Ecommerce is a simplified form of the word “electronic commerce” that defines, in essence, any sort of currency exchange for online products or services.
Ecommerce is an umbrella word that encompasses anything there is to do with online purchasing or sale, and may often be otherwise written as “E Commerce,” “e-commerce,” or “ecommerce.” Any variation of the spelling is correct, and the same act of doing business through the internet is all represented.
Since the concept of e-commerce is so open-ended (it basically encompasses any sort of online purchasing or sale of products or services), there are so many different types of e-commerce businesses.
THE TYPES OF ECOMMERCE BUSINESS MODELS
Ecommerce business models can be differentiated into three main categories:
- What types of products are sold
- Who the products are sold to
- Where the products are sold on
Let’s look into these three identifiers further:
1.WHAT TYPES OF PRODUCTS ARE SOLD
Every e-commerce company can be characterized by the kinds of products it offers. There are four main products that any ecommerce business can sell and they are:
- Physical Products
- Digital Products
Every single online e-commerce company will fit into one or more of these categories, and this basically tells you what kind of goods they sell to their customers.
Some e-commerce companies offer physical goods, which means that the company has real tangible goods that they distribute to their customers, and there would be a physical product that they can view, feel and see when their customers open the shipping box.
On the other hand, digital goods are something that e-commerce firms can sell digitally, but they are not an actual physical product that can be sold to their customers. Sometimes, if a digital product is purchased digitally, a customer can automatically download the digital files without the company needing to actually send something to the customer.
Businesses may also offer digital or in-person services that can be purchased online by their clients. From design services or streaming services (both digital services) to home maintenance services or dog-walking services (which are in-person services), these services can include anything. This category can include any organization that offers a service, rather than a physical or digital product.
Finally, e-commerce firms may also receive commissions through affiliate links that pay them a portion of the income to promote a transaction. Blogs, influencer websites, or even websites such as Canopy that curate goods sold to customers online may be e-commerce companies that receive affiliate commissions.
2. WHO THE PRODUCTS ARE SOLD TO
Next, e-commerce businesses can be distinguished from who the company sells its goods. Although believing that all goods are marketed to buyers might be a common thought, that’s not always the case. Another business may sometimes be the “consumer.”
These are the three major categories in which e-commerce businesses offer their goods or services:
- B2B:This stands for Business-to-Business. This group includes ecommerce businesses that provide physical or digital goods or services to other companies. This may, for instance, involve producers or suppliers that supply other companies with materials or goods.
- B2C:This stands for Business-to-Consumer. Ecommerce businesses that offer customers physical or digital goods or services fall under this category. It involves distributors or e-commerce retailers that offer merchandise to the end customer.
- B2G:This stands for Business-to-Government. Under this group are e-commerce businesses that sell physical or digital goods or services to government departments or agencies. This may involve businesses that produce specialized software, office furniture, uniforms, etc., for instance.
Although most businesses usually market their goods in one of these categories, it is entirely possible for e-commerce companies to sell their products to more than one customer segment. It is crucial for e-commerce businesses to understand who exactly they sell their goods to because it affects important decisions such as their marketing, their branding, their shipping processes, their mark-up, etc.
3. WHERE THE PRODUCTS ARE SOLD ON
Finally, based on the way they market their goods to their consumers, e-commerce firms can also be distinguished. These options are:
- Branded Ecommerce Stores: These are e-commerce stores owned and run by the store’s founder or creator(s), and they sell their own goods to their customer base on their own terms. These kinds of stores are typically built on platforms such as Shopify or Big Commerce for e-commerce.
- Ecommerce Marketplaces: Ecommerce firms, such as Amazon, eBay or Etsy, can also sell via online markets. This is sort of like leasing space in a mall for the business: the mall manages the marketing and brings in the foot traffic, which ensures that the retailers do not have to spend much time or money getting their shops to customers. However, they do have to comply with the laws of the mall, such as their opening hours, what items they can and cannot sell, etc.
- Conversational Commerce: With social media being a big part of the everyday lives of customers, social media channels make it easier for customers to shop through their news feed updates. Instagram, Facebook, Pinterest and Snapchat all have options for conversational commerce from which e-commerce brands can sell their goods.