When you are starting an eCommerce business, it is essential to know the models of an e-commerce business first. Determining the model of your e-commerce business is going to help you retain your customers, reach your products, stand out from the competition, and how customers are going to get your products.
The understanding of a business model is going to get you desired results. This article explains some different types of e-commerce business models, along with some marketing methods, it will help you to choose the best option to start an eCommerce business.
What is an E-commerce Business Model?
The E-commerce business model means how your business is structured to reach the target customers and generate sales. There are many kinds of e-commerce business models that help companies to make their position in the market and effectively reach their customers.
There are two ways to find the right e-commerce business model. The first way to determine how you’re establishing your company means whom you’re selling and how you’re arranging what you have to sell. Then comes analyzing your actual e-commerce business model, the way of finding and capturing customers, and how they’ll reach your product.
Types of Businesses
Before choosing the e-commerce business model that will help you to reach your products to your customers, you’ll need to find out who your customer is. For example, do you want to sell it directly to the customers? Or are you giving something to another business or a government entity?
Business To Customers
Business-to-consumer, or B2C, is the most typical business model and what people generally think of when they refer to e-commerce. In this type of business, the products are sold to customers directly.
Business to Business
Business-to-business, or B2B, is the way of selling products online from one business to another, it is also called wholesale.
Customer to Customer
Customer to customer business model is also called P2P( peer-to-peer). This is a new model boosted by technology that allows customers to interact directly with other customers. For example, a customer uses a platform to publish their product and sell it directly to the end user. The median of their communication is a platform, you can take Meesho as an example of this. The consumer isn’t a business, like in B2C, but rather a participant in this peer-to-peer network. Unlike B2C, the customer isn’t a business but a member of a peer-to-peer network.
Types Of Business Models
Some business models help you to reach customers and generate sales.
Subscription
The subscription model of the e-commerce business has grown dramatically over the past few years. With the subscription, your customers log in to buy a product. The subscription model of business is very reliable and it builds a strong means of revenue and maintains customer relationships.
White-labelling
In this model, you pick a product that is manufactured and sold, but you brand the product with your company’s name, logo design, and packaging and then sell the product to other parties.
On-demand manufacturing
On-demand business model by the name you can guess, If the stock is a concern, you might choose on-demand manufacturing as an e-commerce business model. You manufacture the product when the customer demands it.
Dropshipping
In dropshipping, you do not have to worry about the space for inventory management. You can collaborate with warehouse partners. They will keep your inventory and manage all the operations including merchandising, labeling, and marketing once the order has been received.
Wholesaling and Warehousing
Whole sailing and warehousing work with a bulky inventory. You need a lot of space, a significant amount of inventory, and a substantial amount of investment and need customers to buy from you in bulk.
These are some types of e-commerce business models. Just like most things in business, the more customer data and feedback you can collect, the more useful it becomes to successfully run your business. We hope you liked this article and we somehow educated you on what some of the best business practices are.
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