Types of eCommerce – Business Models, Examples and Benefits
No two e-commerce companies are alike, and all of the decisions that you make about your company should focus on your individual needs. This ranges from your choice of platform to the PoS software that you use and everything in between. Today we would like to look at all the various types of e-commerce and provide you with some industry insights so you can successfully launch and manage your store. It is important to learn from the most common mistakes people make so that you avoid repeating them. First, let’s get an overview of the different types of e-commerce types out there.
The Various Types of eCommerce
The type of e-commerce will vary depending on the parties involved. Currently, there are 6 of them. Identifying the right eCommerce type is the basis of any successful business. You have to identify your market and who your customers are in order to be successful. Whenever you are selling your products to individual customers, there will be a short sales cycle, and their decisions will be based more on emotions rather than actual need. Very often, they will see something on your website that they need to have and end up making an instinctive purchase.
Companies that can capitalize on such emotional decisions can significantly increase their revenue. This is usually done by personalizing your communication with each individual customer and providing them with a tailor-made experience. This will allow you to build a long-lasting and meaningful relationship with each customer, and they will start to trust you more as time goes on. This is one of the reasons why asking for customer feedback is so important. Your clients are looking for ways to make sure that their voices are getting heard and that their opinion matters. You can also start offering smart assistance, such as providing them with personalized recommendations about purchasing certain items. You use the contents of abandoned shopping carts as guidance.
Ecommerce can be divide into two categories: selling to individual consumers and selling to businesses. Let’s take a look at them.
Selling to Consumers
Business to Consumer Sales
There are a lot of b2c e-commerce examples because it is the most common e-commerce model, and therefore it is the most competitive. It is essential to really zero in on your target audience and find your niche since this will be the people you can target. As far as your e-store is concerned, the customer experience and journey must be smooth because nobody is going to spend their time trying to figure out how a complicated checkout process works or any other burdensome aspect. There are other options available to the consumer, and they will not hesitate to go somewhere else if they do not like something about your site.
Consumer to Consumer Sales
The best examples of C2C sales are platforms like Amazon and eBay, where one customer posts a product or service that they are trying to sell to another customer. For people who have their own platforms, a lot of times, they will place advertisements on third-party websites to try and attract new business.
Government to Consumer Sales
We don’t usually think of the government being involved in e-commerce, but the fact that you can pay for your vehicle registration, student loans, and any other fees to the government online is an example of e-commerce. Generally speaking, any online transaction between you and the government is considered e-commerce.
Selling to Businesses
Having businesses as your customers has a lot of benefits and downsides as well. On the one hand, they will have budgets that are much larger than those of individual people and will, therefore, order more products. On the other hand, their sales cycles will be a lot longer since there are usually a lot of people involved in the decision-making process. In fact, for a company with 100-500 employees, seven people are involved in the buying process on average. If we compare this with selling to individual people, selling to business will involve making very logically-sound decisions. In order to be successful in this market, you will need to offer custom pricing to each client and give them flexibility in how they place their orders. The sales process should start with the business registering an account on your website. This will allow you to get a complete view of your customer so you can begin offering them tailored offers. Also, it is important to remember that the service does not end once the sale is made. You have to continue to provide support even after they buy from you to build a relationship and show them that you truly care about their needs.
Selling Business to Business
On the surface, it may appear that selling B2B involves one business selling to another business. While this may be true, you still have to account for marketplaces with many different vendors. Even though your buyers will be individual customers, the owner of the marketplace will sell the digital space to other companies conducting B2B transactions. Keep in mind that if an individual business is selling to the government, this is still considered a B2B transaction.
Consumer to Business Sales
If you have ever hired a freelancer to perform any task for your company, then you have participated in a C2B transaction. This can be something like hiring a web designer for your website, a photographer to shoot quality photos of your products and a lot of other things. Since these are usually individual people looking to attract the attention of companies, they will use a lot of different methods to get their name and work out there. This will include creating a website or portfolio to showcase their work, collecting feedback on an e-commerce website, and many other methods.
Government to Business Selling
Any interactions with the government are usually private in nature, and e-commerce is no exception. The G2B model usually involves the government offering businesses a convenient way to pay for certain services or fees. A good example of this is the website and portal the IRS uses where people can log in, pay their taxes, and then monitor the status of their returns. Now that we have looked at all of the e-commerce business models let’s move on to the types of goods you can sell online.
The Various Ecommerce Goods Sold Online
Let’s start with physical goods like shoes, electronics, accessories, and many other items. When you choose to sell such items, you are entering into direct competition with the brick and mortar stores that will try to attract your customers by offering an in-store experience. To fight back, you will need to show your potential customers that the experience you offer is even better by providing a wider selection, more accurate item descriptions, and many other things.
You can also try selling digital goods which also have their pluses and minuses. The good thing is that there are fewer overhead costs and delivery limits, but you will face some stiff competition from open-source software. That’s why you need to focus on all of the benefits of your products instead of just getting something for free.
The final type we will look at is services. There can be many different types of e-commerce revenue models in play here beyond just selling the service. For example, the customer bought the service but needs help setting it up. This provides you with an up-sale opportunity. If you are selling services online, you will need to communicate more with your clients via phone and email to settle on all of the details and finalize the sale.
The Types of Ecommerce Business Models
It is important to understand your business model because you will organize your supply chain based on this.
The first type is dropshipping. When a customer purchases an item from your store, you can partner with a warehouse to ship the item directly to the customer – this is a good way to offer perks like next-day delivery. Basically, your role here is to serve as a middleman between the customer and the drop shipper. However, the downside is that there are lower margins involved, and you are relinquishing all control of the supply chain process.
Now let’s take a look at warehousing. You can purchase all of the items you need and store them in your warehouse. As you can imagine, you will have to bear all of the overhead costs such as rent and utilities, but you will have more control of the shipping and delivery.
The next type of model is private labeling and manufacturing. This is when retailers choose to outsource the manufacturing items sales under their brand name. This will allow you to have items designed to your exact specifications without having to pay a lot of money to have your own production.
Finally, there is white labeling. This is when you buy generic products and produced by various companies and try to sell them under their brand name. This will allow you to save on the design and development while still communicating a brand message.
Choose a Model That Best Suits Your Needs
While we looked at many different types of e-commerce revenue models and products that can be sold online, nobody can say that one of them is better than the other. You have to determine what it is that you want to sell and match that with the right business model. You will also need to have the right e-commerce software solution to hit the ground running and start being competitive.