E-Commerce Models: What Exactly Are They? [E-Commerce Guide Series]

We’ve already touched on exactly what e-commerce is – If you haven’t read that article, check it out here – but now we’re going to take a look at what “e-commerce models” are, and how they vary from business to business.

We touched on 5 different e-commerce models during our “What is E-Commerce?” post; these were:

– Business to Business E-Commerce (Also known as B2B)
– Business to Consumer E-Commerce (Also known as B2C)
– Consumer to Consumer E-Commerce (Also known as C2C)
– Consumer to Business E-Commerce (Also known as C2B)
– Business to Government E-Commerce (Also known as B2G)

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Business to Business E-Commerce - B2B

What is B2B E-Commerce?

Business to Business e-commerce – Or B2B as some people know it – refers to a situation in which one business makes a commercial transaction with another, totally separate business. This is usually the result of:

– A business sourcing materials for production – For example, a food manufacturer like McDonald’s purchasing salt for their fries.
– A business needs to use the service of another business in order to operate – For example, a business hiring an accounting firm to audit their finances.
– A business re-sells goods and services offered and produced by another business – For example, a supermarket buying the end product from the manufacturer to sell to the general public.

B2B E-Commerce Statistics

  • It’s estimated that B2B e-commerce transactions could reach $1.2 trillion by 2021.
  • This accounts for 13% of all B2B sales within the United States.
  • Google found that close to half of all B2B buyers are millennials, nearly double the number from 2012.
  • 41% of B2B retailers expect B2B online sales to grow more than 25% in 2018.
  • Little over 23% of B2B retailers with an e-commerce channel still accept fax orders.
  • Around 78% of B2B retailers have been selling online for between 2-5 years or longer.

Examples of B2B E-Commerce

Pros & Cons of B2B E-Commerce

Pros

  • Speed of Payment: Accepting online payments means you can get paid immediately and confidently ship items to your customers.
  • Enable Self-Service: Your customers have to call you in order to buy your products. E-Commerce allows them to make purchases at anytime.
  • Valuable Data: Selling products online gives you access to instant and ongoing feedback and allows you a valuable insight into customer satisfaction.
  • New Customers: Posting items in an online B2B marketplace gives your company instant exposure through search engines and referrals.

Cons

  • Credit Card Fees: B2B purchases are often tend to be higher in value, and the 2.5-3%^ standard fee on credit card transactions can take quite a chunk of your potential revenue over a period of time.
  • Lack of Flexibility: Standard e-commerce platforms don’t tend to make it easy to offer volume discounts on products or even special pricing for different customers.
  • Lack of Privacy & Security: Many businesses don’t want their competitors to be able to see their prices at all times, and may also be concerned about exposing their customers’ credit card numbers to potential security breaches.

Business to Consumer E-Commerce - B2C

What is B2C E-Commerce?

Business to Consumer e-commerce – Or B2C as some people know it – is a term used to describe a commerce transaction between a business and an individual consumer directly for their own personal use. It’s likely the model most people are familiar with and experience on a day to day basis.

B2C E-Commerce Statistics

  • 40% of total B2C market is clothing with an average order value of around £50.
  • Global B2C e-commerce reached a staggering 1.2 trillion in 2012, of which 29.7% were generated by the United States.
  • Global B2C e-commerce is expected to reach around $2.3 trillion by the end of 2018.
  • In 2016, sales to private B2C customers in the UK amounted to £142.2 billion.

Examples of B2C E-Commerce

Pros & Cons of B2C E-Commerce

Pros

  • Direct Communication: You can directly connect with your customers through a website, allowing you to communicate with them.
  • Expansion: Using B2C software, you can expand your business to different portions of the world with ease, making it much easier to expand than a traditional brick and mortar store.
  • Cheaper: Setting up a B2C online store is much cheaper than setting up a physical store, and doesn’t require too much to get started.
  • Audience: B2C allows you to reach consumers from every corner of the globe no matter where you’re based.

Cons

  • Delays: There are delays in receiving the actual product you purchase, as well as having to deal with shipping problems that may arise.
  • Security & Privacy: There are concerns for users privacy and security, especially with the rise of phishing.
  • Increased Competition: Increased competition from competitors due to global marketplace.
  • Ease of Comparison: The ease of price comparison with online stores drives prices down making them cheaper for consumers but means businesses aren’t making as much per product.

Consumer to Consumer E-Commerce - C2C

What is C2C E-Commerce?

Consumer to Consumer e-commerce – Also known as C2C e-commerce – is one of the oldest forms of e-commerce and describes a commerce transaction online between two consumers, in which a consumer posts an item for sale or auction and other consumers bid to purchase it. This is usually done through a third party like eBay, who will often charge a flat fee or commission.

C2C E-Commerce Statistics

  • eBay drew over 84 million Us visitors in the beginning of 2014. 
  • In the first quarter of 2018, eBay saw 171 million active users.
  • in 2016, 21% of all individuals used the internet in order to sell goods or services to other consumers.

Examples of C2C E-Commerce

Pros & Cons of C2C E-Commerce

Pros

  • Wider Market: With C2C e-commerce, you’re able to reach a much wider audience with your products than you could through traditional means.
  • Availability: It is always available so consumers can access and purchase whenever they like.
  • Updating: Online stores are often updated regularly in order to keep products new and prices competitive.

Cons

  • Face to Face: Buyers and sellers never meet face to face, increasing the risk of fraud.
  • Payment: Payment made has no guarantee.
  • Scams: Consumers potentially face scams as website may be framed to look like reliable C2C websites while having ulterior motives.
  • Quality Control: There is a lack of quality control fro products purchased online.

Consumer to Business E-Commerce - C2B

What is C2B E-Commerce?

Consumer to Business e-commerce – also known as C2B e-commerce – is where individual consumers offer to sell products and services to companies who are prepared to purchase them, making it the opposite of B2C e-commerce. An example of C2B e-commerce is allowing a company to advertise on your blog.

Examples of C2B E-Commerce

Pros & Cons of C2B E-Commerce

Pros

  • Work Amount: Very little work is required from the owner of the website as consumers are paying the business for the service of promoting their service etc.

Cons

  • Less Money: The amount of money being made is less than if the website owner provided the service themselves.
  • Knowledge: The owner of the website must have a good knowledge of web design or pay someone else to create their website/service.

Business to Government E-Commerce - B2G

What is B2G E-Commerce?

Business to Government e-commerce – also known as B2G e-commerce – refers to businesses selling products, services or information to the government or government agencies. B2G is also referred to as ‘public sector marketing’.

B2G E-Commerce Statistics

  • 12% of EU-based enterprises made B2G e-commerce sales through a website.
  • 13% of enterprises in the UK made B2G e-commerce sales through a website.

Examples of B2G E-Commerce

Pros & Cons of B2G E-Commerce

Pros

  • Guaranteed Payment: When working with B2G, payment is virtually guaranteed in the end.

Cons

  • Low Margin Sales: Low margin sales, along with intensive documentation. All orders must include RFID (Radio Frequency Identification) tags and bar codes on every label.

In our next article, we’re going to take at the application of e-commerce, as well as the regulations surrounding e-commerce, including Electronic Commerce Regulations 2002 and more.