e-commerce or electronic commerce is all about commercial transactions using the electronic and internet media. Long before now, commercial activities has been going on through what is known as the traditional marketing system. But with the advent of the electronic computer and the internet, what was done manually and through traditional marketing can now be done several times over using the internet, this is what gave rise to e-commerce. Since its advent, e-commerce has grown in leaps and bounds. A wide range of categories of products are now traded via e-commerce.
For many businesses, developing an e-Commerce strategy is critical. Defining your target market and determining your e-Commerce business model are important parts of this process. Not taking the time to assess your business strategy and understand your target market can be incredibly damaging to your company and result in thousands of dollars being lost.
Let’s take a closer look at the four basic business models.
The four e-Commerce business models:
- Business to Business (B2B)
- Business to Consumer (B2C)
- Business to Government (B2G)
- Business to Business to Consumer (B2B2C).
Let’s take a DEEPER LOOK
Business to Business (B2B) : Business to business (B2B) marketing is when a company sells its products or services to other businesses directly. Wholesale e-Commerce frequently falls under the B2B paradigm, and clients anticipate similar experiences to those found on B2C e-Commerce sites.
There are two main models of B2B: vertical and horizontal. Manufacturing companies are typically involved in the vertical B2B model, which can be classified as either upstream or downstream. When a manufacturer establishes a business relationship with a parts or raw materials supplier, this is known as downstream. When a pencil firm sources graphite and wood from other companies, this is an example of a downstream B2B interaction.
When a parts or raw materials supplier creates a partnership with a manufacturer, this is known as the upstream model. The materials are being transported upstream. When a paper mill creates a relationship with a bookbinding company to supply it with paper for the books it creates, this is an example of an upstream B2B interaction. The horizontal B2B model includes products and services that do not involve parts or raw materials but are nevertheless useful to the organization.
In terms of e-Commerce trends, online B2B is still catching up to the traditional B2B model. Negotiation and teamwork are the issues. While many businesses value the convenience of shopping online , they are accustomed to working with sales agents who frequently provide special discounts for large orders. A hybrid strategy, in which customers can build relationships with sales agents while simultaneously being able to shop online and receiving the same pricing by entering special codes, could be a viable alternative.
Business to consumer (B2C) : Business to consumer (B2C) marketing is when a corporation markets its products directly to consumers. It is the most well-known type of business among the general population. The B2C e-Commerce business model relies on a platform that can be swiftly modified to meet changing client demand without incurring service delays. The B2C model is simple to comprehend. Every time you buy groceries, have supper at a restaurant, go to the movies, or have your hair cut, you’re engaging in a B2C transaction. You are the end user of the goods and services that these businesses provide.
Direct sellers, online intermediaries, advertising-based, community-based, and fee-based are the five different B2C models in e-Commerce. The most popular model is direct selling. It occurs when customers purchase items from internet stores. Typical of such online stores includes; Amazon, Jumia, Konga, JiJi and a host of others.
Information is given away for free and money is produced via advertising on the site in the advertising-based model. Facebook is an example of a community-based website that makes money by tailoring advertisements to users based on demographics and location. Online B2C sales have been increasing in recent years. Many traditional brick-and-mortar stores have been disappearing as customers increasingly buy online for their needs. This is good news for eCommerce B2C retailers, as they will be able to fill the gap left by traditional stores.
Another B2C trend is the hybrid model, in which businesses have a traditional brick-and-mortar presence as well as an online shopping platform. To improve the consumer experience, several businesses are integrating features of the two business models. Some companies, for example, now allow you to order things online and pick them up at one of their local locations. Many businesses also allow customers to return items purchased online to local locations for a rapid refund or exchange.
Business to government (B2G) : When an enterprise offers its products and services directly to a government agency, this is known as business to government (B2G). This organization could be municipal, state, or federal. When a private engineering firm sells its engineering services to a state or country government to create a new water and sewer infrastructure the state or country, this is an example of a B2G transaction.
Companies often bid on projects when governments issue Requests for Proposals in B2G. Working with government entities is not the same as dealing with other businesses or customers. Business transactions occur at a significantly slower rate than in other sectors due to the need to deal with bureaucracies.
Ecommerce enterprises, like other businesses, are eligible to bid for government contracts. Many government entities, unlike many B2C transactions, will not make an order directly on an eCommerce website. Of course, there are exceptions to this rule. A local government agency, for example, could make an order for a part to fix a piece of equipment straight from an eCommerce company. It is determined by a number of factors, including the agency’s size and the need.
Business to business to consumer (B2B2C) : Business to business to consumer is the final of the eCommerce business models (B2B2C). This model is a hybrid of the B2B and B2C business types. It’s a business arrangement in which one company sells its products to another, which then sells them to customers. When a wholesale distributor sells items to retail stores, the retailers then sell the item to end users, this is an example of a B2B2C relationship. The first business (the business of product origin), a middleman, and the final user are all part of the B2B2C model.
The B2B2C paradigm can be applied in a variety of ways in eCommerce applications. A company could, for example, join with another company to market its products and services, paying the partner a commission on each sale. The acquisition of new clients is the key benefit of the B2B2C business model for eCommerce businesses. This is an important factor to consider for new eCommerce businesses looking to expand their consumer base quickly.
Focusing on Your Business Model Can Help Improve Your Strategy
Defining your eCommerce business model gives you a significant competitive advantage. You can improve your marketing activities and perfect your business model to optimize income once you’ve defined your target market and the correct business model you’ll need to effectively service your consumer base.
This also provides you with a significant edge over your competitors. It is somewhat disappointing to note that many businesses handle sales in a very disorganised manner. You can grow sales with less work and expense by determining the optimal business model for your market and then focusing your marketing efforts on serving that model.
In summary, let me re-emphasis that you must first, define your target market and determining your e-Commerce business model by thorough evaluation before you find the correct e-Commerce solution.