The e-commerce revolution has changed the way we shop today. Think ten years back how we shopped and how we are used to shopping now. Our groceries get delivered to our doorsteps, so do mattresses, meals, clothing and the list goes on. Now more than ever, when the world is reeling under the effects of a global shutdown, we realize how the whole offline shopping experience has been brought right at your fingertips. Businesses have realized that e-commerce is the future of selling and there is no way to avoid the inevitable anymore.
In fact, today there are very few things that can’t be purchased online and shipped to us. Innovative e-commerce solutions have redefined what we thought was possible only a few years back. Having said that, e-commerce is not an easy path to navigate, especially when you are just entering into it. It takes intuition, knowledge of your market, a solid business plan, and careful research into business models to be successful.
One of the biggest hurdles for most newcomers in the space is selecting the right business model. So here we will talk about the various business and revenue models of e-commerce.
E-commerce Business Models
If you’re into an e-commerce business or starting one, chances are you belong to at least one of these four models. Each one has its benefits & challenges and some companies even follow a hybrid of these models.
B2B: Business-To-Business E-commerce
The business-to-business e-commerce model facilitates the delivery of products or services from one business to another. Many businesses following this model tend to be service providers while you’ll also find software companies, office furniture and supply companies, industrial machinery manufacturers, server hosting companies, and numerous other e-commerce businesses under this category. Big brands in this sector include Exxon Mobil Corporation, Atlas Copco and Cummins to name a few.
B2C: Business-To-Consumer E-commerce
The business-to-consumer e-commerce sector is what most people think of when they imagine an e-commerce business. And this true in the sense it is the deepest market in this sector, with many popular brand names ruling this sector. Business to consumer sale is the traditional business retail model, but in this case instead of physical stores business is conducted online. Popular brands like Amazon, Ikea, McDonalds fall in this category. Most hyperlocal business like Swiggy, Zomato, Dunzo, etc. fall in this category providing goods and services to customers from offline stores within a few kilometers around them.
C2C: Consumer-To-Consumer E-commerce
While B2B and B2C are fairly intuitive categories for most, the idea of C2C is different. What does such a business look like? The rise of the e-commerce sector and growing consumer confidence in online business models have allowed sites where customers trade, buy and sell items among themselves. However, setting up a C2C site takes careful planning and most C2C e-commerce businesses are forced to close down due to unsustainable models. Some examples would include eBay, Quikr, etc.
C2B: Consumer-To-Business E-commerce
Lastly, consumer-to-business e-commerce is another model most people don’t immediately but is one that is gaining rapid prevalence. This online commerce business model occurs when consumers sell goods or services to businesses and are approximately equivalent to a sole proprietorship delivering value to a larger business. Service provision websites like UpWork and several blog monetization strategies like affiliate marketing or Google AdSense fall under this category.
Types Of E-commerce Business Operations
Another classification of e-commerce business models can be done according to inventory management and revenue generation plans.
Dropshipping lets you set up an online storefront where customers pay you online. The rest, from managing inventory, packaging to delivering is handled by a third-party supplier.
Wholesaling & Warehousing
Wholesaling and warehousing e-commerce businesses need upfront investments to manage inventory and stock, keep track of customer orders and shipping information, and procure warehouse space itself.
Private Labeling & Manufacturing
Companies who use a contracted manufacturer to produce their products and can either ship directly to the consumer, to a third party such as Amazon, or to the company selling the final product fall in this model.
White labelling model involves a business using an already successful product sold by another company, but sell the product under their own label. This plan is mostly followed in the beauty and wellness industries.
Companies that rely on a subscription model that delivers customers a box of products at regular, scheduled intervals falls in this model. Subscription companies have relatively reliable income streams and can easily incentivize customers to purchase additional subscriptions or encourage their contacts to subscribe.
Selecting the right model for your e-commerce business is essential to bring in sustainable profits. But the right model is dictated by what you are selling and what model you adopt for selling your inventory. Most businesses also struggle to find an end-to-end solution for their e-commerce needs.
If you are one of those companies, we can help. At Amura, our end-to-end e-commerce solutions guarantee your business growth through long-term growth-focused strategy, comprehensive technical support from our in-house team, and expert consultation & assistance.