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 min read
May 31, 2019

How to Define E-commerce Business Models – Part 2/2


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In Part 1, we discussed the various e-commerce models that are possible with factors such as product type, end-customers and product sources. In this blog, let us examine and understand the remaining two factors, online marketplaces and marketing tactics.

Online Marketplaces

The fourth step in the process of defining an e-commerce business model is to select the marketplace. Entrepreneurs have a wide range of options to sell their wares or services online. Making the right choice is essential to your success.

  • Marketplaces: Online marketplaces are websites that host a number of businesses in one place, similar to a shopping mall with multiple stores in a single building. If you choose this option for your e-commerce business model, then there are a lot of rules be followed. The transactions will be managed by an operator, while product delivery is carried out by retailers. Some good examples for marketplaces include Amazon and eBay.
  • Branded Online Store: This is an ideal option for businesses that want to cater to their own niche audiences, and have their own brand name in the market. By choosing this option as part of your e-commerce model, you get to make all decisions, including website design, pricing, etc. This option is time-intensive and requires a lot of effort to drive traffic to the online store.
  • Affiliates: Affiliate marketing is performance-based. If you choose affiliates for your e-commerce model, you need to decide where the affiliate links and promo codes should be put up (like blogs, video content, social media, etc.). To drive consumers to purchase through the affiliate links, you need good quality content to attract leads.

The advantage with e-commerce is that entrepreneurs can choose to use any or all of these options to diversify their operations. This ensures revenue comes in from multiple sources, which will prove beneficial to new business owners.

Marketing Tactics and Revenue Building

The last step in finalizing your e-commerce business model is to decide how to compete in the marketplace and options for revenue, or how you charge customers. Both of these will impact the revenue flow for your online store. To rise above the competition, you must consider the following factors in marketing tactics:

  • Quality & Service: Quality is the first deciding factor in any purchase. Offering high quality products and good customer service gives the product the thrust it needs to survive in the e-commerce market.
  • Brand: The next influencing factor is brand image. For your e-commerce business model to succeed, you need to build a powerful and strong brand image that drives prospects to the website and boosts sales.
  • Features & Value-add: Offering better and improved product features, coupled with more curating options is a definite winner in the e-commerce space. Anything provided with extra features and value-adds, will always have more takers than a regular product.
  • Price: A good pricing strategy can empower your e-commerce business model to drive profits. To work out a good pricing, identify your USP and use that as a leverage to stand out from the crowd.
  • Subscriptions & Memberships: Customers can purchase the product or service through monthly or yearly subscriptions. For entrepreneurs, this is the best way to generate revenue in a consistent manner. Most digital products are marketed using this option. However, it takes time to convince consumers to opt for subscriptions or membership, which may delay revenue inflow for your e-commerce business.
  • One-Time Purchase: This option earns revenue for every purchase made online. In this method, there is no guarantee that the customer will visit the online store again. To drive repeat sales, you need to work on improving the online shopping experience.
  • Advertising: It entails online advertising materials like web banners, frame ads, pop-ups and more. It also includes freebies such as blogs, audio or video content for the marketed product. Irrespective of how your e-commerce business model is shaping up, advertising is required at some point of time to gain viewership.
  • Commission: This is done by promoting affiliate programs for the product or service. If there is already a customer base for the product, this option can bring a steady stream of revenue for your e-commerce business.

Entrepreneurs can create a revenue-generating e-commerce business model that fits their business based on the five factors, detailed here and in Part 1. E-commerce has various channels of engagement, and there has been a steep rise in smartphone users with m-commerce skyrocketing in the last five years. Given this trend, getting a mobile app is the best thing you can do for your business to flourish online.

If you’re interested in maximizing your e-commerce business through a mobile app, Vajro can be of assistance. Renowned as an instant mobile app factory, we can deliver a smart mobile app that delights customers. Drop us a line and we’ll be glad to help!

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