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Lecture 2 Major Ecommerce Business Classifications

The document discusses different classifications and models for ecommerce businesses: - B2B focuses on selling products from one business to another. Examples include ExxonMobil and Boeing. - B2C is the traditional retail model where a business sells to individuals online, like Newegg, Overstock, and Walmart. - C2C allows individuals to buy and sell from each other on sites like eBay and Craigslist. - C2B is when consumers sell goods or services to businesses, like freelance platforms and affiliate marketing. The document also outlines different revenue models for ecommerce businesses, including drop shipping, wholesaling/warehousing, private labeling, manufacturing, and

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123 views

Lecture 2 Major Ecommerce Business Classifications

The document discusses different classifications and models for ecommerce businesses: - B2B focuses on selling products from one business to another. Examples include ExxonMobil and Boeing. - B2C is the traditional retail model where a business sells to individuals online, like Newegg, Overstock, and Walmart. - C2C allows individuals to buy and sell from each other on sites like eBay and Craigslist. - C2B is when consumers sell goods or services to businesses, like freelance platforms and affiliate marketing. The document also outlines different revenue models for ecommerce businesses, including drop shipping, wholesaling/warehousing, private labeling, manufacturing, and

Uploaded by

Pranto Barua
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Major Ecommerce Business

Classifications
Electronic commerce encompasses all online marketplaces that connect buyers and
sellers. The internet is used to process all electronic transactions.

The first thing to think about is the type of business transaction you’re going for. When
you think about the business you want to run, who do you see yourself selling to? Is
your business B2B, B2C, C2C, or C2B?

B2B: Business to Business Ecommerce


A B2B model focuses on providing products from one business to another. While
many businesses in this niche are service providers, you’ll find software companies,
office furniture and supply companies, document hosting companies, and numerous
other ecommerce business models under this heading.

B2B ecommerce examples you may be familiar with include the ExxonMobil


Corporation and the Chevron Corporation, Boeing, and Archer Daniel Midlands. These
businesses have custom, enterprise ecommerce platforms that work directly with other
businesses in a closed environment. A B2B ecommerce business typically requires
more startup cash.
B2c: Business to Consumer Ecommerce
The B2C sector is what most people think of when they imagine an ecommerce
business. This is the deepest market, and many of the names you’ll see here are known
quantities offline, too. B2c ecommerce sales are the traditional retail model, where a
business sells to individuals, but business is conducted online as opposed to in a
physical store.

Examples of B2C businesses are everywhere. Exclusively online retailers include


Newegg.com, Overstock.com, Wish, and ModCloth, but other major B2C model brick-
and-mortar businesses like Staples, Wal-Mart, Target, REI, and Gap.

C2C Ecommerce
B2B and B2C are fairly intuitive concepts for most of us, but the idea of C2C is different.
What does a consumer-to-consumer ecommerce business look like?
Created by the rise of the ecommerce sector and growing consumer confidence in
online business, these ecommerce websites allow customers to trade, buy, and sell
items in exchange for a small commission paid to the site. Opening a C2C site takes
careful planning.

Despite the obvious success of platforms like eBay and Craigslist, numerous other
auction and classified sites (the main arenas for C2C) have opened and quickly closed
due to unsustainable models.

C2B: Consumer to Business Ecommerce


C2B is another model most people don’t immediately think of, but that is growing in
prevalence. This online commerce business is when the consumer sells goods or
services to businesses, and is roughly equivalent to a sole proprietorship serving a
larger business.

Reverse auctions, service provision sites like UpWork, and several common blog
monetization strategies like affiliate marketing or Google AdSense also fall under
this heading.

Government / Public Administration Ecommerce


The models listed above are the primary ecommerce retail structures, but they aren’t
the only ones. Other types involve government/public administration conducting
transactions with businesses or consumers.

● B2G (also called B2A), for businesses whose sole clients are governments or
type of public administration. One example is Synergetics Inc. in Ft. Collins,
Colorado, which provides contractors and services for government agencies.
● C2G (also called C2A): typically individuals paying the government for taxes or
tuition to universities.
Two sectors that are closed for entrepreneur owners but are growing include G2B for
government sales to private businesses, and G2C, for government sales to the general
public.
Types Of Ecommerce Business Revenue Models
The next most important thing to think about is how you want to handle inventory
management and sourcing products. Some people like the idea of making their own
products and others hate the idea of their garage full of boxes.

1. Drop Shipping
The simplest form of ecommerce, drop shipping lets you set up a storefront and take the
customers’ money through credit cards or PayPal. The rest is up to your supplier. This
frees you from managing inventory, warehousing stock, or dealing with packaging, but
there’s a major caveat.

If your sellers are slow, product quality is lower than expected, or there are problems
with the order, it’s on your head (and in your reviews).

Many dropshippers use Shopify and Oberlo. It’s quick and inexpensive to set up. A
popular model is to set up a quick store and drive traffic with Facebook Ads. Margins
are thin and if you can squeeze out some profit here, more power to you.

2. Wholesaling and Warehousing


Wholesaling and warehousing ecommerce businesses require a lot of investment at the
start – you need to manage inventory and stock, keep track of customer orders and
shipping information, and invest in the warehouse space itself.

DollarDays is an online wholesaler with a massive product catalog that includes more
than 260,000 products. They employ a key strategy for retailers in this space – by
offering case prices AND piece prices, they can sell to the general public and to
retailers. This gives them a higher profit margin than a strictly wholesale model.
Solutions For Wholesalers
Wholesale businesses are all about volume. You’ll need to push products out to Ebay,
Amazon, Google, etc. BigCommerce includes all this in their Basic plan for $29 month.
No tinkering needed. If you have dev skills, you can use X-Cart

3. Private Labeling and Manufacturing


If you’ve got an idea for the perfect product, but don’t have the cash or desire to build
your own factory, this might be the right business model for you. Companies that
manufacture products offsite for sale send the plans or prototypes to a contracted
manufacturer who produces the product to meet customer specifications and can either
ship directly to the consumer, to a third party such as Amazon, or to the company
selling the final product.
On-demand manufacturing allows you to quickly change suppliers if you encounter
problems with product quality. The startup costs are minimal, and if you’re interested in
potentially opening your own production facilities later, this is a good way to test a new
product or concept.

4. White Labeling
White labeling is similar. You choose a product that is already successfully sold by
another company, but offers white label options, design your package and label, and
sell the product. This is common in the beauty and wellness industries, but more difficult
to encounter in other niches.

One problem with white labeling is demand. You’re stuck with whatever you order, and
most of these companies set a minimum production quantity. If you can’t sell it, you’ll
have to live with it. Consider this option when you’re willing to work full time on your
business and know your product is in demand.

A common type of white labeling is Print On Demand.

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