The time is now to start up the e-commerce company of your dreams. But before you can get your enterprise off the ground, you must know which e-commerce business model your future endeavor will follow.

The good news – there are only a few major e-commerce business models to consider. Let’s break them down so you’re prepared to hit the ground running as an online entrepreneur.

Seven Types of Ecommerce Business Models: Overview

  1. Business to Consumer (B2C)
  2. Business to Business (B2B)
  3. Business to Government (B2G)
  4. Direct to Consumer (D2C)
  5. Business to Business to Consumer (B2B2C)
  6. Consumer to Consumer (C2C)
  7. Consumer to Business (C2B) 

1. Business to Consumer (B2C)

The first significant e-commerce business model is business-to-consumer or B2C. Business-to-consumer businesses can further be broken down into three subsidiary types. But all B2C companies involve selling products directly to customers or end-users, whether they are physical products or software.

  • Direct Selling
  • Online Middle-Men
  • Recommerce 

Direct Selling

With a direct selling B2C e-commerce business, you sell your products, you guessed it, straight to people who want to buy them. In most cases, you run an online shop, and people place orders and ship those ordered products to their doorsteps.

If your products are digital, you directly sell those Digital Products to people (usually as licenses). Then they download the software apps or digital products to their computers.

Online Middle-Men

Online middlemen in e-commerce B2C businesses involve you instead of acting as the titular “man in the middle” during a sale. For example, you might be a dropshipping business (more on that below) selling products made by someone else. The other party may ship the products to the end consumer, but you still take a cut of the profits overall.

Re-commerce

Also called “reverse commerce” businesses, re-commerce businesses involve reselling previously-owned and used products. These are primarily media or electronic devices like books and movies. Depending on your business model, you may also have repair or refurbishment services to make these used products worth purchasing.

Of course, re-commerce enterprises are only worthwhile in some industries/for specific products. In addition, your profit margins may be skinny – people are not usually willing to spend a lot of money on any used products, no matter how well-restored they might be.

2. Business to Business (B2B)

Business-to-business or B2B businesses sell products to each other. For example, a supply vendor that provides raw materials for construction companies is a B2B business. They don’t sell their products to the people who live or work in buildings; they instead sell their products to other companies like contractors.

B2B businesses are also popular in the digital sphere. For example, there are lots of software development companies that make software or applications designed to be used by other businesses.

Box Genie is another example – we sell customizable boxes to growing businesses like yours, so we’re a B2B business in action.

3. Business to Government (B2G)

As the name of this type suggests, business to government or B2G businesses sells products to governments. These can be either the federal government or state governments. Some B2G businesses even sell products and services to foreign governments.

One great example is Lockheed Martin, which sells aircraft, software, devices, and materials to the US government in exchange for exclusive contracts. Some software companies, like Palantir, are also B2G businesses since they sell data to government entities (though they also sell data to other companies/perform other services).

4. Direct to Consumer (D2C)

Direct-to-consumer businesses are similar to B2C companies, though they have one big difference: complete independence. A standard B2C business probably uses a shipping company, packing company, or a third-party company to fulfill its orders.

Not so with a direct-to-consumer or D2C business. These organizations run everything independently. They sell, ship, and provide products directly to their consumers without intermediaries or third parties.

Some e-commerce businesses can do this, especially those that sell digital products. However, you can only sell particular things without having to involve other companies in your entrepreneurial endeavors.

5. Business to Business to Consumer (B2B2C)

B2B2C or business-to-business-to-consumer businesses are essentially business-to-business organizations. However, they also include an e-commerce or online shopping component for consumers.

In this way, B2B e-commerce corporations or companies hope to make mutually beneficial relationships between goods and service suppliers and online retailers. These are usually larger organizations and e-commerce companies since they require some infrastructure and contacts to have an extensive enough customer base to make growing into this business model worthwhile.

6. Consumer to Consumer (C2C)

Then there are consumer-to-consumer or C2C businesses. These are primarily online marketplaces like eBay, Amazon, or even Craigslist. Consumer-to-consumer companies involve consumers or end product users selling those products to each other rather than involving intermediaries (aside from the platforms themselves, of course).

eBay, for instance, is a consumer-to-consumer e-commerce business since it takes a fee from every sale hosted on its platform. Most e-commerce consumer-to-consumer businesses are platform hosts or marketplaces, such as cryptocurrency exchanges or similar services. They don’t usually provide a physical product to consume.

7. Consumer to Business (C2B)

Finally, consumer-to-business or C2B businesses display another kind of e-commerce entrepreneurship. The most common e-commerce C2B business type is an influencer or social media marketer.

For instance, the influencer builds up a loyal audience base. The audience base has some crossover with another company’s target audience and graphics. Then the company pays the influencer a certain amount of money in exchange for exposure or advertising services.

Most consumer-to-business enterprises are service-based rather than product based. However, they may involve products if they are focused heavily on advertising to a target group.

The Most Common E-commerce Business Types To Consider

As you can see, there are many different ways in which you can model an e-commerce business. The above methods can be successful given the right resources, focus, and executive vision.

However, you’ll also need to decide what e-commerce business you want to run. If you don’t know what kind of business you want to be in charge of, consider these common e-commerce business types before proceeding with your plan.

  • Dropshipping
  • Private Labelling 
  • Subscription
  • White Labelling
  • Wholesaling/Warehousing

Dropshipping

Dropshipping businesses are an e-commerce revolution. In a nutshell, with a dropshipping business, you connect product manufacturers with buyers by selling their products directly to their end-users.

However, a big advantage to dropshipping makes it a popular e-commerce business type: you don’t have to pay for shipping or fulfilling the order. You just put the order into the manufacturer.

This type of e-commerce business model is definitely “middleman” focused. If you run a dropshipping business, you don't have to worry about having space to store your products. Depending on your arrangement with product manufacturers, you may need to focus more on marketing.

This is an affordable and accessible e-commerce business type to get up and running, especially if you don't have a lot of start-up cash.

Private Labeling

A private labeling e-commerce business is also an option. With a personal labeling business, you order private labeled products to be produced by a third-party manufacturer. Then you sell them under your brand name.

Since you are the retailer, you get to determine everything about the product, like:

  • What kind of product is it
  • The specifications of the product
  • How the product is packaged
  • What the label on the product looks like
  • And more

In other words, you pay a manufacturing plant or factory to create products for you. The products arrive at your warehouse or storage facility fully branded. Then you sell the products to your target audience.

Subscription

Subscription-based e-commerce business types naturally rely on recurring payments from loyal subscribers. For instance, you might run a software as a service company and provide software access to ongoing subscribers.

Or you might have an e-commerce company where you provide regular content drops to loyal subscribers through using platforms like Patreon. In either case, with a subscription-based e-commerce business, you need to have content or products that people are willing to pay for regularly, not just once.

This type of business is expected in the creative arena. YouTube creators, for instance, are usually subscription-based or have subscription models for their brands, though they also get a lot of their income from advertisement deals with sponsors.

White Labeling

White labeling e-commerce companies are also top-rated, and for a good reason. They are similar to drop shipping because you don’t have to make physical products.

Instead, you buy relatively bland or interchangeable products in bulk from manufacturers. Said manufacturers are usually in China or other markets. Then you simply rebrand the products to fit your brand or corporate identity. You can sell the products after by marking them up to your target audience.

White labeling e-commerce companies are famous for industries like clothing and jewelry. For example, you can buy 200 plain white T-shirts, print a graphic, and sell them on your online business e-commerce website.

Wholesaling/Warehousing

Alternatively, you could run a wholesaling or warehousing business. With a wholesaling or warehousing business, you build up a significant stockpile of products, then sell them in bulk for affordable prices to consumers or businesses.

Wholesaling and warehousing naturally require a lot of storage space. You'll also need to keep meticulous track of your business inventory. With a wholesaling business, people expect to be able to buy lots of a specific product or material for reasonable (i.e., lower than average) prices.

That said, wholesaling or warehousing businesses can be effective for e-commerce business owners. You don’t usually need a retail location, reducing operational costs. Instead, you can have a functional online store and turn a profit if you build up enough clients.

The Bottom Line

You need to determine:

  • What e-commerce business model works best for your goals and business plan
  • Whether one business model or another better fits your objectives and the kinds of products you sell, as well as your ecommerce store design
  • Which kind of business model is most achievable at the beginning of your organization’s life

There’s an e-commerce business model for you. Even better, you can jumpstart your business and maximize your marketing with custom boxes from Box Genie. Whether you need to ship products to your customers directly or want to stock your store shelves with personalized wrapping, Box Genie can help. Contact us today.

Sources:

What is dropshipping and how does it work? [2022] | Amazon

The State Of The E-Commerce Industry In 2021 | Forbes

Choosing Among the 3 Types of Ecommerce Business Models #MoonlightingontheInternet | Entrepreneur

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