For anyone looking to start an ecommerce business, identifying your business model helps direct your branding and plan marketing strategies effectively.
Likewise, for established ecommerce brands, it’s crucial to keep their business model updated and relevant to current market trends.
In this article, we will be discussing the top seven ecommerce business models that you can adapt to improve your bottom line this 2022.
Top 7 Ecommerce Business Models
1. Business-to-Consumer (B2C) Model
The B2C business model is where commerce occurs between a business and a consumer or end-user.
For example, when you buy books from an online retailer, B2C commerce takes place online.
- It is one of the most common ecommerce models.
- It requires setting up an online store and displaying it on a website.
- Doesn’t require as much capital investment as B2B.
- Companies such as Amazon, Walmart, and Alibaba practice the B2C model.
2. Business-to-Business (B2B) Model
Unlike B2C, the B2B framework involves partnering or engaging in commerce with another business. Your audience is usually companies who use your products or those who resell to the end-user.
- Businesses/companies sell and target their consumers directly, keeping out any third-party entities.
- The model requires a huge capital investment as you’ll be selling in large quantities.
- The B2B model is commonly utilised by software ecommerce giants such as Salesforce, HubSpot, Survey Monkey, etc.
3. Consumer-to-Consumer (C2C) Model
The C2C business model refers to exchanging and selling products online with other consumers for a better deal.
It is a fast-evolving ecommerce business model that involves commerce between consumers using different third-party platforms.
- The model allows you to sell both new and pre-used products by simply listing them on third-party online marketplaces such as OLX and eBay.
- Potential buyers can easily check and contact the respective business and buy products.
- The third-party platforms partner with businesses in return for a small commission for using their website.
4. Consumer-to-Business (C2B) Model
The C2B business model is one where you sell your goods, services, or products to other companies. This scheme is a perfect choice for freelancers or people working from home as it lets them offer their services to a larger marketplace.
- The C2B business model lets individuals offer specialised services to businesses like graphic design, copywriting, web design, etc.
- The model is gaining popularity as it allows individuals to set their prices and conveniently work with companies worldwide from the comfort of their homes.
- An example of this ecommerce model is Upwork, a marketplace connecting freelancers and companies for selling and buying services.
5. Business-to-Business-to-Consumer (B2B2C) Model
In the B2B2C ecommerce model, a company sells products/services to another, who then sells them to end-users.
For example, a wholesaler that partners with retail stores to sell their products to consumers.
- B2B2C allows easy acquisition of new clients.
- In this model, a company builds a partnership with another company to promote and sell its products/services in return for a small amount/commission.
6. Business-to-Administration (B2A) Model
Business-to-administration or Business-to-Government (B2G) is a type of ecommerce business model that involves companies and government agencies/public administrations.
- The B2A ecommerce model enables companies/manufacturers to sell their products or services to government agencies by signing a long-term contract.
- B2A strategies are typically good business models for ecommerce SaaS companies and other similar startups that offer services to the government.
7. Consumer-to-Administration (C2A) Model
C2A or customer-to-government (C2G) is another popular ecommerce business model which involves individuals and the government.
- In this model, commerce occurs directly between government agencies and customers in the form of customers offering something using the online mode.
- Examples of C2A business models include paying water/electricity bills and taxes.
Top Ecommerce Delivery Frameworks for Ecommerce Businesses
Once you’ve decided on one of the above-mentioned categories of ecommerce, the next thing is to choose an ecommerce delivery framework or revenue model for your business. The key options you can choose from include:
This model allows businesses to market and sell their products online without stocking any inventory.
As orders are placed online, dropshippers simply purchase items from suppliers who then ship products directly to customers.
b. Private Label
There are several new ecommerce entrepreneurs with unique product ideas but no resources or capacity to manufacture products themselves.
The private label revenue model allows retailers to exclusively order a certain product from a manufacturer and then label, market, and sell products under their brand name.
c. White Labelling
White labelling is a model where a business rebrands and sells a product made by another company under its name/logo.
The difference between white labelling and private label is that the former is when a manufacturer sells a certain product line to multiple retailers and the latter to an exclusive retailer.
In a subscription model, you agree to continue to send your products to customers over a long period at predetermined intervals.
Among the subscription models are unlimited services or product discovery.
The wholesaling delivery framework involves a business managing everything other than the manufacturing of the product.
In this case, they’re also responsible for everything, including managing inventory/stock, warehousing, tracking customer orders, shipping, and everything in between.
Turn Your Ecommerce Business Idea into Reality
When it comes to keeping your ecommerce venture competitive and bringing in sustainable profits, the importance of choosing the right domain name, ecommerce web builder, ecommerce business model, and delivery framework is immense.
We have discussed some of the top ecommerce business models, each with its own set of advantages. The recommended thing to do is to analyse the unique requirements of your business and accordingly pick the model that suits it best.