What is known by the E-Commerce Model?
As we normally use online sites to buy products for our daily needs or commercial needs, have you ever thought of how purchased products are shipped to your doorsteps from these websites. Are they sold by website owners directly or indirectly sent by a stockist or distributor on their behalf or are they linked directly to manufacturers? Simple clarification to the above said question is that different website owners operate under different business models, such as few sell their own inventories or stocks, for few website such products are shipped by stockists on their behalf, some cases on few websites fulfillment is done by direct manufacturers or brands. So you understood different Ecommerce websites operate under a unique business model, now such operations are briefed as E-Commerce marketplace model, Ecommerce direct sellers, and drop shippers there are various terms and jargons used for the same whoever above said terms are popular and commonly used world wide.
E Commerce Marketplace Model – Any website or apps they connect sellers to buyers for any product/services can be considered under the e-commerce marketplace model. In such a model e-commerce website owner may/may not have self stock or inventory. Each manufacturer/company or entrepreneurs are free to register as sellers and may list their product to promote. On every successful sale sellers will be notified and they are responsible to ship the product for buyers and portals may charge x percentage of commission on total sale value and such Ecommerce model is called marketplace model in Ecommerce industry.
Direct web sellers – Direct selling is very popular among manufacturers and stockists. In most cases, manufacturers/stockists/entrepreneurs own their own sites under the x, y, z label and are responsible for marketing and maintaining the website. Generated orders are shipped directly from the website managed by entrepreneurs/ or manufacturer/company.
Drop shipping – Ecom drop shipping is very much similar to the marketplace model wherein sellers do not need self invonverty to run the business. Besides, they tie up marketplace Ecom sites to ship their products. In such a model drop shipper is responsible for generating sales and market palace websites will do the fulfillment on dropshippers business name or under their label. In such models drop shipping owners select products from popular b2b/b2b marketplace sites and the same is being listed on their sites to sell the product. Sellers are free to offer their best selling prices and margins.
Key differences between E commerce models
| E-Commerce marketplace|
Best for small retailers, brands or manufacturers Limited customer data is shared with sellers Quick start and scaling Shipment support
| Ecommerce direct sellers|
Need funds and self inventory Full control on sellers data Need tech and marketing team Managing self shipment and returns
| Drop shippers|
Require limited funds to launch Full control on sellers data Need tech and marketing team Managing self shipments and returns
- Marketplace model is the best approach to start with for all categories of sellers.
- Direct shipping – Best for manufacturers and stockists looking for expansion with dedicated team and branding media plans.
- Drop shippers – Best start for individuals/team having expertise on product, tech and online media.
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Best for small retailers, brands or manufacturersLimited customer data is shared with sellers Quick start and scaling Shipment support
Need funds and self inventoryFull control on sellers data Need tech and marketing team Managing self shipment and returns
Require limited funds to launchFull control on sellers dataNeed tech and marketing teamManaging self shipments and returns