The Four Types of E-Commerce and How to Choose the Best One

The Internet has grown exponentially since the first transaction was completed about 25 years ago, and it is now one of the most important sectors in the world today. In 2018, e-commerce accounted for 14.3 percent of total retail sales in the United States, an increase from slightly more than 12 percent in 2017.

It’s possible that many people aren’t even aware that they’re taking part in an e-commerce transaction because it’s become so routine.

E-commerce can be difficult to define due to the fact that it encompasses such a vast range of activities. Given the rapid growth of e-commerce, understanding what constitutes an e-commerce transaction is critical for most, if not all, firms in order to succeed in this more competitive environment.

Related: Different Types of Ecommerce

What is E-commerce?

According to Shopify, an e-commerce software business, e-commerce is defined as “the buying and selling of goods or services over the internet.” In addition, the definition stipulates that money and information must be transferred over the internet.

What is missed in this definition is the meaning of what does and does not qualify as e-commerce transactions. Just because a company has an online presence does not imply that they are engaged in e-commerce.

At the same time, an e-commerce transaction does not necessitate the involvement of a firm at all; rather, it involves only two persons who are conducting a transaction online. E-commerce can refer to a variety of activities ranging from retail sales to drop shipping. E-commerce comes in many forms, and organizations should become familiar with them in order to better comprehend the phenomenon and its implications.

Related: SEO vs SEM: What is the difference?

What are the Four Main Types of eBusiness Models?

If you’re establishing an ecommerce business, there’s a good chance that you’ll fall into one of these four main categories at some point. Each has its own set of advantages and disadvantages, and many businesses operate in more than one of these categories at the same time. Knowing which bucket your big idea belongs in will allow you to think more creatively about what opportunities and threats you may face in the future.

B2C – Business to Consumer.

Businesses that sell directly to consumers are known as B2C businesses. Because the business-to-consumer (B2C) model is the most frequent business model, there are many other ways that fall under this umbrella.

Anything you purchase as a customer from an internet retailer – think clothes, household supplies, or entertainment — is considered a business-to-consumer transaction. The decision-making process for a business-to-consumer (B2C) purchase is significantly shorter than the procedure for a business-to-business (B2B) transaction, particularly for things of smaller monetary worth.

Remember, selecting and purchasing a new pair of tennis shoes is a lot easier for you to decide on than it is for your organization to evaluate and purchase a new email service provider or food catering firm. In part because of the shorter sales cycle, B2C enterprises often spend less money on marketing to generate a sale. However, they also have a lower average order value and fewer recurring purchases than their B2B counterparts.

B2B – Business-to-Business

A business sells its product or service to another business in a business-to-business (B2B) business model. The buyer is sometimes the final user, but more often than not, the buyer resells to the consumer. B2B transactions often have a longer sales cycle, but they also have a greater order value and are more likely to be repurchased.

Recent B2B innovators have carved out a niche for themselves by eschewing catalogs and order sheets in favor of ecommerce websites and improving targeting in certain niche markets, among other methods.

By 2020, millennials will account for over half of all B2B purchasers, substantially doubling their proportion from 2012. Growing in importance as younger generations enter the age of conducting business transactions, business-to-business (B2B) selling in the web realm is becoming more prevalent.

C2B – Consumer to Business

Individuals can sell goods and services to businesses through direct-to-business (D2B) firms. In this type of ecommerce approach, a website might allow clients to publish the work they want done and then invite firms to bid on the job. C2B marketing services, such as affiliate marketing, would also be evaluated.

Elance (now known as Upwork) was a pioneer in this concept, assisting businesses in the hiring of independent contractors. The competitive advantage of the C2B ecommerce business is found in the pricing of goods and services.

This strategy allows consumers the ability to set their own prices or to have businesses directly compete to suit their demands, depending on their preferences. The model has recently been ingeniously applied by entrepreneurs to connect businesses with social media influencers in order to sell their products.

C2C – Consumer to Consumer 

A C2C business, often known as an online marketplace, is a business that links people to exchange goods and services. These businesses typically make money by charging transaction or listing fees.

In the early days of the internet, businesses such as Craigslist and eBay were among the first to use this approach.

Buyers and sellers who are driven to buy and sell help C2C firms flourish. However, maintaining quality control and technological upkeep is a major problem for these businesses.

See also: What is SEO?

Which is not a Major Type of E-commerce? 

There are 2 minor types of E-commerce. 

Business-to-Administration (B2A) 

It is included in this category of e-commerce since it includes all transactions that take place online between businesses and government. The scope of this sector is broad and includes a wide range of services, particularly in areas such as fiscal administration, social security administration, employment administration, legal papers and registries, and so forth.

These types of services have seen a significant expansion in recent years as a result of investments in electronic governance.

Consumer-to-Administration Relationship (C2A)

When it comes to electronic transactions, the Consumer-to-Administration model includes all transactions that take place between individuals and government agencies. The following are some examples of applications:

• Education includes spreading information, providing distance learning opportunities, and other activities.
• It is the responsibility of social security to disseminate information and provide payments, among other things.
• Taxes — filing tax forms, making tax payments, and so on.
• Health-related appointments, information on ailments, payment of health-related services, and so forth.

As a result, both models of public administration (B2A and C2A) are firmly related with the concept of efficiency and usability of services supplied to citizens by the government, which is enhanced by the use of information and communication technology.

See also: What is SEM?

Advantages and Disadvantages of E-commerce

Here are the advantages and disadvantages of E-commerce:

Advantages of E-commerce

The primary advantage of e-commerce is its capacity to access a global market without necessitating a significant financial investment on the part of the seller. Consumers can make a worldwide choice, receive the necessary information and evaluate offers from all potential suppliers, regardless of where they are located because the boundaries of this sort of business are not dictated by geography.

Due to the fact that it allows for direct engagement with the final consumer, e-commerce shortens the product distribution chain, and in certain cases, eliminates it entirely. A direct route is established between the manufacturer or service provider and the final user, allowing them to offer products and services that are tailored to the specific tastes of the target market.

When suppliers are closer to their consumers, productivity and competitiveness for businesses grow as a result; as a result, the consumer benefits from an improvement in quality service as a result of greater closeness, as well as more efficient pre and post-sales support and customer service. 

Disadvantages of E-commerce

Disadvantages of doing business online are the following are the most significant drawbacks linked with online shopping:

• Dependence on information and communication technology (ICT) is high.
• Nationally and internationally, there is a dearth of legislation that appropriately controls the emerging e-commerce operations.
• Electronic commerce is frowned upon in market culture (since clients cannot physically touch or sample the products).
• The loss of privacy for users, as well as the loss of cultural and economic identity for areas and countries.
• When it comes to doing online commercial transactions, there is a lack of security.

Five Value Delivery Methods for E-commerce 

Industry leaders and market disruptors have chosen a variety of approaches, some of which are listed below.

Direct to Consumer (D2C)

A new breed of consumer companies has created devoted followings with quick growth by taking out the middlemen. However, firms like Glossier show us how D2C can continue to be a place for innovation and growth despite online retailers like Warby Parker and Casper setting the norm for disruption vertically.

White Labelling

White labeling and private labeling are terms used interchangeably in the industry.

To “white label” is to put your company’s name and logo on a generic product you bought from a wholesaler.

Manufacturers make a product solely for retailers to sell under their own private label in the process of private labeling. When you use private labeling and white labeling, you may protect your design and production investments while also looking for ways to gain an advantage in new areas like marketing and technology.

3rd Party Reselling

A store uses a wholesaling strategy when it wants to sell its product in large quantities at a loss. While wholesaling has historically been a B2B practice, many merchants are now offering it to price-conscious customers in a B2C setting.

Dropshipping

Dropshipping is one of the most popular e-commerce strategies. Dropshippers, like AliExpress or Printful, market and sell products that have been fulfilled by a third party provider. Dropshippers serve as a go-between, connecting consumers with businesses that make the products they want. Users of BigCommerce’s storefronts can integrate inventory from suppliers all over the world using simple technologies.

Subscription-based Service

Publishing companies in England have been using a subscription model for book delivery to its devoted customers since the 1600s. Businesses are moving beyond magazines and fruit-of-the-month clubs with the advent of ecommerce. Subscription services have now arrived in practically every industry to benefit clients in terms of convenience and cost savings.

Subscribe to the Best E-commerce Tool – Ginee!

Merchants and entrepreneurs may operate their firms more efficiently online using an easy-to-use Enterprise Resource Planning (ERP) system. Ginee Philippines is the way!

The running of an internet business is difficult and, to be honest, frightening in the current context of the COVID-19 Pandemic. With Ginee by your side, this isn’t the case. With Ginee’s one-of-a-kind business-optimization solutions and services, business success is now more within reach than ever before.

It’s time for you to manifest your best entrepreneur self yet with Ginee’s support! We’ll offer you seven days to try it out for free if you fill out the form on our website.