With a revenue of $4.2 trillion annually, It’s not a surprise that e-commerce is among the fastest-growing markets in the world. Millions of customers visit online shops to purchase commercial and household products and keep up with current trends. This means that e-commerce businesses of the future need to be competitive to succeed.
One of the main components to achieving this is selecting the appropriate business strategy. With the variety of online businesses operating, many choices are available. Knowing the pros and cons of each is essential to create a compelling and lasting business.
Ecommerce types
In the e-commerce market, there are three primary ways for a product to be sold on the internet:
Consumer to Business (B2C)
An online retailer that sells its products directly to customers is a B2C business. B2C is a term used to describe brands that curate their items and sell products to consumers. Companies like Colourpop or Gymshark provide prime examples of B2C.
It is important to note that some people use “DTC” DTC (direct to the consumer) to mean B2C. While this isn’t necessarily wrong, DTC is best understood as a form of B2C instead of the equivalent of it.
(B2B) Business-to-business (B2B)
B2B e-commerce includes companies that offer items or products to different companies. For instance, companies like SwagUp provide customized products for corporate entities, and companies like Primera sell printers of high-quality and other equipment to other businesses.
Although you might not hear about B2B as frequently as B2C, the ecommerce model is among the most widely used. For the US alone, B2B companies are 1.6 B2B companies per B2C one, clear evidence of the growing popularity of B2B.
C2C, or Consumer-to-Consumer (C2C)
Consumer-to-consumer (C2C) companies are marketplaces on the internet that allow customers to market their products to consumers. Platforms like eBay or Facebook Marketplace are typical examples, but newer marketplaces like Vinted and Wallapop are gaining traction in their home countries.
It is believed that the C2C company model is growing globally. Specific consumer-to-consumer platforms have experienced a 50% jump in their growth from 2020 onwards, and verticals such as fashion, beauty, fashion, and family products offer the most incredible opportunity.
Different types of B2C business models for e-commerce
Within B2C, there are a variety of other business models available. The customers may not know what kind of company they’re working with; however, as a store owner, selecting the correct B2C model is vital to your success.
Direct to Consumer (DTC)
As we have mentioned before, DTC is a B2C business model that focuses on selling goods directly to consumers. Brands such as Cupshe and Allbirds are two of the most famous DTC brands.
AdvantagesSince they control the manufacturing method, DTC companies typically have low prices, high-quality control, and solid margins.
Pros: Owning your manufacturing can be a significant undertaking because you will have to cover the cost of the space for your production and equipment.
Subscription DTC
Direct-to-consumer models that require customers to pay for their services weekly, monthly, or quarterly are known as subscription DTCs. This model type is gaining market demand, with major brands such as Tiege Hanley and BootayBag leading the way.
Notice a key distinction: DTC can have subscription elements but is not an actual subscription model. Proper subscription DTC requires customers to purchase subscription plans exclusively.
Pros The recurring charges contribute to predictable revenue streams for companies, boost customer satisfaction and excellent engagement.
Cons: Not every item is suitable for subscription models, including large appliances and other products that aren’t consumable.
Private label and white
Private and white private label companies sell products created by a third party. White-label items aren’t exclusive (think essential oils) that can be purchased from any manufacturer. However, private label items are designed exclusively for specific companies (think the Target brand Archer Farms).
BenefitsThird-party production takes the pressure of protecting products off your shoulders and allows you to concentrate on more critical tasks such as marketing and customer service.
Pros: Since you have less control over private and white-label producers, you might not be able to control the quality as closely as you’d prefer. Furthermore, third-party producers’ additional fees could eat the profits off the bottom of your account.
E-retail
Certain e-commerce companies have their products sourced from different brands to create a carefully curated store. This is referred to as e-retail,, or the procedure of creating an equivalent to a physical store. E-retail has led to several successful brands like Goop or the Bre,akfast Pantry over the last decade.
AdvantagesE-retailers can offer a broad range of items without manufacturing each item.
Cons: No product of your own can make it difficult to stand out in the marketplace–potentially reducing your brand awareness.
Wholesale B2C
A B2C Wholesale model comparable to an e-commerce version from Costco and Sam’s Club. The most famous brands, like Swish and Alibaba, can offer the characteristics of a business that is B2B but still offer bulk-buying alternatives to individuals.
Pros Bulk purchasing allows companies to benefit romfrom easier packing and picking that flows down the line to produce more efficiency and cost savings.
Cons: Because B2C wholesale clients are most looking to save money their money, your company could be at a disadvantage if it charges lower than its competitors.
The right choice for a business model
The proper business method for your business is a delicate balance between your customers and your resources, as well as your strengths. With a few easy questions, you can remove less effective strategies and look for possibilities that make sense for your business.
What does my target audience want?
The people using your product should determine the bulk of your brand’s values and the most effective structure.
Do a focus group on the potential market before launching any business set-up. Discuss with people their requirements, values, willingness to pay for the product,, and the frequency they would like to purchase. This will form the basis of your eCommerce strategy and guide your focus to the most viable business strategy.
Remember that the more you are aware of your target customers, the more effective this method will prove. If you’ve not yet established customers’ profiles, Now is the perfect time.
What are my resources?
There’s a massive gap between the resources you’ve got today and what you could have in the future. When trying to determine the most appropriate ecommerce model, it’s crucial to think about your current resources and how they impact your existing business.
This is particularly important about the capital. If you plan to prepare small quantities of food in your kitchen, then a DTC model could work perfectly. If you’re planning to create various food items that require intricate instructions, this choice could be expensive.