Which Ecommerce Business Model Should You Adopt?

by Zain Imran  November 20, 2015

Running an ecommerce venture can become a significant source of extra income for you. If you’re successful enough, it can even become your main source of livelihood! So, you’ve decided to take up the challenge of starting an online store, but you’re looking for ideas on what type of ecommerce store to set up. Then, you came to the right article!

The first thing to understand is that every website in the world has a business model. Each of them seeks to attract visitors to the website and someone is always paying for hosting the site. Websites may appear to be free, but there is always an inherent expectation of benefit by someone involved with the website.

Startup models

In order to ensure success for your online store, you need to plan its operation and marketing in advance. In short, you need a solid business model that is likely to keep your website afloat for the first year and bring you profits subsequently (or even sooner!).

Most people offering advice on this topic will jump straight to the various business models. But, I think you should first think about what you will be selling. Only then can you choose the best business model that fits your offering.

What do you want to sell?

The beauty of online commerce is that you can sell pretty much anything. However, it is always a good idea to start with a small range of products. Your store can sell a physical product like clothing or shoes, digital product like ebooks, or service like babysitting.

Physical products

This is the most commonly sold commodity on ecommerce stores. A physical product, such as a carpet or a lamp, or anything that requires packing, shipping and delivery, is the type of ecommerce offering which achieves the most sales. But, how do you decide which product to sell?

Firstly, ask yourself what you are passionate about. Do you love cars? How about selling car parts and accessories, then? Do you love books? Why not start an online book store? You know your passion, now it is time to earn from it.

Analyze your chosen niche industry and find opportunity gaps. What aspect of the industry is underserved in terms of ecommerce? Can you address the potential customer’s pain point? Conduct keyword research on the product you’re looking to sell.

By being aware of keyword metrics related to your product, you can pinpoint locations and demographics to whom you can market your product after launching your store.

Digital Products

There are many products that can be delivered to a customer online. Are you a web designer, content writer, or drawing artist? You can create an ecommerce store around digital products, but you should take some measures to prevent piracy or plagiarism of your creative intellectual property. Make sure to include links to FAQ and Legal section spelling out the method of delivery and the type of copyright status of your offerings.

Services

If you have a crew of skilled carpenters, or house cleaners, or you are an expert hairstylist who offers to visit the customer’s residence, why not create a website to sell your services online? You can significantly increase demand for your services in this manner. Again, create a comprehensive FAQ list and also a legal section detailing exactly what you are offering and what the customer can expect.

Having decided what you will offer on your website, let’s now take a look at the main types of ecommerce business models.

Business to Customers (B2C)

This is the model you should adopt if your product is targeted primarily towards individuals. The potential customer searches for a product, finds your website meta title and meta description in the search results and decides to visit your store’s page if he or she feels that your product could address their pain point.

After browsing the store for a bit, and engaging with the dynamic content on your web-pages, the customer may decide to place an order. An example of a successful B2C business is Portugal Footwear.

Business to Business (B2B)

If the nature of your products or services is geared more towards meeting the needs of corporations, then you would be adopting a B2B strategy. Networking and outreach is a bigger part of this strategy than advertising. It takes more effort to convince established businesses to indulge in your product or service.

The advantage of this business model is that order sizes are usually in bulk and repeat orders are likely, if you maintain the quality of your products and services. An example of a great B2B model is Media Lounge.

Affiliate Selling

In this form of online selling, you usually offer a digital service. Perhaps, you wrote a blog post on a particular topic of interest to people.

For example, you may be an avid gamer and you love writing reviews of various games across platforms. You are paid by one of those gaming companies to advertise their game through the blog. Each time someone clicks on the banner and completes a desired action. This means, the customer was referred to the gaming company by your blog, and you get a commission for it!

Don’t be static!

Although I defined each business model as a separate category, you should never think that only one type of model is applicable to your business.

You have to mix and mash the various strategies, and adjust and carry on with the tides in the fast moving ecommerce world. There are also other models, such as Client to Business (C2B), Business to Government (B2G) etc. which you should also look into.

Never give up. Challenges and setbacks are to be expected. Always share your experience and expertise with others, because one thing everyone agrees on is that in the digital world, you cannot be successful by hogging knowledge and wisdom. The more you share, the more credibility and trust you build, and hence, the more business you acquire.

Cloud is made for ecommerce hosting

No matter what your business model is you need a reliable hosting platform to achieve your business objectives. You need to pick Cloud as it stays online all the time. When it comes to Cloud for ecommerce, Cloudways is your best option. The platform provides ecommerce stores with the edge required to compete in the cutthroat business world. Launch your free trial today to experience fast speeds and the best customer service.

Having said that, are you an ecommerce store owner? Which business model do you operate on? What challenges did you face until now? Share your experience in the comments section below!

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About Zain Imran

Zain Imran is a Digital Content Producer at Cloudways. He is an engineer and loves to learn about technologies. He is a sports and fitness freak.

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