E Commerce Models can be broadly categorised into the following three Models:
|B2B – Business to Business||Oracle, Alibaba, Qualcomm, Honeywell|
|B2C – Business to Consumer||Intel, Dell, Snapdeal, Amazon|
|C2C – Consumer to Consumer||OLX, Quikr, Ebay|
A typical E Commerce Business Model
The following E commerce business Model shows the step by step process and activities followed and used by business firms, seeking to expand their business through help of electronic and telecommunications networks .
A. Business to Business (B2B) E-commerce Models
A B2B Model involves trading of goods and services between two corporate entities. A B2B model enables a business to interact and trade with other organization i.e. business houses trade goods and services with other businesses. Both the parties strike a deal directly through electronic networks and exchange products, services, information etc. This model is generally used for –
- E- HRM (Human resource management)
- E-CRM (Customer relationship management)
Intermediaries are usually market makers and direct service providers (DSP) who assist in matching buyers and sellers.
It involves use of electronic medium for –
- Supply of Inventory
- Channel Management
- Distribution management and order processing
- Delivery and payment management
There are three types of B2B e commerce Models
(1) Supplier Oriented or Supplier Centric Model
In such a model a supplier sets up an electronic marketplace in the domain of the products it supplies. Suppliers provide customized solutions and pricing according to the needs of the buyers.
(2) Buyer Oriented or Buyer centric Model
Such a model is generally used by Big business houses which make very high volume purchases and have a very high purchasing capacity. The organization sets up an electronic platform and places requests for quotations. Sellers contact the organization and place a bid online with his offer. The organization selects the offer that suits its needs, the entire purchase process is carried out using electronic mediums.
(3) Intermediary Oriented or Intermediary Centric Model
In such a model an electronic market maker provides an electronic platform to connect many buyers and sellers and facilitate transactions between them though its potential database of buyers and sellers. The market maker is generally an intermediary of a specific segment who quickly, conveniently and inexpensively connects many buyers and sellers of the segment.
B. Business to Consumer (B2C) E commerce Models
In a B2C Model Consumers get an opportunity to browse, select, customize and buy products online from a variety on online marketplace and portals. Sellers offer price cuts, discounts, shipping and delivery options, online customer service through an electronic portal and allow for personalization and customization of products. This model is generally used by existing businesses for channel enhancement purposes and by small producers or retailers to set up an online internet based store or surpass any entry barriers.
Benefits of B2C model –
- Convenience of online buying
- Customization of products
- Online customer service
- Online delivery and payment
Types of B2C Models –
E-retail or E-tailing – It refers to retailing of consumer goods online through a website.
Brick & Click Retail – It refers to combination of a brick and mortar shop with e-tailing.
Virtual Malls – It is a website that hosts several merchants on one website. Owners of the website charge a small fee from sellers to display and sell their products through its structured revenue model.
This model is suitable for –
- Goods that can be transformed into digital format e.g. books, music, movies, software etc.
- Experience – Educational programs, tutorials and training, Games, Events
- Physical products – consumer durables
- Products that have standard specifications universally
- Branded items with return security
C. Consumer to Consumer (C2C) E commerce Model
Under this model, Consumers sell directly to other consumers through online classified ads and auctions. A C2C Model essentially involves financial interaction of non-business entities using the web.
Consumers usually sell their personal possessions, second hand and homemade products, information services and freelance services to other consumers. Goods and services are generally sold at market determined prices and negotiations between parties are very common. C2C portals may or may not charge fees from its users.
NOTE: E commerce Models may be also categorized into Business to Government (B2G), Government to Business (G2G), Government to Citizen (G2C) and Peer to Peer (P2P) apart from the above three e commerce business models. The explanation of these e commerce models is beyond the scope of this article.