When you’re getting started with an e-commerce business, it can be a bit overwhelming to figure out which details will make your business profitable. But once you have all the information you need, you can be confident the next steps you take are just right for your business.

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Let’s get clear about some traditional business models you can consider.

B2B: 

Business-to-business models sell products or services to other businesses. 

B2C: 

Business-to-consumer models sell products or services to the end-user; their customers are usually the general public.

C2C: 

Consumer-to-consumer businesses connect buyers and sellers and facilitate the exchange of goods or services.

B2B, B2C, C2C, and beyond — e-commerce has transformed the landscape for all of these business models, and your new e-commerce business can take any one of these forms.

How You Approach Your Business

White & Private Label Products

“White label” and “private label” products are customised products. White labelling involves the purchase of a generic manufactured product that you brand and market as your own.

Private label products are unique products. You contract with a manufacturer, and they produce the item specifically for you. Your brand is the sole brand for these products.

With both the private label and white label models, your customers connect directly with your business and buy a branded product straight from you.

The large-scale private label Tesco Everyday Value¹offers mostly pre-packaged foods.On much smaller scales. Much smaller-scale makers might sell proprietary essential oil blends or offer fresh baked goods.

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Pros of White & Private Label Products

• Full control over design and production of goods 
• Full control over sales and customer experience
• Sell products that represent your personalised brand

Cons of White & Private Label Products

• High financial investment
• High level of commitment up front

Drop Shipping

With drop shipping, your business sells products that are shipped directly from the wholesaler or manufacturer to the customer. With this business model, you connect with customers on the front end, and your wholesale or manufacturing partner fulfills your customers’ orders. It eliminates the need for housing your inventory and other aspects of inventory management. 

One of the internet’s largest online furniture and homeware vendors, Wayfair², runs as a B2C e-commerce drop shipping business. It offers a huge supply of products from thousands of manufacturers and serves as the middle agent, marketing and selling those products to customers.

Private label products are unique products. You contract with a manufacturer, and they produce the item specifically for you. Your brand is the sole brand for these products.

With both the private label and white label models, your customers connect directly with your business and buy a branded product straight from you.

The large-scale private label Tesco Everyday Value¹offers mostly pre-packaged foods.On much smaller scales. Much smaller-scale makers might sell proprietary essential oil blends or offer fresh baked goods.

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Pros of Drop Shipping

• Prioritizes digital assets instead of physical assets
• Minimal upfront investment

Cons of Drop Shipping

• Limited control over shipping and fulfilment 
• Potential customer service challenges regarding drop shipping services

Drop Shipping

Wholesalers often operate as B2B businesses. They buy products in bulk and store them to sell to B2C businesses who will ultimately sell them to the end-user. Some wholesalers may also provide drop shipping services.

Trustana³ is a B2B e-commerce wholesaler. We buy food and food service products from manufacturers and makers. We then offer those same products to small businesses in a one-stop-shop³ so they can get them to consumers.

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Pros of Wholesale

• High sales volume 
• High likelihood of customer return for reorder

Cons of Wholesale

• High initial investment requirements
• High overhead due to bulk purchase and storage

Choose Your E-commerce Business Model

Now you have a handle on the basics of e-commerce business models and options. So how do you decide which model is best for you and your vision? Here are some pointers for narrowing the choices down and finding the right fit for you.

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Think about your target audience.

Are you aiming to serve other businesses or individual consumers? What are they looking for when they go to buy what you’re offering? Get to know your ideal customers, their pain points, and their purchasing behaviours.

Consider your resources.

What are your resources and limitations as you get started? How much investment capital are you working with? Do you have logistical resources like space for inventory or a way to manage shipping?

Be clear about your offering.

As you think about the types of products you are selling and how you’ll sell them, it’s important to consider the value proposition you’ll offer your customers. Use your value proposition to set your product apart and attract your target customer.

Your Next Steps to Building an E-commerce Business

When it comes time to make your decision, you want to make a choice that best fits your target customer and their needs, your product, and your sales style and vision. Making the right choice today can mean the success of your new business tomorrow!

Reference:

1. https://www.tesco.com.my/TescoEverydayValue/
2. https://www.wayfair.com/
3. https://my.wholesale.trustana.com/