The e-commerce business is on the rise— the online sale is on the rise. Companies are striving to get the maximum profitability— they are adopting different business models to achieve their goals. There are different business models for conducting the e-commerce business. You have to select a business framework to generate the maximum profitability— the customers are continuously educated by various forms like social media sites and blogs. Shopify SEO Services help their customers— to choose the best business model for their clients.
In this article, we are discussing the different business models for e-commerce sites— readers can be benefited by reading the article— which business model is best for their e-commerce desires. The odds are you would fall in one of the conventional business models.
Business to consumer model:
The Business to consumer model is selling your product and services to the end-user. Most people have commonly used the B2C business model to purchase a thing or two from the internet. For an efficient B2C model— you have to adjust quickly according to the changing demand of the market. A market is a dynamic place— trends are quickly changing here— you have to adapt to the changing needs of the consumers— to outsmart your competitors.
In e-commerce, normally there are five B2C business models—you can adapt according to your specific need.
These B2C models are:
- Direct selling model
- Online intermediaries model
- Advertising-based model
- Community-based model
- Fee-based model
The direct selling model is commonly used— it is the B2C model when the consumer is directly purchasing the product from the company. You can be a whole retailer or manufacturer of a product.
The online intermediaries are the B2C model . Companies bring seller and consumer close to each other and take a commission out of both the parties—if the transactional deal happens between the parties.
In the advertising-based model— companies provide free-of-cost information— these companies usually charge for advertising on their site. Facebook is a prime example of the advertising-based B2C model. It makes money by showing ads to the target market according to the demographics of a product or a service.
Finally the Fee-based B2C model sell information or entertainment to the customer for a fee. Netflix is a prime example of the Fee-based B2C model, Companies do sell their information by taking a fee from the consumer.
The B2C business model is one of the most popular business models— it is trending in an upward direction. Many brick-and-mortar companies are now switching towards the B2C e-commerce business model. Some companies are limiting their physical presence and completely going online as it is more feasible and cost-effective.
Business to the business model:
The B2B business model is producing products for industrial use. In the B2B model, a company markets its products or services directly to other businesses. Wholesale e-commerce fits into this paradigm— these companies are selling their product and services to retailers.
The specifications of the B2B e-commerce website are totally different from the B2C customers— These companies have specific clientage— they have to prepare the product according to specific delivery order— consumers have nothing to do with that product. These can be spare parts— which have to be used for the production of a car or an AC etc.
The B2B model is normally divided into two main categories:
- Vertical B2B model
- Horizontal B2B model
The vertical B2B model is further subdivided into the upstream or downstream B2B models.
Downstream business model
The downstream business model is when a company buys and outsources a part of its final product. For example, if a Pencil manufacturing company outsources the wood and the graphite from other companies— they are now adopting a downstream B2B model.
Upstream business model
The upstream business model is opposite to the downstream business model. In addittion when a raw material company develops its relationship with the final product manufacturer. For example, if a paper mill company creates a relationship with a bookbinding company. Now, this is the upstream vertical business model.
The horizontal B2B model involves products and services that companies don’t use as raw material. These products or services are used by companies in other ways. On the other hand, products and services are generally used in maintenance and operations. For example, a cleaning company or a Janitorial company selling its cleaning products to other companies to clean their offices, floors, restrooms, etc.
How to select a business model for your business:
The big question here is how to choose a business model for your company? In conclusion, it is not that simple as it looks, for this purpose— you have to completely understand your customer— what his needs and wants are. Then decide about the best selling proposition, What is different in your product or service? What is the best way to sell your product and service to your target audience? If you have decided about all of these important questions— you can conclude which business model would best suit your product and service.