E-Commerce Business Models: Type, Benefits & Examples

What is an eCommerce Business Model?

Simply stated, a business model for eCommerce is a plan that guides how a company sells its products or services online and how it earns money from those sales.

An eCommerce business model will help you define how the business operates, who it sells to, and how it delivers its offerings to customers. There are several different types of eCommerce business models, depending on the target audience and the nature of the transactions. Choose the right business model for your eCommerce app development with the help of Apptunix Experts. 

For example, Amazon uses a Business-to-Consumer (B2C) model, where it sells products directly to individual customers through its website. 

Another example is eBay, which operates on a Consumer-to-Consumer (C2C) model, allowing individuals to buy and sell items to each other through its platform.

Why are eCommerce Business Models Important?

Business models for eCommerce are significant because they provide a structured approach to how a company operates and generates revenue online.  Both new and existing businesses need to grow and expand their business. 

With the help of the eCommerce business model, businesses identify their target audience, streamline operations, and determine the best strategies for reaching customers. 

A well-defined eCommerce business model ensures efficiency, scalability, and profitability, enabling companies to adapt to market trends and consumer demands. Ultimately, it lays the foundation for sustainable growth in the competitive digital marketplace.

[Also Read: eCommerce App Development in 2024: Steps, Cost, Tech Stack]

7 Different Types of eCommerce Business Models & Strategies

Following, we’ve discussed 7 types of eCommerce business models & strategies. Let’s discuss:

1. Business-to-Business (B2B)

“Statista data suggests that the North American B2B eCommerce market will surpass $4,600 billion by 2025."

In the B2B model, businesses sell products or services to other companies. The transactions generally involve bulk orders and longer sales cycles. 

Below is an example relevant to the B2B eCommerce model:

2. Business-to-Customer (B2C)

“Global B2C e-commerce revenue is expected to grow to USD$5.5 trillion by 2027 at a steady 14.4% compound annual growth rate.”

The B2C model is the most common eCommerce business model. It involves a business selling products or services to another business, encompassing everything from online retail stores to digital service platforms.

Below is an example relevant to the B2C eCommerce model:

3. Consumer-to-Consumer (C2C)

“The C2C (Consumer-To-Consumer) e-commerce market size is anticipated to grow from USD 2,061.22 billion in 2024 to USD 11,216.30 billion by 2032”

The Consumer-to-Consumer (C2C) model enables individuals to sell products or services directly to other consumers, typically through online platforms. These marketplaces connect buyers and sellers, facilitating peer-to-peer transactions without a traditional business acting as an intermediary. 

Below is an example relevant to the C2C eCommerce model:

4. Consumer-to-Business (C2B)

In the Consumer-to-Business (C2B) model, individuals offer products or services to businesses. This model is common in industries like freelancing, content creation, and influencer marketing. 

Below is an example relevant to the C2B eCommerce model:

5. B2G (Business-to-Government)

The Business-to-Government (B2G) business model involves companies providing products or services to government agencies. This model is common in sectors such as defense, infrastructure, IT services, and public utilities. 

Businesses typically secure government contracts through bids, making this a strategic model for companies capable of meeting governmental needs at scale.

Below is an example relevant to the B2G eCommerce business model:

6. D2C (Direct-to-Consumer)

“The D2C market, in 2024 is set to soar to $100 billion by 2025, especially fuelled by fashion startups poised to reach $43.2 billion.”

The Direct-to-Consumer (D2C) business model allows brands to sell their products directly to consumers without any intermediaries. This model offers greater control over branding, customer experience, and pricing. 

D2C businesses often leverage online platforms to build strong customer relationships and deliver personalized shopping experiences.

Below is an example relevant to the D2C eCommerce business model:

The Business-to-Business-to-Consumer (B2B2C) model combines elements of B2B and B2C. In this model, a business sells products or services to another business, which then sells them to the end consumer. 

For example, a manufacturer might sell products to a retailer (B2B), who then sells to customers (B2C). Marketplace, where producers connect with retailers who reach the consumer market.

Below is an example relevant to the B2B2C eCommerce model:

Emerging Business Models For eCommerce With Examples

Below, we’ve discussed emerging eCommerce business models. Let’s learn:

1. Just-in-Time Purchasing

Let's take a look at the Just-in-Time inventory management process:

Just-in-Time (JIT) purchasing is a popular business strategy whereby businesses order supplies or items only when they will be used immediately. 

Every time a user places an order, the store orders the product from the supplier and ships it to the customer. This is a great option for those with limited resources or without access to warehouse space.

Below is an example relevant to the JIT (Just-In-Time) model:

2. Subscription-Based Models

“Subscription services have a 150% better conversion rate compared to traditional retail.”

The core of subscription-based eCommerce is recurring sales of goods and services, which offers customers consistent value and consistent revenue streams for businesses.

Subscription-based eCommerce business models benefit both the company and the customer. Customers can easily repurchase the product or service whenever they'd like. Furthermore, businesses don't necessarily need to get back in touch with their clients to retain them as potential clients.

Below is an example relevant to the subscription-based model:

3. White-Labeling and Private Labeling

“Almost one in five consumer goods products in the United States is a private label."

White-labeling and private labeling is a business approach, that enables businesses to rebrand & sell products made by third-party manufacturers under their brand names.

This model is popular in fashion industries, beauty, and health where businesses enter the market without investing in manufacturing. 

Below is an example relevant to the private label model:

4. Dropshipping

“The global dropshipping market was valued at 221.3 billion USD in 2022. It is projected to reach a value of 931.9 billion USD by 2030.”

Dropshipping is a low-investment eCommerce model where businesses can sell products without owning an inventory. Here, orders are fulfilled by third-party suppliers who deliver directly to customers. 

This cost-effective model minimizes the upfront costs and allows entrepreneurs to focus on marketing and scaling their operations. 

Below is an example relevant to the dropshipping model:

How to Choose the Right eCommerce Business Model?

Selecting the right eCommerce business model is highly crucial to make your business a huge success. Below we’ve discussed how you can pick the right business model. Let’s find out:

1. Consider Your Niche and Audience

Understanding your niche and audience is important to lay the foundation of your business. It will help you to identify your target market and the specific needs or pain points within your niche. 

Below is an example relevant to the Direct-to-Consumer (D2C) model:

2. Analyze Competitors

Next, it's time to know and analyze your competitors. It will help you understand their business models, pricing strategies, and market positioning. 

Below is an example relevant to exploring a subscription-based model:

3. Assess Scalability and Resources

Now make sure to evaluate your resources, including supply chain, technology, and manpower. It will assist you in determining the scalability of different models. 

Below is an example relevant to the dropshipping model:

4. Market Trends and Future-Proofing

Ultimately, stay informed and up-to-date with the latest trends and evolving customer needs and preferences. It is a crucial step to stay ahead of your competitors and aligned with the latest trends. Get in touch with top eCommerce app developers & take your business to the next level. 

Below is an example relevant to integrating a social commerce model:

Top 5 Benefits of eCommerce Business Models

Let’s now learn how eCommerce business models will benefit your business:

1. Global Reach

eCommerce business models enable companies to expand beyond local markets and reach global markets. This global reach allows businesses to tap into new markets, increasing brand awareness and attracting new customers. 

 

2. Lower Operational Cost

eCommerce companies often incur less in operating expenses than traditional brick-and-mortar retailers. Minimizing overhead costs like rent, utilities, and in-store staffing frees up funds companies may use for marketing, product development, and customer support. 

 

3. Personalized Customer Experience

E-commerce platforms can utilize data analytics to provide customized purchasing experiences. Businesses may enhance customer happiness and boost sales by offering personalized offers, tailored content, and targeted product suggestions based on an analysis of client behavior and interests. 

 

4.Diverse Revenue Streams

eCommerce businesses have access to several revenue-generating channels. It consists of affiliate marketing, direct sales, advertising, and subscriptions. 

This diversification improves overall financial stability by lowering reliance on a single source of income. Consequently, businesses become more adept at adjusting to changing market situations.   

 

5. Scalability

eCommerce models allow businesses to grow and expand rapidly without requiring significant infrastructure changes because of their high scalability. Additionally, eCommerce platforms facilitate operational scaling by providing flexibility for growth.

Partner With Apptunix to Find Successful eCommerce Business Models For Your Company!

Choosing the right eCommerce business models is the foundation for long-term success. Apptunix, a top-notch eCommerce app development company will assist you with more than just technical expertise; you gain a strategic partner committed to understanding your vision and driving results.

Our tailored eCommerce business solutions are designed to help you identify and implement the most effective business model for your unique goals, whether you’re focusing on B2B, B2C, D2C, or a hybrid approach. 

Entrepreneurs who partner with Apptunix unlock the full potential of their business by tapping into our expertise in building scalable, mobile-friendly, and revenue-generating platforms. 

Our agile approach ensures that your eCommerce store is equipped with the latest technology and user-centric features to stay ahead of trends and consumer demands. 

Whether you’re starting from scratch or looking to optimize an existing setup, Apptunix provides the guidance and tools you need to grow your business, adapt to evolving markets, and achieve sustainable success.