Don't miss the chance to work with top 1% of developers.
Sign Up Now and Get FREE CTO-level Consultation.
Confused about your business model?
Request a FREE Business Plan.
eCommerce Business Models: Type, Benefits & Examples
Table of contents
In today’s digital world, most retail businesses operate online. One of their biggest concerns is choosing the right eCommerce business models among the comprehensive list of various types of business models.
By 2027, 23% of retail purchases are expected to take place online and total over $7.9 trillion. If you want to enter a lucrative eCommerce business, you must choose the right eCommerce business model. It will assist your business to move in the right direction with strategic steps.
In today’s guide, we’ll help you navigate through different types of eCommerce business models, eCommerce trends, benefits, and much more.
Let’s get started!
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 major different types of eCommerce business models & strategies. Let’s discuss:
1. Business-to-Business (B2B) eCommerce Model
“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:
| Category | Details |
|---|---|
| Example | Amazon, Zara, Aliexpress |
| Who is it For? | The B2B model works best for companies that sell products/services in bulk to other businesses instead of individual consumers. |
2. Business-to-Customer (B2C) eCommerce Model
“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 sales between online business selling products/services and consumers, encompassing everything from online retail stores to digital service platforms.
Below is an example relevant to the B2C eCommerce model:
| Category | Details |
|---|---|
| Example | Amazon, eBay |
| Who is it For? | The B2C model is ideal for businesses catering to consumers looking for various products or services. It works best for retailers, service providers (e.g., streaming platforms, eLearning), and brands selling directly to consumers. |
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:
| Category | Details |
|---|---|
| Example | eBay, Craigslist |
| Who is it For? | The C2C model is ideal for small sellers, second-hand goods, and niche products. |
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:
| Category | Details |
|---|---|
| Example | Shutterstock, Upwork |
| Who is it For? | The C2B model works best for freelancers, content creators, or individuals who offer products or services to businesses. |
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:
| Category | Details |
|---|---|
| Example | IBM, Oracle |
| Who is it For? | The B2G model suits companies that provide products or services to government agencies. |
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:
| Category | Details |
|---|---|
| Example | Warby Parker, Glossier |
| Who is it For? | The D2C model is ideal for brands that want to sell directly to consumers without intermediaries. |
7. B2B2C (Business-to-Business-to-Consumer)
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:
| Category | Details |
|---|---|
| Example | Alibaba, Amazon (Marketplace) |
| Who is it For? | It’s suitable for manufacturers, wholesalers, or platforms that connect producers with retailers who serve consumers directly. |
Also Read: AI in eCommerce: How You Can Transform Your Business?
Emerging eCommerce Business Models With Examples
Below, we’ve discussed top emerging e-Commerce business models examples. 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:
| Category | Details |
|---|---|
| Why it works? | JIT is cost-efficient, boosts cash flow by minimizing inventory, and allows businesses to quickly adapt to market changes. |
| Examples | Toyota, Zara |
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:
| Category | Details |
|---|---|
| Why it works? | It provides consistent revenue and builds customer loyalty by offering convenience and customization. |
| Examples | Dollar Shave Club, Netflix, Microsoft |
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:
| Category | Details |
|---|---|
| Why it works? | Cost-effective and allows businesses the flexibility to focus on branding and customer engagement while relying on reliable suppliers for production. |
| Examples | AmazonBasics (Private Label) |
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:
| Category | Details |
|---|---|
| Why it works? | Low initial investment, easy to start, and highly scalable. |
| Examples | Shopify-powered stores, Oberlo dropshipping businesses |
How to Choose the Right eCommerce Business Model?
Selecting the right e-Commerce 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:
| Example | If your niche is eco-friendly products, a Direct-to-Consumer (D2C) model might be ideal for building a brand around sustainability and directly engaging with environmentally-conscious consumers. |
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:
| Example | If you notice that most competitors use a B2C model, you could explore a subscription-based model to differentiate yourself and secure recurring revenue. |
3. Assess Scalability and Resources
Now 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:
| Example | If you have limited resources, a dropshipping model could be a good starting point, as it requires lower upfront investment and inventory management. |
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:
| Example | With the rise of social commerce, integrating a model that leverages social media platforms for sales can help future-proof your business against changing consumer behaviors. |
Top 5 Benefits of eCommerce Business Models
Let’s now learn how well-planned eCommerce business model strategy 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.
Also Read: The Ultimate Guide: How to Make an eCommerce App?
Partner With Apptunix to Find Successful eCommerce Business Models For Your Company!
Selecting the best 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 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 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.
Frequently Asked Questions(FAQs)
Q 1.Which is the best business model for eCommerce?
The best business model for eCommerce depends on your target market, products, and goals. For example, the B2C model is ideal for businesses selling directly to consumers, while the B2B model suits companies selling in bulk to other businesses. D2C and subscription models are also popular for building strong customer relationships and recurring revenue.
Q 2.What is the business model for ecommerce?
An eCommerce business model is a strategy that outlines how a company sells products or services online and earns revenue.
Common models include B2C (Business-to-Consumer), B2B (Business-to-Business), C2C (Consumer-to-Consumer), and D2C (Direct-to-Consumer), each catering to different target audiences and transaction types.
Q 3.What are the 4 pillars of business model?
The four pillars of a business model are Value Proposition, Revenue Model, Target Market, and Distribution Channels. These elements define what the business offers, how it makes money, who it serves, and how it delivers products or services to customers.
Q 4.What are the key characteristics of a successful platform business model for retail?
A successful platform business model for retail connects multiple user groups, fosters network effects, offers scalability, and enables seamless interactions between participants. It also typically has a strong value proposition, a reliable revenue model (like transaction fees), and a focus on user engagement and retention.
Q 5.How much does it cost to build an eCommerce mobile app with the latest trends?
The cost to build an eCommerce mobile app with the latest trends varies based on features, design, and complexity. On average, it can range from $25,000 to $150,000 or more. Factors such as platform choice, integration of advanced features like AI or AR, and customizations can influence the final cost.
Q 6.What are the different examples of eCommerce business models?
There are several common eCommerce business models examples, each tailored to different types of transactions and customer needs. Check out:
- B2C (Business-to-Consumer): Here business sells directly to consumers such as Amazon, YouTube, eBay, Spotify, Walmart Zara, Netflix, and more.
- B2B (Business-to-Business): It involves transactions between companies such as wholesalers selling to retailers. Examples include Amazon, Aliexpress, and more.
- C2C (Consumer-to-Consumer): It allows individuals to sell to each other. Examples include Etsy, Airbnb, Letgo, eBay, and more.
- B2B2C (Business-to-Business-to-Consumer): It combines elements of B2B and B2C, where a business sells to another business, which then sells to the end consumer (think of a wholesaler selling to a retailer who sells to customers). Examples include Amazon, Alibaba, UberEats, and more.
- D2C (Direct-to-Consumer): It eliminates the middleman, allowing brands like Warby Parker or Casper to sell directly to consumers. Each model has its own unique advantages, depending on the target market and sales strategy.
Q 7.Classifications of eCommerce Business Models Based on What They Sell
eCommerce business models can be classified based on what they sell. Here are the main categories:
- Physical Goods: Businesses sell tangible products, such as electronics, clothing, or groceries. Examples: Amazon, Walmart, and Best Buy.
- Digital Goods: These are intangible products like e-books, music, software, or digital subscriptions. Examples: iTunes, Netflix, and Adobe Creative Cloud.
- Services: Businesses offer services rather than products, including things like consulting, travel bookings, or online education. Examples: Upwork, Airbnb, and Coursera.
- Subscriptions: Companies sell access to products or services on a recurring basis, such as monthly boxes, streaming services, or software subscriptions. Examples: Netflix, Spotify, and Birchbox.
- Marketplace Platforms: These sites allow third-party vendors to sell goods or services, with the platform acting as an intermediary. Examples: eBay, Etsy, and Amazon Marketplace.
Q 8.What are the different types of eCommerce Platforms?
- SaaS (Software-as-a-Service): Hosted solutions that are easy to use and require minimal technical skills. Example: Shopify, BigCommerce.
- Open-Source: Customizable platforms offering full control over the code, ideal for businesses with technical teams. Example: WooCommerce, Magento.
- Headless: Platforms that decouple the front-end and back-end, allowing for custom user experiences across multiple channels. Example: CommerceTools, Shopify Plus.
- Marketplace: Platforms where multiple vendors can sell products under one site, with the platform owner taking a commission. Example: Magento Commerce, Sharetribe.
- Enterprise: Advanced, scalable solutions for large businesses with complex needs, often offering integration with other systems. Example: SAP Commerce Cloud, Oracle Commerce Cloud.
- Cloud-Based: Hosted solutions running entirely in the cloud, offering scalability and security. Example: Salesforce Commerce Cloud, Shopify Plus.
Rate this article!
Join 60,000+ Subscribers
Get the weekly updates on the newest brand stories, business models and technology right in your inbox.
Introducing Nalini, our tech-savvy content expert with 7+ years of experience in technical content writing. With a knack for making complex ideas simple, she turns intricate tech concepts into engaging reads. Whether you’re delving into mobile app development, AI, or blockchain, she is your go-to technical expert. Beyond the tech world, you’ll find her immersed in Anime, exploring mobile trends, or enjoying badminton and Foosball.
Telemedicine 2.0 - A Comprehensive Guide On What Healthcare Providers Need To Know?
Discover how the latest advancements like Artificial Intelligence in telemedicine are reshaping patient care. This comprehensive resource offers insights into the key trends and innovations driving this shift, providing valuable knowledge for healthcare professionals looking to stay ahead.
Download Now!Subscribe to Unlock
Exclusive Business
Insights!
And we will send you a FREE eBook on Mastering Business Intelligence.
