Types of Ecommerce Business Models

When starting an eCommerce business, many entrepreneurs jump straight to creating an online store, forgetting the heart of any business - creating a business plan that keeps the store running.

Now that you're on this page, you're probably not the kind of person trying to figure out the best business model for your eCommerce website, are you?

Then, this article is for you. In this article, I will describe each e-commerce business model with examples. Keep reading until the end, you will have a complete understanding of each business model, and help you make an informed decision.

If you're ready, let's start with the most common e-commerce business models.

Value-based E-commerce Business Model

Once you have decided on the eCommerce business models listed above, you have to choose at least one based on how you will handle your inventory and deliver your products to the end consumers.

1. Dropshipping

Dropshipping is the simplest form of e-commerce, you just need to set up an online store, find a product supplier, and let customers place orders from your website. After that, the supplier has to fulfill the order - from order processing to shipping, the supplier will handle everything on your behalf.

For starters, dropshipping can be a great idea to get into an eCommerce business because there is no high capital investment and you don't have to worry about inventory management. All you need is a trusted supplier with quality products and great customer support.

2. Print on demand

Print-on-demand is another form of dropshipping business model in which suppliers produce products only after they receive an order, allowing custom designs to be printed individually or in batches.

This is a simple business model where you have to set up an online store and work with a supplier who specializes in printing custom designs on products and offering premium order fulfillment services.

Just like the dropshipping business model, in this type you don't need to manage inventory or make huge upfront investments - just make sure your store runs smoothly and the rest is up to your suppliers.

3. Wholesale

Wholesale can be defined as buying goods directly from the manufacturer at a discounted price and selling them in bulk to retail shopkeepers at a price that is relatively high but below the retail price of the product. In return, they sell their products to customers at retail prices.

The ultimate motive of wholesalers is to continuously supply goods to retailers or middlemen, which helps to meet consumers' demands.

One thing to keep in mind is that wholesale and warehouses are concerned with the number of products. So you need to check stock, shipping, and other processes regularly.

4. White Label

The idea behind white labeling is simple – you like a product that another company is already selling or making; you can choose to rebrand the same product under your brand name and sell it in your store.

In simple terms, white labeling is the process of selling a company's products under your name. The company will remove all of its branding elements such as logos and colors, and the product will be promoted with your brand identity.

White labeling is a great option, but you must understand its scope before choosing it as your business model. If a product loses popularity among customers, it will be difficult to sustain it.