Beyond the Cart: The 6 Types of Ecommerce Business Models (2024) - Shopify (2024)

The ecommerce industry has grown to include a vast array of business models and delivery methods.

So, if you want to start an ecommerce business, you may be unsure on where to begin. This guide is the ideal starting point. One ecommerce business might look totally different from another. Below, you'll learn about the six types of ecommerce, complete with their pros and cons, to find your perfect match.

6 types of ecommerce

• B2C
• B2B
• C2C
• C2B
• B2A
• C2A

Business to consumer: B2C

In business-to-consumer (B2C) businesses, visitors of an online store are individual people, and the business sells or curates its own products. The target customer is an end customer—someone who will use the product (or buys it as a gift for somebody else).

A B2C ecommerce business typically buys products from a third-party supplier to resell to the end customer. The biggest advantage is you can source products in bulk at a lower cost, and resell them at a higher price to the general public. You can also collect data on your customers to reach more of them.

The downside, however, is there’s a ton of competition. Many other merchants will operate in the same niche and industry as you. It’s not impossible to stand out, but you’ll need a strong unique selling proposition and grasp of your target market to do so.

Examples of B2C ecommerce

Kylie Cosmetics

Kylie Cosmetics, the beauty company founded by reality television celebrity and influencer Kylie Jenner, is an example of a B2C ecommerce business. It manufactures its own products and sells them through its online store.

Allbirds

Sneaker brand Allbirds is a direct-to-consumer (DTC) brand that sells shoes to its customers through an ecommerce website. It also has a handful of retail stores to provide shoppers with an in-store experience.

Bombas

Bombas is an apparel brand that manufactures its own clothing. Instead of selling products to other businesses, it sells them direct to customers through its ecommerce site.

Business to business: B2B

When one business sells to another business online, it’s known as business-to-business (B2B) ecommerce.

B2B sites usually cater their shopping experience to high volume orders from the customer (think 1,000 or more items instead of 1 or 10). They also often come with a higher level of “white glove” customer service and more options for custom orders.

The most attractive thing about this type of ecommerce is you don’t need as many customers to make the same income as a B2C brand. A single B2B customer likely will place several high value orders, which means you need less marketing dollars to get to your goal. And although profits are usually lower (wholesale items have profit margins of between 20% and 50%), you make up for that by shifting more units.

Examples of B2B ecommerce

Costco

Costco is an example of a B2B business. The wholesaler purchases items from its suppliers to resell to other businesses in one of its more than 800 trade-only warehouses.

Alibaba

Alibaba is an online marketplace that connects buyers and sellers. Suppliers list their products at a lower price and sell items in bulk. DTC brands can buy their inventory from the marketplace to resell with a higher markup on their own website.

HubSpot

HubSpot sells customer relationship management (CRM) software to other businesses. Because the general public doesn’t use HubSpot, it’s considered a B2B ecommerce business.

Consumer to consumer: C2C

Consumer-to-consumer (C2C) businesses are online marketplaces that allow consumers to sell their own goods directly to other consumers.

eBay is the most famous example of C2C ecommerce. Anyone can sell their old belongings to someone else on eBay. You don’t have to be a registered business to do so.

For a long time, there haven’t been many C2C businesses, due to the popularity of the biggest sites (such as eBay and Etsy) and free alternatives such as Craigslist and Facebook Marketplace. However, a new generation of businesses have shown the value in a more bespoke C2C experience.

Examples of C2C ecommerce

Vinted

Vinted is a mobile app that connects buyers with sellers. However, businesses can’t use the platform to sell products. Only individuals can list their products and sell them to other people.

Poshmark

Poshmark is another mobile marketplace that specializes in fashion. People can upload their old clothes to Poshmark and sell them to buyers.

Craigslist

Craigslist was one of the first online marketplaces to become popular. It has local forums to connect buyers and sellers in specific areas, and covers the entire US—making it a great option if you want to sell your old things to people within the community.

Consumer to business: C2B

Consumer-to-business (C2B) works in the reverse order of traditional ecommerce. Instead of a business selling products to the end customer, the customer sells products to a business.

We can see this type of ecommerce in practice with businesses like LuxeCollective—a luxury fashion brand that purchases goods from consumers, instead of sourcing inventory from another business or supplier.

Physical products aside, consumers can sell other items to a business and fall under this ecommerce model. That could be image rights or freelance services.

Examples of C2B ecommerce

Upwork

Upwork is an online marketplace that specializes in professional services. It’s used by businesses that want to hire freelance talent. Individuals sell their skills—be that design, writing, engineering, or photography—on the C2B platform.

Airbnb

Airbnb is a letting company that doesn’t own the majority of its properties. Instead of buying properties from other businesses, people choose to list their home with Airbnb. This makes it a C2B business.

Shutterstock

Shutterstock is a stock photography website that pays contributors to upload their images. The exchange of money and services is in the reverse order of a traditional ecommerce company.

Business to administration: B2A

Business-to-administration (B2A) is when companies specialize in making business transactions to government agencies. If you’re a software provider that sells accounting services to the IRS, for example, you’d use the B2A business model. It’s sometimes known as business-to-government (B2G) ecommerce for this reason.

Companies using the B2A business model often have higher order values and a longer sales cycle. There’s a lot of red tape around what a public administration can buy, and with budget constraints being a shared issue amongst agencies all over the world, it can be difficult to get sign off and close deals. You’ll spend most of your time selling and building relationships.

That said, you don’t need as many customers if you’re using the B2A model. You could have a lucrative business with just a handful of government contracts. If you went down the B2C route, you’d need thousands.

Examples of B2A ecommerce

Government software

Most government agencies don’t have enough funding to create their own software, so they purchase tools ready to implement from B2A software providers like OpenGov.

Distance learning

Educational facilities like universities, colleges, and schools are sometimes classed as administrative businesses. Companies that sell products, software, or services to these institutions are considered to be C2A businesses.

Health insurance

Many businesses offer health insurance as part of their employee benefits packages. These companies liaise between businesses and government administrators, meaning they fall under the B2A business model.

Customer to administration: C2A

Businesses that use the customer-to-administration (C2A) work similarly to B2A companies, but the difference is that customers make transactions to government agencies—as opposed to LLCs.

Examples of C2A ecommerce

Income taxes

The most obvious example of C2A is income taxes. Because individuals pay their income taxes to the IRS, the money is transferred in the opposite direction.

Student loan repayments

When people repay their student loans, the money gets transferred from an individual to an educational institution, making it a C2A business.

How to choose an ecommerce business model

1. Research your target market

Great businesses start with an audience and their frustrations or desires in mind and let that dictate the products. For example, if you’re passionate about helping new mothers stay healthy through organic meals, find a group of them and ask questions like:

• Do they love shopping for food or do they just want to tick it off their list?
• Do they value variety in their food or consistency?
• Do they prefer to buy in bulk?
• Do they buy the same types of things over and over, or does it always change?
• Are they willing to pay extra for a more premium product?

All of these questions will help inform whether you need one product or many, whether you can offer a subscription model, and whether you’ll be able to afford a lower-margin option, such as a marketplace or dropshipping.

2. Visualize the business you want to operate

New business owners might default to an optimistic outlook. But when evaluating the different ecommerce business models, it helps to be pragmatic and even skeptical.

Some types of ecommerce, such as B2B and B2A, require more cash upfront and more time to operate. Other options, like wholesale and C2C, benefit from great relationships. By taking stock of your supplier relationships and the cash you have available to invest, you can make a clear-eyed decision about the right business model for you.

3. Analyze your skill set

Great businesses are built on a competitive advantage, and that starts with the owner. Your greatest skills can be your competitive advantage, which can inform your model:

• If you know product development for your industry, DTC may be the best fit.
• If you are a branding or social media expert, white/private label may be the best fit.
• If you are best at the customer experience (from ecommerce website to unboxing), dropshipping or marketplace may be best for you.
• If you have a sustainable cost advantage, B2C wholesale may be best for you.

Moving forward with your ecommerce business

The ecommerce industry is now a fairly mature one with many differentiated approaches. That means there are plenty of existing companies to learn from.

By studying the different types of ecommerce, as well as your audience and your own capabilities, you can identify the business model that’s best for you—whether it’s B2B, B2C, or a combination of both.

Once you’ve found the type of ecommerce that best suits your needs and audience, choose a business model that sits within that vertical. From subscriptions to private labeling, the world is your oyster.