What is E-commerce: definition and types of e-commerce models
The concept of e-commerce is pretty simple: it is all the commercial transactions, buying and selling goods and services, done electronically over the internet and through mobile apps. Any time you’ve bought something online or made an in-app purchase, you have partaken in e-commerce. E-commerce takes place all over the internet and within apps all day, every day.
Online storefronts where you go shopping for items from a certain brand or store, are the most obvious example of e-commerce platforms. As are online marketplaces: many people visit sites like Amazon, Etsy, and eBay daily, as marketplaces like these provide a very wide range of products. Social media is often used for e-commerce via ads that click through directly to a product for purchase, like a half-advertisement and half-storefront. In-app purchases are familiar to anyone who likes to play games on their phone, but it also includes transactions like pre-ordering your Starbucks drink via the app or using a store’s app to order products.
E-commerce is a huge global force, with global sales expected to hit $27 trillion by 2020. E-commerce has had a very real impact on brick-and-mortar companies, with some industries struggling to keep up, and many small, independently-owned companies being put out of business. The face of commerce is changing quickly and many of those brick-and-mortar stores are hopping aboard the e-commerce train with websites of their own.
There are many examples of types of e-commerce, as well as its models. Here we’ll go over both.
Types of e-commerce models
The types of e-commerce models follow similarly to models of any business. Of course, there’s always a buyer and a seller, but who those buyers and sellers are can change depending on the type of transaction.
- B2B, or business-to-business, is exactly how it sounds. These transactions can be for goods, such as one business buying office supplies from another, and services, such as a business hiring a design firm to build their website.
- B2C, or business-to-customer, is what most people think of when they hear e-commerce. They most likely then think of Amazon, the internet’s largest retailer, and they would not be wrong. In B2C, the product or service is sold directly to the consumer.
- C2B, or customer-to-business, is not as huge of a market as B2B or B2C, but it is a market. An increasingly ubiquitous example is the blogosphere and social media promotions, where the blogger reviews a product, which they have linked to, and if someone buys it through that link, the blogger gets compensated by the company.
- C2C, or customer-to-customer, is when a consumer makes a transaction with another consumer; think people reselling clothes on eBay or the Craigslist furniture section, where people buy others’ used goods.
- C2A, or consumer-to-administration, is another e commerce business model that means being able to pay taxes and fines online, request city permits, and do other formerly tedious clerical governmental paperwork over the internet instead of having to go into an office to do it.
Examples of types of e-commerce
The types of internet transactions are probably endless, but there are some very common ones worth knowing.
- Retail – these are stores that sell physical goods, such as clothes, shoes, books, housewares, toys, and the other billion things you can find on Amazon and Google Shopping.
- Services – an ever-growing sector in e-commerce is services provided by professionals, freelancers, and educators; these services are often easily directly bought or require a consultation. Either way, it’s a popular way to work with designers, get minor tasks done, and find freelancers.
- Digital products – along with the very popular ebooks, digital products include other digital media such as music, photographs and videos, online courses, virtual goods, and software/SaaS (software as a service), though the list definitely doesn’t end there.
- Subscription – these days you can get automatically recurring subscriptions to anything, from traditional subscriptions like newspapers and magazines to beauty boxes like Birchbox, and even coffees, journaling supplies or Japanese candies – if you can think of it, there’s most likely an online subscription company just for that!
- E-funds transfer – anytime you bank online, transfer money via PayPal, send an e-check, receive a direct deposit from work, or even use an ATM, you are participating in e-commerce.