Different business models for eCommerce

what are they?

[lorax]

The two most often used and talked about models for eCommerce are:

The Drop Ship Model
You sell someone else's products and they ship from their location to the customer for you. The customer pays you and you pay the manufacturer. Within this there are

Private Label the product has your label on it and looks like you manufactured it; and

Reseller, the product keeps it's original manufacturer label.

Direct Sales
The products are your own and you do all the work.

What others have you seen, used, or heard of?

[sun818]

Passive income - AdSense, Affiliate Marketing

Online downloads - multimedia downloads (music, video, images), eBooks (term-papers, recipes, novels).

Server rentals - web hosting, backup storage, bandwidth (torrents), CPU rental for number crunching

[jbinbpt]

Sites that accept funds , donations without delivering products.

Charitable Sites

Political Sites

Paid Memberships

[lorax]

@sun818

SO the model is using the ecommerce site as a content site or were you thinking of just revenue generation on ANY site?

How do you get paid for the downloads? Percentage of sales, monthly fee plus percentage, other? Were you think affiliate or a real business model with contracts between yourself and the suppliers?

@jbinbpt

The model there is to act as the transaction broker and then how do you get paid? Percentage of sales, monthly fee plus percentage, other?

[sun818]

> ecommerce site as a content site
> ANY site

I was thinking blogging and running adsense. And then online affiliate marketers that throw up sites with affiliate links.

> get paid for the downloads?

I don't know how that works exactly... I've seen songs being sold on stores like Apple, Amazon, eBay, GrooveShark, BeatPort, etc.

[jpman]

sites that provide valuable services for a fee

[lorax]

@jpman

So that's a subscription access to the services (as in online services) or services that are sold via a website and then have a human perform them?

[sun818]

live video and/or video streams

[edited by: lorax at 1:25 am (utc) on July 25, 2008]

[buckworks]

I'm involved in a couple of drop ship arrangements where the supplier handles the payment as well as the shipping, and sends me checks. The branding is all mine, though, which makes it different from an ordinary affiliate relationship, and any repeat business from the same customer is also mine.

[phranque]

- auctions

- ticket sales, which can encompass several and multiple aspects of ecommerce
(private label vs reseller, online downloads, auctions, subscription, etc)

[LifeinAsia]

- reservations (hotels, air, restaurants, tours, car rentals, etc.)

- paid membership for access to content

- sites that provide not-so-valuable services for a fee (e.g., online gaming sites)

[Marcia]

I've always thought of ecommerce as strictly products, and others as services (or other models).

[lorax]

Marcia, I know. I think the game field is changing. Any of the models listed above is legitimate eCommerce IMHO because there is an exchange of monies for goods and services. The old line of thinking has to be expanded because the web has a lot of technological advantages over B&M stores. I'd love to hear if other people think these are or are not considered eCommerce.

[ytswy]

I've always thought of ecommerce in Marcia's strict sense - you charge the customer yourself with your own merchant account or gateway, and provide physical products for which you are legally responsible for as the seller. Interesting that the definition seems to be broadening.

On lorax's initial definitions: reseller does not have to imply drop ship - we mainly use a combination of holding stock and buying in to order (ships to us, we ship it out).

Most of the distributors we use either charge extra to drop ship, or their flat rate is more than it costs us to ship ourselves, so it is cheaper to get one order a day from them and ship out using our own courier. It also means we have our own account rep with the courier and can sort out problems more quickly. We drop ship if we don't have enough coming in from a particular supplier to justify doing an order, or as a sort-out when things go wrong.

We're UK based - I can imagine this model wouldn't be possible if your suppliers are scattered across North America.

[HugeNerd]

Stocking Distributor - You keep the original manufacturer's labels, stock the products in your own warehouse, ship with your own account, receive payment via your own gateway. I.E. Amazon.com?
I would think most b&m with websites fall into this category. E-commerce as a supplimentary income to b&m/traditional retail sales.

Most of the distributors we use either charge extra to drop ship, or their flat rate is more than it costs us to ship ourselves, so it is cheaper to get one order a day from them and ship out using our own courier.

If I do direct shipments/drop ship, my manufacturers increase their costs, thereby decreasing my margin. Not to mention they charge me handling, above and beyond freight, and some even have minimum purchases in order to ship direct to customers. This means my cost on Widget A purchased at full truck load schedule (my regular stock order) is $10, but to do direct may be as high as $15. With order minimums, I may have to pay $50! for an item I generally sell for only $20! -- Please keep in mind I work for a large wholesaler/distributor, so my "model" is built on their economy of scale.

[sun818]

As a twist on the drop-ship arrangement, I've had distributors offer to store inventory I purchase on their shelves. This avoids the cost of inbound shipping and they fulfillment on-demand. Essentially it is same as drop-ship, but you buy the inventory upfront.

[malcolmcroucher]

Competitions :

Like design competition .
Where artists create and then voters vote and buy the best designs.

[lorax]

Purchases on spec is another idea - we see it all the time with programming and design services. What about the commissioning of art and photography?

[malcolmcroucher]

following on from above i suppose we can say freelancing .

[willybfriendly]

I have a competitor that has started for pay webinars. Seems to be working for him since the program has done nothing but expand over the past 6 months or so.

[mil2k]

Software as a Service (SaaS). Salesforce is a popular example.

But again like Marcia, I am not sure if SaaS comes under ecommerce.

[lexipixel]

What others have you seen, used, or heard of?

Pay me $1.00 and I'll answer your question...:)

Is that another one? ..Sites that charge money for "answers" or research?

Using the definition that others have here "a site where money is charged for something", would be like calling a Doctor's Office a "Medical treatment store", or a Carpet Cleaning Service a "Carpet Cleaning Store"...

By dictionary definition, commerce is "transactions (sales and purchases) having the objective of supplying commodities (goods and services)"...

So, "eCommerce" should mean the electronic version of same...

BUT! I agree with Marcia -- my opinion is that an "eCommerce website" is a website that sells products, (a site with a "shopping cart", a "web store", etc).

Maybe we need clarification...

Online Store - ecommerce site where goods are sold, usually involves the use of "shopping cart" type software or use of a third party "payment / collection service".

NOTE: I would consider a site where a product is offered online but the customer must pay by mailing a check or phoning in a credit card number to be a "marketing site" more than an online store as no ecommerce (transaction) occurs.

(Commercial) Online Service - website or other internet based provider who's services are provided (for a fee).

That's my $0.02, but since I can't collect the money online, this is not an ecommerce based message.... :-(

[venti]

I fail to see how some of these are "ecommerce". For instance, I would like to know how passive income is "ecommerce"? I could see making the argument that models similar to monetary transactions conducted by direct users of your website would be ecommerce but some of the ideas don't even come close (like passive income, charitable donations). If the term is indeed that broad, then we might as well consider entire internet as "ecommerce" (with few exceptions, after all even wikipedia would be ecommerce with their donation system). A term that is this broad, that essentially encompasses everything, defines little.

I feel a more appropriate description would be "Different business models which generate income online"

[HugeNerd]

@Venti:
No doubt we are being broad in scope with this topic. However, I would argue that any revenue generating stream necessarily constitutes commerce, or in this case, eCommerce. Maybe we should focus on Different business models for eTailing? That would narrow the topic a bit; eliminate donation models, AdSense sites, content sites for the most part, but still leave downloadable media as a consumable item which may be eTailed, webinars, etc...

[lorax]

>> some of the ideas don't even come close (like passive income, charitable donations)

I intentionally chose the title and started off with classic definitions just to see what would come out of the woodwork. As we can see there are different definitions for the same label. Perhaps we can now begin to group the different models under different labels. I personally think all of the models could fit under the eCommerce label but with sub-cats of eTailing, Advertising, etc...

[LifeinAsia]

"Different business models for eTailing" is still vague- what exactly is "eTailing?" Are you restricting it to just products? Does affiliate marketing come under that heading or is it a separate section? What about affiates who sell with a private label site (so the consumer has no idea it's actually an affiliate)?

I think the whole point of this thread is to show how eCommerce has completely destroyed the borders of traditional commerce and opened up numerous types of new revenue streams, many of which simply weren't possible before the Net.

[lexipixel]

New title: "How do people make money on the web?"