One of the first, and most important, decisions when developing an online business is deciding on a suitable eCommerce business model.

The eCommerce business model that you choose can affect all aspects of your operation, including who you are trying to reach as customers and how you plan to grow your business.

All eCommerce business models have advantages and disadvantages, so while what works well for one business may not work well for another, this guide will provide a comparison of the most commonly used eCommerce business models.

Additionally, in this guide, we will discuss eCommerce business models by type of products sold and by type of revenue generated. Overall, the purpose of this guide is to assist you in determining the eCommerce business model(s) that are best suited to meet your specific product, target market, and overall business objectives.

Regardless of whether you are planning to sell products directly to consumers or to other businesses, knowing eCommerce business models will enable you to begin down the road to success.

What Is Ecommerce Shopping?

An e-commerce store is an online business that sells goods or services to customers via the internet. Instead of a physical storefront, e commerce shopping uses websites, apps, or online marketplaces, allowing customers to browse, purchase, and complete transactions online.

The Most Business Models For E Commerce

If your company is either a start-up or scaling as an online company, you will probably fit into one of the three B2C (business to consumer), B2B (business to business), or C2C (consumer to consumer) categories. Each category has its own advantages and disadvantages and is best suited for certain types of companies.

B2C (Business to Consumer)

A B2C business sells products to consumers via an online website or application. Examples include clothing, groceries, or mobile applications. B2C companies can have shorter sales cycles due to the convenience of shopping from anywhere at any time. They also have a wide reach as well as ease in using digital marketing.

B2C companies are highly competitive and therefore often experience lower average order values. Customer acquisition costs for B2C companies are increasing rapidly. This model is perfect for retail stores, small companies, start-ups, or entrepreneurs who want to test their idea but do not want to invest a large amount of money up front.

B2B (Business to Business)

A B2B business model is when one business sells a product or service to another business. Typically, this will be to a manufacturer, wholesaler, or other service provider. The average purchase amount will be higher, you’ll have recurring revenue, and develop long-term customer relationships.

The sales cycle will take longer, you’ll rely on CRM, and you must personally engage with your customers. It is best for enterprises, suppliers, wholesalers s & Any B2B company that would like to implement automation into their sales and build customer relationships.

Are you ready to trade paper catalogs and order forms for a website where customers can buy from you? BigCommerce B2B allows businesses to provide customers with an online shopping experience that is just as easy as B2C.

B2B2C (Business-to-business-to-consumer).

The B2B2C model is business-to-business-to-consumer. In this business-to-business-to-consumer model for e-commerce, two organizations are partnering to sell one partner’s product or service directly to a consumer.

Advantages of the B2B2C model:

• Increased access to customers.
• The credibility that comes from doing business with an existing partner.
• More visibility for your brand.

Disadvantages of the B2B2C model:

• Alignment of brands can be difficult.
• Less control over the customer experience as both partners influence how it will develop.
• A potentially lower margin due to sharing revenue with the other partner.

This model is best suited for manufacturers and service providers that want to get involved in e-commerce but still maintain some level of control over their brand.

B2G (Business-to-government).

Another name for Business-to-Administration is when you sell and market your products to governmental agencies and/or public administration bodies, including local, city, state, or federal governments. The B2G model is based on the ability to successfully win government contracts.

A governmental agency issues a Request For Proposal (RFP), and ecommerce businesses then submit bids in order to compete for those RFPs. Guaranteed contract with government, reliable demand for their product/service, potential for ongoing relationships/partnerships.

Timelines to receive approval can be lengthy, with significant bureaucratic red tape, strict regulatory compliance, and limited opportunity to upsell. This model is suitable for the application of e commerce that includes manufacturers, distributors, and B2B Sellers that offer Specialized Services.

C2B (Consumer-to-business).

Individuals are able to create a C2B e-commerce platform where they sell to businesses through websites such as Upwork or Fiverr. Individuals use these sites to either monetize their skills or sell to businesses as a product.

Businesses have a wide variety of vendors with niche skills and flexibility in what an individual chooses to do. Individuals may experience variable income, and businesses will be at risk of low-quality work. Perfect for a freelancer, content creator, social media influencer, or consultant who wants to monetize their skills.

D2C (Direct-to-consumer)

D2C (Direct-to-consumer) is when a business sells its own products and services to consumers on a one-on-one basis, using the internet to connect directly with its end customer. D2C businesses bypass traditional middlemen, including wholesalers and online retailers.

Direct-to-consumer businesses have full control over pricing and branding; there is a direct connection between the company and the consumer; there is typically a higher margin than in the retail model. Acquiring new customers is often expensive; companies selling directly to consumers need to have strong operations and provide a good checkout experience to convert browsers into buyers.

Direct-to-consumer businesses are best for growing brands that wish to establish and maintain long-term relationships with their customers and build a loyal customer base.

C2C (Consumer-to-consumer).

C2C (Consumer-to-Consumer) e-commerce sites – or C2C Online Marketplaces – allow consumers to directly purchase goods from other consumers. Early examples of such models were created by the likes of Walmart.com, Alibaba, and eBay, which have since become the well-known leaders in this space today. People also ask: Can you sell food on Etsy? Of course! Some other popular examples include Facebook Marketplace and Amazon.

Easy to get started, access to an enormous customer base, greater convenience, and lower prices for consumers. Quality of the product is difficult to assess, with a high level of competition, challenging to create brand credibility with consumers.

This model is recommended for sellers looking to reach many customers at minimal cost, i.e., individuals, side hustlers.

What are value delivery methods?

The way you provide value to your customer is through your delivery system; The way you reach your customers is through your model. Consider it similar to a car – your business model is the car, and your delivery system is the engine.

Just as selecting the correct engine will determine how quickly you scale, how profitable you are, and what strength your brand is built upon, so too does selecting the correct delivery system. The following are many of the ways that businesses currently use delivery systems in e-commerce:

White Label

White labeling is a practice where one company rebrands and sells a generic product as its own product, including using its own logo and name, even though the product came from a third party. White labeling is very common in industries with repetitive products such as clothing, skin care, and cosmetics.

Low cost of production, quick time to market, and rapid brand growth without high Research & Development costs. Products are typically indistinguishable from those of competing brands, have less control over quality, and are potentially liable for problems with products sold by others.

Private Label

A private label product goes beyond white labeling. When a retailer contracts with a manufacturer to create products with specifications, designs, packaging, and branding controlled by the retailer, they are creating a private-labeled product. They are contracting the manufacturing process to a third party, but the result is a product that is unique to the retailer.

Control over the product and pricing, the ability to maintain high margins, and the ability to respond to trends in the online marketplace. More money is needed initially, reliance on the reliability of contract manufacturers, and longer lead times.

If you are selling mobile batteries, then consider custom mobile battery packaging to meet your needs and requirements.

Wholesaling

Wholesale e-commerce is an internet-based version of wholesale sales, which means you are selling products in large quantities at discounted prices to other businesses, serving as the intermediary between the manufacturer and the retailer.

Scalability of income, reduced costs due to purchasing in bulk, and higher average order values. Requires strong logistics capabilities, a substantial amount of capital, and strong relationships with the buyers.

Dropshipping.

The dropshipping method has grown at a rapid pace and is based on the seller promoting and selling products supplied by a third-party supplier,, such as AliExpress or Printful. Sellers acting as the middleman connect the buyer directly to the manufacturer.

Minimal inventory to keep track of, extremely low initial investment, virtually limitless selection of products to test. Low margin for profits, high competition, and minimal control over the delivery speed of product quality.

Subscription Service

A subscription service is one of the most popular business models today – think about it, we have subscription services available from Netflix to meal kits to software. In a subscription service business model, the customer pays the company each month or year for either a product or service they require.

Recurring monthly/yearly revenue is predictable; the customer’s lifetime value is much higher than non-subscription customers, and the cost of acquiring new customers can be less expensive once you’ve got them as a subscriber.

To maintain subscribers, you’ll need to create a successful strategy to retain your customers and get great reviews so your subscribers don’t cancel.

How to select your ecommerce business model

Choosing your ecommerce business model is one of the most strategic moves you’ll make. It will affect how you set prices, fulfill orders, and scale over time. There’s no single “right” model — but there is a model that fits your product, audience, capabilities, and e commerce operations.

Are you looking for custom e-commerce boxes? Feel free to contact Tycoon Packaging. We have all the skills to manufacture these boxes as per your needs through customizable packaging solutions.

Frequently Asked Questions

What are the main ways e-commerce businesses sell products online?

E-commerce businesses mainly sell in one of these categories: business-to-consumer (B2C), business-to-business (B2B), or consumer-to-consumer (C2C). B2C is most common for retail, while B2B involves higher average order values and longer sales cycles with other businesses. Your choice depends on who your ideal customer is and the type of product or service you offer.

Why is choosing the right e-commerce business model so important for a new company?

Choosing the correct business model is the most important strategic step because it shapes everything else. It determines how you set prices, handle fulfillment, and how fast you can grow later. The model affects your customer base, your profit margins, and the type of marketing you will need to succeed.

What is the biggest difference between B2B and B2C e-commerce operations?

The main difference lies in the customer relationship and sales cycle. B2C has a shorter sales cycle, lower order values, and focuses on broad digital marketing. B2B has a much longer sales cycle, requires more personal engagement, and involves high-value, recurring orders with other companies.

What is a “white label” product, and how is it different from “private label”?

White labeling means a company sells a generic product made by a third party, and they simply put their own brand on it. Private labeling goes further; the retailer contracts a manufacturer to create a product using the retailer’s unique specifications, designs, and packaging. Private label gives you more control over the quality and design, but it costs more initially.

How does the Direct-to-Consumer (D2C) model help a brand improve its position?

The D2C model allows a brand to bypass all middlemen, like wholesalers and online retailers, to sell directly to the customer. This gives the company full control over its pricing, branding, and the entire customer experience. By owning the customer relationship, D2C brands can build a more loyal customer base and achieve higher profit margins.

Is it possible for an e-commerce business to use more than one business model?

Yes, it is common for large or growing businesses to use multiple models to reach different markets. For example, a company might use a B2C model to sell single units to consumers while also running a B2B wholesale arm to sell large batches to retailers. Using two models helps to diversify revenue and maximize market reach.

What is the advantage of a subscription service e-commerce model over single purchases?

The main advantage of a subscription model is the creation of predictable, recurring monthly or yearly revenue. This structure also raises the customer’s lifetime value, making the initial cost of acquiring a new customer much more profitable. Success depends on having a strong customer retention strategy to limit cancellations.

Do I need a large amount of money to start an e-commerce business?

No, you do not need a large upfront investment, especially if you start with the dropshipping model. Dropshipping allows you to sell products supplied by a third party without ever holding the inventory yourself. This keeps your starting costs low and lets you test many product ideas with minimal financial risk.

What does “Information Gain” mean in the context of creating e-commerce content?

Information Gain means providing educational value that is specific, trustworthy, and goes deeper than common knowledge. For instance, explaining the difference between a long B2B sales cycle and a short B2C cycle is an example of strong Information Gain that helps readers make better decisions. Always focus on offering unique insights, not just summaries.

What is the Business-to-Government (B2G) model, and how does a company win this type of contract?

The B2G (Business-to-Government) model means selling your products or services to government agencies or public administrations. You win these deals when a government entity issues a Request For Proposal (RFP), and your e-commerce business submits a competitive bid. While the contracts are reliable, the approval process is very long and involves strict government compliance.