Ecommerce business models and how to take your business online
Ecommerce is booming, but many business leaders are still unsure whether it’s a fit for their business model or what it looks like to make the leap. Between the tight competition, cybersecurity concerns, and wondering if your customer experience will still be up to par, it’s important to make sure ecommerce will work for you before jumping in.
And if your business is just getting started, it’s important to know the basic types of business models and how they work in ecommerce. This understanding will help guide some basic business decisions you’ll have to make, especially at the beginning.
The truth is, ecommerce is the future for every business model. Knowing how it works best with yours can help you continue to outperform the competition and continue driving growth long-term. This article will help get you started as we explore:
- Business-to-consumer (B2C) models
- Business-to-business (B2B) models
- Consumer-to-business (C2B) models
- Consumer-to-consumer (C2C) models
- Consumer-to-government (C2G) models
- Business-to-government (B2G) models
- Business-to-business-to-consumer (B2B2C) models
- Government-to-business (G2B) models
- Government-to-consumer (G2C) models
- Ecommerce delivery models
- Examples of ecommerce business models
- Ecommerce business FAQ
Six common business models in ecommerce
Traditional business models haven’t changed, but when it comes to ecommerce specifically, each one has a unique fit.
B2C — business-to-consumer
Business-to-consumer is a business model in which businesses sell directly to the consumers who purchase the goods for themselves. No third party, such as a wholesaler, is involved. A B2C example might look like a clothing company that sells bathing suits to women.
The B2C buyer journey is short and simple. The consumer becomes aware of a need or want, they consider their options, and they make a purchase.
B2C business models may be the easiest to translate into the ecommerce space, and B2C businesses have been many of the first types of businesses to do so. The buyer journey doesn’t need to change at all in a digital environment — the last two stages simply happen online rather than in a physical store.
B2C ecommerce brands are meeting their audiences online in dozens of ways. Because the model adapts so seamlessly to digital marketplaces, many B2C brands are at the forefront of ecommerce technologies and trends. They are engaging audiences and increasing sales through social media selling, personalized ecommerce experiences, mobile apps that bridge digital and physical spaces, and more.
B2B — business-to-business
In a B2B model, businesses sell to other businesses — such as SaaS brands that sell productivity software to other companies. The buyer is an employee (or an entire department) purchasing a product or service on behalf of their company. Retailers, producers, and agencies are all examples of B2B companies.
B2B businesses aim to create relationships through a marketing and sales process that is more complicated than most B2Cs’. The B2B sales funnel typically includes awareness, interest, evaluation, engagement, and purchase stages.
That added complexity is why B2B ecommerce growth has been slower than that of B2C ecommerce. B2B buyer cycles often require more nurturing, and pricing models are sometimes more complicated — and all those nuances have become digital.
B2B sellers reach online buyers using robust content strategies that deliver case studies, thought leadership content, PDFs, and more to target audiences at every stage of the funnel. Account-based marketing (ABM) strategies have emerged and matured in a B2B ecommerce environment to help these brands reach audiences effectively.
C2B — consumer-to-business
In C2B business models, consumers create value and businesses benefit from that value. Think about your company hiring a freelance writer or simply reading customer reviews that share ideas for innovation. That’s consumer-to-business. C2B flips the traditional business model on its head to focus on value (not necessarily a physical product) that originates with the consumer.
Often this ecommerce model uses an intermediary to meet audiences online, such as a platform where businesses can browse consumer profiles and choose whom to hire — like Upwork, Fiverr, or an influencer marketing platform. Even online review platforms count as C2B ecommerce because they provide both data for businesses to use and feedback on how the business could improve.
C2C — consumer-to-consumer
C2C transactions don’t involve a business at all. Instead, C2C business is between two consumers, with a third-party company enabling the purchase. Consumers will publicly share items for sale. Then other consumers can browse the listings or postings, decide what they’d like to buy, and contact the seller.
While newspaper classifieds could be considered C2C, today this business model is primarily online. Examples of C2C ecommerce include:
- Auction platforms like eBay
- Exchange of services platforms such as dog walking app Rover
- Exchange of goods platforms like Etsy
- Payment platforms such as PayPal
C2C platforms are convenient for both buyers and sellers, and the platforms earn their share by charging a small amount for each transaction — like a seller’s fee to list items.
C2G — consumer-to-government
In C2G business models, consumers conduct transactions with the government, such as a citizen paying taxes. These transactions might also be related to education or Social Security.
A C2G business model fosters communication between consumers and the government. It gives consumers a direct line to share feedback or information with public sectors, making it easier for citizens to use government-sponsored services.
B2G — business-to-government
Business-to-government is a complex business model in which a government buys products, services, or information from companies. This might look like a telecommunications company or engineering business offering its services to a government agency.
B2G can apply to local, state, federal, or international governments. The process works a little differently than other business models — in most cases, the government does not go directly to an ecommerce website to purchase. Instead, a government agency looking for a product or service will put out a request for information (RFI) and request for proposal (RFP) so relevant businesses can share what they have to offer. The administration will then decide which company to work with. B2G comes with lots of laws, regulations, and documentation to govern transactions and business relationships.
However, B2G ecommerce transactions do sometimes take place on websites with a marketplace model, where businesses share their products or services and government entities can choose whom to work with at their leisure.
Three additional ecommerce business models
While the six previous business models are the most common, other business models are transitioning to ecommerce spaces too.
B2B2C — business-to-business-to-consumer
In the B2B2C business model, companies work with other companies to reach new customers. For instance, if you’re creating a new product you might join forces with another business to use a service like an ecommerce website. Together, both you and this other business will be able to increase your respective customer bases.
A good real-world example is Instacart. Grocery stores partner with Instacart to reach more customers together, with Instacart enjoying the stores’ existing customer bases and grocery stores profiting from the digital experience Instacart provides.
B2B2C ecommerce utilizes marketing campaigns on various digital platforms to reach its audience, just like B2C businesses. This model is scalable and flexible.
G2B — government-to-business
G2B models are government agencies that offer services to businesses. This might look like business licenses, electronic forms, or registering a startup online. Businesses act as the customer in G2B purchase cycles. It’s the government’s job to offer valuable and convenient digital services and information.
Typically, digital government portals are used to carry out this ecommerce business model. The government provides helpful business services that companies can use online. From business permits to government contracting to taxes, government agencies seek to make processes available online to their business audience.
G2C — government-to-consumer
In the government-to-consumer model, a government sells to consumers. This setup describes the relationship between public administration and residents.
For example, the consumer might need official documents or simply information from the government. Other examples include educational services, employment help, and voting. Whatever the case may be, the G2C model delivers value from a government agency to the residents it represents.
With G2C ecommerce, all communication and transactions take place online. Similar to G2B models, the government provides federal and regional websites and e-platforms where consumers can make payments, access helpful information, and find resources.
Ecommerce delivery models
An ecommerce delivery model is the process or system by which goods and services get to the buyers. Some delivery models lend themselves well to specific types of ecommerce businesses. It’s important to choose the best kind of delivery for your ecommerce business model, so the process will run as smoothly as possible and your customers will be happy.
D2C — direct-to-consumer
Direct-to-consumer delivery does not use any third parties like retailers or distributors. Instead, brands send their products straight from their warehouse to customers. For example, if you sell directly to consumers via your own website, this is a D2C delivery model.
The D2C delivery model works well for B2B, C2C, and some B2C brands (although many B2C businesses use a retailer, which is the opposite of D2C). Brands using D2C models are able to control the entire buying experience, which often leads to happier customers and higher revenue.
White label delivery is when a brand uses a third-party platform that doesn’t look like a third-party platform to buyers — the platform does not use its own branding or logo. Meanwhile, customers have full visibility into details such as shipping cost and delivery time.
White label apps are easy to integrate with your brand. White label shipping is often used for online retail.
A private label is an ecommerce delivery method companies use to take third-party products, package them as their own, and ship the items out to customers. Brands that use private label delivery do not have to stock inventory themselves, and they enjoy extra flexibility in how they fulfill orders. This is a type of D2C business model with no intermediary.
Because private label delivery is a type of D2C, it’s a good fit for the same types of business models.
Wholesaling occurs when a brand sends large quantities of its product to another company for resale. Large commercial orders might be sent via freight shipping or international wholesale shipping. Wholesaling often involves ecommerce platforms.
Wholesaling is a common delivery model among B2B brands. Individual customers rarely need to order a large quantity of a product, and you usually can’t place a wholesale order from a business unless you meet a high minimum order quantity (MOQ).
Dropshipping is a delivery model where a shopper places an order with a retailer, the retailer processes the order, and the retailer sends that order to a wholesaler who then ships the items to the customer. Dropshipping is used exclusively for ecommerce. It doesn’t work for brick-and-mortar stores because these retailers don’t keep inventory on hand.
The dropshipping delivery model is most commonly used by B2C businesses because it’s an easy way to sell small quantities directly to consumers. But B2B dropshipping is possible too — especially for seasonal or especially expensive items that the seller does not want to stock.
In a subscription model, customers pay a regular, recurring fee and receive items on a set schedule — such as once a month or once a week. Customers choose the products they’d like to auto-ship and how often they want to receive their purchases, and they pay a set amount based on the frequency they chose.
Subscriptions work well for ecommerce models such as B2C, B2B, and C2B. In many cases, a business that purchases a subscription is subscribing to a service or resource (such as a premium membership to a digital tool or a budget of freelancer hours) rather than a product.
Ecommerce model examples
Check out how these ecommerce models and delivery models play out in the real world.
1. Virgin Atlantic Airlines — B2C business, D2C delivery
Virgin Atlantic Airlines is a B2C brand. Since the airline’s services are provided directly to customers, Virgin Atlantic uses a D2C delivery model.
And Virgin Atlantic does B2C ecommerce well because the company creates outstanding customer loyalty. With a goal of being the most-loved travel company, Virgin tapped into the power of ecommerce to build a better website and design a strong digital experience. The success of that ecommerce customer experience has helped the company thrive online.
2. Norfolk County Council — G2C business, D2C delivery
The Norfolk County Council helps run the town of Norfolk, England, where it serves 900,000 residents. The council operates as a G2C business to provide residents with information and services, such as legal documents.
During the COVID-19 pandemic, Norfolk County had to turn to an entirely ecommerce model. The agency struggled to keep its operations and services running, so the council streamlined its offerings via automation. Norfolk saved 4.5 days each month and reduced the time it took to prepare legal documents from 45 minutes to just 12 minutes, proving that even government bodies can succeed with ecommerce.
3. RCS MediaGroup — B2C business, subscription delivery
RSC MediaGroup has over 70 brands across Italy and Spain, including newspapers, magazines, television, and more. The brand’s subscription model is a major source of revenue.
RCS wanted to improve its ecommerce model and boost revenue by sending customers the right messages at the right times, so the media group turned to customer data to improve brand engagement. RCS mined information from its CRM solution, ecommerce solution, and customer website behavior to create detailed customer profiles. This enabled the company to deliver more personalized, cross-channel experiences as an ecommerce brand.
E-business model FAQ
Here are a few fast facts about ecommerce business models.
What is ecommerce?
Ecommerce is any type of commercial transaction that takes place over the internet. Sellers list products and services on ecommerce platforms, and buyers purchase the goods. The first ecommerce transaction took place in 1994. Now, Statista reports total ecommerce revenue is projected to reach $1.3 trillion by 2025.
What are the four traditional types of ecommerce?
Some consider business-to-consumer (B2C), business-to-business (B2B), consumer-to-consumer (C2C), and consumer-to-business (C2B) the “four traditional” types of ecommerce. Business-to-government (B2G) is often grouped into B2B, but brands that sell to governments understand there are big differences in this kind of ecommerce model. Ecommerce models that involve the government are often more complex, dealing with more regulations, laws, and documentation.
Which ecommerce business model is most successful?
B2C is a highly successful business model for ecommerce because the traditional sales process is undisturbed and because the short purchase cycle has moved easily to digital environments. It’s also the most common ecommerce model. However, almost every basic business model can be adapted to work well for ecommerce.
Are there different tools and software for different e-business models?
At the core, all ecommerce business models need the same types of tools — a content management system (CMS), a digital payment processing system, and a way to track analytics. However, there are certain tools that may lend themselves better to one model or another, like a payment solution designed specifically for government offices or a CMS that’s set up for B2B businesses.
Choose the right business model for ecommerce success
Any business model can work in ecommerce, which is good — because ecommerce is the future.
Discover how other brands with your business model are winning in ecommerce. Then consider where you can make tweaks to bring your own company up to speed and succeed in ecommerce too.
As the leader in digital commerce, Adobe Commerce can help you build multichannel ecommerce experiences for B2B and B2C from a single platform. From segmentation to advanced experience management to visual merchandising tools, all aspects of ecommerce are made easy. To learn more, take an interactive product tour or watch this overview video.