsoft, Apple, and Samsung. Here, we provide a list of successful businesses based on their revenue model:
Why Can Virto Commerce Cover Them All
Mostly tailored for B2B ecommerce, the Virto Commerce platform can actually cover it all: the open-source API-based system allows integration of any third-party solution and easy scaling to reach any goal.
The B2C sector is what most people think of when they imagine an eCommerce business. This is the deepest eCommerce market, and many of the names you’ll see here are known quantities offline, too. B2C sales are the traditional retail model, where a business sells to individuals, but business is conducted online as opposed to in a physical store.
Examples of B2C businesses are everywhere. Exclusively online retailers include Newegg.com, Overstock.com, Wish, and ModCloth, but other major B2C brick-and-mortar businesses like Staples, Target, REI, and Gap.
Selecting Your eCommerce Business Model
Now that you know the different types of ecommerce models, strategies, revenue models, websites, and platforms. It’s pertinent you know some other key areas of the e-business sector before getting started. Despite the immense potential and incredible worth of the ecommerce market, it isn’t so easy to thrive in the sector.
Businesses face lots of competition in each niche, and according to forensics, most startups fail in their first ten years. The failure results from a lack of knowledge about the business models and inadequate capital to maintain the business. Here are some questions you need to answer to reach your goal successfully.
Who is your consumer?
The lifeblood of any online business is a set of responsive customers.
What are you capable of?
Another vital factor to consider is your budget and the type of products or services you can offer.
You can sell high-end products or stick to low-budget ones depending on your financial capability. What kind of goods and services are you capable of providing? Are they pet products? Apparel for private individuals or Government agencies?
Also, you need to determine how well you can market your products to cut costs and maximize profits.
What is best for your product?
Determining the best way to improve your products to serve customers better is also crucial when starting your business.
You can decide what is best for your product by asking who would your product best serve. Where exactly would your product demand be high? Who needs your product the most?
Studying e-markets and analyzing the demand of individuals and organizations is important in choosing the best model.
What is your positioning?
Lastly, you need to know your standing in the ecommerce market to gain ground quickly.
Do you know what your place in the ecommerce market is? You have to know your competitors and devise means to edge over them. Knowing your market position allows you to make proper preparations to attain a competitive advantage.
What is an eCommerce Business Model?
ECommerce business models are conceptual frameworks that your eCommerce company is built upon in order to attract customers and increase income.
There are a variety of eCommerce business models which allow different types of companies to properly establish themselves within the industry and engage their customers. In this case, it is imperative to implement eCommerce customer service to assist customers and ensure theirsatisfaction.
To be successful in ecommerce, you need to adopt a suitable e-business model, apply a reliable revenue model, develop a responsive website, and use a dedicated ecommerce platform.
What type of license is required for ecommerce?
Most businesses don’t need to have many licenses for ecommerce. You can acquire one of these licenses, including a business operation license, employer identification number, seller’s permit, and sales tax license.
What are the different categories of e-business?
E-business is categorized into selling physical goods, digital goods, and services.
What are the principal ecommerce revenue models?
eCommerce revenue models that are profitable include selling products directly to customers, selling white-label products, wholesaling, dropshipping, freemium, and selling by subscriptions.
Are there specific ecommerce platforms for each ecommerce type?
Yes. The types of ecommerce platforms for running ecommerce websites are Open Source, SaaS, PaaS, Licensed, and Proprietary.
Subscription Revenue Model
The service offerings of these companies generally include music, videos, TV channels, magazines, special services, etc. which is offered to the subscribers for a price to watch/listen or get the latest edition. Now, let me guide you through some examples of basic subscription business models.
- Premium membership: Many social media and business platforms like Xing, Linkedin, stayfriends, etc. offers subscriptions to avail of additional services that get the subscribers to access to daily updates, newsletters, short notices, etc. These information and quick updates are delivered to them directly to their account.
- Internet service providers: We all are familiar with the monthly and annual subscription of internet service providers or rather a broadband connection enabling the subscribers to enjoy unlimited internet service.
Publishers and content services: You are well acquainted with Netflix, New York Times, Spiegel Online, etc. These eCommerce business models ask for subscription fees based on monthly or annually to get access to their content.
We all know that every eCommerce business has one thing in common and that is their payment gateway. These are companies like Paypal, VeriSign whose subscription fee depends upon the SSL certification and the period of service.
Various eCommerce platforms
Before we jump into next section and discuss the various business revenue models, it’s important to familiarize yourself with the various eCommerce platforms available. So let’s begin with the platform that is used by more than 42% of the current eCommerce websites, WooCommerce.
If you haven’t heard of it then, it’s a free WordPress plugin that comes along with a secure payment gateway, shopping cart, checkout process, order management, and other necessary features to support almost any online store.
There are others as well, and I recommend you to compare the best eCommerce platforms here before you choose one.
Transaction Fee Revenue Model
The operator provides a platform for the eCommerce marketplace through which the transaction can be completed. Now, the necessary steps include registering of the vendor and the operator so that the identities are kept intact that may later be required for a business. The model has proximity to the affiliate market but is somewhat different.
To explain it in a better way, let’s take the example of PayPal. The company charges a transaction fee to the sellers of the product once the transaction is completed. Similarly, eTrade gains a transaction fee whenever a stock transaction is made with a customer. The amount to be paid to the operator is either decided upon based on a percentage or a fixed amount with the vendor. Amazon is another example of a transaction fee revenue business model.
What Are eCommerce Business Models Classifications According to What They Sell
The ecommerce market is voluminous, and we’ve discussed the business models in ecommerce, revenue models, ecommerce websites, and various ecommerce platforms.
Additionally, we can classify ecommerce business models further based on the kinds of products they sell.
Below are the e-business model types according to the products sold.
Stores that sell physical goods
The key to success in your ecommerce business is selecting the best and hottest products to sell.
The most common form of ecommerce business is selling physical products. You can have a physical store and still set up a store online. Depending on the amount of stock you have, customers can place orders on your online store, and you’ll deliver the products to them physically.
This can also be applied to rendering services. Customers can book a session online, and you’ll fix a date to render your services to them.
At times, running an ecommerce business doesn’t require holding inventory as you can simply promote services that help businesses sell their products. This form of e-business is referred to as being a service-based retailer.
A very good example is having a group of house cleaners or hairstylists who can render in-house services to customers. You can set up a website that promotes these services, and interested customers will reach out.
Stores that sell digital products
There’s a growing number of businesses selling digital products. Products can range from songs, videos, pictures, ebooks, courses, and many more.
All these products are digitized and only exist on the web. Giant ecommerce platforms such as Spotify, Udemy, Amazon Prime, and GameMaker, sell digital products.
Benefits of Business Models of eCommerce
eCommerce enables online store owners to expand their business and also maximize profits. You can increase your business’s profitability easily by using an ecommerce business model that aligns with your brand.
Here, we take a look at some of the benefits of business models of ecommerce.
Low operating cost and higher profits
Most business owners spend a handsome amount of money setting up their stores. You have to pay your staff, foot electricity bills, pay rent, buy stock, and manage product delivery.
With ecommerce, you can eliminate operating costs. Set up an ecommerce website, promote your products, and make profits at minimal costs.
Faster selling process
eCommerce helps customers spend less time shopping. Buyers can browse through the digital website catalog to place orders. You receive orders and dispatch the goods fast and easily.
Affordable advertising and marketing
Marketing your products has never been easier. You don’t need the traditional hiring of sales marketers to promote your brand. You can run paid ads to generate traffic and connect with buyers faster.
eCommerce platforms help boost your brands’ reach. Your website can be accessed by millions of people worldwide. A larger reach contributes to higher sales.
Given the fact that you can reach a whole lot of people around the world using ecommerce, it gives room for you to sell your products globally.
Amazon, for example, ships products to over 100 countries worldwide.
Classifications of eCommerce Business
As you might already know, eCommerce comprises of all online marketplaces that connect customers and store owners. And the internet is primarily used in the process to control and keep everything going.
So obviously the first thing to think about is the type of business marketplace you’re going for. No matter if you’re a newbie or have been running a business for a while, you should know the kind of eCommerce business model.
C2B is another model most people don’t immediately think of, but that is growing in prevalence. This type of online commerce business is when the consumer sells goods or services to businesses, and is roughly equivalent to a sole proprietorship serving a larger business.
Reverse auctions, service provision sites like UpWork, and several common blog monetization strategies like affiliate marketing or Google AdSense also fall under this heading.
Wholesaling and Warehousing
Wholesaling and warehousing eCommerce businesses require a lot of investment at the start. Which is why you need to manage inventory and stock, keep track of customer orders and shipping information, and invest in the warehouse space itself.
DollarDays is an online wholesaler with a massive product catalog that includes more than 260,000 products. They employ a key strategy for retailers in this space — by offering case prices AND piece prices, they can sell to the general public and to retailers. This gives them a higher profit margin than a strictly wholesale model.
Types of B2C Models
As in any emerging market, B2C ecommerce participants have enormous potential in niche and local fragmentation. The winning formulas vary for international multichannel distributors, theme-based online stores, specific deal aggregators, or national closed retailing. Regardless, the key challenges are still quite similar for all B2C online stores.
Direct selling in the B2C segment is a very effective method for selling consumer goods and services. Generally, this means a sale from a seller to a buyer without intermediaries. In practice, direct selling is a very effective way to appeal to special groups of buyers whose contacts and buying preferences are known. These could be people with a certain hobby, sports fans, owners of premium cars or boats, etc.
For example, anglers and hunters often leave their contacts at specialized stores or ammunition manufacturers’ websites. This way, they can be sent news of the release of new fishing rods or accessories for hunting and then purchase such items directly with home delivery.
Most importantly, online intermediaries allow consumers to quickly access an enormous amount of information and locate online stores with local delivery or an offline POS around the shopper’s location. The shopper may not even have to go anywhere, as many POS have local delivery today.
The advertising-based B2C model is about attracting visitors through interesting or useful content. The B2C model works especially well on news sites and large forums. The owners of such resources receive income by displaying advertisements on their sites.
Also, sites with high traffic volume that target women’s and men’s lifestyles, such as Cosmopolitan and Men’s Health, can generate income from advertising and content (photos, videos, and articles) using product placement and subscription-based access.
Once they have recruited enough members, they use the group to promote their products and services and make money through the platform. In addition, such groups willingly advertise various brands that offer goods on the subject of the group, which is often the main income source for the community’s owner.
Entertainment sites like Hulu or Disney charge fees so that consumers can access their content. Of course, some of the content will be free to demonstrate the site’s value, but the highest quality materials are offered by subscription. The biggest niche in this B2C model is adult content sites.
This fee-based B2C ecommerce is often called a freemium model, where basic content or services are free, but premium features come at a cost. The freemium B2C model is common among social media sites, mobile games, online cinemas, and productivity apps.
Affiliate Revenue Model
Amazon and affiliate are well-known examples that let you affiliate your product links and drive traffic. For each lead driven to your website, you need to pay a certain percentage to Amazon or affilinet as their commission. Interestingly, this brings a win-win situation for both the merchant, who sells his product and the affiliate who advertised or marketed their product. Such an eCommerce business model utilizes different variations such as pay-per-click, banner exchange and also, revenue sharing programs that aim at driving the audience from one platform to another.
There are a lot of other business models that are being used today to gain profit from the online marketplace. However, it’s natural that eCommerce business and digital marketing go hand in hand while delivering the business objective. Today there is an estimated rise of 17% in the eCommerce business since last year and has the potential to grow sky high in the coming years.
What is an e-commerce business?
Imagine coming home to a ton of parcels that you’ve ordered from giant stores like Amazon and Flipkart. Happiness level? 100! After all, who doesn’t love unboxing?
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Now just imagine that instead of spending money on all those parcels, you’ve made money on them. And that is the magic of e-commerce or e-business models.
It’s a store. Just like any other store. But instead of the four walls and a shopkeeper, you have a website where you showcase all your products. Instead of displaying your products on shelves, you list them on your website. To put it in simpler terms, you’re creating an online marketplace. And the biggest advantage is that people can shop from your eCommerce store anytime and anywhere!
As a matter of fact, even payments can be made securely. And with the likes of Amazon establishing trust in the minds of people, getting customers to start shopping on your eCommerce website is easier than ever. All you need are unique products, a website to sell and a good payment gateway to get started.
As an eCommerce businessman, you can sell just about anything. Clothes, shoes, food, plants, stationery, novelty pieces, spectacles, and the list goes on. Your customers will place an order, you will accept the order, package it and ship it to the customer. You can provide them the option of paying online at the time of purchasing/checkout or even collecting cash on delivery.
The best part is that e-commerce is not just related to physical products. You can also sell services. Urban Company is a notable example of a successful eCommerce platform that sells professional services. You just have to select a service, enter your address, make the payment and have the professional visit your home.
Some popular e-commerce websites for you to visit include Nykaa, Myntra, AJIO, etc.
While e-commerce is one of the most promising business opportunities in the Indian business market, you have to decide which of the four models you would like to opt for.
B2C – Business to Consumer Model
This model involves a business selling their goods/services directly to the consumers, without any middleman.
Amazon is a classic example of the business-to-consumer model. It’s a marketplace where various businesses list their products along with their prices. Customers can browse through a wide catalogue, read about the products, and make a uniform decision of buying.
In the same way, you too can make your marketplace and start selling your products. However, the benefit of having your own e-business is that it will only list your products. No competitors to steal your customers. Whereas on giant marketplaces like Amazon, there are chances of your product not getting the limelight because of excessive competition.
But keep in mind, that marketing costs can vary depending on where you choose to list your products.
A B2C model is generally preferable for customers because the price is relatively low. It’s also perfect for homegrown brands/home businesses to expand their boundaries and reach more customers across the city, country, and even the world.
So whether you’re a growing brand or an established one, the results of having an e-commerce website/listing on an e-commerce website are rewarding!
B2B – Business to Business Model
This business model involves a business selling their products/services directly to another business without any middleman. Essentially it’s a place where a business from your business and resells the products to their customers.
IndiaMart serves as the perfect example of one such marketplace. It’s not a place where you will go to buy 10 disposable plates for your kid’s birthday party at home. It’s a place where a caterer will go to buy 1000 disposable plates for organizing multiple parties for their clients.
However, just like Amazon, IndiaMart is a marketplace where multiple businesses list themselves to come in contact with other businesses. If you wish, based on your business model, you can have your e-commerce B2B website. For businesses like marketing, media, plumbing, repairing, manufacturing of raw material, etc you can have a B2B website where other businesses can check out your products/services/packages and avail you.
One must remember that a B2B website doesn’t show super-fast results like a B2C website. Mainly because of the high ticket price. When you sell to a consumer, it’s limited money for a limited product. When you sell to a business, it’s usually in wholesale or involves some expensive manufacturing/reselling products, which is why it takes a little longer to convert.
C2C – Consumer to Consumer Model
Ever heard of selling something that you own directly to a friend or a family member? Well, we’ve probably seen it. From second-hand phones to cars to even being a micro-seller, consumers often turn into small-time or one-time businessmen and get a sale. One of the biggest examples of this business model is the popular selling platform OLX. Its entire business model revolves around consumers listing pre-owned products for resale.
Consumers often purchase gadgets and get over them just as quickly as a new one comes along. Being in proper functioning mode, they are eager to get a good resale amount. OLX serves as the perfect platform to do so. For the owner of a reasonably good laptop, it provides a marketplace to display his product. And for those looking to buy a low-cost/pre-owned laptop, it serves as a place to meet the right resellers. A win-win situation for one and all!
Not just gadgets, platforms like OLX enable people to practically sell anything! Books, cars, utensils, clothes, accessories, etc.
C2B – Consumer to Business Model
We’ve always heard of a company selling things to us. But in this business model, the tables turn. We, the people sell our services to the company. To put things in a simpler manner, let us give you an example.
A man with great designing skills cannot find employment in his neighbourhood due to a lack of opportunities. But that doesn’t mean that his talent will be wasted. By registering himself on various online portals, he can not only sell his services to one but multiple businesses across the country and even the world! Popular websites like Fiverr and Upwork host lacs of people who wish to make a living by selling their services on the site. From voice-over artists to writers to filmmakers to just about anyone, the consumer-to-business model gives the common man a chance to earn on his terms.
Portals like Fiverr and Upwork are so professional and secure that they not only have their own payment gateway but they also protect the financial interests of both parties in order to ensure trust and fairness in business. You’ve heard of freelancers. And the C2B model is the best thing to happen to them. One of the biggest advantages includes massive exposure so that one doesn’t have to wait around for their next project. More so, it also connects you to other freelancers and builds your network.
From the point of view of a business owner, it’s great too! Because for one-off projects or niche requirements you will not be required to find and hire full-time staff. Connect with a freelancer on these gig economy portals and get your project completed without much hassle!
Every business has its upside and downside. So before you begin one, let’s learn all about it.