MODELS FOR E-COMMERCE

Two types of e-commerce make up nearly all the e-commerce activity on the web, business –to-consumer (B2C) and business-to-business (B2B).

Although there are naturally many more of the web who would be primarily classified as consumers (at least by businesses) the B2B e-commerce market is currently larger in terms of dollars spent. The B2B market reached an estimated $137 billion in 2000, whereas B2C reached approximately $10 billion. Let’s explore each of the two e-commerce business models in more detail.

BUSINESS-TO-CONSUMER

The B2C business model is commerce transacted between a business and a consumer. This model is characterized by high margins and low volume. This means that each individual shopper is not expected to buy more than one of any given item and is further expected to make relatively modest purchase, generally under $100. As in a traditional retail store, the margin (price markup on purchase) is high.

BUSINESS-TO-BUSINESS

B2B commerce transacted between separate businesses. It’s similar to bulk rate buying in that it’s characterized by high volume and low price margins. A business is likely to need large quantities of an item, such as desk calendar for every employee or enough paper towels to stock six rest rooms for several months. Because such customers buy in bulk and buy repeatedly a B2B company is able to offer products at a lower margin.