Generating  4.2 trillion dollars annually, it is no surprise that E-commerce is one of the fastest growing segments of the global market. Millions of shoppers visit online stores to purchase commercial goods, and household goods and otherwise keep up with trends, which means that modern E-commerce businesses must increasingly compete to succeed in labor. One of the key factors leading to this success is choosing the right E-commerce models.

E-commerce models

In the world of E-commerce, there are three main models by which a product can be sold over the internet

Business to consumer (B2C)

An E-commerce brand that sells products directly to consumers is a B2C business. B2C refers to brands that manage their own products and sell items to each person. A good example of a B2C model is an online clothing and shoe store: JUNO, MWC…Remember that some people use the term DTC (direct to consumer) interchangeably with B2C. While that’s not necessarily wrong, it’s best to understand DTC as a type of B2C rather than its equivalent.

Business to Business (B2B)

B2B E-commerce includes businesses that sell products or services to other businesses. For example, in Vietnam, the most common B2B models are giants Tiki, Lazada, and Shopee… This E-commerce model is one of the most commonly used models today. In the US alone, there are  1.6 B2B companies for every B2C company.

Consumer-to-consumer (C2C)

Consumer-to-consumer (C2C) business is an online marketplace that allows consumers to sell their products to other consumers. Platforms like eBay and Facebook Marketplace are common examples. The C2C business model is also growing worldwide. Several consumer-to-consumer platforms have seen a 50% spike in growth since 2020, with verticals like fashion, beauty, and home goods offering the most opportunities.

Choosing the right E-commerce models

Choosing the right eCommerce model for your eCommerce company is a balancing act between customers, resources, and personal strengths. By answering a few simple questions, you can weed out less effective models and pursue opportunities that make more sense for your brand.

What do my customers want?

The audience using your product will largely determine your brand, its values, and its most effective structure. Do a focus group on the target market before starting any business setup. Ask people about your product’s need, value, willingness to pay, and how often they might want to buy again. This will form the basis of your E-commerce plan and direct your attention to the most sensible business model. Remember: the better you know your audience, the more helpful this step will be.

What resources do I have?

There is a big difference between what you have now and what you may have later. As you determine the right E-commerce model, it’s important to consider your current resources and how they affect your business today.

This is especially relevant to capital. If you plan to produce small amounts of food directly in your kitchen, the DTC model can work well. However, if you want to make a variety of foods with complicated instructions, this option can be too expensive. Choose your E-commerce model based on what you have now. You can always change things later.

What am I good at?

Understanding yourself (and your business) is successful, especially when choosing a business model. As you compare and contrast the types available, consider how your strengths play against each. If you are a seasoned business professional starting with substantial capital, B2C wholesale can be a great fit. If you are a seasoned marketer or a branding expert, then a white label/private label product may be all you need to differentiate yourself in the market.

Research existing businesses to find the right one

As you cultivate potential E-commerce models, keep an eye out for successful brands that share your niche. Ask yourself: What is working for them? What not? Can their current model be improved to give you a better competitive advantage?

While following in the footsteps of other brands won’t make your business model unique, it will provide a great starting point from which to explore successful approaches. Like scaling a stone wall, studying the status quo will give you a better idea of how to reach the top. Carefully consider your strengths, audience, and competitive outlook, focusing on new opportunities that can give you an edge over what’s already established.

Above all, remember that choosing an eCommerce model doesn’t have to be a one-time process. Keep an eye on your business performance and don’t be afraid to change or tweak things to make them more efficient. By staying alert, you can make much more effective decisions regarding your E-commerce business, both now and in the future.