e-commerce business models of all types are thriving. Sales from online stores are expected to increase 78% by 2020.
It’s easy to get caught up and excited in the latest ecommerce trends, but unless you know the fundamentals, you’ll hit a profitability wall without knowing it.
A booming ecommerce business takes intuition, knowledge of your market, a solid business plan, and careful research into products and business models. But one of the biggest hurdles most newcomers to the space face is easy to solve. Many would-be ecommerce business owners just don’t know how ecommerce businesses are set up and what different types of e-commerce are available to them.
Major Ecommerce Business Classifications
Electronic commerce encompasses all online marketplaces that connect buyers and sellers. The internet is used to process all electronic transactions.
- B2B: Business To Business Ecommerce
A B2B model focuses on providing products from one business to another. While many businesses in this niche are service providers, you’ll find software companies, office furniture and supply companies, document hosting companies, and numerous other ecommerce business models under this heading.
B2B ecommerce examples you may be familiar with include the 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. A B2B ecommerce business typically requires more startup cash.
- B2C: Business to Consumer Ecommerce
The B2C sector is what most people think of when they imagine an ecommerce business. This is the deepest market, and many of the names you’ll see here are known quantities offline, too. B2C sales are the traditional retail model, where a business sells to individuals, but business is conducted online as opposed to in a physical store.
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.
- C2C E-commerce
B2B and B2C are fairly intuitive concepts for most of us, but the idea of C2C is different. What does a consumer-to-consumer ecommerce business look like?
Created by the rise of the ecommerce sector and growing consumer confidence in online business, these sites allow customers to trade, buy, and sell items in exchange for a small commission paid to the site. Opening a C2C site takes careful planning.
Despite the obvious success of platforms like eBay and Craigslist, numerous other auction and classified sites (the main arenas for C2C) have opened and quickly closed due to unsustainable models.
- C2B: Consumer To Business Ecommerce
C2B is another model most people don’t immediately think of, but that is growing in prevalence. This online commerce business is when the consumer sells goods or services to businesses, and is roughly equivalent to a sole proprietorship serving a larger business.
Government / Public Administration Ecommerce
The models listed above are the primary ecommerce retail structures, but they aren’t the only ones. Other types involve government/public administration conducting transactions with businesses or consumers.
- B2G (also called B2A): for businesses whose sole clients are governments or type of public administration. One example is Synergetics Inc. in Ft. Collins, Colorado, which provides contractors and services for government agencies.
- C2G (also called C2A): typically individuals paying the government for taxes or tuition to universities.
Two sectors that are closed for entrepreneur owners but are growing include G2B for government sales to private businesses, and G2C, for government sales to the general public.