TOP E-COMMERCE BUSINESS MODELS
WHAT IS E-COMMERCE?
E-commerce refers to the trade of goods and services electronically over the internet. It may include funds and data transfer. It works in contrasting market segments using different devices i.e. Computers, Mobile Phones, Laptops, Tablets, and other smart devices. Currently, it is attention-seeking technology because all imaginable products and services are available via e-commerce such as outfits, costumes, shoes, cosmetics, grocery, tickets, banking, stock investment, etc.
E-commerce sales are globally about $5.5 trillion in 2022, and this value is will increase in the coming years. It reveals the widespread of e-commerce over the World. Widespread e-commerce business seemed impossible but it is becoming a lucrative option for businesses. It flourishes during the pandemic of COVID-19 and it is not slowing down after that.
E-COMMERCE BUSINESS MODELS:
E-commerce business models help consumers and businesses to sell and purchase goods and services online. Following are the business models:
1. Business-to-Business (B2B) Model:
Business-to-Business model offers its goods and services directly to other businesses. It consists of two methodologies i.e. vertical and horizontal. Both are productive pathways but select according to product, services, and customers.
B2B selling in the online space is trending and becoming more important. Sometimes the buyer of the product is the end user and sometimes the reseller sells the product to other consumers. Its transactions have a longer sale cycle with high-order value and repeated purchases. Media Lounge is an example of the B2B Model.
2. Business-to-Consumer (B2C) Model:
Business-to-Consumer model sells its goods and services directly to end-users. It is very common and widespread all over the World. The B2C model has a short scale of transactions with low-value of orders and with fewer repeated orders. Its Inventors have anchorage technologies i.e. mobile applications, advertisement, and remarketing to make their customers’ lives easy.
Five e-commerce B2C models are as follows:
1) Direct Selling:
Direct selling is a very common model in which consumers buy a product online directly from a retailer.
2) Online Intermediaries:
Online intermediaries provide a platform to sellers and customers and cut their profit from each transaction.
3) Advertising Based:
In this type of model, advertising a business or a product costs money with free information.
4) Community Based:
Within the community, we can earn money by targeting the advertisements to customers according to their demographics and interests. I.e. Facebook, Instagram, etc.
5) Fee-Based:
Fee-based businesses sell information and entertainment to customers for a fee i.e. Netflix, subscription-based newspapers, etc.
3. Business-to-Government (B2G) Model:
In Business-to-Government, a business sells its product or service directly to any government agency that can be a local, county, federal, or state agency. It includes bidding on government contracts, the government agency will offer a contract and request for proposal, and businesses have to bid on these projects.
It is slower than other businesses model, due to the bureaucratic nature of government. Interacting with government agencies is much more difficult than interacting with customers and businesses. Government agencies do not come to order in the place of an e-commerce website rather they request a proposal.
4. Business-to-Business-to-Consumer (B2B2C) Model:
In the Business-to-Business-to-Consumer Model, the business sells goods and services to other businesses and then they sell them to consumers or end-users. It consists of three parts i.e. first business, intermediary, and end-user.
The most important advantage of the B2B2C business model is the increasing number of customers, which will generate more revenue and profit for both of the businesses involved in it. It is a suitable model for newcomers to enhance their sales and customers.
5. Consumer-to-Consumer (C2C) Model:
In the Consumer-to-Consumer Model, consumer sells products and services directly to other consumers with the involvement of third-party websites i.e. eBay, Craigslist, Alibaba, and Esty. Third-party websites or marketplaces facilitate transactions on behalf of sellers and customers.
It allows customers to exchange services and goods with each other and make money by charging transactions or listing fees. In this model, it is a key challenge to maintain the quality and technology.
6. Consume-to-Business (C2B) Model:
In the Consumer-to-Business Model, consumer sells goods and services to companies and make money. Many websites allow individuals to make contacts with companies to offer their time and services accordingly. It also includes affiliate-marketing services.
Websites like Upwork and Fiverr provide a freelancing platform to connect skills, talent, and services to companies. Individuals work on basis of tasks from clients.
SELECTING A SUITABLE BUSINESS MODEL:
Selecting a suitable model for an e-commerce business is a technical task, to select a correct business model one has to consider the following things:
1. Products:
The first thing in selecting a suitable business model is to know exactly about the product, its market value, and demand. Products can be Physical ranging from electronic devices to small stationary products and can be Digital ranging from a complete Website to a small e-book.
2. Services:
To select an appropriate model for the business it is necessary to acquire all the relative information about the service you want to sell. It is crucial to know about its demand, value, and related websites to offer that specific service.
3. Customers:
The next important thing in selecting a business model is the targeting of the audience. You should have a clear image of your customers, their needs, and expectations regarding a particular product or service. The business model should satisfy and fulfill all the demands of customers.
4. Capability:
Another important factor in selecting a suitable business model is to know your capabilities. Select the model that satisfies your strengths and capabilities to stand with a successful e-commerce business.
5. Best Product:
For a successful e-commerce business, you have to know about the most selling product and classify it as your best product. The best product will help a lot to select an appropriate business model. Apply marketing strategies for the advertisement of the best product to gain maximum profit.
6. Competition:
Competition is one of the key factors for an e-commerce business to select a suitable business model for an e-commerce business. It is important to determine your position among the competitors’ list.
