This decade has transformed the way people shop for products. People refrain from stepping out to buy their daily needs, clothing, or luxury items. From expensive watches to groceries, everything is available at your fingertips. With this ever-growing love for online shopping, many people have plunged into the online e-commerce business. But that doesn’t work well if you don’t have a clear vision of your revenue model.
To establish a thriving online business, a sustainable business model is necessary. In the online e-commerce space, there are several techniques to make money, unlike conventional offline sales. Every company has a revenue model that helps them secure the cost of their services and get the craved profits. This amount is essential to keep the business progressing and fulfill the maintenance cost and operating efforts. That is why having a reliable business model is mandatory for every business.
What is a Revenue Model?
A Revenue model is called a framework that helps to make a recurring financial income. A revenue model helps identify the income sources to target, offer value to customers, and price the product. If the revenue model is not self-evident, the business can struggle to sustain and evolve. It is easier to target your audience with a clarity of vision. You can easily fund your business while providing value to your customers.
5 Ecommerce Business Models
Let’s understand the best five eCommerce revenue models that have helped businesses attain success over the years.
Sales Revenue Model
It is the commonly used business model that involves regular sales and purchases. Here businesses earn profits by selling their products and get the money in return. Every company that sells the products online is following a sales revenue model. Most people are aware of the sales revenue model, and hence, they bring this into practice. Sellers list their products online to expand their reach and get more orders.
As an individual, the seller has to manage the packaging, delivery, and returns on his own. However, customers have to find you online and make a purchase on your online platform. To sell using your website, you can hire online store development services and start your business.
The advertising model involves collecting revenue from the advertisers to display their services or products on the seller’s website. It helps the advertiser to get an advantage from the traffic and popularity of the host website. If you are a well-established seller with decent traffic on the website, you can sell your website space for publishing advertisements. It will help you generate a good amount of money from your website. Some platforms that follow the advertising revenue model get regular income without selling any product of their own. This approach redirects the users to another eCommerce platform where the actual purchase happens.
The growing desire for luxury is one of the most significant reasons behind the success of the subscription model. People want to rent the service rather than buying. The massive success of home-sharing, ride-sharing, office space-sharing applications is proof that people have an affinity for subscription services. If you’re looking to make money using a subscription model, there are ample ways. From selling weekly flowers to daily dairy products, the subscription model can help you earn recurring profits. That is why it gives a sense of stability to the organization as thousands of people rely on your services. The only thing you need to consider in this model is to be very competitive with the pricing. Offer quality service at an affordable price that keeps people connected to you.
There is yet another popular model for making money using online e-commerce. In the affiliate marketing model, you don’t need your products to sell. You can be a seller without actually selling anything. In this model, affiliates partner up the e-commerce platform to sell their products and earn a fixed commission in return. It is also one of the best digital marketing strategies as it helps e-commerce platforms improve the sales of their products. Nowadays, people are using Instagram, Youtube, Blogs for affiliate marketing.
Commission Based Model
Out of various other ways of making money using e-commerce, the commission-based method is another beneficial model to charge for sales. In this model, a host can charge a commission from the seller for every sales transaction on its platform. The more products you sell, the better are the profits. The platform owner makes money as the seller sells their services or products. The commission-based model works best for marketplace and listing platforms.
The popularity of online commerce is increasing every day. More and more people are getting addicted to the idea of relaxing on the couch and filling up their carts. That ‘s is why understanding different e-commerce revenue model is essential to drive your online e-commerce business successfully. If you want to earn revenue as a seller or as a host for product listing, it’s necessary to have clarity and planning. Existing business owners, who are already good with one model, always have the opportunity to evolve and add more revenue models to multiply their profits.