4 basic business models in e-commerce
Posted: Tue Dec 24, 2024 6:00 am
What are the main e-commerce business models? Are there differences between these models? Is understanding business models important for online business activities? Running your own online store requires the entrepreneur not only to know the market, but also to specify the business model. Read the article to learn about the basic models used in the corporate world.
4 basic e-commerce business models – index:
Business-to-consumer (B2C)
Business-to-business (B2B)
Consumer-to-consumer (C2C)
Consumer-to-business (C2B)
Business models in e-commerce – summary
4 basic e-commerce business models
Business-to-consumer (B2C)
Depending on the type of customer, there are four basic e-commerce models: B2C, B2B, C2C and C2B. The B2C model is a type of relationship between an entrepreneur and an individual customer. This type relies on selling products directly to the consumer, who is also the end user. B2C is one of the most popular business models. This model can be divided into the following types:
direct seller – the customer purchases the product directly from the online seller
online intermediary – in this relationship, there is an intermediary, who is belarus whatsapp number database the real owner of the product (service). Examples of sites that offer this type of service are Trivago, Etsy and Pakamera
Advertising-based B2C – using free content on the website attracts users and displays personalized ads
B2C model based on community creation – for example, Facebook creates communities on the Internet, while other sites create advertisements that use correct targeting
Paid – Some services, such as Netflix, provide content to their consumers for a fee. Some websites offer free access to materials, but only in a limited version.
Advantages of B2C
One of the main advantages of the B2C business model is the short decision-making process – the customer is usually the only person who decides to buy. With the possibility of global sales, even small businesses can attract consumers from all over the world. Sellers can use analytics tools, such as Google Analytics , to collect information about customers. This knowledge can be used to personalize communications and advertising.
Disadvantages of B2C
The biggest disadvantage of the B2C model from an entrepreneur’s point of view is the need to acquire customers. It is more difficult to win loyal customers, so a lot of financial resources must be allocated to marketing purposes. The other impediment is the high competition in the market.
The B2C model is primarily based on the relationship between consumers and the seller, which means that this relationship must be maintained on a regular basis. Companies know that the cost of acquiring new customers is higher than keeping loyal customers, so companies do everything they can to meet customer expectations. For example, a popular way to attract customers is by using loyalty programs.
Business-to-business (B2B)
It is a relationship between two companies. The company directly sells its product (services) to other companies. These relationships can be established between two intermediaries, resellers, suppliers and other business partners. In the B2B model, there are two types of commercial exchange:
Vertical – is the type of commercial exchange that occurs within a single sector (branch)
Horizontal – is a type of exchange, where transactions are made within many branches
Advantages of B2B
One of the advantages of the B2B model is customer certainty, which results in a high conversion rate. Typically, when business customers search for a product, it is because they want to buy it, and not just browse the range as individual customers do. The typical order from business customers is larger because companies often decide to buy in large quantities.
4 basic e-commerce business models – index:
Business-to-consumer (B2C)
Business-to-business (B2B)
Consumer-to-consumer (C2C)
Consumer-to-business (C2B)
Business models in e-commerce – summary
4 basic e-commerce business models
Business-to-consumer (B2C)
Depending on the type of customer, there are four basic e-commerce models: B2C, B2B, C2C and C2B. The B2C model is a type of relationship between an entrepreneur and an individual customer. This type relies on selling products directly to the consumer, who is also the end user. B2C is one of the most popular business models. This model can be divided into the following types:
direct seller – the customer purchases the product directly from the online seller
online intermediary – in this relationship, there is an intermediary, who is belarus whatsapp number database the real owner of the product (service). Examples of sites that offer this type of service are Trivago, Etsy and Pakamera
Advertising-based B2C – using free content on the website attracts users and displays personalized ads
B2C model based on community creation – for example, Facebook creates communities on the Internet, while other sites create advertisements that use correct targeting
Paid – Some services, such as Netflix, provide content to their consumers for a fee. Some websites offer free access to materials, but only in a limited version.
Advantages of B2C
One of the main advantages of the B2C business model is the short decision-making process – the customer is usually the only person who decides to buy. With the possibility of global sales, even small businesses can attract consumers from all over the world. Sellers can use analytics tools, such as Google Analytics , to collect information about customers. This knowledge can be used to personalize communications and advertising.
Disadvantages of B2C
The biggest disadvantage of the B2C model from an entrepreneur’s point of view is the need to acquire customers. It is more difficult to win loyal customers, so a lot of financial resources must be allocated to marketing purposes. The other impediment is the high competition in the market.
The B2C model is primarily based on the relationship between consumers and the seller, which means that this relationship must be maintained on a regular basis. Companies know that the cost of acquiring new customers is higher than keeping loyal customers, so companies do everything they can to meet customer expectations. For example, a popular way to attract customers is by using loyalty programs.
Business-to-business (B2B)
It is a relationship between two companies. The company directly sells its product (services) to other companies. These relationships can be established between two intermediaries, resellers, suppliers and other business partners. In the B2B model, there are two types of commercial exchange:
Vertical – is the type of commercial exchange that occurs within a single sector (branch)
Horizontal – is a type of exchange, where transactions are made within many branches
Advantages of B2B
One of the advantages of the B2B model is customer certainty, which results in a high conversion rate. Typically, when business customers search for a product, it is because they want to buy it, and not just browse the range as individual customers do. The typical order from business customers is larger because companies often decide to buy in large quantities.