According to Statista, retail e-commerce generated about $5.2 trillion in sales in 2021 and is expected to reach $8.1 trillion by 2026. However, the B2B e-commerce market was even larger, yielding $17.9 trillion in 2021. You’re probably familiar with e-commerce. And perhaps the idea of starting an e-commerce business has crossed your mind. However, it’s crucial to first understand e-commerce and its various types. In this article, we’ll discuss different types of e-commerce and their benefits. Without any further ado, let’s jump into it.
7 Types of E-Commerce Based on Business Models
1. B2C (Business to Consumer)
This is the most common type of e-commerce, where businesses offer products to consumers online. With the rise in online shopping, 75% of B2C buyers buy online at least once a month. Products are typically sold in single units. The customers primarily purchase products for personal consumption, making them the sole decision-makers in the buying process.
Amazon is a leading global B2C e-commerce platform. It offers various products in various categories, allowing consumers to purchase almost anything.
2. B2B (Business to Business)
In B2B e-commerce, businesses sell products to other businesses. These products are mostly sold in bulk quantities at wholesale prices. Gartner estimates that 80% of B2B interactions will take place online by 2025. For businesses, factors like product quality, pricing, quantity, and shipping are important. B2B buyers evaluate all these aspects and make decisions after internal discussions. This means there is usually more than one decision-maker in B2B e-commerce.
Megaventory is a B2B ERP software, that will help you manage your inventory and sales while being exclusively on the cloud.
3. C2B (Consumer to Business)
C2B e-commerce is where individuals provide their services or products to businesses online. This model often involves one-time or short-term contractual relationships for mutual benefit. 62% of independent workers report higher satisfaction than employees. Additionally, one-third of U.S. businesses hire independent contractors for various services, making C2B e-commerce a burgeoning sector.
Upwork is a U.S.-based freelancing platform that connects independent professionals with businesses from around the world.
4. C2C (Consumer to Consumer)
In C2C e-commerce, individuals sell their services or products to other consumers. These platforms facilitate easier access to potential buyers and sellers. C2C commerce is suitable for a variety of products and services. However, it’s particularly popular for second-hand items and unique products like art, handcrafted goods, and more. Usually, individuals communicate directly on C2C e-commerce platforms. These platforms might charge users commissions or fees.
Etsy is a C2C e-commerce, where sellers offer unique and creative products to millions of consumers.
5. B2A (Business to Administration)
B2A e-commerce, or B2G (Business to Government), refers to businesses selling services to the government. It typically involves digital tools and software that the government uses to manage public data, documents, etc. Governments also use these tools and software to manage their day-to-day activities.
Accela is a type of B2A e-commerce that provides cloud solutions to governments.
6. C2A (Consumer to Administration)
E-commerce platforms also connect consumers to the administration (Government) for transactions related to public administration costs. These platforms are utilized for payment and act as communication channels between the government and its citizens. For example, a consumer might pay tuition fees for higher education through a specific website. Moreover, individuals can submit queries or requests for specific information. The government also posts special announcements on these websites.
EFTPS (Electronic Federal Tax Payment System), an e-commerce website managed by the U.S. Department of the Treasury, operates 24/7 for tax payments.
7. D2C (Direct-to-Consumer)
D2C is an e-commerce model where manufacturers sell directly to customers. This model is on the rise, with 55% of consumers seeking direct access to manufacturers for authentic products. American Giant manufactures high-quality men’s and women’s clothing and sells their products directly to consumers.
Categories of E-Commerce Based on Niche
Based on the niche, e-commerce is categorized into the following two types:
Horizontal e-commerce businesses offer multiple categories, serving as a one-stop shop for their users. Thus, customers can purchase anything they want. This model caters to a wide audience and aims for a significant market share. Such e-commerce marketplaces have a reduced risk of failure. Amazon is a horizontal e-commerce marketplace; buyers can find almost everything on this platform.
Vertical e-commerce focuses solely on a specific niche or industry. Managing this model is generally more straightforward. It also allows for more effective targeting of customers. The model is based on a personalized approach, enhancing customer satisfaction.
Wayfair is a vertical e-commerce website targeting homeowners and offering an extensive range of furniture.
Advantages of Choosing E-commerce
- TTM (Time to Market): E-commerce accelerates TTM since it’s relatively easy to start an online business. Compared to traditional brick-and-mortar stores, one can kickstart e-commerce swiftly through various online platforms. Establishing an independent website might take a bit of time, but it’s still quicker than setting up a physical store, marketing it, and securing the first sale.
- Growth: E-commerce simplifies business operations, allowing business owners to manage products more efficiently. This allows businesses to take immediate steps and minimize losses. They can also refine their marketing and advertising strategies. All these factors contribute to business expansion.
- Customer Base: In e-commerce, customers can purchase items from anywhere in the world. This allows businesses to expand their reach far beyond local confines. Many businesses operate across various countries, tapping into a vast audience.
- Business Hours: Traditional businesses often adhere to specific business hours. In contrast, e-commerce eliminates the constraints of a rigid time frame. Buyers can explore sites and place orders at any time.
E-commerce Solution Providers
WooCommerce is an excellent solution for building an e-commerce store out of a WordPress website. Some 3.5 million e-commerce websites are powered by WooCommerce.Its vast number of customizations allows for great customization. Plus, it’s easy to use for non-technical folks.
BigCommerce is another great option for building an online store, boasting almost 1 million users. It is suitable for beginners and small businesses looking for a quick and easy start. It also supports large enterprises with services such as online store creation, web hosting, SEO optimization, business marketing, and order management systems. They offer a 15-day trial, followed by various pricing plans.
Shopify simplifies the process of setting up an online store and selling products across multiple channels. Its excellent reporting, analytics, and automation make it stand out from other providers. With its remarkable features and ease of use, Shopify holds 10% of the global e-commerce software market.
Adobe Commerce (Magento)
Magento, or Adobe Commerce, as it’s called now, offers many different functionalities. Some are inventory control, marketing automation tools, and SEO features. Adobe Commerce also has the option of hosting multiple stores in one account, something that proves to be very useful to many businesses.
Megaventory is ERP software, designed to help you with your inventory management. Also, it integrates with a lot of other platforms, such as WooCommerce and Shopify.
Megaventory can help you and your business transfer data in real time, have available alerts and reports regarding your inventory and sales, and overall keep everything tidy so you can focus on what really matters- taking your business to the next level.
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It’s fairly obvious that e-commerce is not just a passing trend but has become indispensable for businesses. Consequently, the number of e-commerce websites is increasing rapidly. However, the type of e-commerce business varies depending on the business model and target audience. We hope this article helped you make a clear decision regarding your e-commerce store.
Author Bio: Jennifer is a freelance writer who speaks passionately about B2B Go -to Market, digital disruption, online commerce, and companies.