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.

Developing an eCommerce strategy is a crucial piece for many organizations. A huge component of this is identifying your target market and understanding what your eCommerce business model will be. Let's take a deeper look into 4 major business models and the important differences and nuances that come with each.

1. Business to Business to Consumer (B2B2C)

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

The primary advantage of the B2B2C business model for eCommerce companies is the acquisition of new customers. So this is an important consideration for new eCommerce companies that need a way to rapidly grow their customer base. There are several different ways the B2B2C model can be used in eCommerce applications. The B2B2C model is comprised of three parts: the first business (the business of product origin), an intermediary, and the end user.

2. Business to Government (B2G)

This agency could be a local, county, state, or federal agency. An example of a B2G relationship is when an ammunition manufacturer sells ammunition to the US Army. Business to government (B2G) is when a company markets its products and services directly to a government agency.

eCommerce companies can definitely bid on government contracts, the same as other companies. Unlike many B2C transactions, however, many government agencies will not go directly to an eCommerce website and place an order. 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.

3. Business to Consumer (B2C)

You complete a B2C transaction every time you purchase food from a grocery store, eat dinner at a restaurant, watch a movie at a theater, and get a haircut. It’s very easy to understand the B2C model. You are the end user of the products and services these companies sell. In the advertising-based model,  information is given away for free and money is made from advertising on the site. Facebook is an example of a community-based site that makes money from targeting ads to users based on their demographics and location.

In eCommerce, there are five different B2C models: direct sellers, online intermediaries, advertising-based, community-based, and fee-based. Direct selling is the most common model. It is when consumers buy products from online retailers. Many traditional brick-and-mortar retailers have been closing as shoppers go online for the things they need. Finally, the fee-based model involves companies that sell information or entertainment to consumers for a fee, like Netflix or subscription-based newspapers. In recent years, online B2C sales have been trending upward.

4. Business to Business (B2B)

Wholesale eCommerce fits under the B2B model quite often, and those customers expect similar experiences that they get with B2C eCommerce websites. As the name implies, business to business (B2B) is when a company markets its products or services directly to other businesses.

Generally, these are the products and services that are used in maintenance, repair, and operations. An example of a horizontal B2B model is when a janitorial supply company sells cleaning supplies to another company for the cleaning of its production floors, restrooms, and other areas.

The horizontal B2B model involves products and services that do not involve parts or raw supplies but are used by the company in other ways. The upstream B2B model is the opposite of the vertical. The upstream model is when a parts or raw materials supplier forms a relationship with a manufacturer.

Improve your Strategy by focusing on 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.