Types of e-Commerce businesses

Classifying the types of e-Commerce businesses is tricky. We run the risk of turning it into an inconsequential exercise, or we could end up splitting hair. To grasp a deeper understanding of e-commerce concepts, it is important to ascertain the basis and purpose of classifying e-commerce businesses into types.

The two parameters of classifying e-commerce businesses that make the most sense are:

1. type of goods sold
2. nature of participants

Classifying e-Commerce Business Based on Type of Goods Sold

E-commerce businesses sell:

• Physical goods, e.g., books, gadgets, furniture, appliances, and the like
• Digital goods, e.g., software, ebooks, music, text, images, video and the like
• Services, e.g., tickets, insurance, and the like.

The reason such classification is important is that it gives the analyst an insight into the business model and financial model of the business. For instance, the logistics of delivering the physical goods can be a huge challenge for some businesses. Sellers of digital goods do not face that problem. When it comes to selling tickets, there are many parameters that need to be evaluated in real time. Example; in the case of air tickets: availability, location of seats, meal preferences, refundable vs. nonrefundable tickets, and much more.

Classifying e-Commerce Business Based on Nature of Participants

The two most common participants in e-commerce are businesses and consumers.

 

Based on this we can come up with four primary e-commerce types:

1. Business to Business e-Commerce (B2B e-Commerce)
   In this type of e-commerce, both participants are businesses. As a result, the volume and value of B2B e-commerce can be huge. An example of business to business e-commerce could be a manufacturer of gadgets sourcing components online.
2. Business to Consumer e-Commerce (B2C e-Commerce)
   When we hear the term e-commerce, most people think of B2C e-commerce. That is why a name like Amazon.com pops up in most discussions about e-commerce. Elimination of the need for physical stores is the biggest rationale for business to consumer e-commerce. But the complexity and cost of logistics can be a barrier to B2C e-commerce growth.
3. Consumer to Business e-Ccommerce (C2B e-Commerce)
   On the face of it, C2B e-commerce seems lop-sided. But online commerce has empowered consumers to originate requirements that businesses fulfill. An example of this could be a job board where a consumer places her requirements and multiple companies bid for winning the project. Another example would be a consumer posting his requirements of a holiday package, and various tour operators making offers.
4. Consumer to Consumer e-Commerce (C2C e-Commerce)
   The moment you think of C2C e-commerce eBay.com comes to mind. That is because it is the most popular platform that enables consumers to sell to other consumers. Since eBay.com is a business, this form of e-commerce could also be called C2B2C e-commerce (consumer to business to consumer e-commerce).