How to Choose the Right E-commerce Business Model for Your Venture?

When starting an e-commerce business, the first thing that comes to anyone’s mind is, which are the various types of e-commerce business models? After knowing the models, the crucial step is, which model should one choose? Of course, every business model has its own set of advantages and disadvantages, but choosing one that matches your preference is important.

So, here we are to give you clarity. Let’s get started.

The Ultimate Guide to Understanding E-commerce Business Models

With this guide, let’s explore all types of e-commerce businesses.

• Business to Consumer (B2C)

  B2C is a very common e-commerce business model in which businesses sell their products directly to consumers. Whenever you dine out in a restaurant or buy groceries from a store, you are using a B2C business model. The sale can be undertaken through e-commerce stores and also through physical stores.
  Classic examples: Amazon, Myntra, BestBuy, etc.

• Business to Business (B2B)

  As the name suggests, B2B businesses sell their products directly to an intermediate buyer or a middleman. Furthermore, that middleman then sells the products to the end customer. Usually, B2B websites deal with high-volume orders, which is why there is a huge capital and investment.
  Besides, the growth of B2B e-commerce may be slow as the pricing model may become complicated. Besides, convincing the buyers and retaining them for a long period is not an easy task.
  Classic examples: Amazon Business, Indiamart, etc.

• Consumer to Consumer (C2C)

  Lately, the C2C model is gaining pace, wherein it allows consumers to sell their possessions with other consumers by publishing information on a website. It’s like consumers trading with one another and advertising their possessions through the website.
  In this, the website may or may not charge a fee – it all depends on the model. Usually, the registration is free, but if the consumers want to dive deeper, then there is a fee or subscription. By now, you must have realized the bigwigs of this e-commerce model.
  Classic examples: CarDekho (allows you to sell your secondhand car), OLX (sell electronics, furniture, décor)

• Business to Government (B2G)

  When it comes to the B2G model, businesses sell their products to government or government agencies. Unlike other models, this model is complex. There are a lot of rules, regulations and compliance due to the intervention of government agencies.
  Most importantly, this model cannot be undertaken directly as government agencies invite tenders and ask businesses to bid. By the way, the dealings can include everything from office supplies to complex software solutions or consultancy services.
  Classic examples: Tata Consultancy Services (TCS) is one of the largest IT services companies in India. It collaborates with various government departments to provide IT solutions, system integration services, and consultancy.

• Consumer to Business (C2B)

  In these types of e-commerce businesses, consumers sell goods and services to companies. Yes, we have observed businesses chasing consumers. However, in this model, roles are reversed. For example, various online platforms allow you to upload your photos. As a consumer, your photos are bought by publishing bigwigs like newspapers, magazines, etc., and you get paid for them.
  Classic examples: Shutterstock (image library) and various websites conducting surveys where they pay the participant.

• Business to Business to Consumer (B2B2C)

  Now, that’s a complicated and lengthy model. In this model, the first step is selling services and products from one business to another business. Furthermore, the receiving business sells the products and services to the consumer. Overall, there are three entities—the first business, the middleman, and the consumer, hence the name.
  Classic example: PolicyBazaar—This platform collaborates with insurance companies (B2B) and sells their policies directly to consumers (C). It also provides a comparative analysis to help customers choose suitable policies.

• Customer to Government (C2G)

  Consumer-to-government is all about the transactions carried out between consumers and the government. This includes consumers providing goods, services, or payments directly to government entities. Did you know that this model is part of e-governance, aiming to facilitate the interaction between citizens and government efficiently and effectively?
  Classic examples: Tax payments, paying of fines, and utility payments (water tax, property tax).

The revenue models in eCommerce

So, we have highlighted the types of e-commerce business models with examples. But let’s briefly see the revenue models that will complement your business.

• Direct to Customer (D2C) — In this model, there is no involvement of a middleman or any third party. Instead, brands choose to send their products directly from their warehouses or factories to the customers.
• White label — White label delivery is when brands use a third-party platform, but for a consumer, it doesn’t look like one because the third-party platform doesn’t use its branding or logo. This model is often used in online retail.
• Wholesaling — In a wholesaling model, a particular brand sends large quantities of its products to other companies for resale.
• Private label — Private labelling is an e-commerce strategy where companies take products from third-party suppliers, rebrand them as if they were their own, and ship them to customers.
• Subscription — In this model, consumers pay a fee—either regular or recurring—and receive products on a proposed schedule. Customers have the liberty to set the schedule, as in when and how often they want the products.
• Dropshipping — This model is lengthy but is used by many e-commerce business models. In this model, a customer places an order with a retailer. Furthermore, the retailer forwards the order to a wholesaler, and the wholesaler ships the items directly to the customer.

Kwebmaker Digital, Best Ecommerce Development Company in Mumbai

We have discussed various e-commerce business models. It’s crucial for your business to carefully evaluate which models best suit your needs before establishing your operations. Additionally, having an appealing website is essential to attract and satisfy your customers. This is where Kwebmaker Digital comes in. We are dedicated to easing your tasks and helping build your website.

At Kwebmaker Digital, we’re on a mission to design tailor-made solutions. We delve into the finer details of your business to develop a strategic plan that meets your specific requirements. To learn more, call +91 98212 17850 or drop an email at hello@kwebmaker.com.