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3 types of eCommerce business models Business ideas that you can start and run from home

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With people finding themselves in unique situations due to current world events, many are stopping to reflect on, and reconsider, both their personal and working lives.

Another factor many have not had to think about before is the security of their current circumstances, and what they can do to be more in control of their income and financial stability in the future.

With that in mind, and with many facing paused or lost careers, people are starting to look for alternative businesses that they can start up and run from home (to begin with, at least) that do not cost a fortune to get going.

eCommerce might just have the answer.

To understand more about why, read here about the advantages of eCommerce.

 


If you already have an established brand – or even if you don’t – then you need to be aware that your customers and their needs are always changing.

Splento has produced a free report on brand engagement, explaining what you can do to re-engage your customers in this post-pandemic world.

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There are many different business model options available so rather than create an exhaustive list of all of them, we thought we’d focus for now on just a few.

To meet our parameters for this we decided that the business model:

  • Must be proven to work already
  • Relatively low-risk
  • Should be reasonably low-cost to start
  • Can be set up and run from home
  • Must not require special knowledge or skills
  • Can be easily scalable in the future

Taking all these together, we have short-listed our top 3 types of eCommerce business models that meet all those requirements.

1. Dropshipping eCommerce

The attraction of the dropshipping model is that it is quite straightforward to set up, requires minimal (if any) initial investment and can be run by one person.

The disadvantage of it is that because it is so easy to start, everyone is doing it!

The key to dropshipping is setting up an account with one of many manufacturers/suppliers who provide the stock of items that you are going to sell.

You then set up an online store, or subscribe to a store platform, display your goods for sale and sit back and wait for all the orders to roll in.

(Of course, it’s not quite that simple to get the orders themselves, but the set up is easy).

When an order is placed, you order the item from the supplier at that time and they ship it straight to your customer. You never need to invest in or carry stock, and you don’t get involved with shipping out the orders.

Forklift truck - - eCommerce Business Models

Using well-established platforms, most of this process is automated for you, so a laptop and internet connection is enough to get you started.

As you may have already gathered, with a lot of people in the market, and many selling the same product at similar prices, the competition becomes not about the product – it’s about marketing.

Your success will be directly related to your effort and the systems you put in place for advertising, drawing traffic to your site, getting customers’ attention and other tactics to generally get yourself noticed over the other thousands of eCommerce stores all doing the same thing.

This still doesn’t mean high cost, but it does mean high amounts of hard work.

Dropshipping businesses definitely meet our five criteria though – even scalability. As you are not directly manufacturing yourself, your only concern about capacity is the amount of traffic your eCommerce store can handle.

A slight twist on dropshipping is personalised or print-on-demand goods.

This is where your suppliers stock a range of items that can be personalised before shipping.

These are usually novelty or gift ideas such as mugs, baseball caps, clothing, wall art (and a host of other items) which can be personalised with text, photographs or designs.

These may either be provided by the customer or if you have a talent for design, yourself. Without building up any stock, you could create a range of T-shirts, for example, with unique designs and still sell them through the dropshipping method.

The design is your selling point and is what you use to market yourself and stand out from the competition.

2. Private and white label manufacturing

One step up from dropshipping is to design and sell your own products but without the investment in the manufacturing process.

Instead, you outsource the manufacture to a third party. Increasingly popular, you can benefit from the economies of scale of a huge manufacturer without the same size of risk.

There is some outlay, of course, as there will usually be a minimum order size for your product, and there is a process of prototyping that must come first, but this can still be done relatively inexpensively.

Once you have your product made, you can handle the shipping and distribution yourself. This means storage space and handling and shipping involvement, so a better option for the home-started eCommerce business is to outsource that as well.

The manufacturer delivers straight to your distributor who then handles the storage and shipping for you. Amazon is a successful example of this; they also have the advantage of running one of the world’s largest online sales platforms, so aside from your product, all you need is your trusty laptop.

2 women lookimg at a laptop - eCommerce Business Models

The advantage of private manufacture is that you can bring to market a unique product of your design; no one else will be selling exactly what you are.

White labelling is similar to private manufacture except that this time you don’t come up with the product. Instead, you supply the brand.

The manufacturer makes the products, labels it with your branding and finishes it in your packaging.

The advantage of this is that you have no design or prototyping of product to worry about; the disadvantage is that you are no longer unique, as others will be selling identical products under their own name.

Read this article for more advice on marketing in eCommerce.

3. Subscription model eCommerce

Another take on eCommerce that has become popular in recent years is subscription selling.

As above, you have a product, but instead of one-off orders, you set up customers on a subscription, wherein they buy on regularly and indefinitely unless they choose to cancel.

This has proved to be very successful for a diverse range of products, from shaving items and food ingredients to printer ink and beer.

There are several approaches to this type of eCommerce.

The discovery subscription model gains customers with an offer of an initial free or reduced-price product, to win initial interest. In exchange for a subscription, the free trial is offered and gives an otherwise wary customer a chance to ‘try-before-they-buy’. Some will cancel after receiving their free product, but most do not, at least for a few months. This generates enough profit to at least cover the initial discounted items.

Discounts are also offered for payment upfront (say, for a year). This works particularly well for online software services (SAAS) as well.

Access subscriptions give customers premium access to new products (or first refusal on limited offers) before they are offered to the general public. Used in conjunction with membership websites, they award the customer and make them feel part of an exclusive group with added benefits.

Finally, replenishment subscriptions automatically supply customers with new stock as their previous purchase runs out, or at a pre-determined interval. Store-cupboard groceries are sold this way, as are replacement printer ink cartridges, to name two examples.

Woman sitting with laptop - eCommerce Business Models

The huge advantage of subscription eCommerce is that as a business, you have much greater control and prediction over demand. This means that you can control your supply with much finer tolerances and not be left with a huge inventory of unsold stock.

When you have the capacity, you can generate a new range of introductory offers to market to get new business, and this approach works far better for customer referral business as well. You contact all your existing customers and offer a free or reduced-price sample to them and anyone else they recommend, who makes a purchase.

This kind of referral marketing does not work so well with other commerce models, as once a customer has made a purchase, they do not always want to purchase more of it. It works so well here because they have already committed to buying more…and so the appeal of a subsequent discount in exchange for a referral is much stronger.

As with the other eCommerce models, you do need a product of course, but this can still be on a private or white label manufacturing basis, so stock and distribution can still be managed in the same way.

eCommerce – more research required!

This has been an introduction to just 3 types of eCommerce business that you can set up and get running from home fairly quickly and without huge financial investment.

There are many others, all with their own advantages and disadvantages and they should all be considered before you set out your plan and take the plunge into a new and exciting venture.

When the time comes though, and you need other cost-effective services as a part of your launch, Splento can help. We are currently offering a whole range of remote services online, including remote product photography and even online professional portraits.

Have a browse now through the Splento’s portfolio pages for some amazing examples or see some of their Facetime professional photographers.

Check here to discover for yourself how simple it is to make a booking.

Finally, what if you already have your photos taken and they just need a retouch to bring them up to the high standard you need?  Easy – take a look at the Splento retouch service, which will give you high-quality photographs, with editing for just 49p per photo.


Contact Splento if you are in need of:

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