The two parameters of classifying ecommerce businesses that make the most sense are:
- type of goods sold
- nature of participants
Classifying Ecommerce Business Based on Type of Goods Sold
Ecommerce businesses sell:
- Physical goods, e.g., books, gadgets, furniture, appliances, and the like
- Digital goods, e.g., software, ebooks, music, text, images, video and the like
- Services, e.g., tickets, insurance, and the like.
The reason such classification is important is that it gives the analyst an insight into the business model and financial model of the business. For instance, the logistics of delivering the physical goods can be a huge challenge for some businesses. Sellers of digital goods do not face that problem. When it comes to selling tickets, there are many parameters that need to be evaluated in real time, e.g., in the case of air tickets: availability, location of seats, meal preferences, refundable vs. non refundable tickets, and much more.
Classifying Ecommerce Business Based on Nature of Participants
The two most common participants in ecommerce are businesses and consumers. Based on this we can come up with four primary ecommerce types:
- Business to Business Ecommerce (B2B Ecommerce)
In this type of ecommerce, both participants are businesses. As a result, the volume and value of B2B ecommerce can be huge. An example of business to business ecommerce could be a manufacturer of gadgets sourcing components online.
- Business to Consumer Ecommerce (B2C Ecommerce)
When we hear the term ecommerce, most people think of B2C ecommerce. That is why a name like Amazon.com pops up in most discussions about ecommerce. Elimination of the need for physical stores is the biggest rationale for business to consumer ecommerce. But the complexity and cost of logistics can be a barrier to B2C ecommerce growth.
- Consumer to Business Ecommerce (C2B Ecommerce)
On the face of it, C2B ecommerce seems lop-sided. But online commerce has empowered consumers to originate requirements that businesses fulfill. An example of this could be a job board where a consumer places her requirements and multiple companies bid for winning the project. Another example would be a consumer posting his requirements of a holiday package, and various tour operators making offers.
- Consumer to Consumer Ecommerce (C2C Ecommerce)
The moment you think of C2C ecommerce eBay.com comes to mind. That is because it is the most popular platform that enables consumers to sell to other consumers. Since eBay.com is a business, this form of ecommerce could also be called C2B2C ecommerce (consumer to business to consumer ecommerce).
That is not all. Employees can be regarded as a special type of consumer. That would give rise to a new type of ecommerce: B2E (Business to Employee ecommerce).
Likewise if we consider Government to be separate entity, as also Citizens, we can come up with many more types of ecommerce: B2G (Business to Government), G2B (Government to Business), G2E (Government to Employee), G2G (Government to Government), G2C (Government to Citizen), C2G (Citizen to Government).
Types of Ecommerce Businesses Based on the Platform
Setting up shop on Facebook is a fast-growing ecommerce segment so it has been awarded its very own bit of jargon: fcommerce. Likewise, mcommerce stands for mobile ecommerce.
There is a lot of value in being clear about the type of ecommerce business one is talking about. Among other benefits, it allows us to make like-to-like comparisons across ecommerce businesses. At the same time, it helps us better understand the business model of different ecommerce players.