If there is one thing that is expanding with lightning speed, it is the eCommerce business! Recent surveys tell us that in 2021 there will be over two billion digital buyers, accounting almost 19 percent of the worldwide sales.
If these stats fascinate you, and you are ready to start your online business, there is one crucial decision that you have to make first. That is, choosing the right business model for your eCommerce store.
Need guidance for it? Don’t worry, you’ll find everything here in this guide.
Picking the suitable business model can be challenging, since success heavily depends on this critical decision. You become overwhelmed with the number of choices available while choosing the ideal business model for your online store. Therefore, it would be best to start by figuring out which business model best suits your niche.
Before I talk through the type of business model for your online business, let’s have a look at its classifications.
Classifications of Business Models
- Business to Business:
These are the wholesalers and manufacturers that involve online transactions between businesses.
- Business to Consumer:
These are typical online stores where online sellers sell their products directly to customers.
- Consumer to Business:
In this case, individuals aim to sell their products directly to the companies.
- Consumer to Consumer:
This is a typical marketplace where consumers meet each other on an online platform and sell or buy products from each other.
Start by Asking Yourself These Questions
Back to our initial question, which business model suits you? You can make this decision by first asking yourself these critical questions:
- How much are you planning to invest in this business?
- What is your product’s target market?
- What are your long-term and short-term business goals?
- What do you intend on selling?
Addressing these vital questions should be the vital step. Remember, planning in advance can give you a decisive edge over other online businesses.
Once you have charted out your marketing plan based on the above questions, the next logical step is to finalize the appropriate business model. I will discuss each business model thoroughly.
Types of eCommerce Business Models
This is an intelligent way of selling products with your brand name. Most entrepreneurs who do not have the resources to manufacture products themselves get products from manufacturers and sell those products with their own brand name—private label.
The private labeling business model is growing exponentially and is projected to quadruple in the next five years. What makes this model so profitable is that private label products with a solid marketing campaign can create considerable demand.
The white labeling business model resembles the private labeling model but is different in some key areas, i.e., dealing with the manufacturer. This model follows the same process of getting the product from the manufacturer and then selling with your own brand name. But unlike private labeling, here, you do not have your own dedicated manufacturer who provides custom products.
Have no or little capital but still wants to earn through an eCommerce business? Worry not, dropshipping is your business model. This business model is considered a genius retail idea. Why? Because you can market the products online without having to stock them first.
Whenever you receive an order—with your online marketing efforts—you purchase the products from the supplier and ship them to your customer. With this business model, you save warehousing and stock management costs. Furthermore, you can start with a small investment with insignificant financial risk.
In this fast-paced era, you must be a busy professional who is often short on time. Solution is the subscription-service eCommerce business model. A perfect example is a meal delivery service that delivers food to your doorstep.
This business model allows customers to subscribe to a service. Then, they can either resubscribe or cancel the subscription after their subscription expires. This eCommerce business model presents the following business benefits:
- Owners can arrange inventory and delivery ahead of time
- High customer loyalty is warranted
- Business owners gain high margins in profit
The name speaks for itself. In this eCommerce business model, you can sell a large number of products to your customers by offering considerable discounts. With the advent of the internet, anyone can do wholesaling.
You need to put your best effort into securing reliable wholesale business partners by extensive advertising.
You Can Choose Your eCommerce Business Model Now!
Keep in mind, your business success strictly pivots on choosing the suitable eCommerce business model for your business. Therefore, meticulously plan so your endeavor can thrive in the long run.
Once you choose your eCommerce business model, you can then reach out to the experts at commersys to achieve online success.