Types of e-commerce business models in 2022
- superstoresolution
- Apr 16, 2022
- 5 min read
What is an Ecommerce Business Model?
What do You Want to Sell?
Table of Contents
1. Drop shipping
2. Wholesaling
3. Warehousing
Ecommerce business models of all types are thriving. Sales from online stores are expected to increase 385% this decade.
An ecommerce business model refers to how a business operates to sell goods and services online. There are 6 main types of ecommerce business models, namely Business-to-Government (B2G), Business-to-Business (B2B), Business-to-Consumer (B2C), Consumer-to-Consumer (C2C), Consumer-to-Business (C2B), and Business-to-Business-to-Consumer (B2B2C).
The beauty of online commerce is that you can sell pretty much anything. However, it is always a good idea to start with a small range of products. Your store can sell physical products (clothing or shoes), digital products (eBooks are a good place to start), or services such as babysitting.
This is the most commonly sold commodity on ecommerce stores. Physical products (pretty much anything that requires packing, shipping and delivery) often achieve the highest sales.
Discover what you are passionate about. Do you love cars? How about selling car parts and accessories then? Do you love books? Why not start an online book store? Online commerce gives you the perfect opportunity for converting your passion into a viable business.
Digital products are a great way to generate passive income. It’s time for you to create and share something wonderful with the world! But what type of digital product should you start with? Get ready for some digital product ideas and inspiration. Here is our short list of the top digital products you can sell online.
eBooks
Software
Web-based Applications
Graphics and Digital Art
Cloud Design App Templates
Fonts
Music and Audio
Photography
Video
Documents
Spreadsheets
Courses
Professional Services
Tickets
3. Services
Ecommerce customer service is how online businesses provide assistance to customers with everything from making online purchase decisions to resolving issues all while creating a seamless customer experience across channels and platforms.
Electronic commerce encompasses all online marketplaces that connect buyers and sellers. The internet is used to process all electronic transactions.
The first thing to think about is the type of business transaction you’re going for. When you think about the business you want to run, who do you see yourself selling to? Is your business B2B, B2C, C2C, or C2B?
If the nature of your products or services is geared towards meeting the needs of businesses, setting up a B2B strategy is your best bet. Networking and reaching out is a bigger part of this strategy. A big advertising budget is not of much help. The most important challenge you would face is convincing established businesses that your products/services are a great fit for their processes.
The advantage of this business model is that order sizes are usually large, and repeat orders are very common, if you maintain the quality of your products and services. An example of a great B2B model is Media Lounge.
B2B ecommerce examples you may be familiar with include the ExxonMobil Corporation and the Chevron Corporation, Boeing, and Archer Daniel Midlands. These businesses have custom, enterprise ecommerce platforms that work directly with other businesses in a closed environment. A B2B ecommerce business typically requires more startup cash.
B2c ecommerce sales are the traditional retail model, where a business sells to individuals, but business is conducted online as opposed to in a physical store.
This is the model you should adopt if your products/services are targeted primarily towards individuals. The potential customer finds your website and determines whether your product could address their pain points.
After browsing the store, the customer may decide to place an order. An example of a successful B2C business is Footwear.
Created by the rise of the ecommerce sector and growing consumer confidence in online business, these ecommerce websites 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. This is mainly due to the sheer demand of the platforms such as Daraz, Amazon and eBay.
Customer-to-Business (C2B) business model is another great concept that is popular mainly due to platforms that cater to freelancers. In C2B, freelance workers work on tasks provided by clients. Most of these clients are commercial entities and freelancers are often individuals.
In simpler terms, consider C2B is a sole proprietorship serving larger businesses.
Reverse auction websites, freelance marketplaces, and affiliate marketing all form part of this business model.
When a business sells products to another business, and then that business sells to the consumers online, this is what is defined as B2B2C ecommerce.
There are three parties involved in this type of ecommerce business model. For example, if you choose to go with it, you will have to partner with another business, and only then can you sell its products and offer the partner a commission for each sale.
Ecommerce store owners choose this business model mainly for new customer acquisition. This happens because even though customers are already familiar with the partner’s products, they can’t order from them online, due to obstacles such as geographical location, hefty shipping costs, and others.
Hence, this ecommerce business model is most suitable for new ecommerce store owners who want to expand their customer base.
Business to Government (B2G) is an ecommerce business model where a business markets its products to government agencies. If you want to choose this ecommerce business model, you will have to bid on government contracts. Governments usually put up requests for proposals and ecommerce businesses then have to bid on government projects. In most cases, a government agency would not come to place an order on your ecommerce website. However, some local government agencies are exceptions to the rule, depending on their needs.
B2G (also called B2A), for businesses whose sole clients are governments or a type of public administration.
C2G (also called C2A): typically individuals paying the government for taxes or tuition to universities.
Two sectors that are closed for entrepreneur owners but are growing include G2B for government sales to private businesses, and G2C, for government sales to the general public.
1. Drop shipping
In this plan, an ecommerce store gets the products from a wholesale or manufacturer and sells to the visitors at a commission. For example, you have an ecommerce store where you add products from AliExpress and set the prices at a higher level.
Once the store is up, the store targets potential customers through ads and other digital marketing channels. Drop shipping became very popular when ecommerce drop shipping platforms like Woo Commerce and Shopify went mainstream.
Wholesaling is a business plan where an ecommerce store sells products in bulk and at a lower price than the general market prices.
The biggest example of this model is Alibaba, a very popular platform for small and large wholesalers that trade with businesses all over the world.
3. Warehousing
Many ecommerce stores have warehouses where they keep products. These are then put as listings on the ecommerce stores and when a person buys them, they are shipped directly from the warehouse.
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