Here’s a look at different types of e-commerce business models

With increasing internet penetration around the world, a large amount of buying and selling now takes place online. As e-commerce gains in popularity, sales through online platforms are expected to rise by 78 percent in 2020, according to Selfstartr website.

Argaam takes a look at various classifications, business models, and product models of e-commerce below.

1) B2B e-commerce, or business-to-business, is selling products or services between businesses through the internet via an online sales portal.

2) B2C e-commerce, or business-to-customer, is the most common type of e-commerce. It is similar to the traditional retail model wherein a business sells goods or services online to customers.

3) C2C e-commerce or the customer-to-customer (C2C) model allows customers to trade, buy, and sell items in exchange for a commission paid to the site. It allows the seller to keep most of their profit and enables the buyer to get a better price than they would have if they bought the item from a business.

4) C2B e-commerce or the customer-to-business model involves individuals selling products or services to businesses.

5) B2G e-commerce or business-to-government is when companies sell products and services to government clients. There is also G2B, in which the government sell sto private companies, and G2C, in which the government sells to individuals.

In addition, e-commerce business models include drop-shipping, wholesaling and warehousing, manufacturing, white labeling and subscription-based.

1) Drop-shipping is the simplest form of e-commerce, as it allows the business to set up a storefront and receive payments from customers. This model eliminates the burdens of managing inventory, warehousing stock, or dealing with packaging.

2) Wholesaling and warehousing e-commerce businesses require a lot of initial investment, where the business owner needs to manage inventory, keep track of customer orders and shipping information, and invest in warehouse space.

3) Private labeling and manufacturing is suitable when there is no cash or desire to build a business. Companies that manufacture products offsite for sale send plans to a contracted manufacturer, who produces the product to meet customer specifications and can either ship directly to the consumer, to a third party like Amazon, or to the company selling the final product.

4) White-labeling is when a product that is already successfully sold by another company is chosen, and resold with a new design, package and label.

5) A subscription model delivers customers a set of products at regular, scheduled intervals. Subscription companies often incentivize customers to purchase additional subscriptions or encourage their contacts to subscribe.

Meanwhile, e-commerce product models include single product, single category, multiple category, affiliate and hybrid.

1) Single-product e-commerce businesses focus on a single product offered to businesses or consumers. This model is recommended for companies with a high-quality product.

2) Multiple category e-commerce sites are suitable for retailers who have tried a single category site successfully and are ready to expand their offerings.

3) Affiliate sales benefit the original seller by providing added visibility and an opportunity to monetize product reviews, a personal blog, or other site. This is done often through blogs, but sometimes through dedicated e-commerce stores.

4) Hybrid stores offer the benefit of an additional product category without committing to marketing and managing additional products. It can be beneficial for businesses that have outgrown the income stream or the product confines of a single category store.