11 Different Types of Ecommerce Businesses and How to Choose the Best One for You

With so many different types of ecommerce businesses, it’s important to choose the right one for your goals and aspirations in order to succeed. What ecommerce business you decide to start should depend on your enterprise, background, skills, team, budget, target market, and target customers, among other factors.

In this article, we’ll take a look at 11 different ecommerce business types: 6 customer-based and 5 value-delivery based. We’ll discuss what each one means, what it entails, and what pros and cons it brings. This review should help you select the right option for your business targets.

Table of Contents

• What Is an Ecommerce Business?
• 6 Customer- Based Types of Ecommerce Businesses
• 5 Value-Delivery Based Ecommerce Business Types
• How to Select Your Ecommerce Business Model
• Launching Your Ecommerce Business in 2023

What Is an Ecommerce Business?

Ecommerce, also known as electronic commerce or internet commerce, is a relatively new business model. It includes dealing in goods or services via the internet and using technology for completing business transactions. Ecommerce also includes transferring information and monetary payments to complete this process.

As commercial transactions are completed digitally, online marketplaces need to take special care in providing their customers and themselves with strong data privacy and data protection policies.

Online trade has been constantly growing in recent years, with new ecommerce types emerging all the time. Whether we consider the customers of an ecommerce business or the way in which it fulfills deliveries, there is a wide variety of different types of ecommerce stores.

In the following section, we’ll investigate 6 ecommerce business types based on the customers they serve.

6 Customer-Based Types of Ecommerce Businesses

One of the first things you should learn about ecommerce is the types of ecommerce businesses available according to your enterprise and the customers you’d like to target. Each of these businesses has its own characteristics, making each one more unique than the other. Understanding the different types and their requirements ensures you know which one to pick for your next project.

1. B2B Ecommerce Business

B2B ecommerce, also called business-to-business, is one of the most common types of online venture. It signifies dealing between companies and includes businesses sourcing input materials for output from another company.

A classic example is the manufacturing industry that purchases raw materials from another company. B2B ecommerce is generally carried out on a larger scale and offers high earning potential if leveraged correctly.

Pros

• Larger order sizes
• Higher customer loyalty and stability
• Longer customer lifetime

Cons

• A small number of customers
• Limited diversification
• Need for customization

2. B2C Ecommerce Business

B2C, short for business-to-customer, includes a business model that sells directly to the customers or end consumers. It doesn’t require third-party sellers or other middlemen in the business process. Companies like Amazon and Walmart are some of the best known B2C ecommerce stores.

These B2C businesses have helped create different types of ecommerce setups and have their pros and cons. B2C ecommerce has a higher market potential and offers more opportunities to earn from different customers.

Pros

• More customers
• Stronger market diversification
• Simpler operations

Cons

• Relatively high shipping charges
• A lot of product competition
• Higher ecommerce marketing expenses

3. C2B Ecommerce Business

C2B, or customer-to-business, is the type of ecommerce website where customers create business value and then consume it for profit. Customer reviews, product ideas, and others are all examples of such businesses. C2B ecommerce has higher market accessibility and can help connect with a higher audience.

Pros

• Earning potential for customers
• Easier market via customers
• Higher affordability

Cons

• Unpredictability
• Poor customer response
• Reliance on customers

4. C2C Ecommerce Business

C2C, standing for customer-to-customer, business is one of the relatively newer types of ecommerce platforms. It includes using different types of ecommerce websites to sell products from customer to customer. The ecommerce website serves as an online marketplace where individuals sellt o other individuals. C2C ecommerce provides lower overhead costs, making it a highly favorable business model, especially for beginner entrepreneurs.

Pros

• Lower overhead
• Higher customer base
• Higher credibility

Cons

• Potential payment problems
• High market competition
• Limited control over product quality

5. B2A Ecommerce Business

B2A, short for business-to-administration, is also called the business-to-government ecommerce business model. It is one of the highest-paying types of ecommerce business models but has relatively limited types of ecommerce stores.

This ecommerce modeling includes all kinds of payments made between businesses and government bodies to complete business goals.

These business models are as important as B2B or B2C businesses and have dedicated marketing departments. A SaaS company working with an administrative body is an example of these ecommerce models.

Pros

• Easy processing
• Guaranteed customers
• Easier payment methods

Cons

• Difficult entry
• Portal-based operations
• Limited customer base

6. C2A Ecommerce Business

C2A, called consumer-to-administration, is a business model that includes all the transactions from individuals to public administrations. This kind of** ecommerce marketplace **is more common than you might think. For example, a patient paying for doctor services includes the C2A business model. It is one of the more stable **types of ecommerce **businesses.

Pros

• Higher earning potent
• Stable business opportunities
• Safe payments

Cons

• Platform fee
• Limited access
• Challenging qualification requirements for businesses

5 Value-Delivery Based Ecommerce Business Types

Another way to differentiate between various types of ecommerce businesses is based on the fulfillment method or the value-delivery model.

We’ll discuss the 5 most popular types of ecommerce businesses based on this criterion:

1. Private Labeling

Private labeling is the kind of business model where a business works with a company to manufacture new products under the same brand name.

The company is responsible for the labeling, manufacturing, and packaging of products and for providing the expected quality.

Before diving into this kind of business, it’s crucial to complete detailed research on the manufacturer, their practices, quality, and customer reviews. If done right, private label ecommerce can be highly profitable, which is a prime reason for its popularity in the business world.

Pros

• Control over quality
• Better quality products
• Higher customer satisfaction

Cons

• Risk of unethical sourcing
• High competition
• High cost

2. White Labeling

White label ecommerce is the kind of business model where a business purchases a pre-completed product. As labeling doesn’t grant buyers any power, they have to purchase whatever the manufacturers provide. The production process in these kinds of manufacturers is easy and efficient.

Pros

• Easy manufacturing and production
• Affordability
• Energy efficiency

Cons

• No control over the quality
• Risk of unethical sourcing
• Less flexibility

3. Wholesaling

Wholesaling is when buyers purchase large orders and sell them for a higher price to retailers. It is one of the oldest modes of business. The suppliers usually provide discounts in the wholesale ecommerce business model. The buyers can stack the items in storage and sell them to potential customers later.

Pros

• High earning potential
• Less cost and time for business
• Scalable orders

Cons

• Unpredictable income
• Poor customer support
• Difficulties finding buyers

4. Dropshipping

Ecommerce dropshipping, such as Shopify dropshipping, is probably the most unique business model on our list. It has some of the best features offered for buyers and sellers.

Dropshipping includes sellers offering customers products without stocking them on their own. Dropshippers act as middlemen in the business model, increasing the earning potential of the model.

Pros

• High scalability
• More profits
• Easy expansion into new markets and customers

Cons

• Process management issues
• Potential reputation problems
• Difficulties finding reliable suppliers

5. Subscription Service

The ecommerce subscription business model includes buyers and sellers interacting for products monthly and for recurrent sales. The buyer-seller relationship is the most vital element of these types of ecommerce businesses.

The subscription service is highly dependent on market trends and consumer conversion. Nonetheless, it has a wide market base and is one of the most profitable types of ecommerce businesses

Pros

• High investor interest
• Loyal customers
• Improved profit margins

Cons

• High competition from other companies
• Revenue uncertainty
• Difficult setup

How to Select Your Ecommerce Business Type

Now that we have discussed the various types of ecommerce business models available for savvy entrepreneurs, you know the options ahead of you. There’s a wide variety of businesses that you can choose from.

Here are a few factors you should consider when choosing the best business model for you and your enterprise:

1. Consider the Target Audience

The first and foremost factor for selecting an ecommerce business type is the kind of customers you are dealing with. We live in a digital world where customers have high accessibility to many different products and supplies, so it’s impossible for businesses to target all of them.

You can ease the process of choosing your customers by segmenting your audience base. You need to understand the customer’s intentions and behavior to decide. For instance, some customers love buying groceries, while others consider it a chore.

Some buyers prefer variety in their products, whereas others’ purchases are repetitive. The more you understand the audience, the easier it becomes to target them.

2. Think of the Available Resources

Starting a business is profitable only if you can run it in the long run. You need the human and financial resources to start a business and run it.

For instance, you need more upfront cash with a private label ecommerce business type, which is not always a good option for everyone. Think of your available resources and your business goals, and deciding on the most appropriate type of ecommerce business shouldn’t be a problem.

3. Know Your Forte

While external factors matter for the types of ecommerce, your own skills also matter. Consider the kind of business you can run the best. It’s the most effective way to ensure you are ready to handle the business and the challenges that come with it. You have all types of ecommerce businesses, but you can only choose one, so do it wisely.

Launching Your Ecommerce Business in 2023

Many different types of ecommerce businesses may seem appealing to you, but you need to consider their requirements as well as your own resources and skills before choosing the best one for you. Before getting started, you need to be prepared for all kinds of business-related challenges for long-term success. But as long as you plan carefully, put the right efforts into it, and make use of the best online tools, you should be able to launch your own ecommerce business within a couple of months.

To give your ecommerce business the boost that it needs, check out the tools available on Coretava:

• Core Loyalty: Start an AI-empowered loyalty program to build customer loyalty and customer retention.
• Core Marketing: Personalize your ecommerce growth marketing efforts for better results.
• Core Personalization: Customize product recommendations and delivery for more frequent and higher value sales.
• Core Omnichannel: Merge the online and offline customer journey for the ultimate phygital experience.
• Core Teams: Boost team engagement and employee retention through personalized training and gamification.

Click here for schedule a free demo with our team to learn more about how we can help you enhance your ecommerce website.Italic