E-Commerce Explained: The Three Types of E-Commerce

Introduction

There are many types of e-commerce, but they can be organized into three distinct categories. Depending on the type of business you’re trying to start and what you’re selling, one of these categories will likely be better suited than the others in terms of efficiency and scalability. In this article, we discuss the three different types of e-commerce. The goal is to help you determine which type will work best for your business goals—and why that’s important in the first place. The three types of E-Commerce are B2B (Business To Business), B2C (Business To Consumer), and C2C (Consumer To Consumer).

B2B – Business to Business

B2B commerce, or B2B, is when a business sells directly to another business. You buy office supplies for your company, and you buy them from a distributor. (Or you call your office supply company and they order it for you.) One reason B2B can be such a lucrative industry is that these transactions are often complex and take place over an extended period of time. To ensure that you get what you need when you need it – and avoid conflicts – large companies typically use contracts to make sure both parties stick to their promises. 

 A contract is essentially a formal agreement between two businesses outlining terms and conditions. For example, if Company A agrees to sell products to Company B, Company A will probably require payment upfront in exchange for those products; Company A might also request that Company B give them exclusive rights to distribute their product in certain areas. In turn, Company B might request early access to new products or additional services from Company A as part of their agreement.

B2C – Business to Consumer

Businesses generally sell their goods to consumers themselves. A great example is Amazon, who sells its wide selection of products to individual shoppers. Their goal is simply to get more customers. They also make it very easy for buyers, often offering Prime Memberships (free shipping on eligible items). Businesses that operate in B2C are often referred to as online retailers or e-tailers.

Although an increasing number of traditional businesses are selling their goods through online channels, there remains some skepticism about internet shopping as a viable option for purchasing major products like cars and furniture. This could be due to consumer preference, however – according to one study, 73% of people said they liked brick-and-mortar stores better than internet retail options because shopping in person allowed them to see what they were buying before they made a purchase decision.

Additionally, social media has changed consumer behavior by encouraging people to buy locally or visit brick-and-mortar locations while traveling instead of purchasing items ahead of time so they can be shipped at no extra cost.

C2C – Consumer to Consumer

This type of e-commerce works by matching a customer with another individual for a specific transaction. This could be anything from selling handcrafted items to finding someone who has an extra seat on a plane. For many, C2C is their first interaction with e-commerce and serves as an opportunity to facilitate unique transactions that aren’t otherwise possible in today’s world. It’s typically used by small businesses looking to bring in more revenue or individuals trying to find a way to make ends meet. 

Most commonly referred to as peer-to-peer sales, it accounts for roughly 10% of total e-commerce activity today. If you’re interested in starting up your own C2C business, we suggest checking out Airbnb and Lyft for inspiration. Both companies have been able to successfully scale while maintaining a strong focus on user experience. They also happen to be part of our list of top startups!

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