The Ultimate Guide to eCommerce Business Models (B2B, B2C, DTC & More)

Various business models exist in e-commerce, each with unique advantages, challenges, and requirements. It can be difficult to identify which one is the best fit for your use case. 

The following article combines research, dry definitions, suggestions gathered from our clients, and our in-house and world-famous brand examples to help you make that decision a little easier.

An eCommerce business model is the strategic framework that defines how an online business operates, delivers value, and generates revenue. It determines:

• Who you sell to (B2C, B2B, B2G, etc.)
• How you sell (direct sales, marketplaces, subscriptions)
• How you make money (one-time purchases, recurring revenue, commissions)

Essentially, your business model shapes the foundation of your eCommerce venture, from product sourcing and pricing to marketing strategies and customer relationships.

Selecting the right eCommerce business model is not just about selling products—it’s about designing a sustainable, scalable, and profitable business. The better you align your model with market demand, revenue strategies, and technology, the higher your chances of success.

There are five major eCommerce business models, with all the shades in between. 

Let’s cover them a bit in depth.

A business-to-consumer business markets products and services directly to consumers. 

Every time you purchase anything from a store, eat lunch at a restaurant, attend a movie at the theater, or get a haircut, you engage in a B2C transaction. These businesses offer goods and services to you, the customer directly. This is also known as the direct-to-consumer (D2C) approach.

Businesses that want to use the B2C eCommerce model must have a flexible eCommerce platform to quickly adjust to changing customer demands. Service delays and other issues can be avoided in this way.

Revenue vise, companies in B2C are into Direct Selling, which is the most common model in which people buy goods from online retailers. Think of Target or Gap, Nike and Macy's, and even Porche. You pay for the product directly.

Or operate as online intermediaries, i.e., connecting sellers and customers and taking a percentage of every purchase for themselves. Websites like Etsy, eBay, and Booking.com fall into this category.

Or offer a Subscription to their service, i.e., require a paid subscription in exchange for unrestricted access to their content. These are usually entertainment services such as Netflix and HBO Max.

The Direct-to-Consumer (DTC) business model has emerged as a game-changer in the retail industry. By bypassing traditional intermediaries and selling products directly to consumers, businesses can gain greater control over their brand, customer experience, and revenue streams.

Even well-known brands are opting out of DTC marketing strategies.

The business-to-business model means a company sells its products or services to other companies. A B2B transaction typically has a longer sales cycle but higher order values and more recurring purchases.

B2B eCommerce can be divided into two categories: vertical and horizontal.

Vertical B2B companies sell goods and services specifically within one industry. The perfect example is the car manufacturing industry: one company makes steel and only sells it to car manufacturers, another provides tires, and another provides engines.

Horizontal B2B businesses serve a wide range of buyers across various industries and do not specialize in any particular product or service.

Alibaba, for example, is the world’s largest B2B marketplace, connecting manufacturers with retailers globally. Any software vendor like headless commerce platform Crystallize is a B2B e-commerce model.

Direct purchase and subscription models are the most popular revenue approaches in B2B.

B2B2C is a business model in which a company sells its product or service to an end customer in partnership with another organization. An example of a B2B2C arrangement is when a wholesale distributor sells merchandise to retail stores, which then sell the merchandise to end users. 

The main advantages of this business model are that it provides new economic opportunities that would otherwise be impossible to access, improves convenience, combines industries, and increases customer access.

It enables brands to reach a wider audience and scale quickly while still maintaining some brand presence. Instacart is a grocery B2B2C marketplace connecting stores with consumers. A food delivery model, where restaurants sell via Glovo, DoorDash, UberEats, etc., to end customers, is another example of B2B2C in practice.

When a company sells its products and services directly to a government agency, it falls under the business-to-government model. Due to government agencies' supervision and intervention, the B2G eCommerce model is more complex and demands strict compliance with business laws and conditions.

With eCommerce, B2G businesses are mainly in the fields of electronics, telecommunications, and infrastructure. AWS GovCloud is a perfect example.

In C2C eCommerce, consumers sell goods or services directly to other consumers. Third-party websites or marketplaces most often facilitate transactions on behalf of buyers and sellers.

Best-known examples of C2C include eBay and Amazon, which act as both B2C and C2C marketplaces. Since its launch in 1995, eBay has been one of the leading marketplaces for consumers to sell and buy from each other.

This model has benefits, including increased profitability, a larger customer base, and convenience for both parties. However, its disadvantages include platform fees, potential fraud, and low-quality control.

Now that you know who you’re selling to and how (i.e., which business model best suits your needs), it’s time to identify your revenue model or how you’ll make your profits.

Choosing the right revenue model is just as important as selecting your eCommerce business model. It determines how your business generates income, whether through direct sales, subscriptions, commissions, or other monetization strategies.

Direct sales involve selling your product or service directly to consumers, managing payment, and completing the order fulfillment pipeline.

If you’ve ever Googled anything eCommerce, you’ve probably seen a dropshipping course ad or two. It has become trendy in recent years due to its simplicity: you don’t have to manage inventory, you don’t have to have a warehouse or deal with packaging -- but you have to have an outstanding supplier.

You only have to set up a storefront, list your products, and charge your customers for them. Once an order is placed, your supplier takes care of the rest.

Remember that if they’re particularly slow, you’ll open yourself up to bad reviews (remember reviews / online reputation management are crucial for your local SEO efforts and add up to your brand image) and/or product quality complaints if it is unsatisfactory. Additionally, dropshipping will typically have pretty thin profit margins.

Subscription businesses have the most stable revenue streams. They provide ongoing services in exchange for recurring customer payments.

Depending on the type of product or service you sell, you can opt for a replenishment subscription service (usually for commodity products like groceries or cosmetics), a curation subscription service (for collections of products personalized to customers), or an access subscription service (for exclusive access for paying customers).

Subscription offers excellent potential, but success with it does not come overnight. The topic itself is gargantuan, and I invite you to check our Ultimate Guide to Subscription eCommerce for an in-depth view of everything subscription.

In white labeling, you’d find a product that another company makes and offers white labels. You then pay that company for the white label, design and label your product, and sell it as your own.

You’ll frequently encounter this model in the beauty industry or online blogging platforms like Tumblr or WordPress, allowing you to set your custom URL if you pay for the white label.

This model is fairly straightforward. If you don’t have your production line, you can contact a manufacturer and pay them to create the product for you. They can then either ship the product directly to the customer, to a third-party retailer like Amazon, or you so that you can sell it.

This can work well as long as you identify a reliable manufacturer.

Typically, a wholesaler sells products in bulk at a discounted price to other businesses. However, those who opt to sell bulk products at a discount to businesses and separate pieces at the right price to consumers can significantly increase their profit margin (and their workload).

Your product/service is the setting stone. However, selecting the right eCommerce business model is a strategic decision that shapes your brand’s success, scalability, and profitability. It reflects your market understanding, customer-centricity, and long-term vision.

There is no way around it, TBH. So the better you can nail product-market fit, in theory at least, the more likely you’ll adopt a model that fits your use case.

Still, a couple of best practices and contemplative questions can help you understand solutions and make better decisions.

Conduct a thorough market analysis to understand demand, competition, and customer preferences. This will help you recognize your target audience's pain points and help validate your target audience before investing heavily in your business model.

• Question: What unmet needs of the market can your business address? How well do you understand your target customer’s preferences and behaviors?

Develop a compelling value proposition that underscores what sets you apart from the competition beforehand.

• Question: What unique value does your solution offer to its users? How does your value proposition compare to your competitors?

Embrace technology that augments the user experience, streamlines operations, and provides data-driven insights. This includes considering the adoption of headless commerce for greater flexibility and personalized user experiences.

• Question: What technological infrastructures and platforms align with your product and preferred e-commerce business model? How adaptable is your technology stack to the evolving market demands?

Establish a clear monetization strategy. Once you've determined who you’re selling to and what you’re offering, you need to define how your business will generate revenue. Whether it’s a subscription model, a one-time purchase, or a freemium model, ensure that your pricing is competitive yet profitable.

• Question: What pricing strategy will optimize your revenue while remaining attractive to your customers? How does your monetization strategy align with your market position?

Build strategies for customer engagement and retention. A satisfied and returning customer is a valuable asset. Engage customers through personalized experiences, quality service, and value-added features.

• Question: How will you measure and enhance customer satisfaction? What strategies do you have in place to encourage repeat business?

Ensure your business operations are agile and scalable to adapt to market changes. Building a business model that can scale with growth is imperative for long-term success.

• Question: How is your e-commerce business model poised to handle growth and market fluctuations? What processes have you established to remain agile in responding to market dynamics?

Pondering over these questions while adhering to the outlined best practices will help you choose the best business model and engender a comprehensive business plan.

Product/service comes first. Your business is most likely one of the possible combinations of these, and its combination may impose certain technological and promotional restrictions (or rather, audience expectations).

This does not mean that you should conform to these restrictions. Not at all! The best brands in the world defy convention and are successful because of it.

Explore how Crystallize powers modern eCommerce models—SCHEDULE a demo today, and we’ll show you what makes Crystallize a powerful product story engine well suited for your business.

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