By 2021, sales from online e-commerce stores are projected to be worth $4.5 trillion. That is a lot of zeros and you might also be planning to operate a fashion e-commerce, fashion branding, beauty and cosmetics e-commerce (beauty line), certified personal training and health & fitness online stores.
If that is the case, this is certainly a market worth venturing into.
It, however, takes a solid business plan, market knowledge and intuition to run a booming and successful e-commerce business. On top of that, careful research into e-commerce business models and products is vital.
Different types of e-commerce business models are thriving today. Before you initiate your e-commerce store, it’s important to familiarize yourself with the different type of business model and their working so that you can identify the one that suits your business needs.
There are mainly two types of e-commerce business models:
These types of businesses are basically conducted between companies. They include conventional producers and wholesalers dealing directly with retailers. Under this, you will find all kind of electronic dealings and transactions related to the sale of goods and services. The main advantage of this business model is that it is characterized by bigger orders that are typically repeated more frequently.
The downside is that typically the sales cycles are longer and generally there are fewer businesses compared to consumers. Most of the business-to-business transactions are usually automated. The price of products and goods are a big factor in terms of purchase decisions.
The Business-to-Consumer e-commerce business model largely deals with relationships and business transactions between businesses and the product users, the end customers.
Because of the sheer number of end users, business-to-consumer (B2C) is often the most common type of e-commerce business model. Much of the retail eCommerce trade taking place globally falls under this category.
There are, however, other business models such as Consumer-to-Consumer (C2C) Business-to-Government (B2G), Business-to-Administration (B2A), Government-to-Business (G2B), and Consumer–to-Administration (C2A).
Choosing Your Products
When building an online store, the first step is to know what you want to sell, your products. Often, this is the most challenging task you are going to face when starting a new e-commerce business. It usually determines the e-commerce business model to choose.
Single-Product: This type of e-commerce businesses focuses on a single product, offered to consumers or businesses. It’s a good model when you have a solid product to sell that is in heavy high demand coupled with limited competition.
Multiple Categories: These sites are a good option if you already have an established brick and mortar store. If you have successfully run a single category ecommerce site, you may want to expand into a multiple category venture.
Affiliates: This mode of marketing connects you to a business that wants to sell products. Affiliate marketing provides your e-commerce business with additional visibility. A good example of this would be Amazon.
Hybrids: If your business has outgrown the single income stream, this may be a good option where you combine your product site with affiliate marketing to create a hybrid store.
Method of Product Sourcing
After identifying your product (s), the next important step is figuring out how and where to source your products. There are various approaches such as making your own products, acquiring them from a manufacturer or buying them wholesale.
You can also choose to work with a dropshipping partner. The model entails engaging a wholesale supplier who is charged with stocking your inventory and who also directly delivers the products to the customers on your behalf.
A subscription-based Shopify e-commerce store typically uses a subscription model to deliver products to your clients/customers at scheduled or regular intervals.
Building your own online business is both exciting and challenging. The process may be heady at times but the end result can be very rewarding if well-executed.
The basics are identifying the best e-commerce model for your business needs, choosing your products, figuring out how to source the products, and marketing them to new customers. It’s also worth pointing out that there are now endless Shopify apps using various business models that you can tap into.
Happy online selling! Follow me @robertkind