Ecommerce Business Models: A Guide to Making the Right Choice

23rd Nov 2022

Ecommerce Business Models: A Guide to Making the Right Choice

Of the many progressive ways to build businesses these days, e-commerce models offer entrepreneurs and business owners a wide range of channels to generate sustainable revenue.

But it’s not just quite as simple as ‘set up digital shop and get selling’ – like any other business, there are different types of e-commerce models to choose from, so knowing what would work best for you and then executing that model effectively is the best way forward.

To help you understand e-commerce models a bit better we’ve set out some broad guidelines below that should give you an indication of what model may work best for you.

Business to Consumer (B2C)

Like a traditional high-street shop, B2C online shops sell items directly to their customers through their website.

From fashion items, household goods, electronics and the like to services such as insurance, legal advice or similar, B2C ecommerce offers fast transactional value for the entire chain from seller to customer.

Whilst the sales cycle might be shorter than for other businesses, the high turnover means vibrant revenue opportunities but marketing is key – these can be very competitive businesses to run!

Business to Business (B2B)

B2B ecommerce is when a business sells a service or product to another business, oftentimes so that the buying business can repurpose, integrate or simply add a mark-up to the item or service and on-sell it to a consumer at a profit.

Where in the past B2B businesses didn’t have many ‘customer-facing interfaces’ online (they’d usually have a print catalogue and an active team of salespeople out in the field) the digital age has opened opportunities for B2B businesses to develop new clients and sales channels online.

Consumer to Business (C2B)

This relatively new model inverts the relationship between businesses and customers, allowing consumers to present themselves and their products or services to a range of businesses that may want to purchase them.

It also opens the opportunity for consumers who are well-connected in the digital space to broker deals for businesses to market themselves, for example through influencer marketing.

Direct to Consumer (D2C)

D2C businesses have grown significantly as digital capability has expanded, with more businesses able to cut out third-party shopfronts or wholesalers and simply sell straight to their customers.

Platforms such as Shopify have helped D2C businesses with setting up their own sales channels, helping them cut costs and deliver value at a higher profit margin.

Consumer to Consumer (C2C)

The C2C model is, ironically, one of the oldest in the world but has – like other business models – grown significantly due to the digital revolution.

In short, C2C is simply a marketplace-type transaction between two consumers on a platform such as eBay, Facebook Marketplace and Alibaba where the consumer pays a transaction or listing fee to list their product, but controls every other aspect of the transaction.

How do you know which type of e-commerce model is right for you?

Before we investigate that question it’s worth mentioning that the greatest advantage of the digital age is that there will definitely be a model that’s right for your needs!

Here are some question to ask as you plan your e-commerce business:

  • Am I selling a physical product, or a digital product?
  • What impact does this have on my initial and ongoing costs, and therefore my revenue model?
  • Am I selling a service? If so, how competitive is the market for my specific service and what do I offer that’s unique?
  • Who is my target market?
  • Where do they usually shop (online, and bricks and mortar)?
  • How best do I reach them there, and what implication does that have for my marketing strategy and budget?
  • What existing platforms are there that I should look at to sell my product or service?
  • If none of the ‘off-the-shelf’ solutions is suitable, what would I require a bespoke solution to include?
  • What is my growth strategy and forecast, so that I can model marketing strategies around that to ensure I stay focused?

If you’re able to answer these questions the chances are you’ll have a pretty clear picture of an online business model that will work for you.

We have built ecommerce websites for clients of all types selling everything from heavy engineering products to beauty and well-being, so if you need further guidance, give us a call, we’d be glad to help!

Find out more by calling 01223 550800 or email info@realnet.co.uk.

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