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E-commerce Business Model

E-commerce Business Model

There hasn’t been a greater addition to the world economy than the advent of e-commerce, in terms of which we may well see the reality of the added profundity with which the world functions. As the name suggests, Electronic Commerce, or more colloquially a business transaction, has gone digital worldwide and has made the lives of millions better in ways engrossed by the pioneer’s vision since its inception back in the early nineties.

Electronic commerce has more pros than cons because it has become an integral part of the community and society. The global digital ecosystem works in a particularly complex manner. It plays an important role in determining how this complexity is breached to understand the way it has evolved and transformed the digital age.

The dawn of digitalization is now at the doorstep of billions of people. The effective use of the internet to better the economy with a prudent communication network is increasingly seen as the way forward for nations worldwide. E-commerce has strengthened the business culture around the world, including the way business was thought to be conducted. We have now seen an overhaul of the practices of the past and the recognition of the improved ways things can be bought or sold while maintaining the flow of money without any undue disruptions.

The idea of the intensity with which the change in the way businesses and consumers alike has surfaced in the variations in the tastes of interaction and has in many ways brought out the modern E-commerce industry into fruition. The argument over which form of e-commerce is best for both parties has left a gaping hole in which we see an array of mistrust. Not all businesses benefit from being categorized as an e-commerce business, and certainly not when the market-driven line of thought takes precedence over the use of economics to bring up a successful company at the forefront of market dominance. The innate objective of e-commerce was and is to propel the order of the structure of the society and how it reacts to perceptive idealism to bring forth the ethical and moral practices which are completely accentuated through the use of the internet.

E-commerce Business Models

The e-commerce industry consists of businesses that have a basic skeleton framework of how it operates is built. Usually, we found six (6) traditional types of E-commerce Business Models:

1. Business-to-Business (B2B): B2B means that the product is sold to an immediate buyer who then sells the product to the final customer. For example, a whole seller gets an order from the website and sells the product to the customer after consignment at one of the retail outlets.

2. Business-to-Consumer (B2C): B2C method involves selling the product directly to the customer. The customer can choose the product. The manufacturer will get an email as a notification, and then the organization will deliver the product to the customer.

3. Consumer-to-Consumer (C2C): A C2C business model is when one consumer makes and sells a product to another consumer. One consumer may use a platform like Amazon, Etsy, or eBay to sell products to another consumer. With online E-commerce tools like WooCommerce, consumers can even set up a C2C store on their personal website.

4. Consumer-to-Business (C2B): Another method in contention is the C2B model, which effectively tells us that the consumer approaches multiple buyers/organizations relating to what they have in the offer, and the business chooses the required proposal. The customer places their bet on the service and then pays off the money for acquiring the service. The most common example of this is the way a bank charges interest rates and makes the data available to the customers through the internet. The business meets the requirement and then provides the required services. Good examples of C2B businesses would be a business consultant, a freelance graphic designer, or a social media influencer with a large audience.

5. Business-to-Administration (B2A): B2A also known as Business-to-Government (B2G), refers to all transactions between companies and public administrations or government agencies. Government agencies use central websites to trade and exchange information with various business organizations.

6. Consumer-to-Administration (C2A): C2A e-commerce encompasses all electronic transactions between individuals and public administration. The C2A e-commerce model helps the consumer post their queries and request information regarding the public sector directly from their local governments/authorities. It provides an easy way to establish communication between the consumers and the government. Examples of C2A include taxes (filing tax returns), health (scheduling an appointment using an online service), and paying tuition for higher education, etc.

Five Value Delivery Methods For E-commerce Innovation:

1. D2C – Direct to Consumer: A new generation of consumer brands have built loyal followings with rapid growth by cutting out the middleman. Online retailers like Warby Parker and Casper set the standard for vertical disruption, but brands like Glossier are showing us how D2C can continue to be an area for innovation and growth.

2. White Label and Private Label: To “white label” is to apply your name and brand to a generic product purchased from a distributor. In private labeling, a retailer hires a manufacturer to create a unique product for them to sell exclusively. With private labeling and white labeling, you can stay lean on your investments in design and production and look for an edge in technology and marketing.

3. Wholesaling: A retailer offers its product in bulk at a discount in a wholesaling approach. Wholesaling is traditionally a B2B practice, but many retailers have offered it to budget-conscious consumers in a B2C context.

4. Dropshipping: One of the fastest-growing methods of e-commerce is dropshipping. Typically, dropshippers market and sell items fulfilled by a third-party supplier, like AliExpress or Printful. Dropshippers act as a middle man by connecting buyers to manufacturers. Easy-to-use tools allow BigCommerce users to integrate inventory from suppliers around the world for their storefronts.

5. Subscription Service: As early as the 1600s, publishing companies in England used a subscription model to deliver books monthly to their loyal customers. With e-commerce, businesses are going beyond periodicals and fruit-of-the-month clubs. Today, virtually every industry has seen the arrival of subscription services to bring convenience and savings to customers.

Methodology Analysis:

Understand the different E-commerce business models are essential. The Business to Government (B2G) model replicates the B2B model providing services to businesses through smooth transactions and online solutions directed to particular groups. The B2G model helps to approach the business organization for auction and tenders etc. The Government to Citizen Model helps us define how the government provides one-stop solutions to the ordinary citizen, and examples include how government services reach a single individual. The example includes registration for governmental jobs and using government websites plus apps to sign up for vaccines, among many other things.

Meanwhile, an important aspect that must be understood is the close-knit relationship between the e-commerce business models and the number of cycles taking place in selling a product. The number of cycles such that the decision-making process varies from model wise. The decision-making process for a B2B is longer than a B2C cycle, which marks how a whole business responds, awaiting an output. The B2B marketing breathing space is more than B2C, which means it has the extra cash in hand that could be beneficial.

The B2C model spends less marketing dollars to make a sale and has a low average order value and less recurring orders than the B2B counterpart. Also, B2B benefactors replace catalog and order sheets with e-commerce storefronts and improved targets in the niche market. For C2B, we see that there is a prevalence of social media influencers who are ready to market the consumer’s product. The growth of the e-commerce business is best understood when we look at the C2C model where some companies like eBay, craigslist have paved the way towards starting point of the modern e-commerce business scenario.

The way e-commerce transactions are carried out plays an important role in determining its growth. The Direct to Consumer or D2C cuts out the middle man out of the picture and connects the business to the consumer directly to become an arena of innovation and growth. The white label method applies the rules to a generic transaction where the name and brand are associated with a generic product purchased from the distributor. In private labeling, the retailer hires a manufacturer to create a unique product for them to sell exclusively. We are easily induced to invest in design and production for both private and white labeling and look for an edge in technology and marketing. Wholesaling is most notably another area that gained prominence and is the method where the products are sold in bulk at a discount.

In Dropshipping, there is a middle man who connects buyers to manufacturers and likes of them, including Ali express and Printful. The last form of the delivery system in an e-commerce business is that of the idea of a subscription, which connects the subscription model and subscription services to bring convenience and savings. The important point to note is that there is the existence of custom e-commerce platforms that work with other businesses. However, in the case of subscriptions, we are more likely to see relatively more reliable income streams and can incentivize customers to purchase additional subscriptions and encourage other people to subscribe.

We hope you are benefited from reading this article.


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