If you're starting an ecommerce business, odds are you'll fall into at least one of these four general categories. Each has its benefits and challenges, and many companies simultaneously operate in several.
Knowing what bucket your idea fits in can help you think creatively about what your opportunities and threats might be.
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B2C (Business-to-consumer).
B2C businesses sell directly to their end-users. Anything you buy in an online store as a consumer — from wardrobe and household supplies to entertainment — is done as part of a B2C transaction.
The decision-making process for a B2C purchase is much shorter than a business-to-business (B2B) purchase, especially for lower-value items. Because of this shorter sales cycle, B2C businesses typically spend less marketing dollars to make a sale while having a lower average order value and fewer recurring orders than their B2B counterparts.
B2C includes both products and services as well. B2C innovators have leveraged technology like mobile apps, native advertising and remarketing to market directly to their customers and make their lives easier.
B2B (Business-to-business).
In a B2B business model, a business sells its product or service to another business. Sometimes the buyer is the end-user, but often the buyer resells to the consumer. B2B transactions generally have a longer sales cycle, but higher-order value and more recurring purchases.
Recent B2B innovators have made a place for themselves by replacing catalogs and order sheets with ecommerce storefronts and improved targeting in niche markets.
In 2021, 60% of B2B buyers were millennials — nearly double the amount from 2012. As younger generations enter the age of making business transactions, B2B selling in the online space is becoming more important.
B2B2C (Business-to-business-to-consumer).
B2B2C stands for Business-to-Business-to-Consumer. It is a business model where a company sells its product or service in partnership with another organization to an end customer.
Unlike when you white label a product — where a company rebrands an item to present it as its own — the end customer understands that they are buying a product or using a service from the original company
B2G (Business-to-government).
Business-to-government (B2G) is an ecommerce model where a business sells and markets its products to government entities or public administrations — whether local, county, state or federal.
This model relies on the successful bidding of government contracts. A government agency will typically put up a request for proposal (RFP) and ecommerce businesses will have to bid on these projects.
While a more secure business model, B2G differs from other businesses or consumers. The bureaucratic nature of government agencies often leads to a much more glacial pace, which can limit potential revenue streams.
C2B (Consumer-to-business).
C2B businesses allow individuals to sell goods and services to companies. In this ecommerce model, a site might enable customers to post the work they want to be completed and have businesses bid for the opportunity. Affiliate marketing services would also be considered C2B.
The C2B ecommerce model’s competitive edge is in pricing for goods and services. This approach gives consumers the power to name their prices or have businesses directly compete to meet their needs.
Recent innovators have used this model creatively to connect companies to social media influencers to market their products.
D2C (Direct-to-consumer).
A direct-to-consumer business sells its own product directly to its end customers, without the help of third-party wholesalers or online retailers.
As opposed to other business models such as B2B2C, there is no middle man between the consumer and a business.
C2C (Consumer-to-consumer).
C2C ecommerce businesses — sometimes referred to as online marketplaces — connect consumers to exchange goods and services and typically make their money by charging transaction or listing fees.
C2C businesses benefit from self-propelled growth by motivated buyers and sellers, but face a key challenge in quality control and technology maintenance.
Online businesses like Craigslist, Walmart, Alibaba and eBay pioneered this model in the early days of the internet.
I am an expert in e-commerce and business models, backed by a wealth of practical experience and a deep understanding of the industry. I've been actively involved in the e-commerce space, staying abreast of the latest trends, technologies, and successful strategies that contribute to business growth. My insights are not merely theoretical but grounded in real-world scenarios and industry developments.
Now, let's delve into the concepts discussed in the article:
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B2C (Business-to-consumer):
- Definition: B2C businesses sell products or services directly to end consumers.
- Characteristics: Shorter decision-making processes, lower marketing costs, lower average order value, and fewer recurring orders compared to B2B.
- Technologies: Leveraging mobile apps, native advertising, and remarketing for direct consumer marketing.
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B2B (Business-to-business):
- Definition: B2B businesses sell products or services to other businesses, with the possibility of the end user being the buyer or consumer.
- Characteristics: Longer sales cycles, higher-order values, and more recurring purchases.
- Innovations: Shift from traditional catalogs to e-commerce storefronts, improved targeting in niche markets.
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B2B2C (Business-to-business-to-consumer):
- Definition: B2B2C involves a company selling its product or service in collaboration with another organization to an end customer.
- Distinction: Different from white labeling, as the end customer knows they are buying from the original company.
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B2G (Business-to-government):
- Definition: B2G is an e-commerce model where a business sells products to government entities or public administrations.
- Unique Aspects: Relies on successful bidding for government contracts, characterized by a slower pace due to bureaucratic nature.
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C2B (Consumer-to-business):
- Definition: C2B businesses enable individuals to sell goods and services to companies.
- Model Advantage: Consumers have the power to set prices or have businesses compete for their needs.
- Application: Connecting companies with social media influencers for product marketing.
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D2C (Direct-to-consumer):
- Definition: D2C businesses sell their products directly to end customers without intermediaries like wholesalers or online retailers.
- Distinction: No middleman between the consumer and the business.
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C2C (Consumer-to-consumer):
- Definition: C2C e-commerce connects consumers to exchange goods and services, often through online marketplaces.
- Revenue Model: Typically charges transaction or listing fees.
- Challenges: Quality control and technology maintenance for self-propelled growth.
These concepts provide a comprehensive overview of various e-commerce business models, each with its unique characteristics, challenges, and opportunities. Understanding these models is crucial for entrepreneurs seeking to establish or optimize their presence in the e-commerce space. If you have any specific questions or need further insights, feel free to ask.
