The eCommerce concept originated from the United States: on August 11, 1994, Philadelphia resident Phil Brandenberger bought Sting’s new disc “Ten Summoner’s Tales” on the Net Market website. On August 12 New York Times wrote about this man, who paid online with a credit card, in an article titled “Internet is Open”. This is how eCommerce began.
Since then, it has been actively developing, expanding and increasing its market share.
Types of eCommerce Business Models
There are many types of business models involved in eCommerce today. Think of digital trading space as a tool to achieve your business goals. Therefore, types of eCommerce business models determine the directions where your tool will be most effective.
Let’s explore the popular types of eCommerce with examples and see what types are trending now.
B2B (business-to-business)
Business to business model describes bilateral cooperation where the products or services of one business are sold directly to another business. Usually it concerns the sale and purchase of components, spare parts or raw materials.
For example, a computer shop orders spare parts to assemble a PC from different electronics companies. The seller receives money, and the buyer receives items to produce the final product. This also includes all services related to the work of companies online: finding contractors, content creation, website development, running social media and other services that are very often outsourced.
It is in B2B that the most capital rotates. According to Statista, B2B eCommerce will grow annually by 11%, reaching over $3 billion by 2027.
Examples of B2B Business Model
Adobe: software developer for designers, artists and video makers. Frequently used on a commercial basis in marketing, printed materials production and any visual business needs. Such digital tools as Photoshop, Illustrator and etc. are directly involved in business B2B relations.
Alibaba: is the wholesale supplier for many companies. Cost-effectiveness of huge purchases allows other companies to buy a wide range of products, from food to household appliances, forming their own product offers or providing their business with necessary supplies.
Pak Man Packaging & Supply Co.: company has been known in Texas since 1993. This company supplies disposable food and janitorial products that are very popular with restaurants, bakeries, schools, and event organizers.
B2C (business-to-consumer)
A company (or an individual entrepreneur) sells goods to a consumer using an eCommerce platform.
When a girl buys a dress on the marketplace and pays for the purchase through an electronic payment service, she is participating in a business to consumer eCommerce.
This type of eCommerce business model is divided into five additional subgroup models:
- Business has full control over the e-commerce strategy and sells directly to customer
- Intermediary, who brings together the seller and the consumer B2C on one platform, receives a share of each successful transaction
- Advertising-based platform, providing free information to the client, is benefiting from ads presented on website
- Community or social media resources where the earnings come from the displayed targeted ad. For example, Instagram
- Subscription models, when a company sells a product or service to users in exchange for a regular subscription, for example, Netflix
Other examples of Business B2C Model
Amazon: perhaps no one else will define the B2C model better than this global sales giant. It’s a marketing platform that provides a huge range of products directly to the consumer: clothing, electronics, books, beauty products and so on. Customers visit the online platform and choose the desired product from various vendors.
Spotify: a service that gives access to a huge digital library of music, podcasts and videos. Users register their account on the platform, then they can use it for free or on a premium subscription base.
AreaSafe Project: online store selling equipment to create a safe environment next to house, office or a shopping mall, and anywhere else within the city infrastructure.
Read More:
- B2B vs B2C: Leveraging Key Differences and Merging Opportunities
- Horizontal vs Vertical Marketplace: Unveiling the Key Differences
С2С (consumer-to-consumer)
Trade between individual consumers. In the C2C business model people sell and buy goods and services from each other.
Typically, such interaction occurs through a digital platform that charges a commission to the seller for the opportunity to place their products on their storefront.
Examples of C2C Business Model
eBay: the largest display of consumer to consumer communication. On this digital platform users can sell second-hand goods, DIY crafts and so on. The platform is also notable for having a bid system.
Etsy: eCommerce website popular among artists, handmade craft makers, vintage items owners and other unique things that cannot be found in the mass market. Here users create their own small showcases and put out their unique products. With an attractive/in-demand product, it’s not particularly difficult to make money on Etsy.
CraftLand: online marketplace aspired to build a digital community, gathering crafty artisans from the whole world. This platform is intended to sell hand-made exceptional items, promote them on relevant storefronts, and share creative ideas with other people.
B2G (business-to-government)
A business sells its product to government agencies and institutions. For example, when an IT company develops a website for the digitalization of public services.
Usually B2G works through tenders or auctions: the state structure creates an order and publishes it on a special platform on the web. Bidders submit bids and offer their price. The customer chooses the winner (in terms of price-quality ratio) and signs an agreement.
Customers in B2G models would be:
- Medical institutions: clinics, trauma centers, rehabs
- Educational institutions: kindergartens, schools, universities
- Municipal and state authorities: tax, local administration and others
- Cultural and scientific organizations: research centers, theaters, libraries
- Law enforcement agencies: police, army, court
Examples of B2G Business Model
Mark43: developer specializing in providing technical solutions to government organizations. Got a case of providing the Atlanta police with a cloud system to allow faster processing of incoming data.
G2C (government-to-citizens)
This type of eCommerce describes the communication of people with the state via the Internet: paying taxes and fines, obtaining documents, etc. The G2C model also can be connected to non commercial activities. This includes information services where you can find out information about various destinations, events, and government agencies.
For example, in USA.gov local residents can find background information and form appointments in the relevant state facilities.
As for direct amenities, a good example is the Singapore Personal Access (SingPass) system, granting residents access to more than 200 electronic public services.
E-Government Survey 2024 also states that Singapore is one of the leading countries in providing G2C services. Followed closely by South Korea, Denmark and Estonia with the highest EGDI (E-Government Development Index) ratings.
Despite positive trends and aspiration to digitize bureaucratic processes almost worldwide, the G2C sector is still developing very non consistently. Mostly due to the limited budgets or general lack of focus on digitalization.
C2B (consumer-to-business)
Consumer to business eCommerce interaction definitions may vary slightly. Commonly considered that in business C2B the consumer chooses and sets the price of products to different enterprises. However, in this article we will stick to a more broad definition and say that in the C2B model the consumer creates value (not necessarily physical unit of product, but also services) for business and receives a payment for it.
Examples of C2B Business Model
Shutterstock: a library of photos, videos and design materials where users upload their works. When other users download these materials, the author receives a reward. Since the materials are often used on a commercial basis and then serve as a visual representation of another business, and the authors are not employees of Shutterstock, here you can see the C2B chain.
Upwork: one of the most famous freelancer sites where users can offer various services, setting their own cost. Popular place for designers, developers, copywriters and many other digital professionals. On the business side, both small companies and large corporations use the services provided for fast and single work when necessary.
Behance: digital exhibition platform for artists and designers. Often serves as a showcase and portfolio for creatives, but has a jobs section. The website provides an opportunity for professionals to put their contact details in profile, which allows communication between business and consumer. For example, if a company likes a certain job, they can either buy it or hire an author as a freelancer.
G2G (government-to-government)
Exchange of information between authorities. Most often G2G is associated with electronic document management.
This includes implementing technical support for all authorities with connection to local electronic networks, improvement of existing communication quality and maximum level of unification of information processes and procedures.
G2G also helps establish measures for the protection and filtering of information, therefore preventing the dissemination of illegal information. Summing up, the following key points of G2G model can be identified as:
- Unification and simplification of management decisions for the government
- Increase work’s transparency of public authorities
- Operational management of services provided by the state
- Reduction of national budget expenditures
Examples of G2G Model
Northeast Gang Information System (NEGIS): a US digital solution that helps local police of the North Eastern states monitor criminal gang activity in real time.
Khajane: Online financial management system developed in Karnataka, India, with government participation.
B2P (business-to-partners)
Among different types of eCommerce this one represented relations between companies from the same business area. For example, interaction with partners, affiliates or suppliers.
If B2B models are oriented on interaction with a generalized definition of “potential customer”, then B2P eCommerce focuses on questions about another business’ needs: what problems will your offer solve? How will your company help achieve the partner’s goals? That is why the key to success here is the win/win approach.
The B2P elements usually can be traced in outsourcing, outstaffing, marketing, design agencies and so on.
B2E (business-to-employee)
This is the automation of business management. B2E systems operate within companies, help organize the work of employees and conduct commercial activities.
Corporate events are announced, equipment is requested and other company issues are resolved using the system.
Large companies, such as telecom operators, often have complex internal portals where an employee can receive training, find all instructions, etc.
The introduction of the B2E model is necessary for the growth and development of the company. In addition, satisfied employees often turn into brand ambassadors.
In our company there is such a system developed for our internal needs to simplify and automate business processes inside the company. It started as a Helpdesk system and then turned into a real ERP system with integrated company marketplace and other systems.
Other examples of B2E Model
Sephora University: French brand Sephora initiative to provide its employees with additional education and training courses.
Google: company has introduced its own, G2G (Googler-to-Googler) learning method based on the idea that anyone can learn something from another one. With this in mind business has organized training courses where senior employees actively transfer knowledge and experience to new workers.
Amazon: another great example of business investing in employee training. For example, specialists working in a wholesale warehouse can get free courses at the Machine Learning University and Amazon Technical Academy if they are interested in technology.
E2E (Exchange-to-Exchange)
The term that came to eCommerce from the fintech field. Mainly used in relation to financial transactions within banking activities, meaning the link of financial flow along the exchange-exchange direction.
The combination of two or more digital exchanges can occur both by industry and by multi industry principle. However, in practice it is more common to see the first option.
B2A (Business-to-Administration)
Types eCommerce include the B2A model, which may seem similar to B2G, but does not provide its services to public entities in general, only to the administrative parts.
Usually, this model is seen in public tenders on online platforms, signing contracts for the supply of goods or services to government agencies and local administrations. An example is a case where a software developer provides an office package for schools. B2A can also provide services for maintaining the operation of the electronic government system and electronic payments.
C2A (Consumer-to-Administration)
Yet not the most common type of eCommerce, being a direct reflection of G2E. Includes transactions between consumers and government authorities. For example, getting a doctor’s appointment or paying for services online, making a tax return or paying fines.
Overall, the model is very specific for now due to the non-proliferation of digital government services in general.
B2B2C (Business-to-Business-to-Consumer)
Combining B2B and B2C: the company sells the product to the end consumer through an intermediary. At the same time, the consumer knows who the real seller is.
As an example, we can mention a startup that requested Simtech Development to combine three industry parties on one platform: buyers, beauty artists and manufacturers of beauty products. With the idea of values of beauty industry and our expertise a digital trading ecosystem for enthusiasts was formed.
In fact, consumers use B2B2C eCommerce almost on a daily basis. For example, launching a chain of actions like “online order in a pizzeria, get a delivery”, since in this case the business can not sell its goods without a delivery service.
The main difference from B2B and B2C is that the B2B2C model focuses on the core of business, while the non-core business tasks are handed over for other vendors or contractors.
Read More:
D2C (Direct-to-Consumer)
The opposite of B2B2C is D2C, direct to consumer model, which is a type of relationship where the manufacturer sells goods directly to buyers without intermediaries.
Imagine you enter one of the online marketplaces. All products on display are the result of the B2B model: the e-shop has agreed with manufacturers to sell their products. If you buy something, you launch a B2C chain: business has provided you, the consumer, with its goods. However, if you buy the product in a branded store directly from the manufacturer, it will be a D2C model.
Examples of D2C model
JustRight: Dog food manufacturer that sells its products directly through its own website.
Witchsy.com: online shop for accessories with unique design. The platform not only gathers talented artists, but also offers products directly from the brand.
eCommerce Alternatives
Nowadays, users’ demand for convenience of services and purchases is only growing. Considering this, different types of commerce are always developing and trying to reimagine already existing concepts.
Let’s look at the alternatives that, while they fit into the eCommerce types listed above, do bring a new word to business approaches.
Mobile eCommerce
Technically, mobile eCommerce is only part of the electronic commerce world. In this part the entire technical base is developed or purchased as an out-of-box solution for mobile OS with appropriate accessibility and “on the go” convenience.
On the other hand, mobile eCommerce is becoming a full-fledged alternative to more “classic” digital business. Sales through so-called mCommerce platforms are expected to exceed $710 billion in 2025. Moreover, mCommerce has had a big impact on the content that can sell.
Now small and medium businesses, even world-famous brands, necessarily deploy their advertising companies on mobile-centered social media platforms such as Instagram, TikTok and YouTube Shorts. And the app developers became very smart about monetizing content from different influencers.
It is nothing new that users with a large number of followers make money by showing advertised products to their followers. mCommerce abilities, however, are more global than that. So, mCommerce has become a part of users’ lives and is confidently on the path of presenting products here and now, with the same instant opportunity to purchase them.
Examples of Mobile eCommerce model
TikTok: mobile app has its own mobile marketing platform. But giving advantages in the demonstration of goods and services: users see an influencer, for example, using some cosmetic product, then they can click on the description tab, which will immediately redirect them to the shopping platform where they can purchase the product.
Instagram: digital giant puts affiliate links to both video and photo materials. And recently they launched a payment function through Direct Messages to order products from business accounts. In addition, the platform includes content from influencers directly into the Shorts scroll page as advertising.
Social eCommerce
In terms of this definition, we are still talking about social media business models. But social eCommerce focuses not only on the saw-and-buy basis, but forming a certain community.
Social eCommerce is a way of product recommendation, therefore advertising, rooted on trust from one user to another — through reviews, personal recommendations, where the customers have tried the product themselves and made certain conclusions about it.
When users look at a review or see a recommendation from another person who has purchased and tried the product, it makes the purchase more purposeful. It creates the impression that people receive unbiased and reliable information based on real experience, therefore forming a strong community of like-minded people.
Social eCommerce Examples
Facebook Marketplace: a platform for buying and selling secondhand goods. Of course, there is also an advertisement on the website, but the platform focuses on creating a community and highlighting their personal recommendations. Read more about Facebook Marketplace alternatives.
Pinterest: a visual showcase where users share their findings, ideas, inspiration and interests through photos and videos (Pins). There users also pay great attention to the comments and personal recommendations.
F-commerce
For this business model, we can sum up all the above-mentioned alt trends, but implying them exclusively on Facebook. Yes, the California media giant’s influence on electronic commerce has been so great that over time a definition like Facebook Commerce has emerged.
This term describes an online business that showcases their products or services inside the Facebook social network.
However, when analyzing F-commerce it is important to distinguish between transactions that occur through Facebook pages and those that pass through Facebook Open Graph — a tool for merging local web pages with third-party sites. For example, some businesses create stores within Facebook only and then generate sales from active users, while others use redirection of users from Facebook to other websites.
Focusing on business presented exclusively on Facebook, there are successful examples. For example, companies like Ticketmaster or Starbucks that have their own ad companies there with active user feedback.
D-Commerce
D-commerce or digital commerce also affects the realities of providing users with services and goods via the Internet. However, it is important not to get confused.
If eCommerce covers the full spectrum of business, including the provision of physical objects through online platforms, then D-commerce sells intangible items such as e-books, music, online education materials, games, etc, as well as subscription-based streaming services or any downloadable software.
We have already mentioned some global examples of Shutterstock, Spotify and Netflix. However, there are more interesting representatives of this market.
Examples of D-commerce business model
Steam: the leading platform for digital games distribution. In addition to being a marketplace, Steam also forms a community that generates content in the form of guides, reviews, forums and a range of creativities: screenshots, art works and modding tools for favorite games.
Sketchfab: an online platform for 3D modeling. There users can publish, download, buy and sell various digital content including VR and AR technologies.
Advantages of eCommerce
So, if you are an entrepreneur and your business wants to try their hand at the eCommerce field (or expand even more), here are the advantages you can get.
Reduced Costs
There is no need for paying rent, utility services and hiring additional staff in the eCommerce world. Often these aspects make the conventional business incredibly expensive.
Business models within eCommerce are free of such overheads. Moreover, if you want to run a digital storefront, then at first (with small quantities of goods) you can avoid problems with logistics operations by using dropshipping or simply using your space as a storage.
As your platform grows, of course, the needs will grow too, but they will be cheaper than what a conventional business has. So, at the start, the eCommerce business models are probably the most profitable ones.
No Third-Parties
eCommerce business can organize the sale of any goods or services directly through the site itself, without opening a subsidiary brand and looking for partners. It also reduces costs, but now directly on the product implementation and allows business to have better focus on quality of service and personalization of approach to customers.
Direct Access to Current Sales Data
You can implement analytics and call-tracking systems in the administrative panel of your business. For example, Google Analytics.
Direct access to this information allows you to spot the problems just in time and eliminate them. Observe and test different scenarios, let’s say, at which stage customers are most likely to leave your shop or which products or features are most likely to make them return.
Easier Way to Reach Your Customers
Every day millions of users go online to find goods. By making your platform user-friendly, using clear design and layout, setting up advertising, you can easily find customers who will be interested in your product.
Scalability
The eCommerce field, as well as types of eCommerce, is expanding every year. There are plethora of services for online platforms: electronic payment systems, email marketing platforms, CRM’s and many others. With that business has great potential for brand development and additional promotion.
You don’t need to look for a suitable place, so that you are more noticeable to your target audience. Clients can find you by search engines, by specific niche and a lot of other ways that implement improved search engine optimization. And if the user leaves your shop without making purchases, your in-time advertising can remind them about your platform.
Disadvantages of eCommerce
Of course, forms of eCommerce are not a secret magic pill to avoid all business risks. Either way, your company may face some common issues, the most common of which we have listed below.
Increased Focus on Data Security
Unfortunately, not every digital platform for your business can provide a reliable security solution. This issue needs to be approached with special attention. Fraudsters often get access to information and sensitive customer data may be leaked to the Internet. Is it necessary to say that besides the illegality of this event, it’s also a huge hit to the business’ reputation?
Non-Transparent Showcase of Products
Often the quality of the goods cannot be clearly displayed through photo or video. After delivery buyers could discover that the clothes are not the right size or there are scratches on the book.
Sometimes companies use 3D or AR to showcase their goods in real-life size and condition, but this technology needs some improvement and most often serves as no more than an interesting feature.
Consumers are still opposed to ordering too expensive products online. Therefore, in electronic commerce it is important to provide the buyer with the opportunity to view the goods right after delivery and before payment, as well as to make the return procedure as easy as possible. This will serve to build additional trust to your shop.
“Red Ocean”
Almost all niches of eCommerce business are occupied by a lot of similar online shops across the world, and entrepreneurs compete for the attention of each consumer. You have to invest a lot of money in marketing and promotion deals to gain at least some weight in this field.
Hard to Get Users’ Trust
Many customers are afraid of frauds and do not trust online shops, especially new ones. This problem could be solved by earning a good reputation and getting positive reviews about your platform, so close attention to transparency and reliability should remain a high priority.
Dependence on Delivery
If your business is too small to hire your own delivery staff, this may be a problem. Of course, even more so if your business ends up with bad quality delivery.
Customers want their order in full and on time. So dependency on logistics partners may cost some troubles, time and money. To maintain the customers’ trust and not disappoint them with poor packaging, integrity of goods and overall quality, it is important to carefully organize the delivery process. This will require additional resources.
How to choose an eCommerce business model
Get to Know Your Target Market
Successful business starts with understanding the audience — awareness of the things that are necessary to solve their pain points, or complement hobbies, or become part of niche interests, needs and so on. For starters your question may sound like “What do my customers want?” But if you look a little closer, you’ll see a whole list of key aspects. For example:
- What segment of the market needs my products or services?
- What pain points do my product solve?
- What is the priority in my products: diversity or consistency?
- Am I ready to offer something premium-quality?
- Does my business provide specific niche goods or something suitable for the mass market?
All these questions will help determine whether you need one store or several, if you can offer a subscription model, etc.
Imagine the Business You Want
Those who are new to the eCommerce business can be prone to unrealistic optimistic views. In reality, you should stay on the pragmatic and skeptical side.
Some types of eCommerce, such as B2B and B2A, require much more resources and time that you can predict in the beginning. Other options, such as C2C or C2B, benefit from developed community relationships.
By analyzing your possible suppliers (or even absence of them) and the amount of money you have, you can make a decision about the business model that is right for you. One of the most important decisions you need to make is choosing the right business structure for your company. Many businesses opt to form an LLC to minimize the risk of losing personal assets. An LLC not only protects your personal assets from business liabilities but also offers tax benefits. To simplify the process, there are several best LLC formation services available to help ensure a smooth procedure.
Review Your Skills
Business is built on competitive advantage and it starts with the owner. Your skills can be your competitive advantage, which can serve as the basis for your model. For example:
- If you are an expert in product development for your industry, D2C may be the best choice
- If you are a brand or social media specialist, any type including social eCommerce is suited for you
- If you are a customer service specialist, B2C may be the right choice for you
- If you have a sustainable cost advantage, B2C wholesale may work out
In conclusion
The eCommerce industry had time to become quite mature. Business already has a notion of working and non-working startup schemes, patterns of customer behavior and so on. This means that there are many existing companies from which to learn.
Regardless of the type of eCommerce businesses you choose, whether it’s B2B, B2C or other, you can always start from the base CS-Cart/Multi-Vendor and further add the necessary functions.
We can help you with this, as we have been doing the same for our own and client projects since 2005. Contact the experts of Simtech Development to find the best solution for your business idea!