Defining your ecommerce business model 101

by Leah Baker

Defining your ecommerce business model 101

There are different types of ecommerce businesses and then there are different ways to fulfill orders and make money within these types of businesses. 

First, let’s explore the most common types of ecommerce businesses. 

Business-to-consumer

As the most popular type of ecommerce business, business-to-consumer, or B2C, businesses sell products directly to the general public from their online store.

Business-to-business

Also known as B2B, a business-to-business merchant sells products to other businesses. Generally speaking, B2B ecommerce businesses sell products that help other companies do their job better. B2B businesses can also deal in large or bulk orders, depending on the type of product being sold, and might offer wholesale pricing as a result. 

While both types of businesses are straightforward, defining your venture as one or the other will have implications on your future online store design, functionality, and marketing.

Single-product or multi-product businesses

Within these two types of business you can either sell a single product (with the potential to add complementary products down the road, like Endy) or you can start off selling multiple products. Again, this is an important distinction to make as it will dictate how your future online store is set up. 

Once you’ve decided which path to take, it’s time to talk about money. 

How do you plan on creating revenue for your ecommerce business? Here are the types of revenue streams that we most commonly see in new online stores. 

Commissions

This refers to the traditional shopping experience where merchants sell products and customers buy, making one-off purchases. The merchant creates revenue by making a commission on the sale of each item, also known as a profit.

Subscriptions

In a subscription revenue stream, customers pay a set fee at regular intervals in exchange for a membership or recurring product orders. 

Want to see some subscription inspiration? Here are three ways to do it right

Dropshipping

Dropshipping businesses have become popular because they do not cost much to start up. Dropshipping refers to a revenue stream where the merchant sells a product through their website, but the creation, storage, and shipping of the physical product is all handled by a supplier. There is no upfront cost to the merchant, but there is also little control over the products being sold. 

Wondering if dropshipping is the best option for your ecommerce business? Here's what you need to know

 

Find more helpful articles in The ultimate guide to starting an online store. 

Leah Baker
Leah Baker