Understanding the Different Types of Ecommerce Business Models

Understanding the Different Types of Ecommerce Business Models

Ecommerce is a business model that allows businesses and consumers to make purchases or sell things online. There are many different types of ecommerce business models to choose from, and today it’s easier than ever for creative founders to use them to make their ideas a reality.

If you want to innovate and defy expectations — if you’re going to separate your business from all of the others online — you’ll need to know what business model works best for you and how you can leverage that into greater success.

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. No matter your growth stage or business model, ElmMac can position your business for its maximum potential.

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.

As younger generations enter the age of making business transactions, B2B selling in the online space is becoming more important.

Wholesaling.

Wholesale ecommerce is a B2B ecommerce model where, instead of selling your products individually to consumers, you sell them in bulk and at a discount to other businesses — essentially as the intermediary between the manufacturer and the distributor or retailer.

In a wholesaling approach, a retailer will typically offer its products at a significant discount.

Dropshipping.

One of the fastest-growing methods of ecommerce is dropshipping. Typically, dropshippers market and sell items fulfilled by a third-party supplier, like AliExpress. Dropshippers act as a middle man by connecting buyers to manufacturers. Easy-to-use tools can allow users to integrate inventory from suppliers worldwide for their storefronts. Recruit the expertise of ElmMac to develop a professional ecommerce website today.