The invention of the internet has changed the way people shop and has redefined its possibility. Statistics indicate that eCommerce retail shopping increased from 6% in 2013 to 9% in 2017. Experts indicate that the growth is set to continue, projecting a 14% growth by the end of 2021. With the rapid improvement and innovation of online trading tools, it is easier for creative founders to actualize their ideas.
Despite the changes in eCommerce, the rules have remained constant. For creatives to innovate their enterprises, they need to know their business models and define how they will innovate. The following are different types of business models of eCommerce.
Traditional Types of Ecommerce Business Models
- Business-to-Consumer (B2C)
B2C is the most common business model with many approaches. With this model, enterprises sell their products to end-users. An example of a B2C transaction is when a consumer buys anything in an online store. The decision-making process for this model is less complicated than a business-to-business purchase (B2B). Due to the shorter sales of this model, firms spend less on marketing compared to B2B. However, they have a lower average order than their B2B counterparts.
- Business-to-Business (B2B)
With this model, a firm sells its product or services to another firm. The firm can be the end-user or can sell to the final consumer. Firms with this model have a high order value but longer sales cycles.
- Consumer-to-Business (C2B)
The C2B model allows individuals to sell products and services to firms. For instance, an individual may post work to a site and allow companies to bid for the opportunity. This model is competitive in prices for goods and services.
- Consumer-to-Consumer (C2C)
C2C model is also known as an online marketplace that connects consumers to exchange goods and services by charging transaction fees. Enterprises in this model benefit from motivated buyers and sellers. However, they face challenges in quality control and technology maintenance.
Innovative Ecommerce Business Models
- Direct-to-Consumer (D2C)
Enterprises are adopting this model to increase growth by cutting down intermediaries. Thus, they build brand loyalty and ensure customer satisfaction.
This is the fastest-growing innovative model. Dropshippers act as intermediaries by connecting buyers and manufacturers. They adopt easy-to-use tools that enable big commerce users to integrate inventories from suppliers globally.
- Subscription Services
Subscription services enable firms to build loyalty from their customers. Currently, almost every industry is using subscription services to ensure convenience and savings to customers.