5 Types of eCommerce Models for Online Business

1. Drop Shipping

Drop shipping is an order fulfillment method in which a business’s products are stocked, packaged, and shipped by a third-party supplier (i.e., you sell someone else’s products through your store).

With drop shipping businesses, the team that stands up the storefront doesn’t have to worry about managing inventory, stocking warehouses, or handling shipping. They can focus on their front-end customer experience and building their customer network.

One of the biggest caveats to this approach that you need to consider before adopting the process, is that your business will have absolutely no control over the supply chain. Should products arrive damaged or late, or if the quality is lower than expected, it will reflect poorly on your brand. While the onus is on the drop shipper to deliver, you’re the one that is in direct contact with the end consumer and ultimately responsible for handling support requests and managing the relationship.

2. Subscriptions Services

With a subscription model, you are committing to continuously sending your products to customers over an extended period of time at consistent, pre-determined intervals. There are many different type of subscriptions, like product discovery or unlimited services, so pricing, billing, and account management will depend on your business, your products, and your customer’s consumption behaviors.

Supplement is one of the most prevalent categories of consumer goods that tends to perform well with subscriptions, along with fashion, beauty, or even pet products.

While ecommerce subscriptions can prove to be fairly lucrative and have a number of benefits, they are not for every business.

3. Wholesale

Businesses that leverage wholesaling manage everything apart from the manufacturing of the product. You will order goods directly from the supplier, and are responsible for the warehouse, managing inventory and stock, and tracking customer orders and shipping. You tend to see wholesale ecommerce a lot in the B2B space, but it can be leveraged as part of a B2C ecommerce strategy as well.

4. Private Labeling

In private labeling, a business will hire a third-party manufacturer to create their desired products based on their own unique ideas and designs. This will save you from having to build your own factory and manufacture your own products, but give you exclusive rights to sell your own goods.

Once the goods are manufactured, you can either have the manufacturer ship directly to the customer, to an online marketplace, or back to you for you to handle. Initial costs can vary, but should you have the product designs and finances to get started, private labeling can be a great way to get started or test new ideas.

5. White Labeling

With white labeling, you are branding and selling a product under your own name and logo, but it’s manufactured and purchased from a third-party distributor.

You tend to see this in the fashion and health industries, commonly with cosmetics, essential oils, and companies that sell CBD online.

White labeling can boost your brand visibility, keep you from having to manufacture your own products, and allow you to take advantage of the knowledge and expertise of the distributor.

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