B.

COM 1 ST YEAR SEMESTER 2

ESSENTIALS
OF
E-COMMERCE
CHAPTER 2-Types of E-commerce or
Business Models Of E-commerce
 Models Of E-commerce Business
• MODELS OF E-COMMERCE BUSINESS
• There are several types of e-commerce models, based on market segmentation that can be used to conducted
business online. Usually, 6 types of business models that can be used in e-commerce include
:B2B,B2C,C2B,C2C,B2G,G2B

• 1. BUSINESS-TO-BUSINESS (B2B)
• The B2B business model sells its products and items to an intermediate buyer who then sells the product to
the end customer.
• For example, a wholesaler places an order from a company and after receiving the consignment, sells the
product to the final customer who comes to buy the product at one of the retail store. Business-to-Business
electronic commerce facilitates inter organizational interaction and transaction.
Advantages Of B2B E-Commerce Business Model
1. Market Predictability: B2B sectors grow gradually and can adapt to various complex market conditions. This
helps to strengthen the online presence and business opportunities and get more potential clients and resellers.
2. Better Sales: An improved supply chain management process along with a collaborative approach increase
customer loyalty in the B2B e-Commerce business model. This, in turn, leads to improved sales.
3. Lower Costs: Due to an effective supply chain management process, this online business model leads to lower
costs for businesses. In most cases, work the work is done through automation that eradicates the chances of
errors and undue expenditure.
4. Data Centric Process: One of the main advantages of the model is that it relies on effective and factual data
to streamline the whole process. In this way, errors can be avoided and proper forecasts can be made.

Disadvantages of B2B E-Commerce Business Model

1. Limited Market: Compared to the B2C model, this type of business has a limited market base as it deals with
transactions between businesses.
2. Lengthy Decision: Here, the majority of the purchase decisions involve a lengthy process as there are two
businesses involved.
3. Inverted Structure: Compared to the other models, consumers have more decision making power than sellers
in the B2B business model. They may demand customizations, impose specifications and try to lower price rates.
2. BUSINESS-TO-CONSUMER (B2C)
• Business-to-consumer E-commerce, or commerce between companies and consumers, involves customers
gathering information; purchasing physical goods such as books or consumer products or information goods
such as electronic material or digitized content, such as software, or e-books.
• It is the second largest and the earliest form of e-commerce. The more common applications of this type of e-
commerce are in the areas of purchasing products and information, and personal finance management,

Advantages of B2C Model

(i) Vast and diverse market: Compared to the B2B business model, the market for B2C business models is much
larger and more diverse. B2C companies have direct access to multiple customers.
(ii) Data-driven: It is difficult to get and use data to predict new trends in the market. B2C has no shortage of
data as it receives direct and user feedback. Everyone in B2C is a data trove and this data, when used the right
way, gives the B2C company a considerable advantage over others.
(iii) Easiest marketing: It's easiest to market to people than to any other business model. B2C
businesses can use social media and content marketing to drive sales and bring in new
customers. B2C advertising campaigns are very effective.
(iv) Easiest expansion : Expanding a B2B business requires a lot of capital. B2B involves a lot
of overheads and expenditures. In comparison, it is much easier to spread B2C to other
niches and markets with less capital.
Disadvantages of B2C Model
1. High competition: B2C businesses can start with less capital. This type of business has low overheads and
unnecessary expenditures. For these reasons, B2C businesses are very common and there is an atmosphere of
fierce competition between them.
2. Low-profit margin: B2C business is about buying and selling low cost items which have very low-profit
margins. Compare to B2B business, B2C business has to increase sales to increase profit margins. It takes a long
time to recover the invested capital.
3. The role of a middle man: The B2C sector is full of brokers who receive their commissions. Consumers have to
pay more than the actual price. In addition, they are a barrier to establishing a direct relationship between
consumers and businesses. This makes it difficult for businesses to get customer data that can be used for
future improvement.
4. Segmentation: Although the B2C market is very wide and diverse. Where this is an advantage, there is also a
disadvantage. The sheer number of segments, it makes difficult to decide to start a business.
• [Link] to Business
• Consumer-to-business (C2B) is a business model in which consumers (individuals) create value and businesses
consume that value.[1] For example, when a consumer writes reviews or when a consumer gives a useful idea
for new product development then that consumer is creating value for the business if the business adopts the
input.
• C2B or Consumer-to-Business is a business model where the end consumers create products and services
which are consumed by businesses and organizations. It is diametrically opposite to the popular concept of
B2C or Business-to-Consumer where the companies make goods and services available to the end consumers.
• C2B E-Commerce advantages
• It creates employment opportunities and is a great platform for individuals who want to monetize their
talent/ work. This business model has changed how companies work and has brought innovation.
• One of the major advantages of c2b e-commerce is that it has opened a new source of revenue for businesses.
• Moreover, due to the advent of the internet, this unique model allows customers to directly reach out to
business houses. This was next to impossible even a few years ago.
• This is mostly possible with the advancement of technology and the average people having access to laptops
or smartphones.
• The model is mutually beneficial. This can be an advantage for the consumer that can offer value to
organizations. This is the reason why it is becoming popular by the day.
Disadvantages of C2B models
• There are issues related to fulfillment.
• There could be issues related to responsiveness, delay in delivery, etc.
• Industry doesn't have a fixed price as well.
• Loss of privacy or information is another reason why this model is not reliable.
• Many people use this model maliciously, which is again a major disadvantage.

4. CONSUMER-TO-CONSUMER (C2C)
• Consumer-to-consumer e-commerce or C2C is simply commerce between private individuals or consumers.
• C2C business model is a platform for consumers to sell their assets like residential property, cars,
motorcycles, etc., or rent a room by providing their information on the website.
• Website may or may not charge the consumer for its services. Another consumer who is willing to buy the
product of the first customer can view their post/ advertisement on the website and buy the product from
the first customer.
Advantages of C2C Sites
• The business model of C2C is very interesting. The primary benefit which consumers get is reduction in cost
as compared to buying space of their adds on other ecommerce sites which seem to be quite expensive.
• People interested in selling their items can post their respective items for free or with minimal charge
depending on the c2c website. This leads to formation of a profitable customer base.
• C2C websites form a perfect platform for buyers and sellers who wish to buy and sell products of similar
interest. This leads to increase in visitor to customer conversion ratio.
• Another benefit is that business owners can easily afford the low cost of maintaining C2C websites and earn
good profits instead of buying or hiring a shop which could cost a lot.
• Another major plus point these websites have is that personal items like watch, shoes etc can be purchased
and sold with ease which is not in case of other types of e-commerce.
Disadvantages of C2C Sites
• Doing transactions on these type of websites requires cooperation between the buyer and seller. It has
been noted many times that these 2 do not cooperate with each other after a transaction has been made.
They do not share the transaction information, which may be via credit or debit card or Internet banking.
This can result in online fraud since the buyer and seller are not very well versed with each other.
• This may also hamper the C2C websites reputation.
• Business to Government (B2G)
• “Business-to-government (B2G) is a business model that refers to businesse sselling products, services or
information to governments or government agencies.”
• When a government wants to acquire a product or service, it typically first researches the field by
issuing a Request for Information (RFI), which is just what it sounds like. The government is
asking businesses that might be able to supply that product or service for information about
what they offer that could meet the government’s needs.
• B2G e-Commerce Business Model Advantages:
• (1) Market Predictability: Compared to the other business strategies, the B2G e-Commerce
business model has more market stability. B2G sectors grow gradually and can adapt to various
complex market conditions. This helps to strengthen the online presence and business
opportunities and get more potential clients and resellers.
• (2) Better Sales: An improved supply chain management process along with a collaborative
approach increase customer loyalty in the B2G e Commerce business model. This, in turn, leads
to improved sales
• (3) Lower Costs: Due to an effective supply chain management process, this online business
model leads to lower costs for the businesses. In most cases, the work is done through
automation that eradicates chances of errors and undue expenditure.
• (4) Data Centric Process: One of the main advantages of the model is that it relies on effective
and factual data to streamline the whole process. In this way, errors can be avoided and proper
forecasts can be made. With an integrated data-driven approach, you can calculate detailed
sales statistics.
• B2G e-Commerce Business Model Disadvantages
• (1) A change in government could adversely affect a B2G product or service provider
• (2) It often requires huge capital to set up.

• Government-to-business (G2B)
• Government-to-business (G2B) is a relationship between businesses and government, where
government agencies of various levels provide services or information to a business entity via
government portals or with the help of other IT solutions.
• For examples: Business licenses, permits, and regulation updates, Online startup registering etc.
• Advantages of G2B E-commerce
• Faster and efficient
• Less paper work
• Disadvantages of G2B Model of E-commerce:
• Lack of system security
• Low Network Bandwidth
• Advantages of e-business
• 1. Easy to set up: It is easy to set up an electronic business. You can set up an online business even by sitting
at home if you have the required software, a device, and the internet.
• 2. Cheaper than Traditional Business: Electronic business is much cheaper than traditional business. The
cost taken to set up an e-business is much higher than the cost required setting up a traditional business.
Also, the transaction cost is effectively less.
• 3. No Geographical Boundaries: There are no geographical boundaries for e-business. Anyone can order
anything from anywhere at any time. This is one of the benefits of e-business.
• 4. Government Subsidies: Online businesses get benefits from the government as the government is trying
to promote digitalization.
• 5. Flexible Business Hours: Since the internet is always available. E business breaks down the time barriers
that location-based businesses encounter. As long as someone has an Internet connection, you may be able
to reach and sell your product or service to these visitors to your business website.
• DisAdvantages of e-business
• 1. Lack of Personal Touch: E-business lacks the personal touch. One cannot touch or feel the product. So it is
difficult for the consumers to check the quality of a product.
• 2. Delivery Time: The delivery of the products takes time. In traditional business, you get the product as
soon as you buy it. But that doesn't happen in online business. This lag time often discourages customers.
However, e businesses are trying to resolve such issues by promising very limited delivery times. For
example, Amazon now assures one-day delivery. This is an improvement but does not resolve the issue
completely
• 3. Security Issues : There are a lot of people who scam through online business. Also, it is easier for hackers
to get your financial details. It has a few security and integrity issues. This also causes distrust among
potential customers.
 NEW TRENDS IN E-BUSINESS
• Technology is the backbone of e-commerce. Not only does it help connect sellers and customer on mobile
and web platforms, but also enables the effective management of customer orders, deliveries, returns and
payments of purchased goods. In fact, technology plays an important role throughout the e-commerce value
chain, in areas such as recruitment, marketing, and advertising, among many others.

• Everywhere e-commerce and 24x7 sales

Mobile devices have changed the way we live in radical ways, contributing to every aspect of our daily
existence, becoming an integral tool for day-to-day living. According to trade analysts, 90% of all people keep
their mobile phone within reach at all times.
• Digital supply chain
Ensuring on-time delivery is a key differentiating factor for companies in the e-commerce space. The successful
management of extreme market and spiked-demand has, therefore, become the new focus area, optimizing
the supply chain management process for these companies and playing a critical role in ensuring efficient and
faster delivery models.
• AI(Artificial Intelligence)-powered personalization
Many AI companies are transforming e-commerce by devising unique solutions for e-commerce companies. For
e-commerce businesses, AI technology is becoming increasingly important since it holds the potential for
dynamic and adaptable targeting, which helps companies get the right pitch, at the right time, to the right
customer, on the right platform.
• Demand-driven forecasting
This means that, rather than just relying on inviting or reminding customers to repeat their purchases,
Amazon is experimenting with a process that can predict a customer's shopping list and deliver the ted
products to their nearest fulfillment center - even before the order is placed.

• New payment services

Convenience is an essential value proposition associated with e commerce. Faster, efficient and secure
payment options have played a big role in driving the unprecedented growth of the e-commerce market in
recent years.