Is Bob’s Bait & Tackle ever going to get the type of traffic as, say, Facebook or Google? Of course not. While they may have other revenue streams, this tends to be their bread-and-butter. Any business selling items through the internet, regardless of their business model, is following the sales revenue model. The most common of all eCommerce revenue models, here profits are achieved by selling products or providing services online versus, or in addition to, brick-and-mortar stores. Here’s a look at five common eCommerce revenue models that have proven to be highly successful over the years. A franchisee adopts the business model of a particular franchise, meaning they can be a manufacturer, distributor, wholesaler, or retailer! 5 Common Ecommerce Revenue Models That Work In the franchise business model, an eCommerce entrepreneur pays for the right to sell a product or service under the franchise's name. The Dollar Shave Club is a good example they bought basic razors from a manufacturer, slapped their name on them, and then used an innovative (at the time) subscription model (more on that in the next section). They simply purchase generic items from a manufacturer and brand them. White labeling is another way retailers may sell products. Some eCommerce retailers are also manufacturers, producing and selling their own products. RetailerĪ retailer purchases product from a distributor or wholesaler, and sells those products to the general public. Ecommerce retailers will sell a product and pass the sales order to a third-party supplier, or dropshipping company, that then fulfills the order, shipping it to the customer. Today, dropshipping is a popular form of wholesaling. A wholesaler’s sole responsibility is to fulfill retail orders to the best of their ability. Wholesalers work closely with eCommerce retailers to accommodate their needs, often buying products in bulk at a discount from manufacturers or distributors. A distributor will handle passively received orders and actively promote the products to find new buyers, acting as a sales representative for the manufacturer. DistributorĪ distributor purchases products directly from a manufacturer and sells them to a wholesaler. The Great Value brand at Walmart is one example of private labeling. So, they purchase the products from a manufacturer and put their label on them. They may specialize in a product that a retailer wants to sell but doesn’t want to manufacture themselves. Some manufacturers also offer private labeling. Ecommerce manufacturers may sell their products directly to consumers or outsource their sales to a distributor. ManufacturerĪ manufacturer creates its own product using raw materials or assembles pre-made components in order to create a product. Here’s a look at the five most common eCommerce business models within these categories. C2B (consumer to business, such as a freelance writer or photographer selling their services to companies).C2C (consumer to consumer eCommerce company, such as eBay's peer-to-peer online auctions).B2B (business to business eCommerce company, such as a parts supplier selling to a manufacturer). ![]() a company selling directly to the general public) B2C (business to consumer eCommerce company, i.e.Instead, a business model takes into consideration all aspects of your business regardless of whether you're operating one of the following types of businesses: A business model is not just about how your company will make money (although that’s part of it). 5 Common Ecommerce Business Modelsīefore delving into revenue models, let’s take a look at business models. Within this model, a company can have a number of different revenue streams, i.e. The revenue model is considered a high-level look at the revenue structure of a business. Depending on the revenue model, which can be pretty standard or fairly complex, a company may take into consideration manufacturing, purchasing, distribution, fulfillment marketing, and other costs, until the business arrives at a profit. What is a Revenue Model?Ī revenue model is the means by which a business plans to make money. In this blog, we’ll look at various eCommerce revenue models, provide tips for choosing your best option, and more. While most companies do care about their customers and an increasing number of them are even giving back to their communities through charitable efforts, if a company doesn’t have a sustainable revenue model, it simply cannot succeed. ![]() ![]() The ultimate goal of any business is, of course, to make money. 5 Popular Ecommerce Revenue Models That Grow Businesses
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