TYPES OF ECOMMERCE: 6 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
In the ecommerce world, there are three main ways a product can get sold over the internet:
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 personalized 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)
DTC is a form of B2C business model that emphasizes selling goods directly to consumers, as was previously noted. Some of the most successful examples of DTC brands include Cupshe and Allbirds.
- Pros: Since DTC businesses manage production, they frequently offer competitive costs, excellent quality assurance, and substantial profit margins.
- Cons: Owning your manufacturing can be expensive because you have to buy your own workspace and tools for production.
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.
- Pros: Recurring charges boost customer loyalty and consumer involvement while providing businesses with relatively predictable income streams.
- Cons: 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).
- Pros: 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.
- Cons: 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 added fees from third-party production could steal profits from your bottom line.
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.
- Pros: E-retailers appreciate being able to offer a large assortment of products without having to manufacture each one individually.
- Cons: The lack of a unique product of your own can make it challenging to differentiate yourself in the market, thus lowering your brand awareness.
The B2C wholesale concept is comparable to an online version of Sam’s Club or Costco. The most recognizable businesses, such as Swish and Alibaba, have B2B qualities while also allowing private customers to purchase in bulk.
- Pros: Bulk purchasing enables companies to benefit from easier choosing and packing, which leads to cost savings and improved efficiency further down the line.
- Cons: 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.
What does my audience want?
Your brand’s target market should heavily influence its principles and most effective organizational structure.
Before starting any business establishment, do a focus group on the intended market. People should be questioned about their wants, values, willingness to buy your goods, and potential repurchase frequency. Your ecommerce strategy should be built on this, and it should also help you identify the most viable business model.
Recall that this stage will be more beneficial the more you understand your audience. The greatest time to develop customer profiles is right now, if you haven’t already.
What resources do I have?
What you currently have and what you might have in the future are very different things. It’s crucial to take into account your current resources and how they influence your business now as you try to choose the best ecommerce business plan.
When it comes to capital, this is very important. A DTC model can be perfect if you intend to prepare modest amounts of food right in your kitchen. However, if you wish to prepare a variety of dishes with intricate directions, this choice can be too expensive.
Considering what you now have, choose your e-commerce model. Later, you can always make changes.
What am I good at?
Success is knowing oneself (and one’s business), especially when choosing a business model.
Think about how your strengths can be applied to each as you contrast and contrast the available varieties. B2C wholesale can be a perfect option if you’re a seasoned company expert starting with a sizable investment. If you’re a marketing or branding guru, a white-label product can be all you need to stand out from the competition.
Study existing businesses to find a home
Observe successful brands in your niche closely as you narrow in on viable ecommerce business ideas. Why are they successful, you might wonder. Which is not? To provide you a stronger competitive advantage, may their current model be improved?
Even though copying other businesses won’t help your business model stand out, it will provide you a wonderful place to start when looking into effective strategies. Analyzing the present situation improves your knowledge of how to climb a rock wall, as it does. Examine your own strengths, target markets, and competitive outlook with care, paying special attention to any brand-new prospects that might provide you an advantage over the competition.
Above all, keep in mind that picking an ecommerce model isn’t always a one-and-done procedure. Watch your technique.
Above all, keep in mind that selecting an ecommerce model isn’t always a straightforward task. Watch how your company is doing and don’t be hesitant to adjust or change things to make them more effective. You can make significantly more effective judgments for your e-commerce firm today and in the future by remaining vigilant.