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Types of eCommerce Businesses, Models, and Benefits

If you’re looking to know about types of eCommerce and the Benefits of eCommerce you are at the right place.

In this article, you get to know the different types of eCommerce before starting your business.

Now without wasting time Let’s dive into the content.

Types of Ecommerce Businesses

Describing a man thinking Types of business.

Now, there are a lot of businesses in the market and it’s a huge area out there.

Almost all the transactions are taken between consumers and businesses and those are categorized into eight different types of eCommerce businesses.

Well, let me describe them in a simple way rather than going through them in a complex way.

Business to Business: B2B

First B2B eCommerce, as you can know from the name where the business and transactions take place between two businesses using the internet. 

That means, Here manufacturers sell the goods to the wholesaler or retailer. Here no individual person is involved in between. It is simply defined as eCommerce between the companies.

About 80% of businesses in eCommerce are of this type.

Here is an example of B2B Alibaba.com helping to connect business buyers with manufacturers, wholesalers, and retailers.

Business to Consumers: B2C

Here, the business takes place between the companies and consumers. 

It means selling the product or services directly to the customers by the businessman.

It involves customers gathering information, and purchasing physical goods.

 Basically, it can be considered as a local store where you purchase products. If you take the entire store online then it comes under B2C eCommerce.

And here an example of B2C is Amazon.com helping the sellers or retailers connect with their customers.

Consumer to Business: C2B

C2B takes place between the individual customer and business organization. That means consumers offer their products or services to businesses.

Here the business organization requests services from the Consumers for their business needs.

A great example of C2B is online advertising like Google AdSense and affiliate programs like amazon for commissions.

Consumer to Consumer: C2C

C2C is a business that takes place between two customers through an intermediate website.

Here one customer sells the product to another customer using an intermediate business organization. So sometimes it is also called C2B2C eCommerce.

Examples of C2C are eBay, and Olx. These platforms connect consumers together to sell or purchase the products.

Administration to Business: A2B

This type of business takes place between the government and business organizations.

Here, the Government provides or offers products and services to business organizations through websites.

Great examples for A2B are Tenders and Auctions between the government and private business organizations.

Business to Administration: B2A

In simple B2A is the reverse of the A2B. Here, business takes place between the business organization and the government.

The business organization offers services or products to the government

An example of B2A is a private company providing software services for government purposes such as applications or online security systems.

Consumer to Administration: C2A

C2A is the business that takes place between the individual, the citizen, and the government.

Here, the individual person enquires about the information directly by requesting the local government through the websites.

An example of C2A is income tax filing.

Administration to Consumer: A2C

The reverse of C2A can be defined as A2C. The business transactions are done between the government and individual citizens.

Here the Government provides services to the citizens through the website.

Examples of A2C are different certificates applied by citizens such as birth certificates, death certificates, etc.

Types of Ecommerce Business models

Describing Types of business models

Well, we have seen the classification of the business in eCommerce.

Now let us see the business models that you can make revenue.

The most important thing is how you manage the inventory and source the products.

Here are Some of the models mentioned below.

Dropshipping

 This is the simplest form of the eCommerce business.

In simple terms, here you work as a middleman between the consumer and manufacturer.

Here, If a customer places an order through your online store, then you will contact your supplier and ask him to deliver the product directly to the customer.

The product is delivered to the customer under your branding.

As a result, you(seller)  aren’t required to handle the inventory. This frees you from warehousing stock, managing inventory, and dealing with packaging and delivery.

Private labeling and Manufacture (Retail eCommerce)

In retail eCommerce, a product is sold to the customer under your own brand name without an intermediary

Here, you have an idea of the product but you don’t have your own factory.  You Contact the manufacturing company to make the products on your brand name and bring the stock to your place.

If you received the order from the customer you directly deliver the product to the customer.

The best example of retail eCommerce is Amazon.

Wholesaling and Warehousing (Wholesale eCommerce)

In wholesale eCommerce, you firstly require a lot of investment when starting.

Here, you need to invest in the warehouse, manage inventory, and should keep tracking customer orders and shipping.

And the thing is that everything is sold in large quantities or in bulk.

Basically, if you are a manufacturer, if you receive an order from a retailer, you usually sell and deliver the products to the retailer in bulk.

An example of wholesale eCommerce would be Alibaba.

White Labeling

White labeling is the process where you sell a product that is already successful in the market by changing the brand and logo.

Here, you remove the original labeling of the product or service by another company instead you design your package and label and sell the product.

It is mostly done in the beauty and wellness industries. But it is difficult in other industries.

Drop Servicing

This is also one of the simplest and easy ways to execute.

Here, you do not need any physical product or a warehouse to start a business.

Basically, You act as a middle person where you provide the service to customers. You actually outsource the work to the third person to make the work done.

Third-person includes any freelancer expert or an agency who works on behalf of you and takes care of the entire service completion.

Here, you bring the clients and the work is taken care of by a third person.

Subscription

Here, you provide a product or service to the customer, where they use the or subscribe service for a certain period of time by paying the money.

This business is basically focused on recurring the clients rather than bringing new clients into the business.

These business models rely on the subscription model to have a reliable income stream and encourage customers to purchase additional subscriptions.

Examples are Amazon Prime and Netflix, here the customer should pay a recurring amount at regular intervals to use the service.

Crowdfunding

Crowdfunding is a business model where you generate funds and revenue from a certain group of people before the product launch.

Here, the generated funds are used to provide the startup capital needed to get a product or project in the market.

This Crowdfunding is mainly seen for medical welfare, and educational purposes.

Check How to sell on meesho here!

Ecommerce Benefits for Business

Every business out there in the world has advantages and disadvantages.

If there is an advantage to something there will be a disadvantage some other way.

Here there will be advantages on both sides from a business point of view and Customer point of view.

Business View

There are many eCommerce benefits for businesses. Let’s see five benefits you should know.

No Time Period

As if you own a physical store you need to go there in the morning, work hard and come home at night by closing the store at a particular time.  

But here you can sell the products or services all day and every day with a cup of coffee in your hand from your comfort zone by sitting on the sofa.

Global reach

A business with physical stores only reaches local areas or particular areas.

But here, your business which is online can reach globally and sell your products or services to customers anywhere in the world without any restrictions.

Low Cost

A great benefit is here, you don’t require many expenses such as renting a physical store, paying utilities, or paying the staff to maintain the store.

Describing to buy online on time.

If you want to sell online You only need a website and the internet. You only have the expense for website maintenance.

Remarket or Retarget

The other great benefit is you can retarget the customer any time using the ads.

Here, if the customer browses your store if he didn’t purchase you can target him to make a purchase.

It is not possible in a physical store to target the customer if once they step out from the store.

High profits

The main purpose of business is to get profits. Here you can achieve profits easily and high when compared to offline.

Your store will be opened 24/7 so you can increase your profits by targeting the customers.

Customer view

Here, the customer has the freedom to purchase a product or service by visiting different websites of his own choice.

As I said before it’s time-saving for customers to purchase a product from their comfort zone rather than moving out there to a physical store.

The customer can make a support decision before purchasing the product by reviewing the customer’s reviews under the product.

The customer always searches for the best deals and offers whether it is offline or online.

Here, customers can check the best competitive price and can go for a cheaper price or use coupons before purchasing the product.

These are some advantages but there are a lot more. 

Now, You have seen the eCommerce benefits, but now let’s know about some disadvantages of eCommerce.

Disadvantages

As you know if there is a benefit from something for us obviously there will be a disadvantage from that.

For example, Drinking water is good for health but drinking more water is also dangerous.

So let’s dive into the disadvantages of eCommerce

Security Issues

In this cyber world, there will always be a threat that personal information is stolen. We never know what will happen behind the screen.

There might be a lack of security and privacy issues like theft of personal information, credit card or debit card details of the customers by hackers. 

Site crash

There might be a website crash issue if there is no good internet connection.

eCommerce is totally dependent on the internet. If there is no good bandwidth it will lead to a lack of time to load pages or place orders.

Such a small crash can be a big reason for the downfall of the entire online business. So make sure you’re at the right platform where backup precautions are taken when it occurs.

Quality Check

Here customers cannot touch and feel the product personally.

The customer cannot check the quality of experience and the feel of the product before purchasing. 

The only way is that the customer should only believe the product and buy the product.

Shipping Problems

If a customer placed the order there might be late delivery of the physical products. It depends on the product item to be delivered.

The customer has to wait to receive the physical product of purchased items.

If there are digital products such as software, audio or video files, etc can be delivered immediately.

Taxation Issues

There might be some taxation and legal issues in the eCommerce world.

eCommerce is accessible globally and is not limited to particular locations.

The buyer and seller will be at different locations so there will be different taxations mechanisms.

So these are five main disadvantages of eCommerce you need to be aware of rather than the benefits of eCommerce.

Conclusion

I have covered all the things about types of eCommerce for business and the eCommerce benefits.

This is just the beginning for the eCommerce business and you will get to know a lot more things in other articles to start your eCommerce business and succeed in your career.

I hope you liked the article to move ahead forward in the eCommerce business.

Mention your valuable comments and queries in the comments section, I like to read them.

Thank You for Reading.

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