What Are The Different Types of e-Commerce Business Models?

What Are The Different Types of e-Commerce Business Models?

The 21st century is a time of great changes to the way the world economy works and runs. The internet has penetrated the farthest corners of the world. Soon, we will enter the era where everything would run on the internet. e-Commerce is a big phenomenon that has transformed the way businesses operate and interact with customers. This naturally led to the creation of e-commerce oriented business models. What are these different business model types for e-commerce? Businessmen often find themselves asking questions like these.

The answers begin with understanding e-commerce. E-commerce is, in the simplest terms, transactions that happen over the internet. E.g. someone who purchases a watch from a shopkeeper and makes payment via Bharat Pay has done an e-commerce transaction. The concept has gone up by many levels over the past decade. As the internet becomes a part of daily lives more and more, four business models have come up which make up a large chunk of the e-commerce space. Businesses can expect to do well, with a little knowledge and additional education in any of these models as the owners see fit.

  1. B2B Business Model
    The B2B business model stands for Business to Business model. This model involves a company offering its products or services to another company/firm and then doing all its transactions accordingly over the internet. A typical example of this model are digital marketing companies. Businessmen can offer marketing services to other businesses, help them expand and grow.
    Another example is that of a wholesaler. These businesses usually own large stocks and inventories which are then sold to retailers as and how they ask for it. Some businesses have their own websites from which retailers can directly place orders and have them delivered at the location of choice.
  2. B2C Business Model
    Most shops and online retail businesses fall into this category. The company offers its products and services directly to the end customer. FMCG shops, hardware retail businesses, mobile phone shops, supermarkets, restaurants, etc. are some common examples of this. These businesses are the ones that face the end users/consumers directly. Smart businessmen having their ventures in the B2C space usually prefer to opt for taking the business online. Once the business goes online, it officially becomes an e-commerce company doing business over the internet.
  3. C2C Business Model
    This might seem counterintuitive to the commoner’s eye, but a businessman knows this when he sees it. Customers who wish to sell their items to other customers fall into this category. One key difference here is that neither the seller nor the buyer is necessarily an entrepreneur. This major difference makes the C2C model a tricky one.
    Businessmen, however, can create an online platform where sellers and buyers collaborate, communicate and transact with each other, acting as a facilitator rather than an active participant in the transactions. OLX, Quikr are excellent examples of businesses working in the C2C domain.
  4. C2B Business Model
    This is where things get very tricky. When a customer becomes the seller and business becomes the buyer, C2B business model sets in. Conventionally we are all made to believe that business sells and customers buy. The caveat here is that businesses often require services or products that would not be cost-effective if they were to procure/purchase from other businessmen. This is when individuals come in, offering their product(s)/services for costs and timelines shorter than competing companies.
    Freelancing is an excellent example of this. A freelancer is an individual who offers his/her services to various businesses. Here, the exact opposite of B2C happens, where the company becomes the one making the purchase. Of course, the internet is involved, making the C2B fourth e-commerce business model.
    Businesses can also enter this field by creating a portal for individuals to offer their services. Websites such as Fiverr and Freelancer.com act as facilitators for C2B works.
  5. Other Models
    There are more models which involve businesses interacting with governments (private IT contractors such as TCS, Infosys, etc.), Governments interacting with citizens (Income Tax Portal), etc. These models are focused more on corporations and administration levels and also involve large-scale contracts and projects. Sometimes governments hire small companies for minuscule and local level tasks. It goes without saying that being an e-commerce business model, transactions happening online is a given.

In a Nutshell

E-commerce, which was being hailed as the future of all businesses, is already a reality and as of 2021, the future is already here. Businesses that are adapting to the change at an equal pace are sure to thrive. Technology is only going to improve and become more penetrative in the coming years. As smart business people, it then becomes imperative the entrepreneurs keep themselves updated with the latest knowledge available to stay strong and keep growing. DBohra offers courses for new as well as established business folk to update their industry knowledge. Mumineen may choose the course of their liking and interests to gain valuable insights into the business style of the 21st century. 

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