E-commerce Business Models

E-commerce or Electronic commerce is a business model that lets consumers and businesses sell or buy online. E-commerce has four major models:

• Business-to-business (B2B)
• Business-to-consumer (B2C)
• Business-to-government (B2G)
• Business to business to consumer (B2B2C)

What is the business-to-business model?

Business-to-business is a type of electronic commerce that describes online order transactions of products and services (or) the exchange of information between businesses and helps these businesses to operate, grow, and profit.

B2B companies are:

• supportive enterprises
• they have an entirely different target audience
• they don’t emphasize much on brand identity
• have highly calculated buying decisions
• purchases based on long-term goals
• have a complex sales cycle
• sales processes are relationship-driven

Areas of operation of B2B companies:

Business-to-business companies operate in many industries, such as technology, retail, construction, insurance, marketing, sales, financial services, manufacturing, real estate, healthcare, education, telecommunications, engineering, food, and beverage.

According to Grand View Research, by 2027, global e-commerce is estimated to reach $20.9 trillion, representing a compound annual growth rate (CAGR) of 17.5% during the period 2020-2027.

Why do we need B2B companies?

B2B companies address all the pain points of the businesses and provide suitable business solutions to help solve their problems. They are here to help businesses succeed and reap great benefits.

Types of B2B companies:

There are several types of B2B companies. Some of the common types of B2B eCommerce are:

• Resellers and retailers: They can directly (or) through online or both, including B2B vendors, sell products and services of the other companies to businesses.
• Consultancies and agencies: They provide specialized services like advice, oversight, etc., to different businesses.
• Infomediaries: Infomediaries are also known as information sites. These sites provide information about a particular industry to organizations and their employees.
• Manufacturers: It is the manufacturers who produce the finished goods on a large scale by using raw materials, parts, etc., with the help of laborers and machines. In the b2b model, the finished goods are sold directly to wholesalers, retailers, or other manufacturers.

Advantages of using the B2B eCommerce model:

1. Good data analysis: B2B e-commerce provides the best platform for an entity to launch a comprehensive analytics campaign. This analytics would help the organization make better business decisions and analyze what’s working and what’s not working for their business. They can also generate various types of reports to understand their business and make better decisions.
2. Attracting new customers: A B2B eCommerce site is the best way to reach new b2b customers. With good digital marketing strategies, one can increase their business reach.
3. Sell more: If you already have a good customer base, then with the help of b2b e-commerce, you can easily automate up-sell and cross-sell recommendation programs and help your customers find products of their interest.
4. Better analysis of customers and sales: With a digital presence, you can utilize business management software. Using this software, you can get information about how your customer’s shop, and therefore you can provide a better personalized shopping experience for your customers.

Disadvantages of using the B2B eCommerce model:

1.   Purchase decision takes time: The majority of the purchase decisions by the customers involve one to two decision-makers and the decision taking time can stretch long period and the b2b sellers generally operate with long gaps between sales.

2.   Limited market: Due to the limited number of potential customers, every lead and existing customer is more valuable, and the loss of even a single customer can impact the business.

3. The buyer is the king: It is the buyer who is more powerful than the seller. A b2b buyer can demand customizations and bargain for better pricing as the seller is more concerned about retaining its customers.