Doing Online Business: Choosing an eCommerce Business Model

In starting up an online business, whether small or big, there are several things you need to consider. Besides the pros and cons you need to be aware of, there are different business models to choose from before you do a kickstart. And of course, each of these models has its own pros and cons.  

These business models require different levels of financial investment that will also further determine your overall business structure. And the best way to ensure at least a bigger chance to be successful in your entrepreneurial journey is to select the model that will work best for you.   

Doing online business, selecting freight shipping service, and journeying further in the industry is not simple. It usually incurs bigger capital because you will need to buy in bulk. Here are the business models that you can choose from:  

  1. Sourcing from wholesalers and manufacturers 

Sourcing from wholesalers and manufacturers are different business models. Both models require you to purchase the products in bulk and you sell at your own benefit and risk. The difference is the branding.   

On the one hand, sourcing from wholesalers is the traditional retail business that most people have been doing. You find a wholesaler and buy their product at a wholesale price. Selling the products and delivering them to the customers will then be all your responsibility and the wholesaler is now out of the picture.   

This entails bigger capital as you would need to pay in full the wholesaler, and bugger risk because you will need to sell in order to regain the capital and get profit. This is labor-intensive but you will also have big profits.   

On the other hand, sourcing from manufacturers finding a manufacturer that would create your product, own the product by putting your own label and selling it.   

Compare with the former, this model is more labor-intensive because you will need to make your own branding, packaging, and everything that is required in making your own label and brand. The advantages include having your own brand, creating and selling your own product, and higher profits since you are making something new.   

  1. Doing drop-shipping 

This business model is so convenient and does not require too much especially capital. This is the most go-to model that most start-up businesses use. Why? You won’t need a financial investment when you choose this model because you will not pay any cent until you make some sales.   

Additionally, it involves you deciding what to sell, finding a supplier that provides the services, listing the products you want to sell, starting selling, and each purchase, you get some percentage.   

Here is how it further works:  

  • Your customer buys the product from your store at a retail price;  
  • You place the order from the supplier at a wholesale price; and   
  • The supplier ships the select product directly to the customer.  
  1. Creating your own product 

If you are artistic or creative, then you can use this and sell your own product. For instance, you sell your own crafted crochet beanies, painting, or anything of your creation. This is gratifying, both financially and emotionally to people who have turned their hobbies and passion into a business.   

Selecting a business model is just the first step, but this will determine the structure of the business that impacts greatly your success!