Digital advertising, SEO, content marketing and more are effective ways to drive traffic and revenue and bring a large ROI but won't be nearly as effective without a thorough evaluation of your eCommerce business needs.

A huge component of this is identifying your target market and understanding what your eCommerce business model will be. Not taking the time to evaluate your business model and understand your target market can be extremely detrimental to your business and lead to thousands in wasted spend.

Developing an eCommerce strategy is a crucial piece for many organizations. Here at Elastic Path we have experts with more than twenty years of experience in the four main business models outlined below.

1. Business to Business (B2B)

An example of a downstream B2B relationship is when a pencil company sources graphite and wood from other companies. As the name implies, business to business (B2B) is when a company markets its products or services directly to other businesses.

The vertical B2B model primarily involves manufacturing companies and can be categorized as either upstream or downstream. Downstream is when a manufacturer develops a business relationship with a parts or raw materials supplier. Wholesale eCommerce fits under the B2B model quite often, and those customers expect similar experiences that they get with B2C eCommerce websites.

2. Business to consumer (B2C)

In eCommerce, there are five different B2C models: direct sellers, online intermediaries, advertising-based, community-based, and fee-based. Online intermediaries are online businesses that bring sellers and consumers together and take a cut of each transaction made. Direct selling is the most common model. It is when consumers buy products from online retailers.

The B2C eCommerce business model relies on having a platform that can be adjusted quickly and adapt to new customer needs without causing delays in service. As the name implies, business to consumer (B2C) is when a company markets its products or services directly to end users. It is the most widely known form of commerce by the general public.

3. Business to government (B2G)

Business to government (B2G) is when a company markets its products and services directly to a government agency. This agency could be a local, county, state, or federal agency. And an example of a local B2G relationship is when a private engineering company sells its engineering services to a county government to develop a new water and sewer system for the community.

Due to having to deal with bureaucracies, business deals tend to move at a much slower pace than in other sectors. In B2G, companies typically bid on projects when governments announce Requests for Proposals (RFPs). Interacting with government agencies is very different from working with other businesses or consumers.

4. Business to business to consumer (B2B2C)

The last of the eCommerce business models is known as business to business to consumer (B2B2C). This model is actually a combination of both the B2B and B2C models. The B2B2C model is comprised of three parts: the first business (the business of product origin), an intermediary, and the end user. There are several different ways the B2B2C model can be used in eCommerce applications.

It’s an arrangement where a company sells products to another company which are then sold to consumers. An example of a B2B2C arrangement is when a wholesale distributor sells merchandise to retail stores that then sell the merchandise to end users.

Improve Your Strategy by Focusing on Your Business Model

Identifying your eCommerce business model gives you a distinct advantage over your competition. Once you have identified your target market and the correct business model you need to best serve your customer base, you can focus your marketing efforts and fine-tune your business model to maximize revenue.