TYPES OF ECOMMERCE: OPTIONS FOR YOUR BUSINESS
It's hardly surprising that ecommerce is one of the fastest-growing sectors of the global market given its $4.2 trillion annual revenue. Millions of consumers frequent online retailers to buy consumer products, household items, and other items to stay current with trends, which means that successful modern ecommerce enterprises must be fiercely competitive.
Selecting the appropriate business model is one of the main components of this accomplishment. There are many different types of ecommerce enterprises, so you have a number of possibilities. Understanding their benefits and drawbacks is essential for creating a successful and long-lasting venture.
Types of ecommerce
There are three basic methods a product can be sold online in the realm of e-commerce:
Business to consumer (B2C)
A B2C company is an online retailer that sells goods directly to customers. B2C refers to businesses that choose their own products and market to specific customers. B2C companies include such like Gymshark and Colourpop.
Keep in mind that some people conflate the terms B2C and DTC (direct to consumer). Even if it isn't necessarily wrong, DTC is better understood as a subset of B2C rather than as a substitute for it.
Business to business (B2B)
Businesses that offer goods or services to other businesses are considered B2B ecommerce companies. Companies like Primera sell high-quality printers and supplies to other businesses, while startups like SwagUp offer personalised goods to corporate entities.
Although B2B may not be mentioned as frequently as B2C, it is nevertheless one of the most widely used ecommerce models today. B2B is quite common; there are 1.6 B2B companies for every B2C company in the US alone.
Consumer to consumer (C2C)
Online marketplaces known as consumer to consumer (C2C) enterprises enable customers to sell their own goods to other consumers. Common examples include sites like eBay and Facebook Marketplace, however more recent sites like Vinted and Wallapop are starting to gain a lot of popularity in their own nations.
The C2C business model is expanding globally as well. Since 2020, the growth of some consumer-to-consumer platforms has increased by 50%, with verticals including fashion, beauty, and family products offering the most opportunities.
Types of B2C ecommerce business models
There are various business models available for B2C. Although customers may not always be aware of the type of business they are dealing with, choosing the ideal B2C model is essential to your success as a store owner.
Direct to consumer (DTC)
- Benefits: Since DTC businesses manage production, they frequently offer competitive costs, excellent quality assurance, and substantial profit margins.
- Weakness: Owning your manufacturing can be expensive because you have to buy your own workspace and tools for production.
Subscription DTC
Subscription DTCs are direct-to-consumer business models that charge customers on a weekly, monthly, or quarterly basis. Major companies like Tiege Hanley and BootayBag are driving growing interest in this type in the industry.
One important distinction to keep in mind is that DTC might have characteristics of a subscription model without actually being one. True subscription DTC only allows customers to buy subscription plans.
- Benefits: Recurring charges boost customer loyalty and consumer involvement while providing businesses with relatively predictable income streams.
- Weakness: Not all products work well with subscription-based business models, particularly bulky appliances and other non-consumables.
White and private label
Businesses that sell goods under a white or private label brand were made by another person. White label products are non-exclusive goods that any brand is allowed to sell (consider essential oils). Contrarily, private label products are solely developed for specific companies (such as Target's Archer Farms).
- Benefits: Third-party production relieves you of the burden of product protection and gives you more time to concentrate on important duties like marketing and customer service.
- Weakness: You may not be able to oversee quality as closely as you'd want because you have less control over white label and private label producers. Additionally, the additional costs associated with third-party production can reduce your bottom line's revenues.
E-retail
To build a store with carefully chosen products, several e-commerce companies get their product lines from other brands. This is referred to as e-retail, or the process of creating a virtual store. In the last two decades, e-retail has given rise to a number of popular companies, like goop and The Breakfast Pantry.
- Benefits: E-retailers appreciate being able to offer a large assortment of products without having to manufacture each one individually.
- Weakness: The lack of a unique product of your own can make it challenging to differentiate yourself in the market, thus lowering your brand awareness.
B2C wholesale
The B2C wholesale concept is comparable to an online version of Sam's Club or Costco. The most recognisable businesses, such as Swish and Alibaba, have B2B qualities while also allowing private customers to purchase in bulk.
- Benefits: Bulk purchasing enables companies to benefit from easier choosing and packing, which leads to cost savings and improved efficiency further down the line.
- Weakness: If your business doesn't price less than rivals, it may be at a significant disadvantage given that B2C wholesale buyers are primarily concerned in saving money.
Choosing the right ecommerce business model
It takes careful consideration of your target markets, available resources, and personal qualities to choose the best business model for your e-commerce venture. You may eliminate less effective models and seek alternatives that make more sense for your brand by posing a few straightforward questions.
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