Starting an ecommerce store can be a significant learning experience. Many of the challenges you’ll face, like choosing the right ecommerce models, have a lasting impact on operations. The good news is with ta solid business plan and a bit of drive, your ecommerce store will be up and running with success in no time.
Here is a quick guide on how to find and work with ecommerce models.
How to Find Ecommerce Models
Finding the right ecommerce model for your business must take into consideration your short- and long-term goals as well as cost, marketing strategies and product availability.
The first step is developing your business plan. Do you want to have free rein over your branding? How much are you willing to pay? Do you want to be involved with inventory and stocking? What are the norms within your industry?
Asking these questions is a great start. From there, you can explore viable models. These include:
Drop-shipping is a method in which you sell products, but the manufacturer actually ships them. When you make a sale, the merchandise is sent to your consumers without any further involvement on your part. Typically, drop-shipping works based on the manufacturer you choose and your relationship with them. This enables your store to sell products without having to warehouse them or pack the boxes. Once a customer purchases something on your website, the supplier receives a notification, prompting them to ship it to your customer.
This is a relatively low-risk, high-reward business model. One of the primary reasons businesses employ this method is there’s very little up-front investment to be made. When someone places an order and pays for it, you buy the product. The distributor deals with inventory and order fulfillment, leaving you with a lot less behind-the-scenes work.
This model allows you to focus on your core competency: using the best website builder for ecommerce to offer customers a fully-featured user experience on your website. There’s no reason for customers to even know you aren’t also responsible for order fulfillment. For them, it will just be one seamless buying process.
- Wholesaling and Manufacturing
Another common model for an ecommerce business is wholesale distribution and manufacturing of products. This is a smart model to work with if you’re selling in volume. You get more favorable pricing because you’re buying in bulk rather than making one-off purchases. When you’re buying in bulk and selling items individually on your website to consumers, your margins are greater because you paid less to acquire the merchandise.
- White Labeling and Manufacturing
White labeling refers to a fully supported product or service made by one company but sold by another. This allows you to purchase products and create your own brand. As the reseller, you get to make your own brand, logo and identity, meaning customers will associate the products with you.
Additionally, white labeling and manufacturing works well if you’re ultimately trying to save time and money. After all, if you were developing a solution from scratch, you wouldn’t have as much time to make the brand or facilitate customer service. With this method, you can focus on the business while simplifying your relationship with customers.
With the right business plan, you can find and work with the perfect ecommerce model for your company. The choices you’ll make at this stage of the game will have long term implications for the overall success and growth of your business.