E-Commerce Business Models

E-Commerce Business Models

E-commerce is the new way businesses have been undertaking business in the modern world. It has revolutionized how companies conduct business and interact with customers. With the advent of the internet, e-commerce is an important aspect of many business sectors, enabling businesses to reach audiences worldwide and increase their reach. Notably, this research paper will discuss different e-commerce models in the literature. The three major identified e-commerce business models include Consumer-to-Consumer (C2C), Business-to-Business (B2B), and Business-to-Consumer (B2C). Each of these models will be covered in terms of advantages and disadvantages, and various examples of companies that use e-commerce business models in real life will be considered.

Business-to-Consumer Business model

The most common of the four mentioned e-commerce models is the B2C model. The model entails a business selling products and services to consumers directly. According to He (2021), this model has many aspects that benefit businesses. For instance, companies that use this model, such as Target, Walmart, and Amazon, gain various challenges that can be used to understand the model’s advantages. First, the model enables the companies to have a huge consumer base. Since the model can reach a global audience, the companies have attracted many customers from whom profits are raised. Essentially, this is characterized by the revenues that characterize those companies. Second, the B2C e-commerce business model leads to lower company overhead costs. Notably, this is so because the organizations do not have the necessary to keep physical stores for products, which saves the companies many costs associated with physical stores, such as staffing, utilities, and rent. Finally, B2C businesses offer companies direct access to consumers. Essentially, this is so because the model allows companies to easily gather information regarding customers and target them based on their shopping behaviors and preferences.

Despite the benefits identified above, the B2C business model has a share of challenges that companies using it have to cope with. First, shipping expenses are attributable to the model incurred to ship products to customers. Shipping expenses are a significant part of costs to the companies and reduce revenues. Second, the B2C e-commerce model exposes an organization to high competition. Essentially, this is so because a high level of competition is what characterizes the B2C market. Finally, the returns from the model can be low due to aspects such as product handling and logistic issues.

Business-to-Business (B2B) model

The B2B model is almost the same as the discussed B2C e-commerce model, only that the former entails businesses selling products and services to other businesses instead of consumers. Some notable companies, such as Global Sources, ThomasNet, and Alibaba, use this e-commerce business model. The companies reap various benefits from the model. First, they establish long-term relationships with other businesses using the model. The business relationships, in turn, help them predict multiple business aspects that are important to their market survival (Yunanto & Paizal, 2019). For instance, they can predict revenues and repeat businesses effectively. Second, B2B businesses can target specific niches or industries. Essentially, this helps reduce competition identified in the B2C business model. Finally, there are more ticket items in the B2B e-commerce model. Notably, this means that the companies can gain more revenue by selling products and services that are more expensive than the B2C e-commerce model’s products and services.

Various challenges can be encountered consistently while using the B2B e-commerce business model. First, the business model has long sale cycles, which can harm business operations. Notably, companies can face financial difficulties such as liquidity problems and working capital management issues (Risman et al., 2021). Second, businesses that utilize the B2B e-commerce business model encounter a more complex sales process than the B2C model because of the many decision-makers involved in the process.

Consumer-to-Consumer (C2C) model

The C2C e-commerce business model entails consumers selling products and services to their fellow consumers. The model is utilized by companies such as Etsy, Craigslist, and eBay. Companies utilize e-commerce models to attain various advantages. First, the C2C e-commerce business model has few barriers to entry for consumers. Notably, this is occasioned by the fact that C2C-based companies do not have to invest in physical stores or inventory, which makes it easier for consumers to conduct business. Second, C2C e-commerce business models are characterized by huge consumer bases whereby they can reach global audiences that present them with many customers (Zhao et al., 2020). Finally, like the B2C e-commerce business model, the C2C e-commerce model has low overhead costs. Costs such as staffing, utilities, and rent are saved because there is no need to keep physical stores.

Some of the disadvantages associated with the C2C e-commerce business model include a lack of protection for buyers since transactions may lack legal protections. Additionally, there is no quality control for goods and services sold using the C2C business model. Finally, the C2C business model has no customer care services, and in case of difficulties in transactions, consumers remain with no help.

References

Based on Deep Learning. Security and Communication Networks, 2021, 1-9. Conference Series: Materials Science and Engineering (Vol. 662, No. 3, p. 032006). IOP financial stability. Management Science Letters, 11(7), 1979-1984.

He, J. (2021). Analysis of the Business Model of C2B Cross-Border E-Commerce Platform Information Management (JGIM), 28(1), 121–141. intention in C2C e-commerce: An empirical examination in China. Journal of Global Publishing.

Risman, A., Mulyana, B., Silvatika, B., & Sulaeman, A. (2021). The effect of digital finance on

Yunanto, R., & Paizal, G. A. (2019, November). E-commerce in online business. In IOP

Zhao, S., Fang, Y., Zhang, W., & Jiang, H. (2020). Trust, perceived benefit, and purchase

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E-Commerce Business Models

Complete a research paper on “E-Commerce Business Models” should be 3 pages, not including the cover page and reference page(s). The research paper should be typewritten in double-spaced format using Arial 12-point font or Times New Roman styles. Please use APA guidelines when citing your sources.