E-commerce has different models and types and knowing what bucket your big idea fits in will help you think creatively about what your chances and threats might be.
As an E-commerce entrepreneur, odds are you’ll fall into at least one of these four general categories. Each of them has its own benefits and challenges, and many businesses and companies operate in several of these categories at the same time.
So, let’s delve into the kinds of models we have in this field.
1. B2C – Business to Customer
B2C businesses sell to their end-user. The B2C model is the most common business model, so there are many unique approaches under this umbrella.
Anything you buy in an online store as a consumer is done as part of a B2C transaction. It is important to know that the decision-making process for a B2C purchase is much shorter than a business-to- business (B2B) purchase, especially for items that have a lower value.
Because of this shorter sales cycle, B2C businesses typically spend less marketing dollars to make a sale, but also have a lower average order value and less recurring orders than their B2B counterparts (which we’ll consider next.)
2. B2B – Business to Business
In a B2B business model, a business sells its product or service to another business. Sometimes the buyer is the end user, but often the buyer resells to the consumer.
B2B transactions generally have a longer sales cycle, but higher order value and more recurring purchases, which makes it different from B2C model.
As younger generations enter the age of making business transactions, B2B selling in the online space is becoming more important and popular.
3. C2B – Consumer to Business
C2B businesses allow individuals to sell goods and services to companies.
In this E-commerce model, a site might allow customers to post the work they want to be completed and have businesses bid for the opportunity. Affiliate marketing services fall under this category.
Websites like Upwork.com, Guru.com and Freelancer.com are good examples of this model because they help businesses get connected to and hire freelancers who help them get their works and projects done.
4. C2C – Consumer to Consumer
A C2C business — also called an online marketplace — connects consumers to exchange goods and services and typically make their money by charging transaction or listing fees.
Online businesses like Craigslist and eBay pioneered this model in the early days of the internet and we have many of them today.
C2C businesses benefit from self-propelled growth by motivated buyers and sellers, but face a major challenge in quality control and technology maintenance.