What are e commerce revenue models? Well let’s first look at what an e commerce business is. E Commerce refers to commercial transactions which are conducted on the internet. Therefore an e commerce business is focused on sales online. Many physical shops and businesses now have their online counterparts. But it is the online transactions which e commerce is concerned with.
According to U.S. Census data, the rate of online sales is growing at a much faster rate than that of traditional offline sales. In many areas physical businesses have closed down due to this growing trend. So it’s no wonder than entrepreneurs are gearing themselves to take advantage of this new trend – and you can too!
U.S. E-commerce Sales Growth (2014-2016)
E commerce Revenue Models
E commerce revenue models can be separated into the following main categories:
- Business – to – Business (B2B)
- Business – to – Consumer (B2C)
- Consumer – to – Consumer (C2C)
- Consumer – to – Business (C2B)
- Business – to – Government (B2G)
- Government – to – Business (G2B)
- Government – to – Citizen (G2C)
In each model a website is involved in both informing and selling a product. The product is either delivered by the company itself or through another company. This is when the website acts as an intermediate or ‘go-between’. It is the model of the ‘go-between’ where many entrepreneurs can capitalize on the e commerce revenue model.
E Commerce Revenue Models – The Entrepreneurial Opportunity
Here is another business model for e commerce. If you don’t already have a business to take online you can easily promote and profit from someone else’s. The model is affiliate marketing. With affiliate marketing you can promote and sell other people’s products through a website. Amazon is the best known affiliate website. You can join the Amazon affiliate program and sell items from their site through your own website. With each sale you earn a small commission.
E Commerce Revenue Models – Affiliate Marketing
There are several different models when it comes to affiliate marketing. You can sell single physical products from sites like Amazon or Ebay. You just need to sign up to their partner programs, get some code and place it on your website. When someone buys through your link, you earn a commission. You can also sell digital products online and this offers probably the best opportunity for entrepreneurs. A digital product is something you access remotely from your computer. There is nothing physically to be sent out and so costs are kept very low. As such, owners of these products can afford to pay up to 50% commissions and over, for those who promote their products.
This means for a sale value of $500, you as an affiliate can earn $250 by promoting a product you don’t own.
E Commerce Revenue Models – Different Affiliate Models
Selling digital products is a great e commerce model. You can do it from your laptop and all you need is the know how and an internet connection. Anyone can learn how to do this and you don’t need any special skills or experience. Learn more here. However, there are various different models when it comes to digital products. Choosing the right one can mean the difference between success and failure.
- Selling an E-book – Many online marketers create their own e-book and sell it through their website. The great thing about this is you create the book once and sell it over and over again. Because it is digital, you can set up systems which sell and download it automatically.
- Selling a single affiliate digital product – Selling a product like someone else’s e-book is another example of this. Here’s one of the books I promote and I highly recommend it: how to get lots of money for anything fast.
- Selling Memberships – Selling a ‘one off’ item will only get you so far. You need to keep selling it over and over and keep finding new customers. The key to online success with affiliate marketing is to promote membership products. Memberships mean you can make a monthly income from one sale. So long as your customer wants the product and it gives them value, they will keep using it.
- Selling High Ticket Products – It makes sense to sell high ticket products online. If you earn 50% commission you will obviously earn more for each sale on higher value items than you would for a lower value sale, and for often the same amount of work.
E Commerce Revenue Models – Other Considerations
So we can see from the points above that choosing the right affiliate model is vital to our success online. If we also choose products which offer us lifetime commissions, we are future-proofing our business. Lifetime commissions are not guaranteed. However, if you choose a program which offers them, you continue to benefit from your referrals, even after your initial sale. Built in sales teams even close the sales on your behalf.
The Amazon model doesn’t offer lifetime sales commissions for each customer you refer to them. In fact, they offer a ‘cookie’ system which tracks your referrals for a certain time 24 hours at time of writing. (Check affiliate help at Amazon for latest terms). This means that if you refer someone to the site, they have up to 24 hours to make a purchase. Otherwise you don’t get the commission. If they add something to their shopping cart, you can still benefit from the sale for up to 90 days, should they leave without paying on their initial visit. (Check for latest terms).
Choosing an affiliate model which does offer lifetime sales is therefore paramount to your success as an affiliate marketer. It means that even though your customer may only buy a low cost item from a company, if they later go on and purchase a higher ticket item, you benefit from the sale. A good e commerce revenue model will also close sales for you and have a range of higher ticket items to cater for a range of customers.