E-commerce is no longer strange to businesses and consumers. E-commerce models are increasingly developing, contributing to changing people's business and shopping habits. In the following article, MINSoftware will introduce you to an overview of e-commerce models and point out which are the 3 most popular models in Vietnam.

What is the e-commerce business model?

An e-commerce business model refers to how a business operates to sell goods and services online. There are six main types of e-commerce business models, namely Business to Business (B2B), Business to Consumer (B2C), Consumer to Consumer (C2C), Consumer to Business (C2B), and Business to Business to Consumer (B2B2C). Business to Government (B2G).

6 popular e-commerce model best Currently

Business-to-Business (B2B)

What is B2B (business to business) e-commerce? It is when one company buys goods or services online from another business. For example: A coffee shop buys a coffee machine from a manufacturer or a law firm buys accounting software.

Business software such as sales software, management (CRM) and payment service companies are also considered B2B. For example, MINSoftware software is sold to businesses, retailers, etc.

B2B online sales tend to be more complex than other forms of e-commerce because they involve a large catalog of complex products. A B2B e-commerce business typically requires more cash to get started.

Some examples of B2B e-commerce platforms are Alibaba.com, Amazon.com, where hundreds of thousands of businesses around the world trade together. These platforms help connect global businesses, making transactions and buying and selling easy while saving marketing and advertising costs.

Business-to-Consumer (B2C)

B2C (business to consumer) online retail is when a business sells to individuals, the ultimate consumers, but the business is conducted online rather than in a physical store.

Although B2C e-commerce seems to be more prominent, it is only half the size of the global B2B e-commerce market. The B2C e-commerce model is also very popular and growing strongly in Vietnam.

Examples of B2C businesses in Vietnam such as exclusive online retailers include Elise, HoangPhuc, Bibomart, Nike, Adidas... The benefit that this model brings to these businesses is saving on sales costs, when they only need to build an e-commerce website that can reach a huge number of customers via the internet, without having to pay for rental space, sales people...

Consumers will also be more comfortable in choosing products and making purchases with quick operations, products are delivered to their homes, without wasting time traveling.

Consumer-to-Consumer (C2C)

C2C (customer to customer) sites operate as internet exchanges, auctions, and marketplaces where users sell goods to each other. These can be products they make, such as crafts, or old items they own and want to sell.

Thus, it can be seen that the C2C e-commerce model has representatives on the buyer and seller sides who are both individuals and they often transact online with each other through e-commerce platforms or intermediary auction websites. For example, sites following the C2C e-commerce model such as: Ebay, Craigslist and Cho Tot or Shopee, Sendo ...

In short, the 3 e-commerce models above B2B, B2C and C2C are most commonly applied in Vietnam. In addition, there are other e-commerce models as below.

Consumer-to-Business (C2B)

C2B (consumer to business) online commerce is when consumers sell goods or services to businesses. When consumers create value for businesses, it is C2B commerce. Creating value can take many forms. For example, C2B can be as simple as a customer leaving a positive review for a business or a photography website buying images from freelance photographers. C2B also includes secondhand businesses that sometimes buy goods from ordinary internet users.

Service-providing websites like Upwork, some popular blog monetization strategies like affiliate marketing or Google Adsense are also a form of C2B e-commerce model.

Business-to-Government (B2G)

This is sometimes referred to as business-to-administration (B2A). The B2G (Business to Government) model is when a private company exchanges goods or services with a public agency. Usually in the form of a business contract with a public organization to perform a commissioned service.

For example, a surveillance company might bid online for a contract to clean the county courthouse, an IT company might respond to a city's request to manage computer hardware, or a military contractor might provide weapons under contract to the government, or a construction company might participate in a bridge or road project, building toll booths for the government.

Consumer-to-Government (C2G)

Have you ever paid for a car parking space using an app on your phone? If so, you have experience with C2G!

The C2G (consumer to government) model also includes paying taxes online and purchasing goods from government agencies at online auctions, or individuals paying taxes to the government or tuition to universities. Whenever you transfer money to a public agency over the internet, you are engaging in C2G e-commerce!

Major e-commerce platforms in Vietnam

Shopee

Shopee is owned by SEA Ltd and was launched in Singapore in 2015. To date, Shopee has been present in many countries such as Malaysia, Thailand, Vietnam, Taiwan, Indonesia, Philippines and Brazil. Initially, Shoppe developed according to the C2C e-commerce model, but now it has added the B2C model, reaching the majority. Shopee is currently the number 1 e-commerce platform in Vietnam and has an extremely large number of monthly visitors.

Shopee's advantages are its user-friendly interface, diverse product offerings, competitive prices, fast order processing, and frequent promotions and discounts on many online channels, Facebook, TV, etc.

Lazada

Lazada is the number 2 e-commerce platform in Vietnam owned by billionaire Jack Ma's Alibaba Group. In addition to Vietnam, Lazada also has branches in Singapore, Thailand, Indonesia, Philippines, Malaysia...

Lazada also sells a wide variety of products, but you need to research carefully because the platform sells both new and old products, including fake and low-quality products. For peace of mind, you should buy at Lazada Mall, which only sells genuine products from major brands. Lazada also regularly advertises and organizes music events broadcast online on TV with many attractive promotions for consumers.

Tiki

This is a Vietnamese e-commerce platform established in March 2010. The brand name Tiki is an abbreviation of the word "savings", which represents the principle that this platform aims for.

At first, Tiki only sold books and stationery. Then Tiki expanded to many items such as fashion, shoes, household appliances, electronics, phones, cosmetics, mother and baby products, groceries, houses... Tiki has a super fast 2-hour delivery mode and sells quality goods with clear origins, so it quickly received the trust of customers and Tiki has become one of the major e-commerce platforms in Vietnam.

Sendo

Sendo was established in September 2012 and is a subsidiary brand of FPT Software Group. The brand Sendo is an abbreviation of the word Red Lotus, a flower symbolizing purity, Buddhism and the Vietnamese countryside. This trading floor is currently in the top 5 largest e-commerce floors in Vietnam, serving more than 12 million customers and more than 400,000 sellers nationwide.

GoMua

GoMua is an e-commerce platform developed by Mediastep Software LLC. Although it has only recently appeared, this e-commerce platform has attracted the attention of many customers. The advantage of the GoMUA platform is that shop owners can participate in the booth for free, without collecting sales commissions on sales like other e-commerce platforms. In addition, sellers can post videos and livestream online sales on GoMUA without having to spend any costs.

How to Choose the Right Ecommerce Model for Your Business

To find the right ecommerce model for your business, you need to determine two things.

First, determine who you will sell your product to, and then map out how you will position your product. Next, create an e-commerce business plan for your business.

This determines how you will attract customers and how customers will interact with your products. Finally, figure out the right distribution method and model by evaluating what will work best for your e-commerce business.

Distribution Methods for Your Ecommerce Business

Wholesale

Wholesale distribution businesses handle everything beyond manufacturing the product. You’ll order directly from the supplier, and be responsible for warehousing, inventory management, order tracking, and shipping to customers. You tend to see wholesale e-commerce used a lot in the B2B e-commerce model, but it can also be leveraged as part of a B2C e-commerce strategy.

Retailing

Retailing is the act of buying products directly from manufacturers, wholesalers or large distributors and reselling them to end users. Retailing scales vary greatly, it can be a single store, a chain of stores or just an online store. To retail online, you can set up a sales website, create a Fanpage and set up a store on e-commerce platforms.

Retailers only have to handle small orders from a large number of individual consumers instead of large orders from a small number of wholesalers and businesses. To successfully retail online, you must plan, understand consumers and organize many promotional programs to let consumers know about your products.

Dropshipping

Dropshipping is an order fulfillment method where a business's products are stocked, packaged, and shipped by a third-party supplier (i.e. you sell someone else's products through your store).

With dropshipping businesses, sellers don’t have to worry about managing inventory, stocking warehouses, or handling shipping. They can focus on customer experience at touchpoints and building their customer base.

One of the biggest caveats to this approach is that your business will have absolutely no control over the supply chain. If your product arrives damaged or late, or if the quality is lower than expected, consumers will have a very poor opinion of your brand.

Subscriptions services

With a subscription service model, you commit to continuously sending your product to your customers over a long period of time at consistent, pre-determined intervals. There are different types of subscription services, such as providers that offer Internet subscriptions or post-paid phone subscriptions, or you offer pet care services… This type of subscription service is quite limited and does not apply to all types of businesses.

Private labeling

In the “private label” distribution method, a business will hire a third-party manufacturer to create their desired products based on your own unique ideas and designs. This will save you from having to build your own factory and produce your own products, with your own exclusive brand and you have full rights to distribute these goods.

Once the goods are manufactured, you can have the manufacturer ship them directly to your customers, to an online marketplace, or have them shipped back to you for you to handle. If you have the finances and the design ideas for your products, private labeling is a great way to get started or test new ideas.

White labeling

With white labeling, you are branding and selling a product under your own name and logo, but that product is manufactured and purchased from a third-party distributor.

You can see this trend in the fashion and health industries, often with cosmetics, essential oils… White labeling can increase your brand visibility, save you from having to manufacture your own products, and allow you to leverage the knowledge and expertise of a distributor.

How to Choose Your Ecommerce Business Model?

Now that you are familiar with the different e-commerce models, you can now start to choose your model. You need to answer the questions below to help you create a plan and choose the e-commerce model that will make a difference for your company.

Who are your customers?

Who are your target customers? Individuals, businesses or government agencies... from there you will choose the appropriate e-commerce channel.

Also, learn about your customers’ buying habits and behaviors. What do they expect when they buy your products? What are their problems and pain points? Building your ideal customer profile is a great start in choosing the right e-commerce business model.

Understand the capabilities and strengths of the business

What makes you different and superior to your competitors? Is it your price, your customer service, the quality of your products? Also ask yourself, “What am I not doing well?” Knowing where you excel and where you are weak is important to your business strategy. Being honest with your customers about this will help build trust and loyalty with your brand.

What is the best sales channel for your product?

Choose a sales channel that fits your product and makes sense for your customers. Approach this issue from the perspective of a manufacturer or distributor.

For example, if you manufacture your own products, you might consider using wholesale to help cover your manufacturing costs and break even faster.

If you are a distributor of someone else's products, you will want to invest more in direct marketing and branding and strategies to grow your customer base.

Once you have identified your target market and the exact model you need to best serve your target customers, you can focus on building and optimizing your e-commerce infrastructure and marketing tactics to fine-tune your business and maximize revenue.

Conclude

Through the above presentation, you have an overview of the most popular e-commerce models as well as how to choose the right business model for your business. In addition, using account nurturing software such as Maxcare, MaxPhoneFarm will make the business management process smoother.

For more useful information about business or software, please join MINSoftware Community or contact page MINSoftware and hotline: 0965.820.648 – 0969.07.8803 – 0966.260.829 – 0973.363.129 ok!!!