Digital commerce or e-commerce refers to the buying and selling of goods or services over the internet. It encompasses various types of online business transactions conducted on e-commerce platforms and websites.
Digital Commerce has changed how businesses connect with customers and how customers shop, thanks to smartphones and the increasing availability of internet access worldwide. It eliminates geographical limitations, allows 24/7 availability of products and services, and provides businesses with valuable data and insights about consumer behavior.
Global online sales reached $5.4 trillion in 2022, showing the huge growth and impact of e-commerce. This article provides a comprehensive overview of the different types of e-commerce business models commonly used.
- E-commerce enables businesses to sell products and services online, reaching global markets and customers. Online retail is the most common B2C model.
- Digital commerce (D-commerce) goes beyond e-commerce, incorporating various online transaction types like B2B, C2B, and C2C, along with tools like mobile shopping and social media buying.
- M-commerce refers to e-commerce transactions conducted on mobile devices, allowing shopping anytime, anywhere.
- Social commerce integrates shopping directly into social media platforms where people already spend time interacting.
- Emerging technologies like AI and IoT are driving future innovations in digital commerce like virtual try-ons and contactless payments.
- Businesses should leverage different e-commerce models like m-commerce and social commerce, in addition to online stores, to boost success.
E-commerce encompasses various business models and transaction types between organizations and individuals mediated through the internet. Here are some
|B2C||Wider reach, convenience, personalized service||Amazon, Walmart.com|
|B2B||Bulk trade, improved procurement processes||Alibaba.com, IndiaMart|
|C2C||Used goods at lower prices, individual participation||eBay, Craigslist|
|C2B||Leverage consumer skills, data and insights||Upwork, Fiverr|
|B2B2C||Combine B2B efficiencies with B2C reach||Food manufacturers selling to restaurants|
|M-Commerce||Ubiquitous access, intuitive interfaces||Shopping apps, mobile sites|
|Social Commerce||Leverage existing user base, trust through reviews||Instagram, Facebook, Pinterest|
|F-Commerce||Tap into Facebook’s large user base||Facebook Shops, Instagram product showcases|
|D-Commerce||Innovative technologies, expanded capabilities||IoT, AI, AR, blockchain|
The business-to-consumer (B2C) model involves e-commerce businesses selling products or services directly to consumers over the internet. It is the most common and widely known form of e-commerce. Online retail stores are the quintessential examples of B2C e-commerce businesses.
B2C e-commerce refers to the process of people going to online shopping websites such as Amazon, Flipkart, or Alibaba. They choose items, make online payments, and have the items delivered to their homes. These online shopping platforms allow businesses to reach a much wider consumer base, beyond just local markets.
B2C e-commerce is characterized by:
- Businesses selling directly to individual customers
- Lower average order values
- Higher purchase frequency
- Simple pricing models and minimal negotiations
- Large catalog-based selections of commonly purchased item
Other examples of B2C e-commerce businesses include online travel agencies like Expedia and e-ticketing websites like BookMyShow. B2C models provide consumers unmatched convenience through online payments, quick deliveries, and options to return or exchange items.
B2B e-commerce occurs when two businesses engage in trade. This can involve a manufacturer and a wholesaler, or a wholesaler and a retailer. It enables businesses to purchase the goods and services needed for their own operations.
B2B e-commerce may include:
- Online B2B marketplaces and directories
- Ordering systems and electronic data interchange
- Inventory management systems
- Online catalogs with custom pricing
- Procurement software and processes
Compared to B2C models, B2B transactions usually involve:
- Larger order values
- Longer sales cycles
- Complex pricing and negotiations
- Customized products and services
Major B2B e-commerce platforms include Alibaba.com, IndiaMart, and GlobalSources. B2B models allow businesses to find suppliers and partners, showcase catalogs, automate procurement, and conduct transactions digitally with other businesses.
Consumer-to-consumer (C2C) e-commerce involves transactions made directly between consumers through a third-party online platform. These platforms allow consumers to sell new or used goods to other consumers.
When someone sells a used electronics item on OLX or Quikr, it is a C2C transaction. This transaction occurs through classified ads. Other examples include selling of homemade products on Etsy, and auctions on eBay.
Key characteristics of C2C e-commerce:
- Individuals selling products/services directly to other individuals
- Typically used goods, handmade items, or services
- Lower transaction values
- Requires trust between strangers
Facilitated by third-party platforms and online marketplaces
C2C platforms leverage the internet to connect consumer sellers to consumer buyers directly, often bypassing traditional retail channels. They allow ordinary individuals to easily participate in e-commerce digitally.
The consumer-to-business (C2B) model involves consumers selling products or services to businesses, instead of the other way around. This reverses the traditional production-consumption relationship.
- Writers, designers, and programmers selling their services to business clients on platforms like Upwork and Fiverr.
- Bloggers, influencers, and content creators selling their services to brands.
- Consumers providing data insights from wearables to health insurance companies.
C2B e-commerce lets businesses use the expertise and ideas of many online consumers to meet their business requirements. Companies also leverage consumer data and inputs to develop better products and make strategic decisions.
Some hybrid models combine multiple types of e-commerce transactions. Business-to-business-to-consumer (B2B2C) e-commerce involves both B2B and B2C elements.
In B2B2C models, a business sells to other businesses, who then sell to individual consumers. The demand from end consumers ultimately drives transactions across the supply chain.
- A company makes ingredients for food and sells them in large quantities to restaurants, bakeries, and food brands. These businesses then sell the food to consumers.
- An electronics component manufacturer selling parts to device brands (B2B), who then sell fully assembled gadgets to consumers (B2C).
- B2B2C combines the complexities of B2B with the efficiencies and advantages of B2C e-commerce across the value chain.
Mobile commerce, or m-commerce, refers specifically to e-commerce transactions conducted using mobile devices like smartphones and tablets. It is e-commerce optimized for mobile users leveraging features like messaging, touch interfaces, digital wallets, and camera scanning.
By 2025, mobile commerce sales will account for 73% of all e-commerce sales. This indicates that m-commerce holds the highest significance. Consumers use dedicated mobile shopping apps or mobile sites for activities like:
- Browsing and purchasing products on the go
- Comparing product prices across sellers
- Checking product availability in nearby stores
- Making payments using mobile wallets
- Receiving personalized promotions based on location
M-commerce provides flexibility and satisfaction of instant gratification to consumers where they can shop anytime from anywhere.
For businesses, m-commerce enables:
- Development of immersive shopping apps with engaging interfaces
- Personalized push notifications and in-app messaging to drive sales
- Integration with location-based services for contextual promotions
- Seamless checkout using mobile payment systems
- Digital catalogs that can be accessed offline
M-commerce leverages the uniqueness of mobile devices to transform shopping into an always-connected experience for consumers.
Social commerce involves integrating e-commerce experiences within social media platforms where users already spend a lot of their time interacting.
Social media assists users in discovering and purchasing products without the need to visit another website. This is made possible through recommendations, reviews, and influencer endorsements.
Instagram and Facebook now allow users to shop directly from their feeds and stories by introducing shoppable posts and catalogs. Social media and e-commerce combine social channels with online shopping for wider reach and convenience.
Key drivers of social commerce:
- Targeted product recommendations based on interests and behaviors of users
- Brand engagement through influencers, online events, and communities
- Shoppable video content like live commerce and short-form video ads
- Seamless in-app native checkout: saving payment info and minimal data entry
- Reduced risk and buildup of trust through reviews, ratings and testimonials
According to eMarketer, social commerce sales are expected to reach $1.2 trillion worldwide by 2025. Platforms like Instagram, Pinterest, YouTube, and TikTok are enhancing social shopping experiences to boost this emerging trend.
F-commerce refers specifically to e-commerce occurring through Facebook’s tools and platforms. Facebook is appealing for e-commerce businesses because it has a large number of users. Additionally, it has the ability to target these users based on their interests and demographics.
Sellers can directly create and showcase online stores, product catalogs, and shoppable ads on Facebook and Instagram. Payments can also be processed in-app enabling full-fledged e-commerce capabilities.
Key f-commerce features:
Facebook shops and Instagram product showcases
- Shop sections on business pages and profiles
- Shoppable live videos on Facebook and Instagram
- Messenger chatbots to interact with potential buyers
- Product tagging in posts: users can save and buy featured items
- Dynamic ads that showcase products based on individual interests
- On-platform payment processing: Facebook checkout and Facebook Pay
Facebook’s e-commerce integration allows businesses to easily engage and sell to specific online users, creating a unique opportunity for success. According to Facebook, more than 1.2 billion people visit a Facebook shop page each month demonstrating the impact of f-commerce.
D-commerce refers broadly to digital commerce encompassing all types of electronically mediated transactions between organizations and individuals. E-commerce and m-commerce are about buying and selling online. D-commerce includes digital banking, contactless payments, IoT applications, and more.
D-commerce is growing as people use digital devices more for daily tasks. It is expanding beyond traditional e-commerce. This growth is happening with the help of smart objects and cloud services.
Key advancements driving d-commerce:
- Integration of emerging technologies like artificial intelligence, augmented reality, blockchain, etc.
- Increased adoption of smart devices and appliances connected to the internet-of-things
- Virtual try-ons, 3D product views and interactive content to enhance buying experiences
- Secure cloud computing services and blockchain-based transactions
- Innovative payment systems like cryptocurrency, mobile money and microtransactions
- Automated, AI-driven personalization, predictive analytics and marketing
D-commerce encompasses exciting futuristic commerce possibilities that go beyond today’s e-commerce. As various new-age technologies converge and computing moves to the edge, the transactional possibilities are exponentially expanding.
The Future of Digital Commerce
Digital commerce is essential for transactions and interactions between organizations and consumers in the interconnected global economy. E-commerce has already become integral to business operations and consumer shopping behaviors will continue to shift online rapidly.
M-commerce, social commerce, and innovative d-commerce prospects will drive future growth and evolution of digital commerce.
Businesses need to be flexible, use data, and engage with customers across different channels in order to succeed. They should also consider changing expectations, new payment methods, and disruptive technologies.
Organizations must learn digital commerce to stay ahead, reach global customers, and prepare for future internet innovations.