We all know a few people – perhaps a little bit more than few – who spend hours surfing the internet, shopping for their favorite things online rather than in-store. You and I are no exception actually! And we have got ourselves a very good excuse, that is, instead of driving several miles to get to a store with limited product inventory, you pick up your smartphone and with a few clicks, a huge gallery of all sorts of products are at your disposal to browse through and choose from. And we are talking a large array of products ranging from electronics, books, wears to pet supplies and more.
Yet, believe it or not, e-commerce has become quite common that a great many people may not even comprehend that they be part of an e-commerce transaction. So the question to be asked here is, what is electronic commerce?
Over large electronic networks, typically the internet, could you do business (buying/selling of goods or services). That is in a simple sense what e-commerce means. In any e-commerce, exchanges (or in other words, transactions) take place between two parties, companies and consumers. However, these transactions can also occur between companies as well as between individuals.
There are a handful of e-commerce businesses out there, yet classifying them may not the be quite simple. Therefore, to elaborate further we have to sort the distinct types of goods that be sold in e-commerce businesses along with defining the nature of participants.
Three Different Types of Goods Purchased Online
These e-commerce businesses offer three distinct types of goods:
In order to get a better understanding of the different e-commerce businesses, this classification of goods is crucial. It offers insight into the business model and the financial model of the enterprise. You will be operating through a physical delivery system if you are offering physical goods to your consumers, as you will have to transport what is purchased by your buyers to them. On the other hand, operating online only is enough when it comes to selling digital goods. When selling physical goods, you may come across a few obstacles in the way, amongst which could be the logistical challenges of delivering these goods. The matter which does not constitute a problem if it is digital goods that you are selling. According to offering services online, say plane tickets, there may be a few things to be handled in real time. Engaging phone or email communication channels would definitely be needed to settle the details and finalize the deal with a customer. You would also have to, for instance, make sure of the locations of seats, some meal preferences and whether or not a re-fund policy could apply if needed. Another important to way to help define the different e-commerce businesses is through classification of participants.
6 Types of E-Commerce Businesses by the Parties Involved
B2B
Business-to-business (or what is also referred to as business marketing or industrial marketing) is an internet business model which performs services or provides products for other businesses. Business information may also be shared. It could engage businesses that manufacture a product, service or merchandise component that that is sold to another business, which then advertises the product on its website for sale to buyers.
B2C
This type is the most widespread in ecommerce. Indeed, examples of companies selling to consumers online are numerous in diverse industries. Facebook, Google, and definitely Amazon are all examples of B2C companies. They could involve working with fashion, cosmetics, and food ecommerce companies.
C2B
A form of e-commerce that is less known. In this transaction, the consumer acts as a seller and the business acts as a buyer. ShutterStock for photos is a great example of a C2B transaction. What happens is that the user captures a photo and uploads it to a stock photo site. The business then pays for the right to use the stock photo. The intermediary site hosts the transaction, transferring the money and information online.
C2C
eBay is one prominent example of consumer-to-consumer ecommerce providers. Within the C2C form, users sell assets or services to other users online. To place sales advertisements and connect to potential buyers, individuals use a third-party business (an ecommerce website or an online marketplace).
B2A
Think of Taxes. Business to administration is a form of ecommerce which can also be referred to as B2G (business to government). It happens when a business offers an online service, through typically a website, for the government. These taxes which go the government’s way could be filed online through third-party businesses, such as TurboTax.
C2A
Consumer to administration is quite similar to B2A, C2A. It occurs when a consumer is providing something for the government. Transaction in C2A businesses is as simple as paying for parking tickets or ordering a new government ID. Having said that, this must be done online so it could be regarded as a C2A e-commerce transaction.
The variety of available business models has to be the most noteworthy side of ecommerce’s versatility. Entrepreneurs have abundant room for creativity; take a look at these four business models.
Subscription Services
“Services that provide subscribers with on-demand access to audiovisual works for a periodic fee.” Usually, these subscription services may offer limited free trial subscriptions
Service Products
A business model that allows users to buy a desired result rather than the equipment that delivers that result. This model offers benefits to both the customer and the provider. Some examples of products as a service, which shift the risk of performance from the customer to the manufacturer, include jet engines, compressed air, valves, robots, water pumps, smart lighting systems, and even passenger trains.
Drop Shipping
Another popular ecommerce business model which entrepreneurs often use when they lack space to store products. With drop shipping, you sell products on your website that are manufactured, stored, and shipped to your customers by someone else who has the space and resources to store and ship.
Wholesaling
It is also called warehousing. You purchase products in bulk at a store, direct from a manufacturer, or from a site like Alibaba. Then you sell them from your own site. Believe it or not, profits could be substantial and that’s what makes wholesaling stands out.
Conclusion
Being part of the e-commerce industry requires creativity and the insight you have gotten from this article will likely be crucial as you choose a path to follow. And now before you decide on a business plan, do some math and calculate your opportunities and deficiencies associated with each e-commerce business model.