Millions of shoppers today visit online stores to buy a variety of goods and services, always keeping up with market trends. This means on the one hand that modern e-commerce businesses bring significant profits to their owners and on the other hand that to continue to be profitable, they need to become increasingly competitive.
One of the key requirements for the success of eCommerce businesses is the choice of the right business model. With all those types of eCommerce businesses that exist, many options are available. Familiarity with their advantages and disadvantages, of course, is critical to shaping a successful and long-lasting online business and can also help to properly manage the company’s future sales.
An e-commerce business model essentially refers to how a business operates to sell goods and services online.
In order to find the right model for your company, you need to take a number of steps:
First, you need to define who you will sell your products to and then how you will do this. Next, you need to figure out your e-commerce business plan, which will determine the method you will attract customers and how they will interact with your product. Finally, assess the delivery framework, evaluating what will work best for your eCommerce business.
In the world of eCommerce, then, there are 6 types of business models you can choose from:
- B2B Business to Business
If the nature of your products or services is geared towards meeting the needs of other businesses, creating a B2B strategy is the best option for you. Networking and outreach in this case play an important role. The most important challenge you will face is to convince businesses that your products and services are a good fit for them.
The advantage of this business model is that order sizes are usually large and repeat orders are very common, as long as, of course, you maintain the quality of your service. Importing and exporting products is easy and convenient, as is identifying buyers and sellers.
B2B customers order more products than retail customers, and as we understand, business-to-business sales can bring in more revenue even than business-to-consumer sales.
It is worth mentioning, at this point, B2G Business to Government, which is part of B2B, as the basic distinction between them is based on individual and corporate participants in e-commerce.
It is therefore an e-commerce business model in which a business sells its products to government entities. If you want to choose this type, you will need to bid on government contracts.
Governments usually submit requests for proposals, and e-commerce businesses must then bid on government projects. In most cases, a government agency would not come to place an order on your eCommerce site. However, some local government agencies are exceptions to the rule, depending on their needs.
- B2C Business to Consumer
It is the most common form of business and follows the traditional retail model, where businesses sell products directly to the end user. Therefore, it is the model to adopt if your products or services are mainly targeted at individuals.
Any prospective customer who wants to find solutions to their problems (pain points) finds your website and finds out if the product you sell can help them solve them. Thus, after browsing your e-shop, he also decides whether to proceed with an order.
The buying process is therefore shorter and purchasing decisions are usually based on emotion, allowing for spontaneous purchases. The downside here is low consumer confidence. Individuals, for example, often buy a product from an e-shop and may never return to the business, even if they are satisfied with their purchase.
- C2B Consumer to Business
This is an extremely popular model, mainly because of the platforms aimed at freelancers. In this case, freelancers work on tasks given to them by their clients. Most of these clients are commercial entities, while freelancers are often individuals. In simpler terms, we can say that C2B is a sole proprietorship that serves larger businesses.
An example of C2B is photographers who sell their photos on websites or bloggers who post a photo of a business’s products in exchange for a certain amount of money.
- C2C Consumer to Consumer
This business model means that individuals sell their products directly to each other, usually through a third-party website. In all transactions, the platforms charge a small commission, and we can see that these businesses usually operate as B2C. However, this model creates an uncertainty about the quality of the products sold and is quite complex. It therefore requires careful planning in order to work effectively.
- G2B Government to Business
A good relationship between government and local businesses, both large and small, is incredibly important in a thriving economy and because of this, G2B and B2G interactions are equally important.
The G2B model, then, is an e-commerce interaction between government and private businesses. An example of G2B is a government website where companies pay their taxes, while a common example of G2B and B2G collaboration is government contracts.
This model would be said to give businesses the convenience of managing payments and legal processes such as document renewals, significantly reducing paperwork.
- G2C Government to Consumer
G2C describes the relationship between the government and its citizens. While it is significantly similar to a B2C company that deals with communication between a business and its customers, in the case of G2C, the environment is government and the customers are citizens.
Therefore, government agencies can draw a lot of insights from the ways in which the most successful businesses communicate with their customer base, as in the commercial space, customer relationship management (CRM) platforms have become key differentiators.
How do you choose the right type of e-commerce for your business?
It is obvious that eCommerce is booming rapidly in our country. Any business that would like to see its profits increase and its products become known within and beyond national borders should immediately get active.
It is very important, therefore, to study what we have listed above separately for each type of e-commerce before you come to the right decision for your business. And we recommend doing this with care, as once you choose one of the above models, you will immediately involve both your finances and your time and efforts in your new venture.