eCommerce can be a convenient and quick way to conduct business. It entails selling online through marketplaces that connect buyers and sellers or standalone websites that accept a variety of payment methods.
eCommerce websites have a lot of appeal because eCommerce sales have increased by nearly 300% in the last ten years, from 3.3% to 12% of total retail sales in the United States.
Consumers prefer buying online because it is convenient and allows them to make sound purchasing decisions from the comfort of their own homes.
Overall, the online purchasing experience and the sense of security that people feel make eCommerce appealing enough that it has changed traditional business models and given rise to new types of business models in eCommerce.
Say you want to start an eCommerce business but don’t know where to start; you may even be wondering what a business model is. You should not be concerned.
There is a simple formula for determining which eCommerce website business model your profit strategy is best for your situation.
First and foremost, you must determine what you want to sell. Is it a tangible item, a digital product, or a service? The next step is to decide who you want to sell to.
To a company? To customers? Finally, decide how you want to deliver your product there are numerous options.
It is critical to have the best eCommerce business model that works for you because it will ensure the survival of your company.
Each component of the formula necessitates different considerations to arrive at the best model for you. To make things easier, we’ll explain the various types of business models and their characteristics.
Models and strategies for eCommerce
In eCommerce, four common business models define your company’s target audience. They only serve as a loose framework to help you organize your thoughts and plans because each target audience requires a different type of content and outreach channel.
The models are not a box into which you must fit despite the overarching similarities in companies that fall under a given model, there is plenty of room to carve out uniqueness. Furthermore, businesses can certainly target both businesses and consumers.
Here are the most common sales models, as abbreviated as they are:
- B2B (business-to-business)
- B2C (business-to-consumer)
- C2C (consumer-to-consumer)
- C2B (consumer-to-business)
- B2G (business-to-government)
- C2G (consumer-to-government).
B2B business model
When one company sells to another, this is a well-known model. In this model, the company being sold to may not be the end user, but rather a reseller. Many companies that use the B2B sales model provide services, but not all of them.
This model allows a company to sell anything from physical products like office furniture or paper to software or services like billing or human resource management.
B2C Business model
When most people hear the term “eCommerce,” they immediately think of this. However, consumer sales are still primarily thought of in terms of the traditional model of brick-and-mortar retail. This industry is rapidly expanding.
B2C eCommerce sales totaled $2.3 trillion in 2017, and are expected to reach $4.88 trillion by 2021. In general, products and services sold to consumers are less expensive than those sold to businesses.
As a result, marketing costs are lower, and the buyer’s decision-making cycle is shorter. As a result, the cost of starting a B2C business can be significantly lower for the owner or founding team. All that is required is an online store that is open 24 hours a day, seven days a week.
C2C business model
For some people, the C2C model is a great way to get a business up and running because it is a low-cost method of verifying market interest and growing a customer base that can be up and running quickly.
Customers in this model use a marketplace, such as Etsy or eBay, to exchange, buy, or sell items.
The selling consumer relies on the platform to provide the transactional technology. The seller has to do less marketing because they are using a pre-existing marketplace with regular visitors, saving time, money, and effort, and they do not have to build and maintain their website.
C2B business model
This is a new model whose business model definition is individuals or sole proprietors selling goods or services to businesses.
So far, this model has been used to create and sell WordPress themes and other digital downloads such as stock photos on sites like Shutterstock, offer affiliate marketing services as links on personal blogs, and reverse auctions on platforms like Upwork where consumers can bid on projects companies need to be completed.
Because of the product links the “consumer” can feature, C2B may be mentioned as an affiliate eCommerce business model.
Furthermore, influencers can connect with businesses in need, and bloggers can write promotional posts for clothing and other consumer goods on their blogs.
The advantage of using this model if you offer a product or service that fits this model is that you have no inventory to manage, no monetary investment, and no customer service. These are one-time sales.
The disadvantage is that traffic is important. For companies to want to market through you or for you to make money from link clicks from your affiliate eCommerce site or blog, you must have a high traffic volume. Purchase from Amazon via a link on your blog earns you 10% off the sale.
Less commonly used eCommerce business models
B2G (business-to-government) and C2G (consumer-to-government) models are less common, but they exist. In this case, the government replaces a business.
They still require and use services, and they have money to spend. Businesses may sell government services such as data storage and document sharing. The C2G model is primarily based on consumers paying taxes to the government.
Recommended Guide: Most Effective Strategies For Selling On Amazon.
There are numerous items that you could sell as an eCommerce business. Perhaps you already have some in mind or know that you want to sell something.
Physical items
A physical good is something that people can touch and feel, at least once it has been fulfilled and delivered to the customer’s home. This product has traditionally been sold in brick-and-mortar stores, which still account for roughly 90% of retail sales.
Digital products
E-courses, music tracks, e-books, and software are all examples of digital goods. They are becoming increasingly popular as consumer consumption methods. The benefit of selling digital goods is that you can avoid the hassle of storing and shipping inventory by using electronic delivery.
Services
Services can also be purchased online and delivered either online or offline. Companies can provide services ranging from consulting to web design to handyman work. Furthermore, the software is being marketed as a service via the SaaS model (software-as-a-service).