ecommerce business models in India

Ecommerce business models are evolving to be more complex as the industry grows. Just recently, research published by FIS Global stated that the ecommerce industry in India will grow to $111 Billion in revenue by 2024. So, if you are already an e-commerce seller or have sold online congratulations! However, as someone who is part of the industry you should be aware of the fundamental business models. 

If one looks back, not one e-commerce marketplace has maintained the same business model they started with. The most simplistic example would be an Amazon or Flipkart; which started with books and grew to be the juggernauts they are today. Many sites start on an inventory-based model where they sell their own products but later become marketplaces. This allows them to offer a range of products and drive down prices. Now let us dive deeper into this topic. 

Business to Business Ecommerce (B2B)

These are marketplaces that promote business between businesses. Simply put, the purchase is made to use as raw materials, to be used as a service to enhance one’s own business, or can be used to resell.  A globally popular site is Alibaba.com which allows businesses from across the world, purchase products from enlisted sellers. Some B2B ecommerce marketplaces in India, are Indiamart.com, Industrykart.com, etc.

B2C Ecommerce Business Models may appear simple, but involve structural & logistical complexity.

Business to Consumer Ecommerce (B2C)

Here, the transaction is between a business and the end consumer. They are the virtual version of brick and mortar stores where a retailer sells directly to consumers. Owing to the pandemic, the adoption of such ecommerce business models grew drastically. Day today, we all shop for clothes, consumer durables, and even FMCG products. They can be stand-alone sites, marketplaces & more. 

Consumer to Consumer Ecommerce (C2C)

This ecommerce business model, enables the transaction of products and services between two consumers. A third party creates a site, payment gateway and ensures critical mass so as to make the business attractive to buyers and sellers. 

Resellers in B2C2C businesses bring in a personal connect while selling & act as salespeople for the supplier (business).

Business to Consumer to Consumer (B2C2C) 

B2C2C is one of the ecommerce business models which falls under social commerce. However, we would like to call it organized social commerce (we will talk about social commerce in detail later). Here, a seller sells to a consumer (meaning not a business entity) and the consumer resells to another consumer. Meesho , Dealshare, Glowroad, and Bulbul are examples of such a model in India. 

Direct to Consumer (D2C)

Direct to Consumer is an ecommerce business model which eliminates any kind of middle party. The sale is directly from the manufacturer to the consumer. A world famous example of this model is Tesla cars. Closer to India, there have been many companies which started solely as D2C. This format grew exponentially as more people turned to entrepreneurship. Companies also saw merit in taking this route as physical supply chains was disrupted. Thus shipping products directly to consumers worked practically.

Social Commerce

When the pandemic erupted in 2020, different types of business models emerged. One of them was, what we like to call un-organized social commerce. It is true that the B2C2C model is a type of social commerce, however, it is led by an ecommerce company such as Meesho and hence organized. The unorganized social ecommerce we are talking about is that which led to the growth of micro-entrepreneurs during the pandemic. Manufacturers, small-scale businesses – all wanted to do business. However, the shutting down of their brick & mortar shops meant they had to move online.

The pandemic contributed heavily to the positive inflection in the ecommerce industry

Classification Basis Sourcing, Marketing & Revenue Flow

Drop-Shipping

This was one of the ecommerce business models which emerged as an answer to a key entry barrier for small businesses. Capital. In drop shipping, a seller does not own the inventory nor does he store it. He also does not spend cash in buying inventory in bulk. Instead, he acts as a medium through which end consumers can place an order with suppliers. The supplier directly ships the product to the consumer. The supplier’s share from the revenue is then passed on to him. 

Private Labels

Private labels came to the fore in Indian business in brick & mortar store. This was when large retailers such Reliance Fresh and Vishal Mega Mart realized that they can sell products under their brand by sourcing them from existing manufacturers. They already had their store as an offline channel for selling. 

White Labelling and Private Labelling is perfect when you don’t want to invest in manufacturing, yet build your own brand.

White Labels

Many people tend to get confused between white labels and private labels. White labels are well-established brands with great products, that allow other businesses to also brand them as their own. One can see this happening in the case of beauty products or cooking oil. 

As a player in the ecommerce industry, it helps to be aware of the various business models. You may not be an ecommerce seller but maybe a service provider. You may be already selling online but may want to try dropshipping. All in all, it does help to stay ahead of the curve and know how the ecommerce industry is developing.

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