The craze for eCommerce has never been hidden or ignored but has only grown within the consumers as well as the business owners. Being a giant marketplace in the online world, it’s been predicted that more than 95% of sales will be done online by 2024.
The number doesn’t surprise us anymore, but obviously, it is huge. People don’t only adore eCommerce because of its to purchase from the comfort of their homes, but also as it opens a door to many small and large businesses with several eCommerce business models.
There are currently more than 24 million websites across the globe and the number is not ready to stop.
With all-time access to the internet and the treasure full of ideas and knowledge available on it, it has become easier for people to build a website and sell whatever they can. But many eCommerce startups fail due to incomplete and deep knowledge that is required to beat the eCommerce competition.
If you are an eCommerce business owner, do you know what type of eCommerce business model do you follow? Or if you are someone who wants to start an eCommerce business, do you know what kind of eCommerce business model you want to follow? Wondering what’s all about these eCommerce business models now? Let’s stop this trail of questions and find out.
What are the eCommerce Business Models?
eCommerce is the platform that allows buyers and sellers to interact online and finalize the deals in regards to the products and services in exchange for money.
eCommerce business models give an idea and create a category under which the businesses fall and work. These commonly are of 4 types i.e. B2B, B2C, C2B, C2C. There are two more least talked about that is G2B and C2G.
Let’s talk about these in detail now.
1. Business to Business (B2B)
B2B models are dealt with between the companies and usually require large capital to set up. It is because a business is started with a vision of running for the long term, which means that it will be needing another business to deal with it as long as it runs with consistent or even larger supplies with time.
The B2B usually involves a supplier and a manufacturer where one provides raw materials and the other utilizes them for further business with the consumer. Here, the supplier runs with a B2B model and the manufacturer falls under the category of B2C eCommerce business models.
The B2B owners sell to a registered firm or a company but don’t deal with individual customers.
An example of B2B eCommerce business models is Mailchimp and Hootsuite.
2. Business to Consumers (B2C)
B2C encompasses the wides share in the eCommerce business models. It is the most common and largest model that almost every person is familiar with. This is the business to consumers eCommerce business model.
In 2019, B2C accounted for US$3.5 trillion and is expected to grow at a rate of 7.9% (CAGR) between 2020 to 2027.
B2C eCommerce business models are so at the top because there are too many consumers around the world. You might get excited about its popularity and think that it would be a great idea to adapt it. But like every other business, this model also has a lot of competition.
It requires a lot of dedication, putting customers at priority, providing world-class service, displaying thousands of choices, and most important – delivering promises.
If you miss fulfilling any of the aspects, then you might need to be ready to take the fall. There is no way we are discouraging your spirit, but only saying the true words for you to be prepared.
B2C has a lot of scope, profit, as well as fame if one succeeds to cover all the aspects mentioned here.
The greatest examples of businesses that follow B2C eCommerce business models are Amazon and Flipkart.
3. Consumers to Business (C2B)
Most people may not be aware that there is a model in which businesses buy from customers. You may consider this a small level sole proprietorship where the consumer creates something and lets the business sell it to its customers further.
This takes a lot less of the investment as compared to the other eCommerce business models and involves lower risk. If you are new to eCommerce and experience how to be in it, then C2B can be a great choice, to begin with.
The affiliate marketing strategy can be the one that comes under the C2B eCommerce business models.
4. Consumers to Consumers (C2C)
Yes, there exist the eCommerce business models where the customers sell to the customers. C2C may not be the most used medium but is gaining popularity.
Here, the customers sell the articles they own to the customers who are interested in them. C2C also involves businesses that sell their products to customers through other customers on a commission basis.
Let’s say a jewelry business contacts you and asks you to spread the word about its products to the people you know and work as a seller. If a customer agrees to buy from you then the business is going to send you the product you just sold to deliver to the person who purchased it. In return, you will be awarded a commission.
You become the middlemen here who spread the word about the products from a business.
The best examples of C2C are Etsy and eBay.
To learn How to sell on Etsy, we suggest you read the linked article.
With this, we now end the discussion for the 4 most common eCommerce business models. Let’s talk about the other two.
Business to Government (B2G)
It is one of the most expensive and important forms of eCommerce business models. Here, the online services are provided exclusively to the government for governmental purposes only.
The businesses that thrive in providing the service to the government are GSA Advantage and FHA Connection.
Consumers to Government
This is one of the eCommerce business models that has been functioning for years but has never been talked about or considered as one of the eCommerce business models.
These include the taxes and fees to the government universities that we (consumers) pay to the government.
Which Online eCommerce Business can you Start with for a Brighter Future?
Now that you have understood the difference between various eCommerce business models, you might be thinking that which online business has a vast scope and good revenue generation capacity?
We have listed a few most popular eCommerce businesses to choose from:
Dropshipping holds a very bright future in the eCommerce industry. It allows you to sell products online without taking care of the inventory or packaging. You simply fulfill the responsibility of taking orders and making sure that they get delivered.
This means that you do not need to invest much into the business or create a space for the inventory and keep a track of it. You can begin it with a little less inventory and budget.
If you are interested in starting or learning more about the dropshipping business, then we highly recommend you to read the Secrets of Top Dropshipping Strategies that will give you an excellent boost.
2. Second-hand Market
The second-hand market is booming. With people wanting to invest in good brands, they are leaning towards a more economical option to acquire the product and satisfy the need.
The most common items that sell well are expensive gadgets, cars, antiques, PlayStations, and high-range games.
If your business can provide the customers with an easy reach to such items at a reasonable price, then your online business can become no less than a boon to your customers.
ThredUp has estimated that by 2023, the resale industry will be a $53 billion industry.
3. Warehousing and Wholesaling
In this business, you can generate a lot of revenue\e as with this n\model you can sell to the retail business owners in wholesale as well as to the customers individually.
However, higher profits demand higher investments. Warehousing and wholesaling will need a huge investment initially that includes the space for the warehouse, the inventory to fill in, managing the orders from your consumers, keep the track of the inventory, etc.
You will be handling almost everything that your online business demands. From investing in taking care of it.
With proper inventory management and outsourcing, a few tasks such as logistics can help you well in running the business smoothly and earn a well-defined revenue.
4. Affiliate Marketing
Affiliate marketing is a program that demands near to zero investment but a lot of effort and determination.
What you are required to do here is promote the products that other online businesses are selling. Your commission is based on the number of clicks that come on an eCommerce business from your promotion.
You can add the links of your affiliated products in your blogs, website, social media, or any platform through which you can influence people to visit the link to the products you affiliated with. If required, you can start your affiliate marketing program with platforms like Amazon.
5. White Labelling
If you know the product that sells really and wish that it was shipped under your name for your online business to get promoted, then white labeling is the answer to your prayers!
Here you take an already well-selling product that allows white labeling, design your label and package, and sell it to your customers.
However, the companies that allow white labeling demands an order of a minimum quantity. So be sure to join hands with it only when you know that your complete order will be sold, otherwise you will be stuck with the cartons full of unsold products.
Which Model would you pick now?
We have explained all the eCommerce business models that exist and will continue to exist in the long run. Half of these eCommerce demand a higher investment and half demands a little lesser than those.
Whichever eCommerce business models you choose, be sure that each of them demands consistency, effort, and determination to reap success.
Many online businesses are in trend and can help you build a fortune. Check out our new blog about eCommerce Trends to grow your business.
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