The 5 Best E-Commerce Business Revenue Models

The e-commerce business revenue models are varied and cover a wide range of verticals and industries. To keep your operations running and profitable, we will explain exactly which revenue models apply to e-commerce and break down the different revenue models based on the various e-commerce operations you may wish to pursue.

What Is a Revenue Model?

An ecommerce revenue model aims to define where an online store’s revenue is predominantly sourced from. This is determined by which revenue sources to pursue, what value to offer the market, how to price this value, and who the customer base is.

5 Types of E-Commerce Revenue Models

1. Dropshipping

The dropshipping revenue model is a method of selling goods online without ever holding stock. The store owner simply lists the item for sale and when an item sells, the store owner purchases the item from a third-party (or uses its warehousing services) and has it shipped directly to the customer.

Dropship models example:

StardustLEDS is a great example of a dropshipping business model. They source colorful LED lighting products that are sold directly to customers from a manufacturer through their storefront.

2. Manufacture

The manufacture revenue model is a more of a traditional style of selling goods. Unlike the dropshipping model, online business owners source raw materials and then design, manufacture, and sell the products themselves - all conducted in-house.

Manufacture models example:

Vew-Do manufactures a wide range of board sport products directly through their online store.

3. Wholesale Distributor

The wholesale distributor revenue model categorizes online businesses who act as a middleman between manufacturers and wholesalers. Most commonly, a distributor will promote the goods of a manufacturer and sell the manufacturer’s goods to a wholesaler.

Wholesale distributor models example:

The best example of a wholesale distributor is AliExpress. They connect millions of suppliers with e-commerce storefronts from around the world.

4. Subscription-Based

The subscription- based revenue model works just as it sounds. Customers sign up for a subscription-based service and goods are distributed on the agreed upon frequency over an allotted period.

Subscription models example:

Manscaped has quickly climbed the ladder and positioned itself as the ultimate subscription-based e-commerce store. Selling men’s shaving products through their subscription services directly to customers around the world.

5. Private Label

The private label revenue model involves an online store teaming up with a third-party company that offers white label e-commerce products. On receiving the product, the merchant often brands it with their own labeling and presents it to customers as their own product.

Private label models example:

The white label revenue model is becoming more and more popular. One of the best examples of this is e-commerce stores using online marketplaces to source and sell rebranded products directly to their customers.

Is There a "Best E-Commerce Revenue Model" for Your Business?

Determining the best-suited e-commerce revenue model for your business can lead to serious success. Although, as you may have already worked out, the e-commerce revenue model that is great for one store may not be the best for another. The type of store, the product it sells, and the target audience are all important factors to consider when determining which e-commerce revenue model is best.

Get this right, and your online e-commerce store is not only sure to succeed, but absolutely thrive.