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Ecommerce Business Models For Your E-Business

ecommerce business models tutorial Ecommerce business models are the fundamental methods that show how an e-business makes money online.

These are called all sorts of things by many different people on all kinds of web sites, infact there is alot of confusion around these online business models.

This is because they are an evolution of the more conventional brick and mortar business models.
Although Ecommerce business models have their origins out in the real world, they have adapted and evolved to suite the environment they are in: the Internet.

Most successful web sites do not fall into just one of these models, instead they utilize a combination of the e-business models to create great success. This is what I intend to describe, the ways in which you can use these different Ecommerce business models to your advantage, and create success for your online business.

We will go over all the different e-business models and then use examples to explain how you can utilize more than one of these business models and build a strong profitable website

B2B B2C C2C That Is The Question!

All the major Ecommerce business models fall under 3 main categories which we will go over briefly.

  • B2B - Business to business
  • B2C - Business to consumer
  • C2C - Consumer to consumer

Thats pretty straight forward, but if we just replace the "Consumer" with Customer it makes more sense, and doesn't sound like a fast food outlet! Or is that just me?

B2B - Business To Business Model

business to business ecommerce business model B2B- Are generally larger companies that are supplying a service or merchandise to other businesses. Many web sites using the business to business "B2B" Ecommerce business model are solely web based. A large market has developed for business software or services that can easily be digitally downloaded or conducted online.

Getresponse.com is an innovative B2B service based company that has revolutionized the small business email marketing niche. Providing a web based email marketing platform aimed at the small business owner wanting to market their business online.

Another good example of a B2B Ecommerce site is Incorporate.com who have reduced the cost and streamlined the process of creating Limited Liability Companies. In a few easy steps online, anyone can create their own company for a fraction of the cost a corporate lawyer would charge.

By providing their services online both these companies have opened up new markets for their services far beyond geographical boundaries. The advantages of ecommerce are quite staggering with yearly growth figures that outperform their real world counterparts.

C2C - Consumer To Consumer Model

consumer to consumer ecommerce business model C2C- Any website where people are brought together to buy, sell, or trade. Online auctions such as Ebay.com and Craigslist.org are a perfect example of this business model.

The C2C Ecommerce business model has its origins out in the real world of News Paper classifieds.

In more recent times the blogging phenomenon has incorporated this business model well. The development of online communities with specific niche interests can gain huge followings.

Inevitably when collectors and people with the same interest form communities online it will lead to trading within that online community. A website or blog can charge a small fee for advertising on its sales page. This in turn, can be very profitable for the website, world wide the numbers of people with any particular interest no matter how obscure are enormous

B2C - Business To Consumer Model

B2C-Represents the vast majority of Ecommerce web sites online. It is based on its real world counterpart, your local store. Any business that sells directly to its customers online falls into this business model.

The Business to Consumer ecommerce business model is one of the oldest on line. One of the first companies to open an online store was Pizza Hut back in 1994 at a cost of 50million. A little beyond the reach of your average retailer at the time.
In more recent times a new term has been coined to represent businesses that have both an offline, "real world" store and an online presence in the form of an Ecommerce store. The "bricks and clicks" business model is fast becoming normal business practice giving its customers the ability to buy online and to visit their real world counterpart.

Things have progressed at a fast rate since 1994, the 50 million dollar price tag for an ecommerce web site has dropped to a few hundred dollars a year, and in most cases cheaper than a business listing in the yellow pages.

Companies like Bigcommerce.com have made opening an online store as simple as drag and drop. Their technically advanced ecommerce store templates give the visitor a user friendly enjoyable surfing experience. The merchants interface is logical and smoothly designed with the small business owner in mind.

A well thought out pre-installed credit card payment facility and simple ease of use has made Bigcommerce.com popular for both the "bricks and clicks" retailer and internet only retailers.

The Nitty Gritty Of Ecommerce Business Models

Here are the basic Ecommerce business models that can be used in combination. Have a good look at all of these different business models, and we will go over some examples to better show you how e-businesses use a combination of these with great success.

Merchant Ecommerce Business Model

merchant ecommerce business model The merchant e-business model is the online version of you local store. If you can name it, you can find an online store selling it. Some of these may have a brick and mortar store and an Internet store "bricks and clicks", but the great majority are solely online.

They accept online payment methods and ship the merchandise to the customer, or they use a 3rd party online shipping and warehousing service. These companies warehouse and ship goods directly to the customer on your behalf, meaning no product handling or postage for you!

Advertising Ecommerce Business Model

advertising business models
The advertising e-business model is based on your daily newspapers and monthly magazines. You collect revenue either by renting a small space on your pages or getting paid for every click on the ad.

Google adsense is a perfect example of this. There are many paths out there regarding online advertising company for you to explore.

Advertising should always be targeted directly at the readers to compliment your websites content, most advertising companies are good at doing this job for you, but I am still amazed at how many sites get it wrong!

Affiliate Ecommerce Business Model

The affiliate e-business model is based on commission sales. You do not have to buy the product to resell, and you are not involved in the handling or shipping. All of this is done by the parent company. You simply redirect the customer from your own website to the product on the parent companies website and if they make a purchase you earn a commission.

Amazon is a good example of a parent company. They were, infact, the first company to use this method of selling, allowing anyone to sell and get commission through Amazons merchandise. There are many reputable affiliate programs for you to join and earn commissions from.

In more recent years the affiliate ecommerce business model has been used with astounding success by the in your face marketing techniques of internet entrepreneur Jeremy Shoemaker.

Jeremy Shoemaker or "Shoemoney" as he likes to be called has made millions and is now considered one of the most influential people online today. When Google rings you to trail its products you can change your name to anything you like!

His in your face affiliate marketing techniques and brash statements are backed up by his successful marketing strategies which have put his face on the front page of many major business magizines.

Brokerage Ecommerce Business Model

The Brokerage e-business model is a website that brings two parties together to conduct business, The best example of this is online auctions like Ebay. However it is not limited to online auctions, Online Real estate, business brokers, boat brokers etc also use this method. They generally collect a fee for their service which can be worked out with a percentage base or a set fee.

Information Ecommerce Business Model

The Information e-business model is based largely around specialized information on a particular subject. These websites can attract a large following of people interested in their specific field of knowledge and will use Ecommerce business models, other than their specialized information, to create revenue.

Subscription Ecommerce Business Model

In the Subscription e-business model customers pay a set fee on a monthly or yearly basis to get access to the products or services of the company. Some good examples of this model are online newspapers or magazines, adult websites, and Internet service providers.

E-business - Getting The Right Mix Of Ecommerce Business Models

In the e-business example below, we will look at how you can build a strong profitable website that targets your viewer and compliments the content of your site by using a combination of these Ecommerce business models.

We will also look at how you can optimize the click through rates on your website by knowing the best positions to place advertising.

In this e-business example we will use the information business model with a mix of others to make your site more profitable.

ecommerce business model example of page setup

e business color guide green graphic

This green area directly under the navigation bar is a hot spot! We naturally scan pages from left to right which means one of the first places we look when arriving on a website is the left side navigation. This is a great area to place your most profitable products. You can use any of the e-business models.

If you were an information website about travel destinations, you could use the affiliate business model to sell airline tickets or online hotel bookings.


e business color guide graphic

Continuing with the travel information e-business site analogy, this area would be a great place to to sell rugged travel luggage. The luggage not only compliments your site and content, but is a natural follow on from the box above!

You could use the merchant business model here, by either using a drop shipping company or an online shipping and warehousing service to sell your own merchandise.


advertising business model graphic

The blue area on the right of the page would be an ideal area to take advantage of the Advertising business model. You could use Google adsense, Yahoo advertising, or any number of other advertising companies that will use your web pages content to find the advertising that most appropriately targets your viewers.

This will earn you cents per click, and in some cases its dollars per click!

brokerage business model graphic

This red area would suite any of the Ecommerce business models mentioned. In this example we will use the Brokerage business model to create revenue, by facilitating villa rentals in the particular travel area that each page is about.

Your viewers contact you about renting a villa in the south of France or Florida. You pass this information on to the owner of the villa who will then pay you a commission for your service.

Obviously you can use any combination of these Ecommerce business models for your e-business, It is a good practice to have various streams of income. Don't be afraid to experiment and try different things.

You will find what works best for your particular e-business enterprise!

The Advertising E-Business Model And Ad Placement!

In this Advertising model diagram below you will see areas from light to dark around the page. The darkest areas on the page are the places where you will get the highest click through rates! The lightest have the lowest click through rates.

Maximize your revenue from advertising by planning your page with this is mind!

advertising model hot spots on page

If you develop a good Ecommerce strategy then when you are ready to build an Ecommerce website you will have a clear picture of what you want to achieve.

The advantages of Ecommerce are quite staggering, you can attract a vast amount of people online! Using a mix of these Ecommerce business models can make your website hugely profitable place.

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