Types of e-commerce

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This is a list of the traditional classification of e-commerce models. These models are based on the 4 different marketing segments. However, nowadays two additional types have been added to this classification.

Business to business (B2B)[edit]

B2B e-commerce refers to all electronic transactions of goods and sales that are conducted between two companies.[1] Sometimes the buyer is the end user, but often the buyer resells to the consumer.[2] This type of e-commerce typically explains the relationship between the producers of a product or and the wholesalers.[1] In addition this can be the relationship between the producers or the wholesalers and the retailers. However the same relationship can occur between the service providers and the business organizations.[3]

B2B typically requires more startup cash and it generally means a longer sales cycle, but higher order value and more recurring purchases.[4][2] In 2015, Google found that close to half of B2B buyers are millennials — nearly double the amount from 2012. As younger generations enter the age of making business decisions, B2B selling in the online space is becoming more important.[2]

Examples of this model are ExxonMobil Corporation and the Chevron Corporation, Boeing, and Archer Daniel Midlands. These businesses have custom, enterprise ecommerce platforms that work directly with other businesses in a closed environment.[4]

Advantages:

  • Convenience: While companies can sell through physical storefronts or take transactions by phone, B2B commerce often takes place online, wherecompanies advertise their products and services, allow fordemonstrations and make it easy to place bulk orders. Sellers also benefit from efficient order processing thanks to this digital transaction model;
  • Higher profits: B2B companies often sell their items in wholesale quantities so that buyers can get a good deal and need to restock less often. Larger order numbers lead to higher potential sales and more cash coming in for B2B sellers. At the same time, the ease of advertising to other businesses through B2B websites can help cut marketing costs and boost conversion rates;
  • Huge market potential: From business software and consulting services to bulk materials and specialized machinery, B2B sellers can target a large market of companies across industries. At the same time, they have the flexibility of specializing in an area like technology to become a leader in the field;
  • Improved security: Since contracts are a common part of B2B commerce, there's some security for both buyers and sellers in that there's less concern that one will pay and the other will deliver goods as promised. Since sales usually get tracked digitally, it's also more secure in that B2B sellers can track and monitor their financial results.[5]

Disadvantages:

  • More complex setup process: Getting started as a B2B retailer takes work to figure out how to get customers who stay dedicated and make large-enough orders. This often requires thorough research to advertise to potential businesses, set up a custom ordering system and adapt quickly when sales are underwhelming;
  • Limits to sales: While B2B companies can sell a lot, they do miss out on potential sales to individual customers. The smaller pool of business buyers and the need to negotiate contracts can put some limits on profits, especially when the company loses key buyers to other competitors;
  • Need for B2B sellers to stand out: At the same time, the B2B market has many companies competing and selling similar products and services. Sellers often need to cut prices and find special ways to grab companies' attention to succeed in the market;
  • Special ordering experience needed: B2B companies selling online need to put much effort into designing a website and ordering system that buyers find easy to use. This means presenting product and service information clearly, offering online demos or consultations and using order forms with appropriate options for quantities and any special customization needed.[5]

Business to consumer (B2C)[edit]

B2C it is the most common model. It deals with electronic business relationships between businesses, both producers and service providers with end consumers. Many people enjoy this avenue of e-commerce because it allows them to shop around for the best prices, read customer reviews and often find different products that they wouldn’t otherwise be exposed to in the retail world. This e-commerce category also enables businesses to develop a more personalized relationship with their customers.[1] Anything you buy online as a consumer — think wardrobe, household supplies, entertainment — is done as part of a B2C transaction. The decision-making process for a B2C purchase is a much shorter than a business-to-business (B2B) purchase, especially for items that have a lower value and because of this it had shorter sales cycle. Thus B2C businesses typically spend less marketing dollars to make a sale, but also have a lower average order value and less recurring orders than their B2B counterparts.B2C innovators have leveraged technology like mobile apps, native advertising and remarketing to market directly to their customers and make their lives easier in the process.[2]Examples of B2C businesses are everywhere. Exclusively online retailers include Newegg.com, Overstock.com, Wish, and ModCloth, but other major B2C model brick-and-mortar businesses like Staples, Wal-Mart, Target, REI, and Gap. [4]

Advantages:

  • Unlimited market place:It exhibits unlimited marketplace by enabling the customers to explore and shop as per their convenience. It should be in our best interest that we can check on the desired services from home, offices and anywhere else without the stress of following a restricted timeframe. We can purchase the products at a global level from every corner of the world. It means that the internet has broken the international barriers and has given us the opportunity to stash various items and equipment without the need of being at the shops in person;
  • Lower cost of doing business:The B2C has reduced a number of business components including, employees, purchasing cost, mailing confirmations, phone calls, data entry and the requirement for opening up stores with physical existence. It has influenced and declined the transaction costs for the customers;
  • Business administration made easier:It has made it easier to record store inventory, shipment, logs and overall business transactions compared with the traditional ways of business administration.These aspects of business are now being calculated automatically with utmost accuracy for the online entrepreneurs. Moreover, it provides real-time update feature through which we can explore all the latest happenings in our business;
  • More efficient business relationships:Building new and improved associations with the dealers and suppliers;
  • Work flow automation:This process gives us an edge over shipping products in a timely manner. Furthermore, it automatically adjusts the stock levels and figures out location availability with a ballistic speed. Highly reliable security system with step by step verification, account entry and admiration mode to look after the business transactions.The third party direct sales are backed up with familiar banking and accounting features that enable us to reach out to our vendors and perform internal business transactions accordingly. [6]

Disadvantages:

  • Infrastructure: Even though, it provides a massive customer reach and breaks the international barriers by calling people out on the same platform, but the fact remains unchanged. According to a research, a total number of 26 million people in the world are deprived of using a stable internet connection. It should be in our best interest that some portion of the world is still unable to witness our value added services and this issue will take some time to resolve;
  • Competition: Indeed, the competition is severe since there are millions of online brands and services that can put our business at a stake in terms of customer base. There are certain companies that have managed to maintain a great market share giving them a chance to survive in the long run. We must understand the importance of introducing new and improved products in the world of internet to acquire the best response from the customers;
  • Limited Product Exposure: It is worth mentioning that in spite of rewarding the customers with ease of access and a unique level of flexibility for choosing products, the e-commerce has restricted the product exposure for the buyers over the internet. Most websites wouldn’t allow customers to go beyond the glamorous product images and their descriptions at the time of purchasing the product. It gives us an ideal that e-commerce is supporting ‘limited product exposure’, which is why some products disappoint the customers at the time of shipment and are sent back to the companies immediately.[6]


Consumer to business (C2B)[edit]

C2B e-commerce is when a consumer makes their services or products available for companies to purchase.[1] The C2B e-commerce model’s competitive edge is in pricing for goods and services. This approach includes reverse auctions, in which customers name the price for a product or service they wish to buy. Another form of C2B occurs when a consumer provides a business with a fee-based opportunity to market the business's products on the consumer's blog. [7]

For example, food companies may ask food bloggers to include a new product in a recipe, and review it for readers of their blogs. YouTube reviews may be incentivized by free products or direct payment. This could also include paid advertisement space on the consumer website. Google Adwords/Adsense has enabled this kind of relationship by simplifying the process in which bloggers can be paid for ads. Services such as Amazon Affiliates allow website owners to earn money by linking to a product for sale on Amazon. The C2B model has flourished in the Internet age because of ready access to consumers who are "plugged in" to brands. Where the business relationship was once strictly one-directional, with companies pushing services and goods to consumers, the new bi-directional network has allowed consumers to become their own businesses. Decreases in the cost of technologies such as video cameras, high-quality printers, and Web development services give consumers access to tools for promotion and communication that were once limited to large companies. As a result, both consumers and businesses can benefit from the C2B model. [7]

An example of this would be a graphic designer customizing a company logo or a photographer taking photos for an e-commerce website. [1]

Advantages and disadvantages of C2B on an example:

The C2B website offers a Lending Tree advertisement at the top of the page, www.thefreemortgagecalculator.com. The advantage of this website is that the owner doesn't have to sell mortgages, meet with customers, or pay for everyday business operation expenses in order to make money. If the Lending Tree advertisement is used by a visitor, the website owner gets paid a commission from Lending Tree for the lead. The disadvantages of C2B transactions are that one must be well versed in web design to create such a website and the amount of money earned is far less than what could be earned by selling the mortgage directly to the consumer instead. [8]

Consumer to consumer (C2C)[edit]

C2C represents a market environment where one customer purchases goods from another customer using a third-party business or platform to facilitate the transaction and they typically make their money by charging transaction or listing fees.[9][2]

These businesses benefit from self-propelled growth by motivated buyers and sellers, but face a key challenge in quality control and technology maintenance.[2]Another customers’ benefit is the competition for products and often finds items that are difficult to locate elsewhere. Also, margins can be higher than traditional pricing methods for sellers because there are minimal costs due to the absence of retailers or wholesalers.[9] Opening a C2C site takes careful planning.[4]

Examples of C2C are companies like Craigslist and eBay which pioneered this model in the early days of the internet. [2] Generally, the transactions of this model are provided by online platforms (such as PayPal), but often are conducted through the use of social media networks (Facebook marketplace) and websites (Craigslist). [1]

Advantages:

  • Availability: It is always available so that consumers can have access to whenever they feel like shopping;
  • There is regular updating of the website;
  • Higher profitability: Consumers selling products to other consumers benefit from the higher profitability that result from selling directly to one another;
  • Low transaction cost: Sellers can post their goods over the internet at a cheaper rate far better than higher price of renting a space in a store;
  • Direct relationship: Customer can directly contact sellers and do without an intermediary.[citation needed]

Disadvantages:

  • Payment made has no guarantee;
  • Security issues: There could be theft as scammers might try to create their website with names of some famous C2C websites such as eBay to attract customers;


Business to administration (B2A)[edit]

B2A, also known as B2G, refers to all transactions between companies and public administration or government agency. Government agencies (administration) use central websites to trade and exchange information with various business organizations. [10] This is an area that involves many services, particularly in areas such as social security, employment, and legal documents. [1]

Hurdles to B2G:

Businesses that are used to interacting with other businesses or directly with consumers often encounter unexpected hurdles when working with government agencies. Governments tend to take more time than private companies to approve and begin work on a given project. Layers of regulation can drag on the overall efficiency of the contracting process.

While businesses may find that government contracts involve additional paperwork, time, and vetting, there are advantages to providing goods and services to the public sector. Government contracts are often large and more stable than analogous private-sector work. A company with a history of successful government contracting usually finds it easier to get the next contract. [11]

An excellent example of a B2A model is Accela; it’s a software company that provides government software solutions and public access to government services for permitting, planning, licensing, public health, and so on. [10]

Consumer to administration (C2A)[edit]

C2A (consumer to administration) e-commerce encompasses all electronic transactions between individuals and public administration.

The C2A e-commerce model helps the consumers to post their queries and request information regarding public sectors directly from their local governments/authorities. It provides an easy way to establish communication between the consumers and the government. [10]

Examples of this include taxes (filing tax returns), health (scheduling an appointment using an online service), and paying the tuition to universities. [1]

See also[edit]

References[edit]

  1. ^ a b c d e f g h Wilks, Alex. "What are the different categories of e-commerce?". www.numinix.com. Numinix. Retrieved 28 May 2020.
  2. ^ a b c d e f g Tyler, Jesse. "Traditional Types of Ecommerce Business Models + Innovative New Ones To Consider For Your Next Venture". www.bigcommerce.com. Big Commerce. Retrieved 28 May 2020.
  3. ^ Chen, James. "What Is Business-to-Business (B2B)?". www.investopedia.com. Investopedia. Retrieved 28 May 2020.
  4. ^ a b c d DeMatas, Darren. "5 Types Of Ecommerce Business Models That Work Right Now". www.ecommerceceo.com. E- commerce CEO. Retrieved 28 May 2020.
  5. ^ a b Donohoe, Ashley. "Advantages & Disadvantages of B2B". www.bizfluent.com. Bizi Fluent. Retrieved 28 May 2020.
  6. ^ a b Study, Study 4 business. "Advantages and disadvantages of B2C". www.study4business.com. Study 4 business. Retrieved 28 May 2020.
  7. ^ a b Arline, Katherine. "What is C2B?". Business News Daily. Business News Daily. Retrieved 28 May 2020.
  8. ^ Bell, Chris. "E-commerce models". Chris Bell. Retrieved 28 May 2020.
  9. ^ a b Tarver, Evin. "Customer to Customer – C2C". www.investopedia.com. Investopedia. Retrieved 28 May 2020.
  10. ^ a b c Javed, Arslan. "6 Types of eCommerce Business Models You Need To Know (2020)". Ecomsay. Ecomsay. Retrieved 28 May 2020.
  11. ^ Kenton, Will. "Business to Government". Investopedia. Retrieved 28 May 2020.