eCommerce - Jul 14, 2021

Different Types of E-commerce Revenue Models in 2021

Once you’ve established the kind of e-commerce business model you’d like to follow, the next thing you would need to think about is how to monetize your goods or services efficiently. 

The accessibility and familiarity that people feel with the e-commerce industry have made changes to the way businesses are traditionally run. New e-commerce businesses and better-suited revenue models have been created to sustain this ever-evolving industry. A few commonly used e-commerce revenue models include:

In this type of e-commerce revenue model, advertisers approach content creators to put up an ad on their digital platform(s) in exchange for a commission based on the traffic or the number of clicks that the ad generates. The idea is that consumers who visit the content creator’s website will be able to view the advertisement that will, in turn, lead them to the business website or the product page. 

A few companies that use this form of revenue model include Facebook, Instagram, Google Adwords, Adsense, etc.

A subscription model is generally used to obtain a product or service for a specified period by paying a recurring fee- either monthly or annually. Subscription models can also be categorized to give users a certain level of access or privilege to the product or service offered.

The subscription e-commerce revenue model is not rare and can be easily observed in companies such as Netflix, Spotify, Amazon Prime, Youtube Music, etc.

The sales revenue model is the most common type of e-commerce revenue model where profit is generated by paying a set amount for a commodity or a service. Buying or selling products over the internet- much like physical stores- to a larger audience helps companies conduct business through this model.

Most e-commerce companies such as Amazon, Myntra, Sephora, or any other B2C organization work on this type of revenue model. 

In the transactional revenue model, businesses make a profit by facilitating the transfer of money from one party to another via an online payment channel such as Paypal, E-Trade, or RazorPay (to name a few).

RazorPay and Paypal, for example, charge a fee to sellers which can range anywhere between a recurrent fixed price to a percentage of the transaction. 

An affiliate revenue model generates revenue for each consumer steered to an affiliated website. You sell products produced by other retailers on your website. The retailers pay you a small fee or commission for driving new business to their products. 

There are different ways that you get paid for affiliate marketing- pay per click, pay per lead, pay per impression or pay per sale. 

Flipkart, Amazon, and Facebook Marketplace are great examples of the affiliate e-commerce revenue models.

In the featured listing revenue model, marketers place bids for advertising privileges across platforms to enhance the visibility of their products. Based on the bid, sellers can have a featured listing placed higher than their competitors for a particular category.

Featured listings cannot be used as a sole revenue model- it needs to be used to augment other marketing efforts. 

Hotel booking sites, Capterra, and Software Suggest are a few examples of sites that offer featured listings to sellers.

A majority of times, great marketing efforts alone are not enough to give you a high ROI. Brand name, reviews, reliability, and goodwill all play a role in how well a brand performs in the market. 

It is, therefore, an excellent idea to form partnerships with related industries or companies to indirectly increase revenue and brand value. 

Conclusion

When it comes to the e-commerce industry, no one shoe fits all models. You need to keep in mind what your business goals are, and then find the right business model and revenue model that suits your business the best for the long haul. No business is complete without the right logistics partner to ensure service delivery. Learn more about how Shyplite prepares you for success.

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