By Syed Balkhi
The e-commerce industry is more volatile than ever. The rise and fall of the global trends influence the e-commerce businesses’ decisions and the way they operate. The e-commerce landscape encompasses a variety of business models. What works for you is dictated by different factors. This article discusses it all and provides you with the ins and outs of global e-commerce.
E-commerce has made it easier for us to buy our preferred products or services. We don’t need to go out to purchase things. We can buy anything that we need from the comfort of our homes.
The rise of e-commerce has not only proven useful for consumers but also for aspiring entrepreneurs. You can leverage different business models to start your e-commerce journey and build your empire from the ground up.
However, you can’t say that choosing the right business model would be easy. The global e-commerce trends may affect its implementation.
We are here to help you understand different business models and learn about global e-commerce.
So, without further ado, let’s dive in.
Global E-commerce Trends
Before we talk about the noteworthy business models, let’s go through the global e-commerce trends and see how they influence e-commerce.
Mobile Commerce
It was a pain to carry out e-commerce transactions through mobile devices back in the day. Businesses used to optimize their websites or platforms for desktops. So, mobile users struggled with a clunky experience.
However, things are different now. Mobile e-commerce represents 60% of online sales around the globe. A key takeaway from this is that you should strive to offer a seamless user experience through mobile devices to ensure e-commerce success.
The Rise of Social Media
You can’t think of social media as a place to interact with your friends or family anymore. It has become one of the biggest sources of e-commerce transactions.
We research brands through social media apps and seek the experiences of others to make smart buying choices.
It serves as an opportunity for e-commerce businesses to leverage social media platforms that align with their respective niches to generate traction.
Social media has over 5.04 billion users worldwide. So, having an active presence is a must if you seek success in the e-commerce industry.
Digital Payments
Paying for products or services online is becoming easier with each passing day due to the availability of diverse payment options.
E-commerce payments have moved beyond just credit card transactions. People are using their digital wallets and cryptocurrency to complete their e-commerce purchases.
Businesses even use payment options to outmaneuver their competition. They offer a variety of options to stay ahead of the curve and engage the intended audience segments.
AI-Powered Solutions
Over the years, we’ve seen groundbreaking improvements in AI-fueled solutions. Leveraging them for e-commerce can help you boost audience engagement and your revenue-generating capabilities.
You can significantly grow your business by providing personalized product or service recommendations to the intended target audience and increasing your conversion chances.
AI can also fuel your customer support. You can use chatbots to cater to customer queries or concerns and ensure lasting relationships without having to onboard an army of customer service operatives.
Improved Logistics
The e-commerce landscape is changing with each passing day. E-commerce made it possible for us to sell our products or services to anyone in the world. However, even though we could receive orders from around the globe, fulfilling them was easier said than done.
Thanks to rapidly improving logistics and payment options, we can expand our business operations beyond a certain diaspora and sell our solutions worldwide.
Improvements in logistics and minimal trade restrictions allow us to scale our operations and grow our business across borders.
Commonly Leveraged Business Models
A business model showcases the way a company will operate and generate its revenue. There may be a variety of business models that you may consider when starting an e-commerce journey. However, we will be discussing the ones commonly used and worth mentioning.
B2B
The B2B business model encompasses business transactions between two companies. You don’t sell your products or services directly to the consumer but rather to the solution provider.
If you’re a manufacturer of a particular product or service, you will be promoting and selling it to wholesalers and retailers rather than the end users.
You can consider Alibaba as an example here. The company sells its products to businesses of all sizes all over the world, generating millions of dollars in revenue.
B2B businesses generally accept orders in bulk. So, we’re looking at huge profit margins. However, starting such a B2B company may require a hefty investment and access to resources in abundance.
B2C
The B2C business model represents transactions between a business and a consumer. You pitch and sell your solutions to the end user.
You can take Amazon as an example here or any other platform that accepts and fulfills orders received directly from its customers.
Subscription-based businesses, such as Netflix, also fall in this category and serve as a fitting example for B2C businesses.
B2C businesses are easy to start compared to B2B. However, the average order value of a B2C company is far less than that of a B2B company.
C2C
Welcome to the digital equivalent of a global yard sale. The C2C model encompasses consumers selling products or services to other consumers.
C2C transactions generally take place on free-to-access marketplaces or e-commerce platforms, such as eBay. Consumers also sell products to others through social media apps with marketplace features, such as Facebook.
It’s a fitting business model for small manufacturers or craftsmen with no budget to build an e-commerce site or willingness to leverage a premium third-party e-commerce platform.
B2G
The B2G business model is somewhat similar to B2B. The business requires comparatively more resources to start, and the average order value is high.
The difference is that you sell your solutions to government institutions or agencies. Plus, there may be more legalities associated with the B2G business model compared to other alternatives.
C2B
Businesses often hire resources on a contractual basis. They post projects online and look for competent human resources who may be willing to work with them temporarily.
If you happen to accept such projects, the services you offer to businesses likely fall in the C2B category. A renowned platform that facilitates such transactions is Upwork.
The C2B business model also encompasses product-based transactions. For example, a software developer selling complete rights to a digital solution to a business serves as an excellent example of the C2B business model.
D2C
Back in the day, businesses preferred collaborating with retailers to make their products available to the right buyers. Later down the road, they decided to cut the intermediary from the process and started selling directly to consumers.
If you choose to go with this approach, your business will represent a D2C business model. All you need is an e-commerce platform to make your products accessible to your target audience.
The D2C business model connects you with your customers directly. It becomes effortless for you to build a community around your brand and establish lasting relationships with your target audience.
How to Pick the Right Business Model
Choosing an appropriate e-commerce model is somewhat similar to selecting the ideal outfit for the occasion. What’s perfect for one may be entirely inapplicable to another. There are a number of factors that may come into play. You need to consider them in order to make an informed decision. These factors may include:
- Target audience
- Competitive landscape
- Type of products or services
- Business goals
- Budgetary constraints
- Operational capacity
It all starts with knowing your audience and being familiar with their goals. Without a clear understanding of who you wish to serve and how you will do it, selecting a fitting business model will be a bit of a challenge.
The competitive landscape also tells about your business model. It’s less likely for you to be a B2C company in an industry where the rest of the players represent a B2B business model.
Your selection of a business model also depends on the type of solutions you intend to offer. For example, if you plan to sell an online course, business models that fit your needs can be B2B and B2C.
The same goes for your business goals. Whether you plan on carrying out small-scale operations or seek accelerated growth often dictates your selection of a business model for your company.
Your operational capacity and budget also come into play when selecting a business model at the start of your journey. When you’re a small company with a limited budget, you should pick a business model that’s easy to implement.
One size doesn’t fit all. You need to do your research and carefully consider your options to see what aligns with your operations, budget, and long-term goals.
Over to You
The e-commerce landscape is constantly changing. The latest trends give rise to new opportunities and make it easier for aspiring entrepreneurs to step into the realm of online business.
However, starting a business is not as easy as it sounds. There may be different models to choose from, but you must know how to make the right call.
In this article, we discussed the noteworthy e-commerce trends and different business models for you to consider.
If you’ve been wanting to start your e-commerce journey, the recommendation we provided may come in handy.
About the Author
Syed Balkhi is the founder of WPBeginner, the largest free WordPress resource site. With over 10 years of experience, he’s the leading WordPress expert in the industry. You can learn more about Syed and his portfolio of companies by following him on his social media networks.
