When the new normal is being more at home rather than going outside so people are leaning towards electronic gadgets such as mobiles and laptops, so it is more feasible for them to access the online marketplaces and this has been a boost for the ecommerce business. As business is more about making the money, revenue streams are the most crucial part.
In 2020 where the worldwide pandemic makes it a difficult period for the growth of the business, by way of finding new streams for revenue for your ecommerce business can generate more income and make financial positions better. ecommerce business. An entrepreneur should first learn about the sources; from there they will generate revenue before directly jumping into an ecommerce business. ecommerce has emerged a lot with changes in the sources of revenue.
Ecommerce business is a popular business as it brings more return than their investment. Nowadays entrepreneurs are investing more in ecommerce business. said Jack Ma former chairman of Alibaba group
In carrying out ecommerce, the most important thing is to keep doing what you are doing right now with passion, to keep it up
Popular eCommerce Business Models & Revenue Streams
There are different methods and ecommerce business models by which revenue can be generated, some of the important models are explained here under.
1. Commissions Revenue Model
Ecommerce shopping sites commonly followed this method as it is the simplest way of generating revenue. Commissions are charged by ecommerce business from sellers as per the product category they are selling. A fixed percentage is charged on the product when it’s sold. For example, 40 to 50% of the commission depends on the product category are charges by fashion apparel site Myntra. Amazon charges its commission 5 to 20% which depends on the product category.
2. Subscription Revenue Model
The subscription fee is charged from buyers or sellers at a fixed price of the subscription. After paying the subscription fee they can continue their service from an ecommerce site and using their product. In most cases, business providers lure the audience by availing the content free of cost, and when they get addicted to content then they have to pay for it after a particular period. For example, Netflix provides a subscription on a monthly & yearly basis depends on the subscription, and a one-month subscription is provided free of cost.
3. Advertisements Based Revenue Model
Advertisement is a paid communication like CPC (cost per click) & CPT (cost per thousand) by the seller to influencing people for buying their product or services. The advertisement gives information to a targeted audience regarding their product, and how it’s going to be beneficial for them to buy their product or service. It helps in increasing the selling and boosting growth while targeting customers. The advertisement has always been the most attractive way of engaging the audience for a particular business whether it’s on TV or some website. Ads are influenced by the user’s search history and that’s how business providers find the targeted audience.
4. Featured Listings
In the featured listing, the product or service will be on top after paying fees to the site owner. The featured listing will make the audience believe that the featured product has some specialties because it’s coming on top. it is a very easy method to generate revenue by charging fees on the listing product of sellers. In reality, there is nothing special about the product as it is the method of advertising and standing out in the competition.
5. Affiliate Partnership Revenue Model
eCommerce sites make a partnership deal with the third party to showcase their product or service to buyers and redirects the audience to their site for making a purchase. eCommerce site owner earns as and when visitors from their site made a sell from the third party. Third-party is responsible to pay a commission on the sale. The responsibilities of shipping and storage area on the third party.
6. Sponsored Emails
With the full consent of subscribers, email is subscribed to them, so the third party gives an advertisement of their product or service in their subscribed email. The product advertisement on sponsored email has to be relatable with ecommerce site business. the newsletter email is subscribed by the subscribers with their consent, then the ecommerce company will be sent regular emails newsletters to them with the advertisement. If the subscriber cancels the subscription company will no longer send them newsletters. The category of the advertisement has to be similar to the sponsored party’s business, for example, you cannot advertise footwear on the education newsletter email.
8. Logistics Revenue
Delivery and shipping of products to the buyer generate revenue for ecommerce sites. Many popular ecommerce companies are now keeping their focus on developing logistics. For safer and secure delivery these websites rely on trusted logistics and some of them have their own. By using their logistics, they can save more money. Amazon, Snapdeal, Flipkart, eBay are earning revenue from delivery and shipping.
9. Physical Product Sales Revenue Model
In an ecommerce business, a physical tangible product is sold to its buyer and helps in generating revenue. Manufacturing of products and transporting products and delivery of physical product requires a lot of processing. The site owner earns from the margin of the physical product after selling it to the customer. Physical product selling helps in earning revenue if the targeted customer is chosen wisely.
10. Informational Product Based Revenue
Information is provided online to users when they pay for the information. Booksellers, education sites, learning courses online are all the example of information product, where information is traded. It requires a lot of content promotion to influence the visitors for buying their product. They provide more relatable content based on the user’s search history using cookies.
Here we conclude that by following these methods of revenue generation ecommerce sites can improve earning and make more profit out of it. Before choosing a way of revenue streams researching the pros and cons of different ways is prominent. In this blog, we have highlighted ten important aspects that can improve the result and outcome of launching an ecommerce business.