E-commerce is one business that is presently shaking the world off its feet today. In 2015, one of greatest e-commerce platforms Alibaba made over 14.3 billion dollars in just a single day sales; one of Nigeria’s biggest e-commerce platform Konga, processed sales order of more than 100 million Naira in just a matter of 4 hours. You can imagine the economic potentials of e-commerce. The world is evolving and e-commerce is the global future of today’s business transactions.
Electronic commerce a.k.a. e-commerce or sometimes called e-business is a business model or concept that allows people to conduct business transactions on the internet and may involve little or no physical interaction between those involved. One could also describe it as the buying, selling and transfer of goods, service, and data over an electronic platform on the internet.
E-commerce has evolved over the years and it now encompasses a diverse range of different models that can be adopted by an entrepreneur. However, the type of e-commerce business model you should adopt should be based on your business strategy or the kind of business you want to operate.
There is no e-commerce business model that supersedes all. There is no reason for you to adapt to only one. You could mix various business models to suit what you want.
Here are 4 e-commerce business models you can adapt in Nigeria.
Business to Business (B2B)
When people think of e-commerce models, their minds most probably jump to business to consumer (B2C) retails. Generally speaking, business to consumer (B2C) business model is probably the most common and widely encountered and discussed e-commerce model and you may not be familiar with B2B unless you operate a business yourself.
Business to business (B2B) e-commerce site or platform provides businesses the opportunity to offer sales of products to other businesses online. For instance, suppliers of products such as computer systems and office supplies allow small business owners to make purchases online through a business to business (B2B) platform without having to visit a physical location to make the purchases.
This way, they can save their time and conceivably even save their money, such as when they receive some discounts from making purchases through a website.
Generally speaking, there are two prevailing business models in the business to business (B2B) e-commerce business model. They are:
- Online Marketplaces
Online marketplaces vary from the straight-up online retail outlets given that instead of only one company offering sales of products on the site or platform, a wide variety of third party companies can set up ‘stalls’ in the marketplace and use it as an avenue for selling. A notable example of this is Alibaba, the world’s largest business to business (B2B) e-commerce platform for small businesses. Other examples include Konga, Yangamall, Webmall, etc.
- Catalogue Sites
This describes any business to business (B2B) e-commerce platform where you as a small business owner can browse through a company’s stock by category and place order for goods through the website. Examples include Grainger, Sprint, etc.
Business to Consumer (B2C)
This is the most popular e-commerce business model. Most people actually tend to think of e-commerce and retail in general in terms of business to consumer (B2C) transactions only. This is because business to consumer (B2C) business model is the natural form in which consumers most often encounter it.
Business to consumer (B2C) e-commerce business model means you are selling directly to the end consumer who needs the product through an online interface. Over the years, the B2C e-commerce business model has evolved to become the most diverse of all the various e-commerce business models. Here are some popular business models in the business to consumer (B2C) e-commerce category:
- Standard or Direct Retail
This is the default and typical B2C e-commerce business model: The business sells a product to the consumer who pays for it and then receives it. However, this is by no means the only business model in the B2C, and can easily be combined with other B2C business models for a wide-ranging service.
This business model is used across e-commerce businesses, from food, publishing to hygiene. Some examples of this business model include Graze, which sells healthy snacks in slim cardboard subscription boxes.
In the publishing industry, subscriptions to newspapers and magazines are prevalent. A good example is Stack which delivers a different independent magazine to its subscribers every month.
Pink Parcel is a very good example of subscription business model that sends out monthly packages of sanitary towels and care items to consumers.
Consumer to business (C2B)
This is an e-commerce business model where consumers offer sales of products and services to businesses instead of the typical businesses to consumers’ sales. For instance, consumers –who may not necessarily be a business owner– could list products they want to sell or jobs-to-be-done and businesses would compete for and complete the transactions through the consumer to business (C2B) e-commerce platform.
Another way is a business could have a site where consumers sell them things that they need.
The fundamental principle of most C2B e-commerce business model which distinguishes it from the typical B2C e-commerce business model is that the consumers are responsible for creating value for the products.
Examples of the consumer to business (C2B) business model include freelancer sites where the end-user list jobs he can perform and businesses will, therefore, employ his services.
Consumer to consumer (C2C)
In this e-commerce business model, the e-commerce website serves the function of facilitating the transactions between consumers. Examples of this type of e-commerce business model include e-bay, OLX, Jiji, Craiglist, etc. Dating sites or sites like Etsy could also be considered as the consumer to consumer (C2C) e-commerce business models.
One notable business model in the consumer to consumer (C2C) e-commerce business model is:
- Online Marketplaces
Just like the business to business (B2B) e-commerce business model marketplaces, the consumer to consumer (C2C) business model online marketplaces are platforms where consumers launch their own shops in order to sell goods to other consumers. The marketplace platform profits by charging a listing fee or taking a percentage of the final sale value when the product has been sold.
A sale on an online marketplace could take the form of an auction, where potential purchasers bid in increasing amounts in order to win a product. A common example of this business model is e-bay. It could also take the form of a direct sale of the product.