What are the different types of e-commerce?

E-commerce refers to any transaction carried out online. Buying and selling products, services and digital products through the internet are all e-commerce. These exchanges cover a wide range of business types, sectors and products. The first online transaction took place decades ago, but the way consumers shop has changed dramatically since then. Today, millions of dollars are spent every year and that number keeps increasing.

In the past, operating an online store was a competitive advantage that most brands did not have. Brands that have established e-commerce have been successful in reaching new customers and increasing sales and have experienced early growth. Brands that don’t sell online limit their reach. Those who want short and long term growth should invest in building an online store. Operating online is vital for a brand’s success!

E-commerce: advantages and possibilities

The rise of shopping and selling online has created opportunities for millions of people and offers distinct benefits to those who participate. Increased bottom lines, more customers, and maximum brand awareness are some of the fruits of e-commerce, but they’re not the only ones. Opening an online store removes many of the boundaries associated with a physical retail location. Ecommerce stores can sell nationally and even globally if desired. This exponentially increases your potential customer base. Anyone with access to the Internet can search, find, and purchase products that were previously geographically limited. Another feature that increases sales is the fact that online stores don’t close. They are open 24/7 and 365 days a year. This means that payment can take place anytime, day or night.

Opening a virtual store also helps reduce overhead and labor costs. Once the store is fully functional, it basically runs on its own. Some maintenance may be necessary, but a well-designed store will only require minimal attention over time. Brands should remember that setting up an online storefront is an investment.

E-commerce: types of transaction

Much of today’s ecommerce market is about maximizing the conversion rate, which translates into increased sales, revenue and potential profit. Establishing an e-commerce store opens up an untapped revenue stream for new or existing businesses.

Thereare many types of e-commerce and transactions in the world of e-commerce today. Understanding these options and choosing the one that best represents your business will help you in the process of building your site and selecting an e-commerce CMS.

  • Business-to-Business (B2B)
  • Business-to-consumer e-commerce (B2C)
  • From consumer to consumer (C2C)
  • Consumers to businesses (C2B).
  • Consumers-administration (C2A)

B2B and B2C are the two most prevalent types of e-commerce in the world today and they are the traditional transaction types that most people think of when they hear the word e-commerce. Businesses can specialize and operate in more than one type of e-commerce. Each recipient of the transaction has different wants, needs and business requirements, which makes each type of transaction different from the others.

Almost all of the types of transactions listed can relate to the same product or service. However, some of the differentiators can include price, quantity, frequency of orders, method of fulfillment, product expectations, scale and even barriers to market entry. There are many factors to consider when developing a business plan, but understanding your target market and target audience is a great place to start.

Business-to-Business (B2B)

As the title suggests, a B2B transaction is a transaction where one business sells to another business. These transactions often involve the customization of an order on an ongoing basis. B2B transactions can include wholesale prices, bulk orders, or specialty products that an average consumer would never need on a daily basis. B2B transactions create powerful and lasting relationships between both parties when properly orchestrated. Typical products involved in B2B transactions include office supplies, gasoline and oil, medical equipment, airplanes, ships, and military equipment. These are large or large quantity items which would be overwhelming for an average consumer to buy on their own.

B2B transactions come in many forms and take place on a global scale. A popular derivative of the B2B model occurs between a company and any administration (B2A). B2A transactions take place between businesses and public administration bodies such as the government. In addition, the B2A model is sometimes called B2G (business-to-government). As the world becomes more and more dependent on the Internet, so do governments.

Business-to-consumer e-commerce (B2C)

The most traditional type of transaction from a consumer perspective is the B2C model. This model mimics a purchase made in a physical store, but which is done entirely online. Businesses sell goods directly to consumers through their website. The Internet serves as a market in itself, and the e-commerce store serves as a portal between businesses and consumers who shop online. Online stores are able to list multiple products and SKUs, giving customers plenty of options to choose from during their shopping experience. This allows a customer to have more options to research and find the perfect product for them. Clothing, electronics and outdoor recreational equipment are just a few of the products that actually sell online in B2C. The B2C transaction is not limited to products, but services are often distributed this way as well. Businesses can offer services like financial counseling, tutoring, memberships and other services to increase their online presence.

From consumer to consumer (C2C)

With the rise of electronic commerce, a lot of innovations have taken place in many forms. The Internet itself is a powerful market in itself. Other markets have sprung up to provide consumers with shopping options and ways to get the products they want. Platforms like eBay, Craigslist, Grailed, and even parts of Amazon allow consumers to sell to consumers. This bridge allows men and women to sell goods without having to establish a custom store. This results in quick and easy one-on-one transactions enabling the online sale of niche items, second-hand goods and individual listings.

Inthe C2C model, the platform itself does not own or sell any products. Rather, it serves as a bridge between the consumer who sells and the consumer who buys. They act as third parties to supervise and authorize the transaction in order to ensure its smooth running. Popular platforms have found success with a large number of users and traffic, while also providing a solution to get rid of goods with low cost and overhead.

From consumer to business (C2B)

On the other side of the spectrum, the C2B model allows businesses to receive value from consumers while traditionally the reverse. Consumers are able to provide a service to businesses to increase their existing business through a reverse auction system. Consumers can act like entrepreneurs bidding on certain projects, allowing them to add value to the business. This name, your pricing option, allows businesses to reach different parts of a community that may not have been previously operated. For example, popular bloggers may charge a fee to businesses that want their article or idea listed for exposure.

Consumers-administration (C2A)

 

This relationship enables consumers to receive information, make payments and establish a direct line of communication between the government or authoritative body and the consumers it represents. Many common C2A transactions can include paying taxes, fines, inquiries about zoning codes, or paying tuition fees to a university. This allows consumers to instantly do business with large organizations that in the past may have been cumbersome and inefficient. Previously this type of activity was tedious and time consuming, but operations have improved dramatically since transactions can be done over the Internet.

 

Regardless of the type of model (s) your business will operate under, understanding the basic functionality of your business is essential. This internal development and understanding will produce more desirable results and smoother operations.

 

If you have any other tips to share on the different types of e-commerce, don’t hesitate to share them!

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