Types Of Ecommerce | 2023 Business Models

Since the pandemic, eCommerce has been redefining how we shop and engage with businesses. If you’ve ever tinkered with the idea of starting an online business, now is the time. But before that, there are key choices you must make on products, target markets, revenue models, types of eCommerce websites and most importantly, the eCommerce business model.

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In this article, we’ll dive deep into the successful models of 2022 and break down each concept. Whether you’re an established digital entrepreneur or a newcomer to the eCommerce space, by the end of this article, you’ll be able to identify the best eCommerce business model that makes you stand out from the competition and thrive for greater success. Let’s go!

This Article Covers:

What Are Ecommerce Business Models?

An eCommerce business model is the core framework for operating, driving sales and reaching customers. It defines your pricing strategy, target market and customer value proposition. A structured model allows your business to position itself strategically in the market and effectively reach customers.

There are two layers to defining an eCommerce business model. Firstly, you must determine internally how to acquire or manufacture the product, who your target audience is and how to generate revenue. Then comes figuring out how you plan to attract, convert and retain customers.

You should regularly update the business model to stay ahead of industry trends and obstacles. Active business model innovation helps meet changing market demands and retain an edge over your competition.

Types of Ecommerce Markets

Before chalking out a business model, you must figure out who your customers are. For example, it’s important to decide if you’ll sell to end consumers or other businesses and middlemen. It helps align your marketing strategy and create a suitable customer experience.

Let’s look at some of the popular types of eCommerce models based on markets and audience bases:

B2C

Business-to-consumer (B2C) is the most prevalent model where you sell to end users. Most online stores you come across on the internet, from clothing brands to food supplies, grocery markets and even entertainment businesses (like Netflix or YouTube), follow this model.

You don’t need to spend big on educating the audience about your product as they are lower-value items compared to B2B products. Your customers don’t research too long before making the purchase, leading to a shorter sales cycle and lower average order value.

B2C is a straightforward approach focusing on driving sales through adding value to your products or services. You don’t need hefty investments to convince and train customers.

B2B

As the name suggests, business-to-business (B2B) is commerce between two companies. The buyer can be an end user or can resell items to other parties.

For example, when a SaaS company sells software, the buyer is usually the end user. On the other hand, when a car battery business sells to Audi or Chevrolet, the buyer reassembles the initial product into a new and bigger product for final customers.

B2B businesses have a higher order value and longer sales cycle than their B2C counterparts and require in-depth product descriptions. Traditionally, B2B businesses didn’t prioritize customer experiences and operated with long, unassuming catalogs and order sheets.

But recent reports show that millennials and Gen Z are predominant B2B decision makers, demanding self-service options with transparent pricing and intuitive interfaces. B2B innovators must replace boring sales cycles with intuitive eCommerce storefronts that mimic B2C customer experiences to attract younger generations.

B2G

A few businesses specialize as contractors providing goods and services to government entities and public agencies. The agencies typically issue requests for proposals (RFP), and B2G (business-to-government) businesses bid on the project. These highly specialized organizations adhere to strict product or service criteria that government agencies define.

It’s a more secure business model because it’s contractual and has a steady revenue source. But the bureaucratic nature of public agencies can lead to unnecessary delays and other unforeseen circumstances.

C2C

Consumer-to-consumer businesses, also known as marketplaces, establish a foundation to connect consumers and let them exchange goods and services. This business typically makes money by charging listing or transaction fees.

The marketplace can be auction-style like eBay, mimic a flea market with fixed item rates like Etsy, or warrant further discussions and have unique policies for each item like Craigslist.

The primary motive of C2C businesses is to empower individual customers to buy and sell without middlemen. They rarely invest big in marketing; the self-fuelled motivation of buyers and sellers propels their brand value. The only challenge is quality control and technology maintenance.

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