Whether you’re a new or an established store owner, e-commerce business models are important to keep you on your toes in terms of profitability and product value. It directs your branding, helps you scale and plan marketing strategies, and affords you a competitive edge.
If you’re just starting, identifying your e-commerce business model is vital in building your company because it gives you an identity and insight into your headway. But, if you’ve been here for a while, there’s no harm in keeping your business model up-to-date and relevant to current market trends.
In this article, we’ll walk you through eight proven business models you can adapt to excel your bottom-line this 2022.
When Should I Start Planning About My E-Commerce Business Model?
As soon as today.
By the year 2040, it’s estimated that 95% of all purchases will be through e-commerce.WPForms, How Many eCommerce Sites Are There in 2022
The online marketplace evolves as the world wide web becomes more dynamic everyday. In fact, this 2022, e-commerce sales are estimated to reach $5.42 trillion each year. It’s safe to say that while the online business sector is incredible and shows no sign of slowing down anytime soon, soaring past your competitors may be tricky.
This is the number one reason why as a store owner, thinking about your e-commerce business model should be one of your top-most priorities.
While it’s easy to get caught up and excited about the ways to stand out and bag more profit, keeping your business model in place as soon as possible will help you narrow down your options and maximize your growth potential in the early stages.
Four General E-Commerce Business Models
Today, we have four most common e-commerce business models:
1. Business-to-Consumer (B2C)
B2C relates to commerce between retailers and their end-users. Essentially, these companies directly sell and target their consumers, keeping out third-party entities.
2. Business-to-Business (B2B)
Unlike B2C, the B2B framework involves partnering with another business figure, typically a supplier or producer. A great example of this would be Wholesale businesses.
3. Consumer-to-Consumer (C2C)
Ever purchased a second-handed item? C2C business model operates this way. It refers to exchanging and selling products online with fellow consumers for a great deal.
4. Consumer-to-Business (C2B)
Go for a C2B business if you’re planning to sell your goods, services, or products to other companies. This scheme works when consumers cater to companies or enterprises.
8 Proven E-Commerce Business Model Examples
Here comes the exciting part – where do you fit in?
E-Commerce amplified the competition in the commercial market as it offers a whole new level of flexibility and purchasing capability. For starters, it might sound a bit challenging for you to find your own identity – but trust us, you’ll get there!
Of course, there are many ways to keep up with the pace and improve your sales opportunities. But it all boils down to first establishing a concrete e-commerce business model.
Here are some of the top examples we’ve gathered to help you trim down your routes:
- Digital Products
- Direct-to-Consumers (DTC)
Dropshipping refers to store owners partnering with third-party wholesale suppliers who directly ship the products to the consumers. This model doesn’t need you to manage storage and inventory upfront.
Other than affordability, this model can offer many other benefits, making it a safer option for many e-commerce owners today, especially those who want to cut costs.
Do you want to sell a variety of products or brands in bulk? Maybe offer discounts in exchange for the quantity? Then, this model is the perfect solution for you!
Wholesale E-Commerce is a tried and tested B2B approach that allows business owners to provide their consumers with several products and purchasing options. It doesn’t only increase your numbers quickly, but it also keeps you moving faster because you get to sell familiar and established brands.
If you see yourself succeeding through wholesaling, you definitely cannot miss out on the best e-commerce plugin in WordPress for wholesale – Wholesale Suite!
Wholesale Suite makes wholesaling a lot easier in terms of pricing, product visibility, shipping and payment schemes, order forms, and the like. With over a hundred more features across three different plugins, it makes selling bulk items more efficient without worrying about the high costs of operating on another wholesale-dedicated website.
3. Digital Products
Are you looking for a way to sell digital items without constantly restocking inventory? Then, this category gets you bucked down!
Digital product is a form of e-commerce business model that involves selling products such as courses, e-books, photography, web templates, plugins, and many others, on the internet. Even more convenient, these products are downloadable or transferrable online so it doesn’t need physical deliveries.
If you’re interested, we recommend reading several guidelines about how you can start selling profitable digital products this year.
While the previous category is an attractive venture if you want to stimulate your creativity and later earn from it, Print-on-Demand is another way to monetize your creative juices.
One important note is that, unlike digital products, Print-on-Demand requires another party to handle the products’ printing, packing, and shipping.
Of course, you can be your own printing service provider. But successful store owners in this line of business like Spring (formerly, Teespring), Merch by Amazon, and Red Bubble, link with suppliers of white-label products to sell their designs on a per-order basis.
This way, they are marked safe from the risk of holding inventory of products that aren’t really selling.
5. Direct-to-Consumers (DTC)
Direct to consumer business model allows you to sell products directly to customers, resulting in a greater consumer experience. It bypasses the need for wholesalers, middlemen, or external retailers to sell your products.
It is also an excellent way of building a block of loyal customers because it eliminates the hassle of a multi-layered communication process between you and your customers.
Today, because of the effects of the global pandemic in businesses, this framework has grown immensely mainly through e-commerce and digital marketplaces because of its self-sufficiency.
If you’re into a close-customer kind of model like this, we have several tips to help you get started:
TIP #1: Improve your digital footprint
To gather the information needed to interact with your customers and earn revenue, you’ll need an integrated marketing approach across all of your digital touchpoints – that’s why you being on the internet isn’t enough.
TIP #2: Study your target market
Because DTC is an intimate model, store owners are more likely to have the opportunity to understand their consumers on a personal level. This allows you to improve your customer’s experience significantly as compared to other e-commerce frameworks.
TIP #3: Pay close attention to demands
Use every information gathered to your advantage. If you end up producing or delivering products and services that aren’t really inclined with what your customers would like, you’ll end up hitting the wall.
Makers is the perfect game-plan for DIY-lovers and hobbyists. This business model provides handy and crafty individuals with a gateway to create products and sell them online.
An advantage of this business is you’re likely to stand out more in the market since you have a first-hand touch with the products and precise control over their quality. This way, you can introduce a completely unique spin-off.
But, you also have to gear up for the cons.
Products under Makers usually take up a chunk of your time & energy to pull off. On top of that, these products typically demand a decent workspace and storage to maintain the quality – which may not be ideal for starting owners.
Subscription is an e-commerce business model we pretty much all have been consumers of. Are you a Netflix or Spotify subscriber? There it is!
Customers pay a cost to access a product or service at regular intervals, commonly monthly or yearly, under a subscription business model. Today, recurring revenue models increasingly grow in popularity because it leads to higher revenues and stronger customer relationships.
If you’re looking for a way to get started with this kind of model, we highly recommend checking out WooCommerce Subscriptions.
WooCommerce‘s Subscription plugin is convenient for beginners and advanced WordPress store owners alike as it provides you with an easy-to-use and frictionless system of offering subscriptions to your consumers. Plus, it also allows you to extend discounts as an additional incentive for subscribing!
Manufacturing is a viable option if you have unique ideas, resources, and financial capabilities upfront. Many e-commerce business owners choose to run trials first before entering the manufacturing field for one reason: you have to set great store with your products because it involves high investment costs.
Today, two forms of manufacturing star the scene: private and white labels.
- Private label products are goods produced by one company and sold under another company’s branding.
- White labels products, on the contrary, are usually generic and sold to a broader range of customers. This model includes a company selling and distributing its products to multiple networks under the retailers’ customized request.
Sounds confusing? We can help!
Essentially, these two products involve a third-party manufacturer. But the key distinction between the two is the production process.
You sell a private label product under your name and specific directions. As the buyer, you describe everything about the product, including what’s in it, how it’s packed, and how it’s labelled.
Meanwhile, you sell a white label product as it is – except for the branding. As the buyer, you can only specify the labelling. The manufacturer determines the rest of the specifications, like what goes in it or how it is packed.
Your e-commerce business model is the core framework of your business. The pillars of your business – profitability, productivity, payment method, and even personalization – are all dependent on the framework you adapt and apply to the structure of your operations.
Hence, if you want to set up a successful online business, or maybe simply expand your e-commerce store, identify first which of these 8 proven e-commerce business models speak volumes to you.