Types of E-commerce and Revenue Models for Online Businesses 

types of ecommerce
types of ecommerce

The general perception is that all e-commerce businesses can be created, built and marketed with a similar set of strategies and tools that are usually available online. This is only partially true.

The type of e-commerce model you choose can significantly impact your business plan and determine the marketing approach. 

Businesses can often fit into multiple types of e-commerce models however, to create a sustainable and growth-oriented venture it is crucial to understand the e-commerce model that can best work for your business.

This article explains the various models of e-commerce based on their structure as well as revenue to help you plan an effective business strategy.

Types of e-commerce models

Here’s a classification of e-commerce based on the establishment or individual each one caters to.

1. Business-to-Business (B2B)

A Business-to-Business model is where one business sells its goods or services to another. The buyer may need the product/service for their own enterprise or might further sell it to the end-user (consumer).

B2B transactions have been traditionally done by producers and wholesalers who sell their products to retailers. More often than not, the B2B model involves recurring purchases and a higher sale value when compared to other e-commerce models. 

With digital transformation, entrepreneurs with a B2B e-commerce model have been able to successfully target their audience online – according to a research 56% of companies incorporate digital marketing in the B2B world.

2. Business-to-Consumer (B2C)

As the name suggests, this e-commerce model entails selling goods or services by a business directly to its consumers. Users can access the products and other details online before placing an order on the website.

The B2C model is able to cater to a huge number of people on the internet but the order values are less and so are the recurring purchases. Nevertheless, the B2C model in e-commerce is among the most popular and fastest-growing models.

The next few years will see tremendous growth of B2C e-commerce in the retail industry, with global revenues expected to grow by 85 per cent until 2023 compared to 2019.

3.Consumer-to-Consumer (C2C)

In a Consumer-to-Consumer (C2C) model one individual sells a product to another without the presence of a business entity. Usually, such transactions happen when personal goods are sold through an online platform/marketplace.

The C2C model has flourished with more and more consumers wanting to buy and sell pre-owned goods ranging from furniture to automobiles and electronics.

The online platform that facilitates this commerce also takes care of the product quality and transactions in addition to connecting the buyers and sellers.

Cars24 is a good example of a C2C model for pre-owned cars in India. The company manages a huge inventory of automobiles and even home delivers them through its team of drivers.

Here’s how Paytm Wallet has helped the business go cashless and save on fuel costs.

4. Consumer-to-Business (C2B)

In the Consumer-to-Business model, businesses source products or avail services from an individual. The simplest example of this is a developer who builds and sells an app or website to a company.

The C2B model also works through a marketplace where multiple consumers display their products for businesses to buy. Here the consumers are able to decide and negotiate the final cost of their offerings. This model is relatively flexible in terms of the work/product as well as the price.

5. Business-to-Administration (B2A)

This Business-to-Administration model encompasses businesses that offer their services to administrative bodies or government organisations.

These businesses usually bid on government contracts after a Request for Proposal (RPF) has been displayed by an agency. 

The B2A model can often demand lengthy processes and entail a longer time owing to the administrative compliances and policies.

6. Consumer-to-Administration (C2A)

Consumer-to-Administration e-commerce model is where individuals avail services, access information or share their feedback related to government and public sectors. Consumers interact with government bodies through a website or an application.

Users pay bills, submit fees, buy insurance and file taxes through the platform. Individuals can also ask questions and request a response or share their reviews about a government organisation directly with the administrative authorities.

Some of the services include:

Identification cards: Application for PAN card/Aadhar card/voter identification

Travel portals: Railway tickets booked through IRCTC

Health: National Digital Health Mission, COWIN app

Education: Central universities and public institutions

Bills: Electricity, water, etc

Tax: GST, tax returns

Types of revenue models for e-commerce

In addition to the above-mentioned types of e-business models, here’s a look at the corresponding types of e-commerce business models based on revenue.

1. Dropshipping

The dropshipping model involves selling products online without managing an inventory. You can set up a storefront and enable transactions while the products are shipped directly from the vendor to your buyer. 

Dropshipping can be started with minimum investment and without the hassles of packaging or shipping products. However, it requires applying the right marketing strategies to reach your target audience online. You can also use established marketplaces and platforms to promote and sell the products.

2. Warehousing and Wholesale

An investment-heavy venture, the wholesale and warehousing model requires you to store, manage and maintain a huge inventory and stock. You also need to handle the packaging of products and assign shipping based on the orders received.

The items are sold in bulk usually to retailers at a discounted price. The wholesaler connects the manufacturer and the vendor while ensuring a smooth distribution channel.

3. Manufacturing

Manufacturers produce goods and connect with wholesalers or distributors to further sell them. This business model is product-oriented with an emphasis on the design specifications cited by the respective companies.

An e-commerce site can be essential for manufacturers to display their catalogue to a larger audience and accelerate their production capacities. They can also choose to sell their product directly to the customer through marketplaces such as Amazon and Flipkart.

4. White Labelling

White labelling is a business model where you create an identity for a product in the market through an effective branding strategy. The product might be already sold and popular, but your design and label differentiate it from the rest of the lot.

This is a common practice for online grocery stores that often sell products under their brand alongside multiple other brands of the same item. The products are likely to be sourced from a common manufacturer.

Did you know – A white label payment gateway can add significantly to the customer experience. Read more to find out how.

5. Subscription

An e-commerce model that is based on subscription curates a box with a specific product category and ships it at regular intervals to customers who have subscribed to those products. 

This model has a predefined number of orders and hence a dependable income stream. However, the subscription model is not very popular in India and is available in a few categories such as beauty and grooming, fashion, and food.

The importance of a payment gateway in an e-commerce business

Every e-commerce business aims at a seamless customer experience and payments are a big part of it. Hassle-free and quick payments can motivate your buyers to transact more frequently on your website.

A payment gateway manages a series of complex processes to help you accept payments instantly from your customers. Paytm Payment Gateway has been the payment partner of several unicorns and startups operating across the above-mentioned e-commerce models.

Here’s how Paytm Payment Gateway simplifies e-commerce for businesses:

Quick integration

  • Offers a fully online onboarding process with powerful APIs and custom SDKs
  • Activates digital payments on your website/app with minimum documentation
  • Provides plug-in support for e-commerce platforms such as WooCommerce and Magento

Multiple payment options

  • Offers payment options such as credit cards, debit cards, net banking, EMIs, and UPI
  • Supports 100+ payment sources
  • Customers can also transact through Paytm Wallet and Paytm Postpaid

Fastest settlements

  • T+1 settlement cycle which is fastest in the industry and is irrespective of weekends or bank holidays. 
  • Businesses can also opt for real-time settlements and batch settlements based on their needs.

International payments

  • Lets merchants accept payments in 100+ currencies without separate API integration. 
  • Helps businesses expand and target a global audience.

PCI DSS compliant

  • Paytm Payment Gateway is PCI DSS Level 1 compliant.
  • Has a dedicated team of 200 cybersecurity experts to ensure secure transactions

Irrespective of the e-commerce business model you choose, a reliable payment gateway is an important tool to take care of the payments and enable instant transactions for your customers.


Switch to Paytm Payment Gateway

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