Internet Business Models

Several business models exist on the Internet, but four dominate: Business-to-consumer (B2C), business to- business (B2B), consumer-to-consumer (C2C), and business-to-government or government-to-business. Business-to-consumer models have the most public visibility and are what most people consider as business on the Internet. B2C models are essentially online storefronts, but there are many variations, ranging from strictly informational sites all the way to highly interactive and personalized transactional sites. Although statistics of Internet usage are suspect due to different measures, the numbers provide some insight.

In the U.S., 84% of Internet users have purchased something online (NUA, 2002b). Even though B2C e-commerce is only about 1% of all retailing, 49% of Internet users bought online in 2001 and spending online have increased threefold since 1999, probably due to increased consumer confidence and perceived convenience. Interestingly, consumers express considerably more trust in some institutions than others. A national survey of Internet users revealed that 68% of them trusted information from small businesses almost always or most of the time, but only 32% held that much confidence in large corporations (Princeton Survey Research Associates, 2002).