5 Major Types of Ecommerce

types of Ecommerce

Do you want to grow your business? You need to have an e-commerce component to your business. Since COVID-19 kept people at home, they found other ways to get the goods and services they needed.

They turned to the internet. Ecommerce was projected to grow by 20% in 2020 alone, while traditional retailers took a major hit. Many well-known retailers had to file for bankruptcy because they didn’t adapt.

As you make the shift to e-commerce, you have to know the types of e-commerce businesses and where your business falls.

Read on to learn the types of e-commerce businesses, the types of business models, and how to start your e-commerce business on the right foot.

1. Business to Business (B2B)

Does your business sell to other businesses? Then your business is considered to be a B2B business.

In-person meetings and trade shows have historically driven B2B sales. That’s mostly because B2B sales cost a lot and need multiple people to sign off on the sale.

More businesses are turning online for the products and services that they need. B2B e-commerce was projected to have more than $6 trillion in sales in 2020.

The pandemic is driving part of the shift to e-commerce, but a generational change is contributing. Millennials are decision-makers now, and they will look online for solutions.

2. Business to Consumer (B2C)

This is what most people think of when they think of e-commerce types. B2C sales are sales directly to consumers. Amazon, Wal-Mart, Target, grocery stores, and other retailers are in the B2C space.

Does your business fall in the B2C space? Then you need to depend on creative marketing tactics to distinguish your company from the heavyweight retailers.

You have to have a powerful brand and understand the needs and desires of your audience. You can then use social media to build your loyal following online.

3. Consumer to Consumer (C2C)

Thanks to technology, consumers can sell goods and services to other consumers. Think of C2C as one giant garage sale.

Third-party websites like eBay and Craigslist made it much easier for people to rent an apartment, sell old books, and get rid of fitness equipment sitting around collecting dust.

It’s not likely that your current business is a C2C business. However, you can start a C2C website to facilitate these transactions.

If you decide to jump into the C2C world, you have a much better chance of impacting your local area. You don’t want to start a national or international site to compete with such well-known companies without a lot of money behind you.

4. Consumer to Administration (C2A)

Another type of e-commerce involves government agencies. Many have been incredibly slow to adapt to the changing times, but they are trying to switch to e-commerce.

Many government services are online, such as taxes, health care, education, and Social Security payments. The federal government has worked hard to update its systems, but states have a long way to go.

We learned during the pandemic that state unemployment systems run on a 40-year old computer language called COBOL. It’s a similar story with states trying to get health care programs online.

There is also the B2A type of e-commerce. Examples of this type of e-commerce include government contract work, tax payments, and business registration.

You can expect that if you are dealing with the government in an e-commerce format, it can be frustrating for business and consumer users.

5. Consumer to Business (C2B)

How can consumers sell to businesses? That may seem like an oxymoron, but it is a legitimate type of e-commerce. Remember, the one thing that e-commerce has done is shift the balance of power from corporations to consumers.

They have more information at their fingertips, and they have access to more choices than ever. This gives them much more power.

This can be very similar to a B2B market. Here’s the difference – you’re primarily a freelancer or sole proprietor selling your services to other businesses.

You could be a consumer who dabbles in photography and post your photos for sale as stock photos. An online influencer is another example of a C2B relationship.

How to choose an e-commerce model

Once you know what types of e-commerce businesses exist, it’s time to choose a way to make money online.

It’s a pretty straightforward process. Here are the most common ways to monetize an e-commerce business.

Subscription-based model

A subscription-based model is widely used by SaaS providers, bloggers, and service providers. This is a good model to use if you want to provide an ongoing service to clients.

Even if you have a product, you can charge a monthly or annual subscription to clients.

Retail model

This is the traditional retail model, where you have a product and sell it to a customer. In traditional retail, your primary advantage is your location.

That changes in e-commerce, where customer service is front and center. You need to work hard to make every customer touchpoint memorable.

Dropshipping

Rather than produce your own products, you can design a unique product, sell it, then have someone do the rest of the work.

That’s the definition of dropshipping. You do the front-end work to market your products. Your drop shipping partner takes the orders, produces them, and fulfills them.

This can be a profitable business, but you have to choose the right dropshipping company. That will help you avoid customer service headaches. 

Which model is right for your business?

How do you choose which business model is ultimately right for your business? Start by assessing your business. Are there services that you can deliver online?

That might not work for a landscaping industry, but a fitness business can shift to provide online training. The auto industry is seeing a significant shift to e-commerce, too.

If you do have services that you can provide online, that’s a good place to start. You can use a subscription-based model to provide those services online.

You need to think through the entire business and ask yourself a few questions.

  • How will you acquire customers?
  • How will customers order products?
  • How will orders get fulfilled?
  • What is the customer service process?

These questions help you define the foundation of your business.

Develop your eCommerce business

There will be different ways to develop your e-commerce business. How you develop your business depends on the type of e-commerce business you have, the monetization model, and the price point.

For example, a B2B e-commerce business is likely to have a service or product-based business with a higher price point. This requires a different marketing strategy than someone selling a $20 product.

Despite those major differences, there are three areas of your e-commerce business that you need to focus on. We’ll go over each one below.

Website

Your website is the storefront of your business. People will form opinions about your business based on your website, and they’ll decide if they will work with your company or not.

Keep in mind that your e-commerce site has to reflect your industry and your brand. An automotive ecommerce site needs to be well organized so customers can find the parts they need instantly.

Traffic

Your e-commerce business is doomed if you don’t have a lot of traffic. There are two basic rules to drive traffic to your website.

The first is to understand your customers. Know who they are and where they are online. The second rule is to put your e-commerce business in front of those customers.

For instance, an automotive parts business knows that its customers are on automotive forums and blogs. The company can have an active presence in those forums and advertise on those blogs.

Conversions

The last piece of the e-commerce puzzle tells you how effective you are at driving the right traffic to your website. You need to measure how many visitors to your website become leads and customers.

If your conversion rates are low, it could mean that you are driving the wrong type of people to your website. It could also mean that your website is the problem.

Jump into the world of e-commerce

Ecommerce offers businesses a ton of opportunities right now. The industry grew much faster than expected, thanks to the COVID-19 pandemic.

Don’t let your business get left behind; get online! You now know the different types of e-commerce businesses, the business models, and how to get traffic and conversions. You have to do the work now.

Do you want more insights into business and marketing? Check out the marketing section of this site for the latest.

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