You’ve undoubtedly heard that the eCommerce market is booming at the moment. Exactly! Customers will spend $4.13 trillion on online retail purchases this year, and mobile commerce will account for 72.9% of the total.
E-commerce businesses have never been more in demand, as people increasingly choose to shop online and on their mobile devices.
Even if you want to open an internet shop, there is a steep learning curve involved. Investigate several eCommerce company concepts and websites as a starting point for your investigation.
You’ll be able to make better decisions about how to operate your online shop and how to make money from it after you understand the various business models. A deeper look at eCommerce business models is in need.
What is an eCommerce Business Model?
ECommerce business models are conceptual frameworks that your eCommerce company is built upon in order to attract customers and increase income.
There are a variety of eCommerce business models which allow different types of companies to properly establish themselves within the industry and engage their customers. In this case, it is imperative to implement eCommerce customer service to assist customers and ensure theirsatisfaction.
Four Traditional Types of eCommerce Business Models
You’ll almost probably fall into one of these four categories if you’re starting an eCommerce business. Each has its own set of benefits and drawbacks, and many businesses operate in more than one category at once. Knowing which bucket your big idea goes in will help you think more creatively about your opportunities and risks.
B2C – Business to consumer
When a firm sells directly to customers, it is referred to as B2C (business-to-consumer). It’s the most common sort of business out there. B2C e-commerce is rather simple.
Every time you go to the grocery store, have supper out, go to the movies, buy a new king-size mattress, or get your hair cut, you’re engaging in a business-to-consumer transaction. You, the customer, are the ultimate beneficiary of the goods and services provided by these businesses.
B2C comprises not just products but also services. Mobile apps, native advertising, and retargeting have all been used by B2C innovators to promote directly to their customers while also making their lives easier.
B2B – Business to business
When it comes to B2B eCommerce, things are exactly as they are spelled: Where firms offer their items to one other. Anything that improves another company’s business processes might be classified as a product.
A software firm is a great example of a B2B business. HubSpot, Salesforce, and SurveyMonkey are all examples of CRM software. The normal mom-and-pop customer would have no business investing in commercial software since all of these items are geared at businesses.
C2B – Consumer to business
C2B corporations allow individuals to offer goods and services to businesses. A site could enable the customers to publish tasks they require completed and have organizations contest for the assignment in this eCommerce strategy. B2B services, such as affiliate marketing, are also categorized as B2C.
Elance (currently known as Upwork) had been an early innovator in this concept by supporting businesses in recruiting freelancers. The price of goods and services is where the C2B eCommerce firm has a competitive advantage. Customers can establish their own price or have businesses fight for their business directly using this technique.
This strategy has recently been employed to creatively connect businesses with social media influencers in order to market their products.
C2C – Consumer to consumer
The consumer-to-consumer business model is one that most people are unfamiliar with. Companies like Craigslist, eBay, and Esty have paved the ground for the notion to take root in the digital age.
Customer-to-customer (C2C) electronic commerce is the sale of products or services by customers to other customers. Third-party websites (like the ones we described before) or marketplaces that arrange transactions on behalf of buyers and sellers are the most common means of doing this.
Because they don’t need their own website, these eCommerce marketplaces let small firms and even amateurs sell their goods at the prices they choose without having to worry about upkeep.
Five Value Delivery Methods for Ecommerce Innovation
This is how a product is made so that it can be used by people who will get value from using it. The value delivery process includes picking (or figuring out), giving (or delivering), and telling people about better value. The value chain is a way to figure out what activities in a business make and cost money.
Here are some of the most prevalent techniques employed by market disruptors and industry leaders.
D2C – Direct to consumer
Direct to consumer(D2C) sales, sometimes referred to as direct to consumer eCommerce, is a sales technique in which a firm sells directly to its clients. People have become more loyal to consumer brands that cut out the middleman.
This has led to a lot of growth for these brands. There are a lot of online stores such as Avon that set the benchmark for vertical interruptions. Companies like Cards Against Humanity show us that D2C can still be a place for expansion and creativity.
White label and private label
The white-labeling model is when you sell a product that isn’t your own but with your own name on it and in your own packaging. A good thing about this model is that you can sell a product that you already know is a good one to sell. One thing that could change is whether or not and how you sell it.
Usually, you have to buy a certain amount of the product, and then if you can’t sell it, you’re stuck with the rest of it. So, you need to be pretty sure that people will buy it. This method has been difficult in the past.
Brands like IKEA are successful because they understand how to take an established product and make the most of it from an eCommerce standpoint.
Retailers offer their products in bulk at a lower price when they use the wholesaling method. The term “wholesaling” usually refers to a business-to-business practice, but many retailers now offer it to budget-conscious customers in a B2C setting.
Manufacturers that maintain sales offices to fulfill wholesale services, as well as merchants who operate warehouses or otherwise participate in wholesale operations, are also included in wholesale channels.
Dropshipping has been a popular method of selling products on the internet in recent years. Amazon & Inspire Uplift are two examples of drop shippers who advertise and sell products from a third-party vendor. Dropshippers connect buyers to the companies they wish to buy from by acting as a middleman.
Subscription models have been used by publishing houses in England since the 1600s to provide books to regular clients. Businesses are moving beyond magazines with the dawning of eCommerce. Online services are now commonplace in almost every industry, bringing both convenience and savings to customers. Right now, membership sites are quite popular. There are a plethora of membership websites available! From picture background removal services like Removal.AI to food delivery services like Hello Fresh, where you can order nearly anything, there is something for everyone.
Make your own
As a final resort, you can create your own goods from scratch. Using this strategy takes a long time, and it’s tough to scale. On the other hand, customers prefer this approach because it makes it clear what you’re making and why it’s valuable.
There are no production or supplier fees, and you are in charge of the product’s quality even if your time is limited. This could be a good beginning point and a place to build from, depending on your product. C2C sales of handcrafted goods have been made possible through the usage of online marketplaces like Etsy.
How to Select Your Ecommerce Business Model?
Selecting an eCommerce business model is an important decision your company has to make, so learn from the mistakes and the wins of others to select the business model that is as close to the “right” one as possible.
Each model and product type has advantages and disadvantages, as previously mentioned. And to get the most out of your business, you should pick a model that plays to your specific skills.
There are a number of questions you should ask yourself before deciding on a model. For instance, what are you trying to sell, and what price range are you looking to sell it in?
The question is whether or not you intend to provide a variety of products. Selling a single piece allows you to concentrate and is effective in markets with little competition. On the other hand, once you’ve mastered the basics, you can go on to more advanced concepts and ideas.
Amazon, in fact, took this approach. Amazon began by selling simple books. See where they’ve gotten to now.
It’s very important to have the full picture and try to make the best decision upfront, but the most important thing is to start somewhere and adapt along the way.
By asking yourself the right questions, this shouldn’t be a problem. An honest assessment of what you do well will help you find a model that doesn’t just sound good but aligns with your strengths.
Add in thorough research of your market to decide who to sell to and you will be well on your way to assessing the opportunities and threats found within each product production and delivery method.
Miguel Davao is a graduate of literature and linguistics and has been writing content for about 5 years now. Currently, he works as a full-time writer at Removal.AI – a fast-growing start-up that offers image processing and AI background remover for eCommerce, web, and app development, and marketing automation.
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There’s no doubt that e commerce has grown exponentially and continues to grow the same way. Today, we’ve reached an age where an enterprise without online presence is static and dated. But you should be wary of looking at an ecommerce website as something you need to just have in order to fulfill a criterion.
What is ecommerce?
E Commerce is the buying and selling of goods, products and services over the internet, and transactions of money, data or funds made over the internet also come under the purview of Ecommerce. Ecommerce is also known as electronic commerce. The transactions that happen in ecommerce can be done in many ways such as Business to Business (B2B), Business to Customer (B2C), Customer to Customer (C2C), and Customer to Business (C2B). More or less these are known as ecommerce models.
Given that global retail e-commerce reached up to $27 Trillion in 2020.In this article, we will discuss each of these aspects in detail to help you gain a greater understanding of ecommerce, including top solutions for your own business. This section, we are going to talk about all the components that can make ecommerce businesses different from one another.
These components ideally make decisions that you want to make when planning to start your own ecommerce business.
Models represent the type of an ecommerce business transaction. Models can be classified into four main categories and this classification is done on the basis of the actors that are involved in each ecommerce transaction. When you start a new business, chances are that you will fall into any one of these models that suits your business.
- B2B business model
- B2C business model
- C2B business model
- C2C business model
- Mixed models
B2B business model
The B2B model implies a longer sales cycle, but greater order value
B2C business model
Here, the business sells directly to a customer. This is the most popular and common model among existing ecommerce models. Quite a number of methods can be adopted under this model to cater the needs of customers including advertising, Omni channel architecture etc.
The B2C model implies a shorter sales cycles and less order value
C2B business model
This model gives the consumer the flexibility to sell products to business. Freelance artists, writers, and software developers are good examples, as are bloggers, lawyers, and accountants who serve business needs. This model is generally service based given its constriction to be as effective as other ecommerce models.
C2C business model
The C2C model facilitates Consumer to Consumer. This is the type of e-commerce that involves individuals selling one another directly.
Companies like Craigslist and eBay pioneered this model in the early days of the internet.
C2C businesses benefit from large scale participation by motivated netizens, but face a key challenge in integration, quality control and site maintenance.
Business to government (B2G)
Business to government (B2G) is when a company markets its products and services directly to a government agency. This agency could be a local, county, state, or federal agency; however, many government agencies will not go directly to an ecommerce website and place an order.
Eg: Business to business to consumer (B2B2C)
This is an example of mixed ecommerce business models and is known as business to business to consumer (B2B2C). This model is actually a combination of both the B2B and B2C models. In this model a company sells its products to another company that sells the products to customers. An example of a B2B2C arrangement is white labeling
Improve your strategy using business model
Identifying your ecommerce business model gives you an extra advantage over your competition. Once you have identified your suitable business model (that) you need to best serve your customer base, you can concentrate on improving the business network.
Choosing a business model for e-commerce is not a piece of cake, there are many e-commerce business models, and finding the perfect one for your business will help you succeed.
Let’s get the ball rolling.
Types of e-commerce businesses
There are 4 main types of e-commerce businesses:
B2B is a commercial activity between two companies.
If your products or services are geared towards meeting the needs of your business, your choice is a B2B e-commerce strategy. Networking and outreach are a big part of this approach. The most important task when using B2B is to convince established companies that your products/services are ideally suited to their needs.
B2C e-commerce is a more traditional e-commerce model. In B2C, online stores sell products directly to end consumers. This model will suit you if your products or services are people-oriented.
This is not a very common type of online business. In this case, consumers themselves set the price for services and goods offered by enterprises.
Most of the clients are for-profit organizations, and freelancers are often individuals. Freelance platforms are a typical example of C2B.
Customer-to-consumer platforms profit from charging commissions or selling additional features. C2C websites help the consumer sell their assets, such as residential properties or cars. This business model is complex and requires careful planning to operate.
There are also types that involve government transactions with businesses or consumers.
The B2G model involves the government using websites to conduct transactions with businesses. B2G deals are carried out based on tenders or quotes.
Typically, this model works like this: businesses that meet government requirements calculate fees and provide pricing information for the project. After that, the government considers and selects the most suitable enterprise and decides whether to sign a B2G contract with it.
C2G is an e-commerce business model in which people conduct transactions with the government. An example of a C2G e-commerce business model is paying for services on a government website.
E-commerce business models
Once you understand the direction in which you want to develop your site, you will need to start choosing an e-commerce model for your business. There are various models of e-commerce, let’s take a closer look at them:
Dropshipping is a direct delivery of goods from a supplier to a buyer, in which the seller does not store goods in his warehouse. The goods are sent to the customer directly from the warehouse of the manufacturer, supplier, wholesaler, or distributor.
Dropshipping scheme: you find buyers and send their order to the supplier of goods(your partner); the supplier sends the order directly to the end customer. You earn a profit from the difference between the wholesale price set by the supplier and the final price at which the item was sold.
- Low initial investment
- No warehouse needed
- Product price under your control
- A limited quantity of goods
- Delivery options and speed
- Supplier problems are your problems
Wholesaling is one of the most expensive ways to start your e-commerce journey, but it can be very rewarding. With a wholesale approach, you buy an item in advance from a supplier and then sell it to customers at a higher price. In the past, wholesaling was mainly a B2B business practice. But thanks to the Internet, wholesaling has become a common practice in C2B or B2C.
Before going wholesaling, research the market for the demand for the product you want to sell. If demand turns out to below and you cannot sell the product, then you run the risk of serious financial losses, and in addition, you will have to store unsold items.
- Location doesn’t matter
- No advertising costs
- Favorable purchase prices
- Limited customer base
- High intra-sphere competition
- High initial investment
Selling digital products
An e-commerce store for digital products has many benefits, especially when it comes to your own product. Selling digital products is attractive in that it does not require you to organize the storage or delivery of products. Also, this type of e-commerce business is convenient for buyers, because they can receive their purchases instantly and the digital product will always be in stock, so you can sell unlimited items.
On the other hand, the field of selling digital products is highly competitive. Before you start, you will need to consider how you can differentiate your product from the competition.
- Unlimited stock
- Higher profitability ratio
- No costs or restrictions associated with shipping
- Harder to advertise
- The cost is not obvious
- High intra-sphere competition
It is important to note that using this approach, you cannot just start selling a product and forget about it. For customers not to leave and new ones appear, you will need to constantly update your offer.
- Recurring payments and predictability of income
- Long customer lifetime
- Demand predictability and planning capability
- High entry threshold, because you need to build a loyal customer base
- This model is difficult to switch to for companies with complex products, the distribution of which is built through dealer networks.
- Requires regular content update
Manufacturing products is another way to get started in e-commerce, especially for people who are passionate about the products they create.
Advantages in selling your product: you completely control your brand and its development, and you also have a chance to occupy a free niche in the market.
To achieve success in this area, you will need to think about how you will scale your business in the future, how your product range will change to be competitive and offer customers something new.
- Small initial investment
- Full control of the assortment
- A sufficient number of free niches in the market
- Good opportunity for a startup to test a product
White Label is a concept of cooperation between two companies: one produces a product or service, and the other sells them under its own brand. White Label is often confused with private label, but there is a difference between the two.
Private label products are also manufactured by another firm, but they are only produced for sale in the stores of a particular distributor. Using the White Label concept, you can sell a product to a large number of consumers.
This model allows you to save on production, but there are certain risks. You need to determine which batch of goods to make and whether it will be in demand. If you cannot sell the product, then you just have to accept it and calculate the losses.
- No need to create something new
- Reduced costs and reduced risks
- Reduced launch and promotion costs
- There is no complete control over the processes since some of them take place on the partner’s side.
- Difficulties in managing inventory
- High competition
So, what business model will you choose?
B2B — Business to Business:
Just like it sounds, this is when one business sells its goods/services directly to another business. Think supply chains, where you have giant suppliers and giant distributors. The big plus about this e-commerce model is that order quantity is quite large and orders often get repeated in a reliable way. Some of the most popular examples of this in the region are Dubai Traders Online, The Desert, and Togar.
Another great example is Panasonic Middle East. The company’s managing director, Hiroki Soejima, said, “We see huge growth potential in B2B business as multiple projects are being announced across the region.” The company is focusing on B2B as much as possible and it’s likely to pay off.
B2C — Business to Consumer:
Probably the most common business model is B2C, or when a business sells directly to the end consumer. If you go onto Namshi and purchase a new pair of jeans, what you’re doing is B2C. Other popular B2C sites in the region include Mumzworld, for all things mama and baby, and Desertcart, for basically everything.
As anyone who does online shopping knows, it’s easy to find what you want and at a good price. This is because B2C companies know their potential audience and who is buying their products. They make it quick and easy, which is why it’s so popular with buyers. Sites such as Amazon and Groupon are great examples of the various ways B2C can work wonders.
C2B — Consumer to Business:
- The customer: individual who has a product or service to offer
- The business: purchases product or service from customer
- The website: portal that connects customer and business
This simple network creates new connections for everyone involved, which is why websites such as Upwork and Amazon Affiliates have become more and more popular.
C2C — Consumer to Consumer:
These are the four main paths you could take as a potential business owner when deciding about your e-e-commerce transactions. Or, as an existing business owner, you now know which model complements your product/service, so you can expand your growth. Either way, the opportunities in the e-commerce world are practically endless. So, make a decision and get to it!
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This blog is intended for informational purposes only, and should not be considered business or legal advice. MENA 360 DWC-LLC (Fetchr) will not be held liable for the use, non-use or misapplication of this information, lost profits, personal or business interruption, or any other loss.
Every online store has a business model of its own. Many earn by attracting visitors to the website. Selecting ecommerce business model is a challenge, especially for beginners who have little to no experience in the industry.
Selecting the right model for your ecommerce venture is essential for keeping the store afloat and bringing in sustainable profits. However, when planning the ecommerce venture, many people make the mistake of jumping straight to the fine details and forget that all this depends upon what you plan to sell and what model you adopt for selling your inventory. If successfully executed, an ecommerce venture can become a significant source of income.
In a hurry? Jump to the ‘Types of Ecommerce Business Models’ section.
- What is an Ecommerce Business Model?
- What do You Want to Sell?
- 6 Types of Ecommerce Business Models
- Top 9 Delivery Frameworks for Your Ecommerce Business with Examples
- Ecommerce Promotion Options
- How to Choose Your Ecommerce Business Model?
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An ecommerce business model refers to how a business operates to sell goods and services online. There are 6 main types of ecommerce business models, namely Business-to-Government (B2G), Business-to-Business (B2B), Business-to-Consumer (B2C), Consumer-to-Consumer (C2C), Consumer-to-Business (C2B), and Business-to-Business-to-Consumer (B2B2C).
In order to find the right ecommerce model for your business, you need to define two things. Firstly, you will have to define who you will sell to, and then define how you will position what you have to sell. Then, figure out your ecommerce business plan. This will define how you will attract customers and how they will engage with your product. Lastly, figure out your delivery framework, by assessing what will work best for your ecommerce business.
What do You Want to Sell?
The beauty of online commerce is that you can sell pretty much anything. However, it is always a good idea to start with a small range of products. Your store can sell physical products (clothing or shoes), digital products (ebooks are a good place to start), or services such as babysitting.
Let’s see what type of products are currently being sold online and how you can tap their market.
This is the most commonly sold commodity on ecommerce stores. Physical products (pretty much anything that requires packing, shipping and delivery) often achieve the highest sales.
But, how do you decide which products to sell?
Discover what you are passionate about. Do you love cars? How about selling car parts and accessories then? Do you love books? Why not start an online book store? Online commerce gives you the perfect opportunity for converting your passion into a viable business.
Analyze your chosen niche and find the opportunity gaps. This covers all the aspects of the industry that are underserved. Similarly, try to analyze the pain points of the target customers.
Next, conduct keyword research on the product you wish to sell. This way, you can pinpoint the demand for your product that will help you plan your inventory and order placements.
If you have a crew of skilled carpenters, or house cleaners, or you are an expert hair stylist who offers to visit the customer’s residence, why not create a website to sell these services online? You can significantly increase the demand for your services by creating a comprehensive FAQ section and a Legal section detailing exactly what you are offering and what the customers can expect.
Ecommerce is a global phenomenon and as such support several models. The good thing about ecommerce is that you could choose one or more models for your venture.
If the nature of your products or services is geared towards meeting the needs of businesses, setting up a B2B strategy is your best bet. Networking and reaching out is a bigger part of this strategy. A big advertising budget is not of much help. The most important challenge you would face is convincing established businesses that your products/services are a great fit for their processes.
The advantage of this business model is that order sizes are usually large, and repeat orders are very common, if you maintain the quality of your products and services. An example of a great B2B model is Media Lounge.
This is the model you should adopt if your products/services are targeted primarily towards individuals. The potential customer finds your website and determines whether your product could address their pain points.
After browsing the store, the customer may decide to place an order. An example of a successful B2C business is Portugal Footwear.
While B2B and B2B business concepts are familiar, Customer-to-Customer (C2C) is a concept unique to ecommerce. This is mainly due to the sheer demand of the platforms such as Craigslist, OLX, and eBay.
Customer-to-Business (C2B) business model is another great concept that is popular mainly due to platforms that cater to freelancers. In C2B, freelance workers work on tasks provided by clients. Most of these clients are commercial entities and freelancers are often individuals. In simpler terms, consider C2B is a sole proprietorship serving larger businesses.
Reverse auction websites, freelance marketplaces, affiliate marketing all form part of this business model. Again, this model requires planning due to the legal complexities involved.
Business to Government (B2G)
Business to Government (B2G) is an ecommerce business model where a business markets its products to government agencies. If you want to choose this ecommerce business model, you will have to bid on government contracts. Governments usually put up requests for proposals and ecommerce businesses then have to bid on government projects. In most cases, a government agency would not come to place an order on your ecommerce website. However, some local government agencies are exceptions to the rule, depending on their needs.
Business to Business to Consumer (B2B2C)
When a business sells products to another business, and then that business sells to the consumers online, this is what is defined as B2B2C ecommerce.
There are three parties involved in this type of ecommerce business model. For example, if you choose to go with it, you will have to partner with another business, and only then can you sell its products and offer the partner a commission for each sale.
Ecommerce store owners choose this business model mainly for new customer acquisition. This happens because even though customers are already familiar with the partner’s products, they can’t order from them online, due to obstacles such as geographical location, hefty shipping costs, and others.
Hence, this ecommerce business model is most suitable for new ecommerce store owners who want to expand their customer base.
Have You Selected An Ecommerce Business Model?
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9 Innovative Value Delivery Frameworks for Your Ecommerce Store with Examples
Once you have chosen the ecommerce business model, the next step is the selection of an appropriate value delivery framework. Let’s discuss the most innovative and profitable value delivery frameworks for ecommerce businesses.
In this plan, an ecommerce store gets the products from a wholesale or manufacturer and sells to the visitors at a commission. For example, you have an ecommerce store where you add products from AliExpress and set the prices at a higher level. Once the store is up, the store targets potential customers through ads and other digital marketing channels.
Dropshipping became very popular when ecommerce dropshipping platforms like WooCommerce, PrestaShop, and Shopify went mainstream.
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They are a successful dropshipping store because they consistently present the best deals for the products in their niche. They also make sure they show the discount badges on all products throughout every page of their site. Daily Steals also uses PPC ads to their advantage and strategically place display ads showcasing their flashy premium deals and discounts.
Wholesaling is a business plan where an ecommerce store sells products in bulk and at a lower price than the general market prices. The biggest example of this model is Alibaba, a very popular platform for small and large wholesalers that trade with the businesses all over the world.
Many ecommerce stores have warehouses where they keep products. These are then put as listings on the ecommerce stores and when a person buys them, they are shipped directly from the warehouse.
White-label branding is a business plan in which one company produces the product, and another company rebrands and distributes it. An example of this plan is of influencers that sell white-label products through their social media accounts.
White-labeling Example: Seed Beauty, a private label company, produces Kylie Jenner’s products and white label cosmetics for ColourPop. White-label products are generic products that are mass-produced. For example, if you want to sell white label cosmetics, you can focus on one product, like lip balm.
Outsource fulfillment is a business model in which the shipping is outsourced to a third party. This model is mostly used by ecommerce stores that are too busy running the operations or too understaffed to ship the products themselves. Fulfillment by Amazon (FBA) and 3PL services for ecommerce stores fall under this category.
Outsourced Fulfillment Example: A hand sanitizer brand, Touch Land, was growing fast during covid, selling high-quality moisturizing hand sanitizers. But soon, they were sold out, and had almost 34000 customers on their waiting list. They even did pre-orders to meet the demand as they had up to 700 orders per day and sold 10,000 dispensers to industry-leading brands in those three months. This is when using 3PL services helped them.
How Nate Materson, CEO of Maple Holistics, Achieved Success with Amazon FBA
Subscription Model Example: An American meal kit service, Blue Apron, provides high-quality food ingredients. It allows its customers to set their food preferences and then takes care of everything after the customers have subscribed to receiving their meal kits. It’s a great example of how the subscription business model can work with an ecommerce store.
Rent and Loan Model
Websites such as Loan Now and Lending Club work on this model.
Rent and Loan Model Example: Lending Luxury is an ecommerce store that is successfully using the rent and loan ecommerce value delivery framework to make luxury apparel affordable for couture-hungry people.
Once you have the model and the plan, the next step is choosing the right promotion options.
Affiliate marketing is when you promote a product by another producer/supplier on your website or blog. Top ecommerce websites provide affiliate programs where content producers can sign up to become an affiliate. For example, you can sign up for Cloudways web hosting affiliate program. When you bring leads to Cloudways, you will earn a commission. Check the complete details of how an affiliate program works on the affiliate page.
Pay Per Click (PPC)
Pay Per Click (PPC) is a e-business model in which the advertisers will pay for every click that leads to their products page. The business model is offered by affiliate marketing programs such as Viral9 and Max Bounty.
Pay Per Sale (PPS)
Pay Per Action (PPA) is a generic term in marketing. The model applies to all types of affiliate marketing tactics in which any type of action is expected of the visitors. Usually, leads, sales, and clicks all are considered valid outcomes for PPA programs. Most affiliate programs use these actions as the performance measurement unit for their campaigns. Maxbounty uses PPA or (CPA Marketing) for all types of lead generation methods.
Pay Per View (PPV)
Native advertisements is a recent addition to online marketing. It came to light when Buzzfeed started adding promotional content in native or natural articles. These articles were about regular topics but promoted brand products by mentioning them somewhere within the article without breaking the flow. Readers would not think that these are promotional articles as nothing of the sort is mentioned in the content. Native advertising costs vary on various factors such as the content websites rankings. While going this route, make sure what Federal Trade Commission (FTC) says about them.
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How to Choose Your Ecommerce Business Model?
It is very important to come to the right decision when choosing your ecommerce business model. Why? Because once you have selected one, your finances will be involved in your ecommerce business and so will your time and efforts. Therefore, it is important that you ask yourself some primary questions before you choose one. We have a few examples.
- What will you sell and how much will you sell it for?
- Will you sell a single product or want to sell a range of products?
- Who is your product for? Who is the audience you want to sell to?
- What would your audience/potential customers want? What will be their expectations?
- Which factors will you compete on? (price, quality, selection, service, the value you add, or something else)
Answering the above set of questions and being clear on them will give you a clear idea of what ecommerce business model would work best for your online store.
Which Type of Ecommerce Business Model should I choose?
As you must have observed by now that there are several ecommerce models available, each with its own set of benefits. The right thing to do is to analyze your business model and then pick the right model.
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What is Ecommerce
Ecommerce = electronic commerce. In simple terms, it means running an online business. It refers to the selling and purchasing of goods and services over the internet where the exchange of money and data takes place via protected connections in order to execute a transaction.
History of Ecommerce
The history of ecommerce goes back to the early 1990s. The ecommerce phenomenon kicked off in 1991 when the online world became more recognizable. It took some time but was open for commercial use sooner than expected. Since then, many businesses took up their residence over the World Wide Web.
As soon as the common men became familiar with the internet by 1994, ecommerce become popular. Security protocols like DSL and HTTPS nearly took around four years to effectively develop in order to allow a quick, persistent connection to the Internet.
During the year 2000, many businesses from the USA and Western Europe went online to sell their products and services. This was the time when the meaning of “ecommerce” changed. Many retailers saw the benefits of ecommerce and began to optimize their websites in order to expand their businesses online.
By the end of 2001, Business-to-Business (B2B) model became the most effective domain of ecommerce as it made roughly $700 billion in revenue. Since then, ecommerce has seen an unprecedented growth as online sales continued to rise.
If we speak about the growth of ecommerce in the last decade, according to Google Trends, it has remained steady with nominal fluctuations since 2008 until 2015/2016. However, the trend of ecommerce began to grow with a promising incline since 2016/2017 and since then, more and more businesses began to create their online presence in order to grow in today’s digital landscape.
Today, ecommerce, for people, is a process of purchasing goods and services over the Internet by using an electronic payment service through protected connections. The best-selling products are emerging from categories like music, books, computers, office supplies, and consumer electronics.
Importance of Ecommerce in Today’s World
Online retailers on the other hand, also get to enjoy many ecommerce benefits. The internet or more accurately, search engines allow online businesses to reach global markets. They can be found by potential customers without spending hundreds of dollars on expensive advertising campaigns. The internet has allowed them to track customer preferences and then execute perfectly tailored marketing campaigns.
Ecommerce or E-commerce?
The correct way to write this term is to add a hyphen: e-commerce While search engines don’t really pay much attention to hyphens and other symbols, it is preferable that you use the original term, which is “e-commerce” when writing or searching.
Nonetheless, if you’re keyword-conscious, then yes, “e-commerce” wins. According to KWFinder, people search “e-commerce” more than “ecommerce”. Take a look at the average monthly search volume of both keywords in the illustration below.
Search Volume of “ecommerce”
Search Volume of “E-commerce”
To sum this ecommerce or e-commerce, in my opinion, ecommerce is oftenly hyphenated in the online world. However, when it comes to choosing between “e-commerce” and “ecommerce”, I prefer to choose the former. But even if you search with the hyphen, you will get to see similar results on SERPs.
Business-to-Consumer (B2C) Ecommerce
With the help of the B2C model, the customers can view and purchase the desired products from the retailer’s online store. Once the online retailer receives an order, he processes the order and then sends the goods directly to the customer. For instance, Amazon is an excellent example of B2C ecommerce model as they sell individual goods to individual customers. There are many B2C companies that have taken the market by storm, such as Expedia, Inc., IKEA, and Netflix.
Consumer-to-Consumer (C2C) Ecommerce
Another ecommerce business model is the C2C model. It allows the customer to sell the goods or services to other customers with the help of the internet. It makes perfect sense in today’s digital landscape. In simpler terms, this is mobile ecommerce!
The C2C ecommerce model allows an individual to sell their assets online for e.g. a car, a house or a bike to other individuals. The seller can publish an ad containing all the product details. Interested customers can view the details of the product and contact the seller to pursue the transaction. Ebay or OLX is a great example of the C2C ecommerce model that is running successfully.
Consumer-to-Business (C2B) Ecommerce
The C2B ecommerce model allows individual customers to sell goods or services to businesses that are willing to purchase from them. For instance, if you are a software architect, then you can showcase your skills set to potential businesses on platforms like Fiverr or Upwork. If the business is enticed by your software skills then they will purchase the software from you, and might as well, hire you for future services.
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Top Examples of Ecommerce
There are some pretty major examples of ecommerce businesses that have made it big, including Amazon, FlipKart, eBay, and Myntra. Here are some major examples that you might have heard of.
Amazon. com Inc
Amazon.com Inc. is one of the best examples of a thriving ecommerce business that initially began as a retailing platform, however, with the passage of time; they moved their operations online and became one of the largest ecommerce platforms in the world.
They are located in Seattle, Washington (USA) and was founded in 1994 by Jeff Bezos. It became one of the first American ecommerce business to sell goods online.
Initially, Amazon.com was considered as an online book store. However, with time, they have extended their market reach in a variety of business spheres by adding products like electronic gadgets, software, DVDs, video games, music CDs, MP3s, apparel, footwear, health products, etc.
In the year 1999, Time Magazine entitled Jeff Bezos as “Person of the Year” in recognition of Amazon.com’s success. Although their headquarter is located in the USA, Amazon established different websites in various developed countries such as the UK, Canada, France, Germany, Japan, and China. Amazon.com supports and operates retail websites for various popular organizations, including Marks & Spencer, Lacoste, the NBA, Bebe Stores, Target, etc.
Moreover, Amazon is also one of the first ecommerce websites to establish an affiliate marketing program. Nowadays, Amazon.com generates 40% of its sales from a well-established affiliate program where affiliates sell the goods on their own website.
According to the research conducted in 2008, Amazon.com attracted nearly 615 million online customers annually. Their most popular feature is their product review system that allows any customer to submit their review and rate the product on a scale from one to five stars.
Warby Parker is an American online eyewear retailer that is headquartered in New York City. It was founded in 2010 by Neil Blumenthal, Andrew Hunt, David Gilboa, and Jeffrey Raider.
They primarily sell prescription glasses and sunglasses through their website, however, they also have more than 80 retail stores in the USA and Canada. The organization’s official name is JAND Inc. whereas Warby Parker is its trade name.
Their “Home-Try-On” program allows any customer to ask for five frames from their website. When they receive the eyewear, they can try them at home for five days, with no additional charges.
Toms is located in Playa Del Rey, California. It was founded in 2006 by Blake Mycoskie, an entrepreneur from Arlington, Texas. Toms design and sell shoes, eyewear, coffee, apparel, as well as handbags. Toms’ business model is also known as the “One For All” model which refers to their promise to deliver value.
- When they sell a pair of shoes, a new pair of shoes is provided to an impoverished child.
- When they sell eyewear, a part of its profit is used to save or restore eyesight for the people who are unable to see.
- With the purchase of each coffee, Toms work with their “giving partners” in order to provide 140 liters of water.
- Also, during the year 2015, Toms’ collection of bags were launched to help contribute to the advancements needed in maternal health. With the purchase of every Toms bag, training for skilled birth attendants was provided. Furthermore, they began distribution of birth kits containing items that allow women to practice safe childbirth.
Birchbox is an online monthly subscription service based in New York City that sends its subscribers a box of selected samples of beauty related products. These products vary from skincare items, perfumes, organic products, and numerous other cosmetics.
Birchbox was founded in September 2010 by Katia Beauchamp and Hayley Barna. Birchbox’s initial funding began with $1.4 million in seed funding from investors during October 2010. Moreover, Birchbox managed to gather $10.5 million in Series A Funding in August 2011.
By April 2014, Birchbox had managed to generate $60 million in Series B funding. In July 2014, Birchbox opened its first brick-and-mortar store in New York City. They were valued at $485 million by the end of 2014.
By September 2015, Birchbox had more than a million subscribers catered by 300+ employees. As of May 2018, it has raised a total of almost $90 million in funding.
Dollar Shave Club
The Dollar Shave Club is an American company located in Venice, California. It basically delivers grooming products like razors to customers by mail on a monthly basis.
The company was founded by Mark Levine and Michael Dubin who met at a party and exchanged their frustrations with the cost of razor blades. After a while, they put in some money from their own pocket as well as garnered an initial investment from Science Inc. The Dollar Shave Club began its operations in January 2011 and went live with their website in April 2011.
During March 2012, seed investors offered the Dollar Shave Club a funding of one million dollars from groups like Kleiner Perkins Caufield & Byers, Andreessen Horowitz, Shasta Ventures, and a few more. Moreover, Venrock, provided a Series A funding of $9.8 million in October 2012. The next year, a series B funding of $12 million was raised by Venrock, Comcast Ventures, New World Investors and Battery Ventures.
Amidst the fundraising announcement, Dollar Shave Club announced that it would be expanding its product line to include additional products for men in 2014. In June 2015, they secured $75 million in series D funding. Later on, in July 2016, the Dollar Shave Club was acquired by Unilever for a reported $1 billion in cash.
Types of Ecommerce Businesses
Dropshipping is one of the most successful ecommerce business models. Before you ponder how to start a dropshipping store in 2021, you will certainly be happy to know that with dropshipping, you never have to stock merchandise.
Image Courtesy: Oberlo
The dropshipping business model allows you to purchase a product once you have already made a sale and have been paid by the customer. Once you get paid, you can purchase the product from a third-party manufacturer or a supplier and ship the product directly to the customer. With the dropshipping model, the store owner don’t have to worry about ever seeing or handling the inventory.
If you opt for the dropshipping business model, do ensure to quickly run through the best dropshipping tips for guaranteed success. There are many trending products to sell in 2021, however, the best dropshipping products will allow you to scale your ecommerce business effectively.