The growth of technology has created a situation where every business is essential to have an online store to have a global presence. Before the establishment of your online store, understanding and creating an effective business strategy is the crucial part of your business. As it defines your business and its services, implementing a suitable business model would help in the clarity of your purpose and to understand the needs of your customers.

In this article, we have shared the importance of an effective eCommerce business model and top eCommerce business models that could influence in establishing a strong online presence for your business.

Let’s start with a quick introduction on the basics.

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What is a Business Model?

It is an approach that every company would adapt to make their establishment a profitable one with an excellent global presence. Business models help in identifying the products, services, target market, and costs. Evaluation of the business model is of utmost importance for both — a new business or an existing one.

An online business models should perform SWOT analysis, and it would help in choosing the most suitable business model for your organization. SWOT analysis is carried out with the goal of enhancing a company’s strengths and decreasing its weaknesses. SWOT analysis should be performed first if you wish to analyze your company’s existing situation, improve it, or execute a new plan.

Why is Business Model Important for Online Business?

The implementation of a business model helps in targeting the customer base of the company, creating marketing strategies, evaluating and projection of expenses and revenues. 

Evaluating business models also helps in gaining knowledge about the company’s competitive edge, a better understanding of the financial data and future prospects of the business. It is to be considered that business models can be changed or updated, but sustainability is very hard without the implementation of a business model.

General Websites vs eCommerce Websites

A general website’s intention is to display information about the services or products that the business offers. Here, the actual transaction and service delivery takes place offline. The main objective of a general website is to educate its audience on your business. This helps them to gain knowledge and learn more about your business for further proceedings.

An eCommerce website is the next level of a general website. It is designed to accelerate commercial businesses with online transactions. Some popular eCommerce websites are Amazon, Flipkart, eBay, Etsy, iTunes and more. Some eCommerce business models are B2B, B2C, C2C, C2B, D2C, D2B, and more.

The purpose of a website is to promote your business products and services, whereas, an e-commerce website takes it to the next level. It provides your customers/audience the ability to purchase products/services directly from your business along with online transactions. An e-commerce website helps in reducing a lot of expenses and makes your customers feel appealing and convincing. An e-commerce website with proper optimization and design would bring in great results to your business.

Niche Focused Online eCommerce Business Models

Here, we can discuss some niche based eCommerce business models that are proven to be successful. We are also going to mention some real-time examples who are in the limelight by adapting these significant business models.

Inventory Based Model – Nykaa

In this model, the company can directly purchase from the manufactures and then stores in their inventory. Later, the products’ delivery process will be carried out based on the availability. The implementation of this model would allow for high-profit margins and also helps in increased efficiency, productivity, bringing in customers and much more.

The best example of an eCommerce business that has implemented the inventory based business model is Nykaa – the retailer that sells cosmetics and commodities.

Hybrid Based Model – FirstCry

The model is the one that blends remote work and in-person experience. It is a mix of traditional product sales along with other services through subscriptions.

The best example for this model is FirstCry, which has a massive online presence along with 400 stores and 350 franchises across India.

Multisided Platform Business Model – Uber

The objective of this model is to allow a direct connection between two or more groups of people. The model would facilitate connection, making it easier for them to interact with each other effectively.

One of the best examples of multisided platform business model is Uber, the ride-sharing company.

Aggregator Business Model – Airbnb

It is an eCommerce networking business model where the company collects all data related to the services offered by several competitors and displays them on their website or application. Here, the aggregator need not invest in warehousing or inventory but act as a platform/domain where the visitors can look for and conveniently match the prices and specifications of the services.

The best example of this model is Airbnb, a community based online platform for listing. It is a medium that connects people who want to rent their homes with people looking for accommodation. 

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Big Components of Online eCommerce Business Models 

Products

When you are planning for an eCommerce business, it is essential to find an efficient way for sourcing the products. Either you make it by yourself or source it from manufacturers or go for dropshipping. Once you have found the source for the products, it is important to ensure the products are genuine with good quality. You will be able to gain a good reputation and customers’ trust only by delivering quality products. Compromising with the quality would lead to losing customers.

Product Pricing

This is the term that directly affects the conversion rates. Customers usually look and also compare the products’ pricing that you offer. It is critical to evaluate your product pricing as it is the first thing that consumers would look for while visiting your website. Always standardize your pricing strategy for being successful in an eCommerce business model.

Customer Support – If your business has excellent customer support that answers your customers’ queries on purchase, payment, return, and more then, reliability gets added along with an increased trust on your business. Having good customer support will help in keeping your growth inclined. Ensure that you have 24/7 customer support with a splendid approach.

Store Security

Customers would be very keen on the security of your online business. Having your business implemented with excellent security features would help in creating trust among your customers and as well as improve your reputation. This would also help in preventing your customer’s personal information from getting hacked through vulnerable attacks.

Customer Engagement

Make sure you create a good impression for getting more potential conversions. Have a simple and elegant website design, making your customers feel appealing about it. In addition, you can implement loyalty and referral programs to keep your customers engaged and bring them back often.

Social Platforms

It is the smartest way to get your global presence. Make use of social media platforms to increase your presence, more conversion, and revenue.

Business Model Advantages 

An effective business model gives the company an edge in the industry, resulting in good profits. Whether you are unique or first to the market, implementing a business model as it helps in targeting the market and also future prospects. Some advantages of implementing a business model are,

• Competitive advantage comes from a solid business model
• creates an appealing reputation in the marketplace that encourages investors to stay invested
• leads to an increase in cash reserves and new investment opportunities
• A proven business model provides financial stability to an organization.

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Top successful eCommerce business models

Before you start with your eCommerce business, you must get familiar with each type of eCommerce business model, and you must also identify the platform that best fits your business model.

B2B: Business to Business

This model focuses on providing products/services from one business to another. Here, the service providers will work directly with other businesses in a close environment. Companies that sell software, office furniture, hosting companies, and more.

Example: Apple, holds a B2B relationship with firms like Intel and Panasonic.

B2C: Business to Customer

This is the most common business model, where the business sells directly to the end-users. It is the traditional retail model, where the businesses sell to individuals online. 

Example: Amazon, Walmart, Netflix.

C2C: Customer to Customer

This model is completely different and is also known as an online marketplace. It connects customers to exchange goods/services and make money with transactional charges and listing fees. Through the C2C model, your business could experience self-propelled growth, but quality control and maintenance could be the challenges.

Example: eBay, Craigslist.

C2B: Customer to Business

This model allows customers to sell products and services to companies. Affiliate marketing can be considered as C2B. The model can be used by social media influencers for promoting the company’s products and services.

Example: referral programs, paid testimonials work in the concept of C2B.

D2C: Direct to Customers

Here, the business directly sells products and services to its customers without any intermediator. Through this model, both the owner and the consumer benefit from a transparent trade.

Example: Dollar Shave Club, Chubbies.

Dropshipping

This allows you to set up a storefront and get the payments directly from the customers. The biggest advantage of this model is that you need not invest in inventory management, warehousing, or packing. In case, the seller is not delivering quality products or any similar issues, you may have to face the situation. It is a popular model with a quick store setup and gets traffic with Facebook Ads. Shopify and Oberlo are most commonly used for store setup.

Some upcoming business models that can be utilized for your business are,

AdSense – it is a simple business model that allows you to create a content site and drive traffic to your business. While the traffic clicks on an AdSense ad, Google pays you for it.

Amazon Affiliate – This model allows the business owners to create links and earn referrals whenever customers click through and buy products from Amazon.

Affiliate marketing – This business model is where you can sell different products and build sites with a simple sign up.

Amazon FBA – This is an eCommerce store hosted on Amazon.com. 

Apps – It is a big business and people keep using it often once downloaded

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Configure the most suitable one for your business

Now, you would have got an idea of what a business model is and its importance. Choose the most suitable business model for your eCommerce business and identify the target market. Work towards optimizing and establishing an eCommerce business by keenly understanding the customer base. 

Do you have an innovative idea for establishing your eCommerce business? Are you confused about deciding a suitable business model?

If you are looking for professional assistance, you can contact ColorWhistle by sending us a message or call us at +1 (210) 787-3600, we’ll get back to you at the earliest. We provide services tailored to your requirements that suit your business model.