An Introduction to Popular Ecommerce Business Models for 2021

Ecommerce is driving our shopping habits and shaping the way we live our lives. Online retail is a crucial sector in the increasingly fragmented and complex global economy. Over the last decade, it has revolutionized the way retailers do business and changed how we shop.

It is now easier than ever for anyone to set up an online business. You only need to start a site on one of the website creation platforms and you are ready to start selling your goods worldwide. But if you’re new to the world of ecommerce, it helps to have a little more information to hand before you head off into the unknown.

Here we answer your ecommerce questions and provide the knowledge you need about different business models for a smooth, efficient online retail experience.

How to Categorize Ecommerce Businesses by Parties

Ecommerce can be categorized in two main ways, by the products the retailer provides and by the different parties doing business.

Two types of ecommerce business classified by the parties involved are B2B and B2C (business to business and business to consumer). Of these two classifications, business to consumer is the most frequently encountered. This is where the site sells its products directly to the customer, such as supermarket chains, or its services, in the case of power utilities. B2B is when a retailer or a business supplies its products and services to another business, and can also include a physical presence such as a headquarters or store.

Ecommerce Business Point of Sale

Within the B2C model, you have ecommerce businesses combining an online presence with a bricks and mortar store. Sales are combined across the two entities and linked using point of sale systems like Wix pos. Point of sale systems keep tabs on inventories and stock levels so that retailers ensure products meet customer demands.

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More Ecommerce Business Classifications

B2B and B2C are not the only classifications in 2021 retail. Another key category is C2C, which stands for consumer to consumer. This model has increased in popularity since ecommerce began, and is where two people rather than two businesses make a trade or sell/buy goods. Examples of this popular business model include eBay and Facebook Marketplace.

C2B is consumer to business. This model could include freelancers; individuals who are providing services to businesses. Or C2B operates in the form of individuals selling their own products like images or services, through places like Upwork ( a freelance work site) or image download sites.

B2G stands for business to government. As you would expect, this model allows businesses to sell to local, district and federal government agencies. Products and services are included. And on the other side, G2B is government to business, where the government allows businesses access to its resources or information, such as legal reports or planning documents.

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Classifying Ecommerce Models By Product – Physical Products

It can be more helpful to categorize ecommerce business models by the type of product they sell. This ranges from digital downloads to food and clothing.

Physical products are what you commonly think of when you picture online retail. Online stores using this model sell everything and anything, from greetings cards to garden chairs, burgers to bulldozers. This business model is supported by fulfillment systems that get the physical goods to consumers or businesses. Newer systems like print on demand allow smaller businesses to operate to tighter margins, and without having to have warehousing facilities. Dropshipping is an option in these situations, too. Dropshipping is where a retailer uses an outsourced service provider to handle the product orders and fulfilment, leaving the retailer to focus on design and business planning.

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More Business Models – Services and Digital

Another business model is selling services online, such as individuals providing freelance design work or sites allowing users to download accountancy software. This business model also includes subscription services and streaming, such as Netflix. Digital products are another type of business model for ecommerce.

How to Improve Ecommerce Business Models

There are various ways to boost the success of any of these ecommerce business models. Shipping costs are integral to the popularity of stores, for example. Free shipping, when offered, can sway many undecided consumers in the direction of your products but obviously comes with a price tag.

Sites must also improve their transparency and integrity, to allow consumers to trust their brand and spend money at their site. Online security is paramount, especially with cybercrime on the rise. Adding high quality product images and videos helps increase sales. This is true across most business models. Retailers can also add more purchasing information such as FAQs, testimonials, and points of comparison to allow consumers to more easily make a choice. Social media is an invaluable tool for boosting ecommerce success. In fact, it is vital to have a strong social media presence to attract and retain your target market.

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About the Author: Cory Weinberg

Cory Weinberg covers the intersection of tech and cities. That means digging into how startups and big tech companies are trying to reshape real estate, transportation, urban planning, and travel. Previously, he reported on Bay Area housing and commercial real estate for the San Francisco Business Times. He received a "best young journalist" award from the National Association of Real Estate Editors.

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