Major Types of E-Commerce
The several types of e-commerce in use today are classified based on the nature of the transactions: business-to-consumer (B2C), business-to-business (B2B), consumer-to- consumer (C2C), consumer-to-business (C2B), and non-business and government, and organizational (intra-business).
Creating an E-Commerce solution essentially involves creating and deploying an E-Commerce website. The first step in the development of an E-Commerce website is to identify the E-Commerce model. Depending on the parties involved in the transaction, E- Commerce can be classified into 4 models. These are:
- Business -to- Business (B2B) Model
- Business- to- Consumer (B2C) Model
- Consumer – to-Consumer (C2C) Model
- Consumer- to- Business (C2B) Model
1. Business-to-Business (B2B) Model
The B2B model involves electronic transactions for ordering, purchasing, as well as other administrative tasks between houses. It includes trading goods, such as business subscriptions, professional services, manufacturing, and wholesale dealings. Sometimes in the B2B model, business may exist between virtual companies, neither of which may have any physical existence. In such cases, business is conducted only through the Internet.
Let us look at the same instance of www.amazon.com. As you know, www.amazon.com is an online bookstore that sells books from various publishers including Wrox, O’Reilly, Premier Press, and so on. In this case, the publishers have the option of either developing their own website or displaying their books on the Amazon website (www.amazon.com), or both. The publishers essentially choose to display their books on www.amazon.com at provides them a larger addressees.
Now, to do this, the publishers need to transact with Amazon, involving business houses on both the ends, is the B2B model.
Consider a hypothetical instance. ABC Business sells automobile parts and XYZ Business assembles these parts and then sells the automobile to consumers. XYZ Business comes across the Website of ABC and discovers and locates it suitable. XYZ therefore, requests for more information about ABC and finally, decides to purchase automobile parts from ABC. To do this, XYZ places an order on the Website of ABC. After ABC receives the order details, it validates the information. As soon as the order is confirmed, the payment procedures are settled. Finally, ABC sends an acknowledgement of payment to XYZ and delivers the goods as per the shipment details decided between the two organizations.
Advantages of the B2B model:
- It can efficiently maintain the movement of the supply chain and the manufacturing and procuring processes.
- It can automate corporate processes to deliver the right goods & services quickly and cost-efficient and effectively.
The B2B model is predicted to become the largest value sector of the industry within a few years. This is said to be the fastest growing sector of E-Commerce.
2. Business-to-Consumer (B2C) Model
The B2C model involves transactions between business organizations and consumers. It applies to any business organization that sells its goods or services to consumers over the Internet. These websites display product information in an online catalog and store it in a statistics and facts base. The B2C model also includes services online banking, travel services, and health information.
Consider a hypothetical instance in which a transaction is conducted between a business organization and a consumer. A business house, LMN Department Store, displays and sells a range of goods & services on their Website, www.lmn.com. The details information of each and every one their goods & services is contained in the huge catalogs maintained by LMN Department Stores. Now, a consumer wants to buy a gift for his wife. He therefore, logs on to the website of LMN Department Stores and selects a gift from the catalog. He also gets the detailed information about the gift such as, the price, availability, discounts, and so on from their catalog. Finally, while he decides to buy the gift, he places an order for the gift on their Website. To place an order, he needs to specify his personal and credit card information on www.lmn.com. This information is then validated by LMN Department Store and stored in their statistics and facts base. On verification of the information the order is processed. Therefore, as you can see, the B2C model involves transactions between consumers and one or more business organizations.
The instance of the www.amazon.com website also involves the B2C model in which the consumer searches for a book on their website and places an order, if required. This implies that a complete business solution might be an integration solution of more than one business model. For instance, www.amazon.com includes the B2B model in which the publishers transact with Amazon and the B2C model in which an individual consumer transact with the business organization.
The B2C model of E-Commerce is more prone to the security threats because individual consumers make obtainable and provide their credit card and personal information in the website of information is safe and sound and used efficient and effectively by the business organization. This is the main reason why the B2C model is not very widely accepted. Therefore, it becomes very essential for the business organizations to make obtainable and provide robust security mechanisms that can guarantee a consumer for securing his information.
3. Consumer-to-Consumer (C2C) Model
The C2C model involves transaction between consumers. Here, a consumer sells directly to additional consumer, eBay and www.bazee.com are common instances of online auction Websites that make obtainable and provide a consumer to advertise and sell their goods & services online to additional consumer.
Nevertheless, it is essential that both the seller and the buyer must register with the auction website. While the seller needs to pay a fixed fee to the online auction house to sell their goods & services, the buyer can bid without paying any fee. The website brings the buyer and seller together to conduct deals.
While a consumer plans to sell his goods & services to other consumers on the Website of eBay, he first needs to interact with an eBay website, which in this case acts as a facilitator of the overall transaction. Then, the seller can host his product on www.ebay.com, which in turn charges him for this.
Any buyer can now browse the website of eBay to search for the product he interested in. If the buyer comes across such a product, he places an order for the same on the Website of eBay, eBay now purchase the product from the seller and then, sells it to the buyer. In this way, though the transaction is between two consumers, an organization acts as an interface between the two organizations.
4. Consumer-to-Business (C2B) Model
The C2B model involves a transaction that is conducted between a consumer and a business organization. It is similar to the B2C model, nevertheless, the differentiation is that in this case the consumer is the seller and the business organization is the buyer. In this kind of a transaction, the consumers decide the price of a particular product rather than the supplier. This category includes individuals who sell goods & services to organizations.
For instance, www.monster.com is a Website on which a consumer can post his bio-statistics and facts for the services he can offer. Any business organization that is interested in deploying the services of the consumer can contact him and then employ him, if suitable. Let us look at additional instance of the C2B model.
William Ward needs to buy an airline ticket for his journey from New York to New Jersey. William needs to travel immediately. Therefore, he searches a Website for a ticket.
The Website offers bidding facility to populace who want to buy tickets immediately. On the Website, consumer quotes the highest price and gets the ticket.
In addition to the models discussed so far, five new models are being worked on that involves transactions between the government and other entities, such as consumer, business organizations, and other governments. Each and every one these transactions that involve government as one entity are called e-governance.
The various models in the e-governance state of affairs are:
5. Government-to-Government (G2G) model:
This model involves transactions between two governments. For instance, if the Indian government wants to by oil from the Arabian government, the transaction involved are categorized in the G2G model.
6. Government-to-Consumer (G2C) model:
In this model, the government transacts with an individual consumer. For instance, a government can enforce laws pertaining to tax payments on individual consumers over the Internet by using the G2C model.