Types of E-Commerce – 6 Pillars of Conducting E-Business as of 2021
Let’s go back to school and learn a thing or two about the way people conduct business as of 2021. We’re talking about the main 6 types of E-commerce as a look back into the basics and laying down groundworks for later discussion.
After last week’s fascinating yet incredibly difficult topic of AI, we’ve decided to go back to the basics again. Today we’ll be discussing Business 101. Specifically, the 6 main types of E-commerce – B2B, B2C, C2C, C2B, B2A and C2A. Now if you’ve ever wondered what those abbreviations mean, then you’ve come to the right place!
You might be wondering why we’re discussing seemingly obvious things when it comes to the business domain. Well, if you’ve been an avid reader of our blog, you’d know how many people “pretend” to know things, and are reluctant to ask “simple” questions. So, there’s never a bad time to revisit some basic terminology and get our facts straight. This will come in handy when we’ll be discussing some more obscure abbreviations later down the line – things like PIM’s, WMS, CMS etc.
Aside from that, with the global pandemic still raging on, lockdowns still in effect in many regions of the world – e-commerce is becoming a more varied and nuanced place, so foreknowledge is crucial!
Disclaimer: There are many enterprises in this world, some are exclusively online while others are regular brick-to-mortar businesses. Many of these make up more than one type, however in our article we’ll be discussing online web-apps and solutions primarily.
6 Types of E-commerce
So, typically when you hear the word “e-commerce” your mind instantly goes to “online shops and transactions between supplier/customer”, which is a fairly good explanation. However, it’s important to distinguish the diverse types of e-commerce for a better understanding of the topic, especially so when you’re preparing a business plan or report for your stakeholders.
Or if you want to skip all the pleasantries and get down to business (to defeat the huns..) just contact our team. No? Okay…
We’ll be starting off with the most common notion of conducting business online:
Type 1: Business-to-Consumer (B2C)
The most well-known and widespread business type – retail. This is what everybody pictures when they talk about e-commerce. As the name suggests, it revolves around a business’s supplying the final consumer. Another abbreviation you might encounter for this type is D2C – Direct-to-Consumer.
Massive websites like Amazon, Target, Alibaba, Walmart, and many other make up this category. Especially now in recent years this type of business has flourished massively. For good reason too, it allows consumers to be exposed to a wide variety of products they might not normally find in the physical world; they can compare prices far easier and research the product via customer reviews, all from the comfort of one’s home.
B2C typically has lower sale cycles compared to other types which means they generally spend less money per sale on marketing. However, this also means they have a lower “average of order value” and far fewer recurring orders from returning customers, compared to B2B for instance.
One of the more shining aspects of this type of E-commerce is its push towards innovation. Leveraging technology like cross applications, AI algorithms, VR, adaptive and targeted advertisement and much more to push those margins and metrics to the max.
Being arguably the biggest type of e-commerce out there, it comes with a few disadvantages as well. There is sever competition requiring constant rush for improvement; complex infrastructure on ERP levels, legal nuances(taxes) etc.
Type 2: Business to Business (B2B)
While in commerce world B2B and B2C might be somewhat different, one catering to singular customer and others catering as the name suggests to business transactions between enterprises; in e-commerce things converge to a more similar (yet still different) aspect.
The sale’s portal (a web-app/platform of some sort) still has the same functionality: a search bar, navigation, product information, FAQ’s, shopping cart etc. For the goal of the platform is the same as a retail shop – optimizing efficiency, convenience, security of the sale’s process and such, in this case between businesses.
Most importantly it removes some of the human factor like sale representatives, negotiations, supply chain problems etc. out of the equation; leading to lower overhead costs. Digital Automation is the word of the game here.
Besides, according to a survey by TrustRadius, the majority of B2B tech buyers (DM’s) are now millennials. This means that the old “true” and “tested” sales techniques that were developed in 2000’s, are somewhat outdated, which can readily be seen when some “out of touch” marketers try out to get “down to the kids” in their sales campaigns. But we digress..
Compared to B2C e-commerce, the sales process is generally longer, involving multiple decision makers, huge value to sale averages, more niched targeted markets and a higher degree of recurring orders. Typically, these transactions involve relatively big shipments of goods on a discount for bulk orders.
B2B E-commerce typically applies to the following scheme “manufacturers > wholesalers > B2C industry”. Essentially these portals are the link between producers of goods, to wholesale re-sellers, that then sell the product to retail stores, be that online, or deliver to brick-and-mortar stores across the world.
Type 3: Consumer to Consumer (C2C)
This type of E-commerce and a stellar example Digital Transformation was pioneered by EBay way back in 1995. Now we have many outlets from Craigslist to Facebook Market, to Amazon and others. It provides a market environment for consumers to buy or sell their products directly to other consumers.
Being a third-party aggregator between consumers, the profits come from transactional or listing fees. However, opening such a marketplace is incredibly difficult today, not only due to heavy competition from established sites. It requires ample planning from the business model to complex infrastructure server side, and delivery of quality control among other key challenges.
However, it occupies a very important niche in the market, often times allowing customers to find items that are difficult to find elsewhere, due to rarity of the product in question.
Type 4: Consumer to Business (C2B)
The advancements of technology and the subsequent reduction in operational costs for freelancers has allowed this business model to flourish.
Where before commerce relationship was strictly one directional, with businesses pushing their products onto consumers, with high-tech cameras, high-quality printers, or software such as adobe suite and has various platforms for self-promotion has allowed a bi-directional model to develop; previously available only to big companies.
C2B e-commerce is the model where consumers basically auction off their own product or service, on platforms designed to connect enterprises with the aforementioned freelancers.
Essentially any freelance platform such as Fiverr, UpWork, FlexJobs makes up this category as well as platforms like FreePik or Shutterstock among others. C2B model relies heavily on being the aggregator between parties (third party service if you will).
A less known variant of C2B e-commerce are platforms that allow consumers to name a price for a product they would be willing to buy, and let companies compete for the sale offering “lower bids” – these are known as reverse auctions.
Though occupying an incredibly important niche on the market, these e-commerce platforms are not the most profitable while requiring very heavy investment in infrastructure, development, UX design etc.
Type 5: Business to Administration (B2A)
There are various rules set when it comes to commerce, legal fees, taxes, regulations etc. These rules are overseen by the government. Hence our next type – Business to Administration. This type of E-commerce usually involves web-apps or platforms designed for easier interaction with governmental institutions. For instance, automatic document registration or requests, tax forms, and other such documents.
Anything relating to the public sector’s interaction with enterprises falls under this type of E-commerce. Another interesting aspect of web-apps falling under this category is cross integration between the software development team that designed a government app of any sort. As we’ve mentioned, no application, especially a long term such as a .gov one, goes without constant maintenance for an indefinite period.
B2A projects have a great advantage of reliability for Software Developers.
Type 6: Consumer to Administration (C2A)
And final type revolves around Consumer to Administration E-commerce. The same rules apply as the B2A, except the main interaction is between the average consumer and the public sector.
Platforms based around C2A take care of, for example: scheduling an appointment with your doctor, registering for social welfare, education institution tuition or public database etc.
And those are the 6 main types of E-commerce out there. We’ll be coming back to these regularly as we discuss the various needs and solutions these types of business encounter. How to plan and build them, after-all that’s what we do.
With that we’re closing our basics course into this topic as we look forward to the coming 2022 and the plethora of amazing subjects, we’re planning for you dear read in the following year!
Finally, what do you think about E-commerce? Is it about to go onto a decline as the world attempts to recover from the pandemic and go back “into the real world” or its only the beginning and we’ll see more digital automation in every sector?
Tell us in the comments!
Stay classy business and tech nerds!