What are the Types of Ecommerce Retail Models?

It is anticipated that there will be 501.6 million e-commerce consumers by 2029. Businesses of all sizes can benefit greatly from e-commerce.

The e-commerce business model facilitates online sales and purchases for brands and customers alike. An e-commerce company concept can take many distinct forms.

It is imperative to comprehend the different ecommerce retail models and their implications for your SEO strategy before venturing into the online sector.

Related: Ecommerce vs. Retail: What’s the Difference?

So, selecting the right model is essential to the long-term success and financial gain of your e-commerce enterprise.

This blog post looks deeply into these models, giving you the knowledge you need to decide which option is best for your business and how to choose the model right for you.

What is an Ecommerce Business Model?

An online business’s structure is defined by its ecommerce business model, which also outlines the methods for delivering goods and services, connecting with potential customers, and making money.

For example, if you opened a store and sold to final consumers, you would operate a business-to-consumer eCommerce retail model.

For long-term success, selecting the appropriate model is essential.

Six main business models exist for eCommerce:

• B2C Business
• B2B
• F2S
• B2B2C
• C2C
• C2B

Source: CDN

Types of eCommerce Retail Models

1. Business-to-consumer (B2C)

This is the most typical retail approach, in which companies sell to customers directly. Well-known examples are B2C companies like Walmart, BestBuy, Amazon, and Alibaba. They use e-commerce websites to resell the goods of other businesses.

Typically, B2C e-commerce businesses have:

• Brief sales cycles (the length of time needed to draw in a prospect and see them through to completion of a purchase)
• high volume of transactions
• Low transaction value on average

The five types of B2C models that are commonly observed include

• Advertising-based B2C,
• Community-based,
• Fee-based,
• Direct sellers, and
• Online intermediaries.

Source: CDN

2. Business-to-business (B2B)

Businesses use this strategy to sell products or services to other businesses. Unlike B2C purchases, these transactions frequently entail larger order quantities and a longer sales cycle. A few examples are businesses that sell office supplies, software, or industrial equipment.

For instance

B2B provider of marketing software, HubSpot

HubSpot provides other companies with customer relationship management (CRM) software. HubSpot is categorized as a B2B e-commerce company because its users are not the general public.

There are four types of B2B.

• Manufacturer-Distributor: This business-to-business (B2B) interaction entails a distributor buying goods from a manufacturer and reselling them to the final customer.
• Manufacturer–Retailer: This business-to-business (B2B) relationship happens when a manufacturer sells its goods directly to a retailer, who then resells them to the final customer.
• Manufacturer-Wholesaler: In this kind of business-to-business exchange, a manufacturer sells its goods directly to a wholesaler, who resells them to the final customer.
• Service Provider-Client: In this kind of business-to-business (B2B) interaction, companies receive services like marketing, financial services, consulting, and transportation.

Source: Forbes

3. Business-to-government (B2G)

Businesses using this business model provide goods or services directly to institutions or government organizations. B2G transactions must adhere to stringent laws and frequently require particular certificates.

An RFP is typically the first step in a B2G deal. Here, a government organization asks companies to submit a proposal for a contract by pitching their goods or services. It’s a massive B2G market. Just the federal government uses outside contractors for $18.2 to $42.6 billion a day.

The sale of ammunition to the US Army by a manufacturer is an illustration of a business-to-business (B2G) connection. When a county government hires a private engineering firm to design a new water and sewer infrastructure for the town, that is an example of a local business-to-business (B2G) partnership.

When governments release requests for proposals (RFPs), businesses in the B2G sector usually submit bids for those projects.

Examples of business-to-business transactions are

• Building, road, and infrastructure construction
• On-premises or cloud-based software options
• Setting up a unified communications system
• Upkeep of public buildings and parks alike

Source: Vectorstock

4. Consumer-to-consumer (C2C)

Customer-to-customer, or C2C, is a business model in which consumers can transact with one another, usually online. Classified ads and auctions are two examples of C2C market implementations.

With the advent of the internet and businesses like eBay, Etsy, and Craigslist, C2C marketing has become increasingly prominent.

For example

Etsy allows business owners to design a unique website that they can use to promote their goods to customers. The C2C website provides tools and advice for expanding a business that varies in cost based on a company’s development stage.

An additional tool for effectively managing orders, listings, and customer inquiries is the “Sell on Etsy” app.

eBay: Fixed-price and auction items are the two categories of product listings available on eBay. Fixed-price items can be acquired quickly by clicking the “Buy It Now” button. A Place Bid button allows bidders to enter and view the current bid price on auction items. These goods are up for bids for a set period, and the highest bidder is deemed to have “sold” them.

Source: Startuptalky

5. Consumer-to-business (C2B)

Traditionally, companies have sold goods and services directly to customers through online commerce. Customers who engage in business-to-business trade (B2B) exchange goods or services for cash or other advantages.

Influencer marketplaces allow for C2B transactions, and influencer marketing is one kind of such activity. A large portion of the creator economy indeed involves C2B.

C2B platforms include freelance marketplaces such as Fiverr and Upwork.

Source: Collidu

Examples of C2B scenarios include the following:

• An affiliate link to culinary supplies from a kitchen firm is shared on the blog of a food blogger.
• An IT blogger who, in return for a share of the ad money, shows their audience an organization’s service advertisements.
• Prominent online retailers or vendors compensate customers for product reviews they write or share on social media platforms.

6. Consumer-to-government (C2G)

Source: Medium

Consumer-to-government (C2G) E-commerce is the practice of customers using the Internet to purchase goods or services from government organizations. In a C2G transaction, the government organization is the seller, and the customer is the buyer.

One instance would be people obtaining government licenses or permits. Businesses can purchase products or services from consumers through C2B e-commerce.

One could sell product ideas to a manufacturer, or a consumer might sell their marketing expertise to a company.

It also allows users to market goods or services they’ve produced, such as digital goods or handcrafted goods.

E-commerce models that are C2G come in several forms, such as:

• E-government portals: In this concept, many services and goods from government agencies are made available to the public via a single web portal, including licenses and permits.
• Platforms for electronic commerce: In this concept, government agencies use websites like Amazon or eBay to sell goods and services to customers.
• Internet-based services: In this paradigm, government organizations offer their constituents online services like healthcare and education.

How to Choose Your Ecommerce Business Model?

1. Product or Service: What Are You Selling?

Think about your target market and what you’re selling. Are you going after specific customers or other companies?

For instance, a business that makes handcrafted jewelery might prosper by using a B2C business model and selling to customers directly via its website.

2. Target Market

The optimal platform to reach your audience depends on your understanding of their online and purchasing behaviours.

• Would they rather just cross it off their list, or do they enjoy food shopping?
• Are consistency and variety more important to them in food?
• Is buying in bulk what they prefer?
• Are the goods they purchase consistently the same, or do they vary every time?

You can determine the answer to these questions by looking at your needs: how many products do you need? Can you offer a subscription model? Can you afford a lower-margin option like dropshipping or a marketplace?

3. Resources: What Are Your Strengths and Weaknesses?

Determine which model best suits your skill level and capabilities by considering your budget, workforce, and experience.

• Instead of opening a full-fledged online store, a small firm with limited funding may begin selling handmade goods on a C2C platform like Etsy, which requires less initial investment.
• Dropshipping or marketplaces can be a good option if you excel at providing the finest customer experience, whether through an e-commerce website or unboxing.

Conclusion

Several e-commerce methods are accessible, each with a unique set of advantages, as you have undoubtedly noticed by now. Partnering with an ecommerce seo agency can further amplify your online presence and success.

Knowing what business models to adopt and how to leverage them can make the difference between a successful company and one you never hear about again for companies trying to expand into the digital space.

Read more: E-Commerce Retail Trends 2024

FAQ

1. What is a retail model in e-commerce?

An ecommerce retail model sets out the framework for your online company, including how you’ll contact clients, ship goods, and make money.

2. Is Amazon a retail or ecommerce?

Amazon is an e-commerce retail company that sells directly to customers using the business-to-consumer (B2C) model.

3. What is the difference between retail and ecommerce retail?

Traditional retail signifies actual physical stores where customers can browse and make purchases. Without a physical store, e-commerce retail buys and sells products using online platforms like websites or apps.

4. What is the retail model generally used for?

The retail model explains how companies get goods from producers or distributors to final customers.