How To Choose The Right Ecommerce Model For Your Business
I’ll just set up an eCommerce store and start selling… It’s never that easy, so learn how to choose the right Ecommerce model for your type of business.
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There isn’t just one way to structure an ecommerce business, so launching an online store isn’t quite as simple as it sounds.
You must first decide which sales model best fits your preferences, which will depend on how much time you want to put into your business, the types of product you’re thinking about offering, and what you realistically expect to achieve for your efforts.
Starting a business is hard, and you need to get it right. In this post, we’re going to run through the most common ecommerce models, and explain how you can decide which one you’re going to use.
Enough preamble: let’s get started.
Though it isn’t the choice for big brands, dropshipping is a great ecommerce model for those just starting out in online retail (or just dabbling in it as a side-hustle). It doesn’t require any warehouse space, shipping arrangements, or even supplier negotiations, so it’s perfect when you’re trying to get a store running with minimal investment.
All you do is list products from dropshipping supplier inventories, mark them up to establish profit margins, and try to sell them: any orders will go directly to the suppliers for fulfillment. That’s all you need to do. You might not make that much profit, but you’ll only make profit.
Somewhat similar to dropshipping, print-on-demand differs in that you can stock some products, but you don’t sell them as they are. Instead, you get them customized in accordance with buyer preference before you send them out. This can be very profitable because people will pay far more for customized clothing items than the materials are worth.
Just think about how often companies want branded merchandise made, or people want to buy shirts with custom designs for friends, loved ones, or coworkers. You just need to find a good printing service, source some blank clothes, and you’re ready to go. If you can find a style that sets your print-on-demand business apart, you can do very well.
Conventional ecommerce involves stocking products and sending them out upon request, but there are multiple ways to approach it.
Here’s a thorough list:
- Regular supply. This model is the most basic and unsurprising. You negotiate rates with suppliers, stock their products, list them online, and ship them out when ready. It’s exactly what people think of when they imagine running an ecommerce store.
- White label. While label selling is about buying unbranded generic products and tailoring them to your brand. You could just put the name of your brand on a white label product, or you could have a lot of extra production work done. It’s up to you.
- Private label. If you have ideas but no manufacturing equipment or skills, you can use a private label manufacturer to turn them into real products. This can be tough for profit margins, though, so be sure to price your range accordingly if you take this route.
- Digital products. Whether you bundle services (like physical therapy or consultations) into store listings, or offer digital items such as downloadable ebooks or video courses, you can really get somewhere using this model. With no physical storage or shipping services needed, you can deliver instantly at almost no cost.
- Subscription boxes. Subscription services have become very popular, allowing buyers to get selected product arrays on a regular basis (often with elements of surprise involved). If you think you have a good understanding of what people are looking for, this can be a strong and reliable way to bring in revenue.
How to decide which one is the best fit
Now that we’ve been through various ecommerce models, we can return to the titular concern of how to choose the right model for your business.
What should you go with? Well, it depends on various things, so here are some suggestions:
- If you want to put in minimal effort, use dropshipping. It’s by far the easiest and cheapest way to try ecommerce, so you can get your store going and forget about it.
- If you have great creative ideas, use print-on-demand. Pick out some eye-catching designs and you can make great money selling basic shirts.
- If you want to carve out a niche, use standard retail. The other models are limited, so if you want to build a growing business, figure out which products you want to stock.
Let us know what you ended up choosing and why in the comments below.