Business Models in Technology?
Business Models of Ecommerce – Best Options to Buy or Sell in 2018!
It is important for business owners and investors alike, to understand the
foundation and structure of certain ecommerce business models.
This is true regardless if you looking to buy a e-commerce business
online in Los Angeles, California or Orange County. The reason being is,
understanding the base and structure of anything, helps with the preparation
of a great plan.
Foundation – Business Models in Technology
Remember, that the execution of the plan is just as important of
an element, as the structure itself. Having the right knowledge,
will help you consider the best options for your
personal and business needs and growths.
Business Model Mold?
There is no one size fits all, to any business model or business mold,
regardless if it is through ecommerce or not. This is because there
are so many ever-changing external and internal components of
technologies, that can influence the direction and business course.
Remember, electronic commerce draws on many different web and
Web Tools for Business Technology?
These web tools, are required to advance the mission of online
electronic business expansion. The areas of technologies that
ecommerce derives its success and advancement on, are as followed:
- Electronic Funds Transfer
- Supply Chain Management
- Internet Marketing
- Online Transaction Process
- Mobile commerce
- Electronic data interchange or EDI
- Data Collection
- Inventory Management Systems
Increase in Ecommerce Business Models
With the increase in ecommerce business models, and with sales expected to
exceed 78 percent by 2020, it makes sense to
review the basic structure and operation of each model.
This is because even though this new online marketplace is booming,
it still needs to be understood for complete comprehension.
This trend shows, that many new prospects will be entering
this new digital buying platform, so be ready for it!
You always want to make sure that you have a solid business plan in place.
This will help to maximize your investment dollars and
end results, without creating any present or future loss.
Think of it, as a risk insurance management
policy, protection for your business future.
Introduction to E-commerce Business Models and Types
So, what are the e-commerce business models that you
need to understand before you buy or build?
They are classified as the following:
- Business to Business – B2B
- Business to Consumer – B2C
- Consumer to Consumer – C2C
- Consumer to Business – C2B
Business Model – Deciding Factors for Ecommerce
When considering what type of e-commerce business to buy or sell, make sure
you consider a few things before. For example, you will want to identify
the platform that best suits your preferred business model.
This means, what will enhance your current investment or business portfolio.
You can be a current software company owner, looking to add a
new piece of web technology to your current business model.
Or, you might be brand new to the e-commerce marketplace and want to branch
into it, before it becomes overly saturated with buyers and sellers.
Whichever the case, it is always best to understand the framework
and business approach to anything, before you buy, sell or build.
Ecommerce Business Models
First things first. Different types of e-commerce
business models exist, and are listed below
for your convenience and reference:
- 1. Drop -shipping
- 2. Wholesaling and Warehousing
- 3. White-labeling
- 4. Manufacturing
- 5. Subscription-based
Do not be alarmed, if everything above looks foreign.
Each item above will be examined in detail and discussed in relation
to each business model platform. The business model platform is geared
towards online electronic commerce exchange and industry.
This means, understanding the inner components to this business
practice, to help decide on the business opportunities available
through both online and e-commerce website purchase and selling.
Discovery of E-commerce Business
Business opportunities are revealed through analysis,
research and close case examinations.
The next area of discussion in these online business article pieces will
be a look at the different forms of e-commerce.
Starting with Drop Shipping!
What is Drop-shipping? Drop shipping is considered by many
online resources, as the simplest form of e-commerce, out there on
the market in 2018! This is because everything is done for the
business owner. Think of Drop shipping as a fulfillment business model.
This allows the products to be bought individually from a wholesaler
and then shipped directly to the online consumer. This is instead of
buying a large inventory base, right up front. This traditional means
can be a costly out of pocket expense, no matter if you are
just starting a new business venture or not.
Business Risks of Drop Shipping?
You always want to consider the risks, and if they outweigh the benefits
of your business model. The supplier in this example would ship
the product directly from the business warehouse to the customer’s residence.
This all takes place for a charge for the shipped items. Yes, that’s it.
Everything else in the transaction process is, handled by your supplier.
This allows more time to be allocated to other important business and operational tasks:
- Inventory Management
- Stock Warehousing
- Packaging Dealing
Drop Shipping Case Examples – Where to Locate?
For example, the only area where the business owner or retail owner
needs to be concerned within the transaction process
is the scheduling part of the customer to meet at a storefront.
This is usually scheduled to take money for the product that was
purchased from the customer. You can always go to a supplier directory,
to find drop shipping suppliers. These such suppliers can
be found from directory lists, like the world-wide brand’s website.
You can ask the supplier if they offer any dropships as products.
This will help direct you in the best possible way.
Drop-shipping E-commerce Software
There are examples of drop shippers who use software or web-based technologies
to advance this online marketplace of shopping. This was done in an inexpensive
way, however. This is because the set-up costs are little to nothing.
The software model is easy to set up and can create more online
visibility and traffic to your main business website. Such software
that can advance this goal is, Shopify. This is a popular way to hit
Facebook Ads and increase online exposure in the social arena.
It is noted, however, that profits can be extremely thin on this business type platform.
This is in part because, if the seller is slow to act, and you cannot deliver a
high-quality product, deep seeded problems will occur.
This is because business profits are marginal in this business model type,
to begin with, and profits must be squeezed out when possible.
An example of an online e-commerce business site using the
drop shipping function would be, Wackyhippo!
What are the benefits of drop shipping?
Like with many business models and operations,
there are good and bad types of operational functions.
In this example of drop shipping, we will first focus on the advances
of this e-commerce model type.
The advantages of using a drop shipping model are strong.
Some of them include:
- Lower Capital Requirement
- Wider Product Selection
- Reduced Risk
- Lower Capital Requirement
- Wider Product Selection
- Location Independence
- Highly Scalable
What does Lower Capital Requirement Mean?
The benefit of this data selection from drop shipping should be examined
again to help better explain the answer to this question. This is because,
with Drop Shipping, there is no need to put money up for an investment
of thousands of dollars. That means, you only buy product
or merchandise when an online customer places an online order.
What is Wider Product Selection?
This is an ecommerce business type, where you do not have to
pre-purchase or have in physical stock, merchandise for your
online customers. This means that you can offer a larger selection
of more online products, to your online customer base. This
can help to expand your business income and profit streams.
Just think of the advantages of not having to lease or buy,
extra storage space, or facing the risk of losing any unsold merchandise or products.
New Business Venture and Drop Shipping?
If you are a new business venture, this may look like a
very attractive business model base to buy, sell or build.
This is because, it shows a reduced risk investment, from
not having to lose thousands upon thousands of lost inventory products.
All the risk factors involved in housing products in warehouses,
are avoided with this new way of doing online business transactions.
The risk is drastically reduced, so even if the business venture turns
sour, you are not in the hole for the lost product or merchandise.
Location Business and Remote
Freedom Not having to rely on or worry about running a fulfillment
agency or warehouse is one thing. Doing it from anywhere in
the world is another thing. This independence from location strings is very
attractive to all types of buyers of e-commerce businesses.
This is because, it can easily adapt to an existing retail, brick and
mortar business regardless of the retail business is in the city
of Long Beach, California or Garden Grove, CA.
So, outside of having the independence of working from anywhere
in the world, the business is also, highly scalable.
Highly Scalable Business Model This is because, as we already mentioned,
the manual labor part is removed from the buying and
selling transaction process. So, this can help an ecommerce business,
with the control and freedom to easily scale a drop shipping business.
These are attractive online business decisions and incentives.
You will want to consider them when deciding if drop shipping is
the right type of ecommerce business for you. Now that we
have discussed the advantages of having
a drop shipping e-commerce business, let us discuss the cons.
Disadvantages of Drop Shipping and Ecommerce?
The most popular reason for a disadvantage of this business model is the
increased competition. It is not like you think, however. The problem does
not start with increased competition. This is just an aftereffect of the
ecommerce buying trends in 2018. Since many new business investors are
hitting the ecommerce buying stage, this type of ecommerce type is very attractive.
Because, it allows for little capital upfront, or, to have a physical
storage place for products, like a warehouse facility. The attractive qualities
of owning your own online business, without any physical strings per se,
is very appealing to many. But this appeal also works as a disadvantage.
Yes, this happens, because with an increasing pool of new buyers and
sellers of ecommerce, so are more buyers and sellers for drop shipping ecommerce.
High Competition, Low Margins
This business phenomenon can happen in many business types,
regardless if they are online or not. This is because, the more
competition, the more diluted the business investment and
profit pool becomes. This is because, the access point to this new business flow,
is backlogged with this new surge of online users, who are interested
in entering the field of information and technology science.
With these new business trends forecasting even more buyers
and sellers of information and technology, only more will be
entering the online marketplace for buying and selling purposes.
This channel of business and information trade, will now overflow
or become overconcentrated. This only exacerbates the idea of a
face to face meeting, which is recorded by e- commerce educational
Concluding Thoughts: Lower Profit Margins for Ecommerce Business?
Unfortunately, this surge of online buyers and sellers, from quality
content and efficient help, only lowered the margin for supermarket
placement. This is because, it makes it harder to finically grow as a
business if you cannot afford to spend money on advertisement.
This is because, now with so many new people and companies hitting
the industry, advertisement becomes attractive and expensive.
These should be considered in your business plan, when approaching
new ways of e-commerce business models.