Types of eCommerce Business Models, Pros, and Cons
The first thing that comes to our mind when we talk about eCommerce is that it is an online commercial or sales transaction that takes place between the supplier and the customer. While the idea of the concept is right, there are more specific factors involved that categorize eCommerce into six major types. Based on the services offered, there are several types of eCommerce models that have been developed over the years. The major categorization is based on the customers and the seller.
Each of these types has different features and attributes.
Typically, eCommerce business models can be divided into six major types, such as:
- Business-to-Business (B2B)
- Business-to-Consumer (B2C)
- Consumer-to-Consumer (C2C)
- Consumer-to-Business (C2B)
- Business-to-Administration (B2A)
- Consumer-to-Administration (C2A)
Business-to-Business (B2B): This type of eCommerce consists of all the electronic transactions and dealings related to the goods and services. These basically are conducted between companies and include conventional wholesalers and producers dealing with retailers.
Business-to-Consumer (B2C): The Business-to-Consumer e-business model is related to the transactions and relationships between businesses and the end customers. This is mainly to do with the retail eCommerce trade that takes place online. With the inception of the internet, B2C eCommerce has evolved to a great extent.
Today, we find scores of electronic shopping sites, and virtual stores on the web, that sell myriad products, ranging from computers, fashion items to even necessities.
In this case, the customer has more info about the products in the form of informative content and there is also a chance to buy products at cheaper rates. Most times, quick delivery of the order is also maintained.
Consumer-to-Consumer (C2C): This eCommerce model consists of electronic transactions of products and services between two customers. These are mainly conducted through a third party that provides an online platform for these transactions. Sites, where old items are bought and sold, are examples of C2C eCommerce.
Consumer-to-Business (C2B): In this eCommerce business model, a complete reversal of the selling and buying process takes place. This is very relevant for crowdsourcing projects. In this case, individuals make their items or services and sell them to companies. Some examples are proposals for a company site or logo, royalty-free photographs, design elements, and so on.
Business-to-Administration (B2A): In this kind of eCommerce transaction, there are dealings between companies and public administration. It encompasses different services, such as social security, fiscal measures, legal documents, employment and so on.
Consumer-to-Administration (C2A): In this eCommerce model, electronic transactions are carried between individuals and public administration. Some examples are distance learning, information sharing, electronic tax filing, and so on.
The main objective of both the B2A and C2A types of eCommerce is to increase flexibility, efficiency, and transparency in public administration.
Pros of eCommerce
Perhaps the greatest benefit of eCommerce is its huge reach and reception across the global market, with minimum investments. It enables sellers to sell to a global audience and also customers to make a global choice. Geographical boundaries and challenges are eradicated drastically reduced.
Through direct interaction with final customers, this eCommerce process cuts the product distribution chain to a significant extent. A direct and transparent channel between the producer or service provider and the final customer is made. This way products and services that are created cater to the individual preferences of the target audience.
The process of eCommerce enables sellers to come closer to customers that lead to increased productivity and perfect competition. The customer can also choose between different sellers and buy the most relevant products as per requirements, preferences, and budget. Moreover, customers now have access to virtual stores 24/7.
eCommerce also leads to significant cost reduction. It leads to a significant reduction of transaction costs and accordingly customers also get to buy at a lower rate.
Cons of eCommerce
eCommerce has its share of disadvantages too, such as:
- It depends strongly on network connectivity and information technology
- There aren’t definite legislations both domestically and internationally to regulate eCommerce transactions
- The whole market culture is not favorable to electronic commerce (for example customers cannot try the products)
- At times, there is a loss of the privacy, culture or economic identity of the customer
- There is a chance of fraudulent financial transactions and loss of sensitive financial information
Nevertheless, the pros overweigh the cons when it comes to eCommerce. With innovative eCommerce processes in vogue, it is expected that these limitations will be done away with.