What Are the Different Types of E-Commerce Business Models?

E-commerce in Australia is growing at lightning speed and is forecasted to generate $43.21 billion in sales this year. The COVID-19 pandemic has made many brick-and-mortar entities sell online to maintain their profits and sustain the company. It has worked in favour of small businesses, which have increased their reach and acquired new customers across markets without making huge investments.

Thus, entrepreneurs in Brisbane are making a beeline to lap up the lucrative opportunity and start their e-commerce platforms. It must be noted that setting up a website is only half the battle won. Business owners should know about different types of e-commerce business models are set up a system that suits their business needs and goals. In-depth knowledge of these models can help quick growth and success.

What is the E-Commerce Business Model?

Electronic commerce or e-commerce is used for buying and selling products and services online. Businesses and individuals can both use this method to become online sellers and buyers with the help of a high-speed internet connection. It can be carried out with the help of a website with a shopping cart and online transaction facility. A wide range of products and services are sold online, including electronics, furniture, clothes, cosmetics, groceries and books.

Buyers in Queensland can access these websites with the help of laptops, desktops, mobile phones and tablets to browse through the product catalogues. They can wish-list the products to buy them later or put them in the cart to complete the purchase. Many websites offer different transaction modes, such as cash on delivery, credit card payment or online banking. These transactions are conducted safely and have become the preferred choice among young buyers who enjoy the convenience and seamless shopping experience.

Some companies follow the subscription-based revenue generation system, wherein customers subscribe to the service by making monthly or yearly payments. For example, Netflix and Amazon Prime use subscriptions. Another profit-making method used in e-commerce is freemium service, wherein some features of the software are free to use while the advanced features need payment.

What Are the Different Types of E-Commerce Business Models?

Whether you are setting up an e-commerce business or planning to buy a business for sale Brisbane, you need to know that it can be operated in the six ways listed below.

1. Business-to-Business (B2B) E-Commerce Model

A business-to-business model involves one business selling its products or services to another business. These are usually wholesale transactions and require long-term contracts between the two parties. For example, an IT hardware manufacturing company sells computers to a software company instead of individual buyers in a retail store.

These involve bulk purchases that can be easily processed online. The buyer can track the shipment and get the products delivered to the doorstep instead of travelling all the way. The B2B e-commerce model requires relationship building with buyers to get repeat orders.

2. Business-to-Consumer (B2C) E-Commerce Model

Businesses that sell directly to the end users of the products follow the business-to-consumer model. There are no middlemen, and the brand advertises its products online to generate traffic to its website and increase conversions. It is the most common type of e-commerce business model. For example, a woman’s clothing brand sells clothes to females, or a men’s shoe company sells to men online.

Social media marketing and search engine optimisation help increase the brand visibility and improve its online presence. Businesses must ensure that their products get positive reviews and ratings to get more conversions and profits.

3. Consumer-to-Consumer (C2C) E-Commerce Model

The lure of online shopping has captured the imagination of various passionate individuals looking for passive income. Since an e-commerce business does not require a physical office or a huge investment, many aspiring entrepreneurs use the C2C business model. It involves consumers selling to consumers with the help of a third-party website, such as eBay, Amazon or MyDeal.

Sellers can sell old or new products and have to pay a commission to the third-party site for using their service. However, the seller does not have to worry about shipping or product tracking. They only need to display products on the website and prepare the stock for packing and shipping.

4. Consumer-to-Business (C2B) E-Commerce Model

The way consumers sell to other consumers, they can also sell to businesses. Consumers can offer goods and services through dedicated platforms, such as freelance content writers offering their services to digital marketing companies and small businesses in need of content.

Similarly, graphic designers, bookkeepers and legal consultants can use this e-commerce business model to showcase their portfolio to businesses and get project-based work assignments. It has become popular after remote working became a norm during the pandemic. Many businesses prefer outsourcing tasks to save time and money spent on an in-house expert.

5. Business-to-Government (B2G) E-Commerce Model

The business-to-government business model involves businesses selling products and services to the federal or state government in Queensland. It is a niche market segment with few sellers and does not have much competition. Thus, this e-commerce business model is rare to find.

Usually, government signs long-term contracts with the sellers. For example, Balance Internet offers design and hosting services to Australian Government websites. With technology advancing at a fast pace, the future of software-as-a-service (SaaS) businesses is bright in this sector.

6. Business-to-Business-to-Consumer (B2B2C) E-Commerce Model

The B2B2C e-commerce model has been thriving because it helps two businesses to partner to sell the product online. For example, a restaurant business partners with an online food ordering app to sell food to customers. The mobile app receives a commission on each order and gets the food delivered to the customers on behalf of the restaurant.

If you have purchased a business for sale in Brisbane that is struggling to increase its sales, you can use this e-commerce business model. It does not require investment in creating and managing a website and helps access a broader customer base.

Wrapping Up

E-commerce is not a passing phase, but the business type is here to stay. With digitisation becoming the need of the hour and the penetration of smartphones, all types of e-commerce models are gaining momentum.