Electronic Commerce Business Models

On a broad level, electronic commerce is divided into four distinct categories:

Business-to-Business

Consumer-to-Business

Consumer-to-Consumer

Business-to-Consumer

Business-to-business electronic commerce would be companies that uses a network for ordering from its suppliers, receiving invoices and making payments. This category has been well established for several years, particularly using Electronic Data Interchange (EDI) over private or value-added networks.

The Consumer-to-Business electronic commerce model is a typical business model that has emerged strongly due to the technological advantages of the Internet and the World Wide Web. This model is typically known also as buyer-led pricing in which the buyer determines the price of a good or service to prompt sellers to meet the price.

Consumer-to-consumer electronic commerce primarily refers to the sale and purchase of goods and services between consumers e.g. classified ads and auction sites.

Business-to-Consumer electronic commerce model primarily refers to electronic retailing in which businesses sells goods and services to consumers through the World Wide Web. This has predominantly been the model that was pushed during the first phase electronic commerce.

As stated earlier, the Internet has predominantly caused new business models to emerge that can only come about due to the advantages of the Internet and the World Wide Web. In the next few sections, we will examine these Internet business models in detail.