8 E-com Business Models Explained (inc. pros vs cons of each model and how they work)

Looking to get into E-Com?

Bookmark this Thread. It will save you time and money.

//Thread//

There are many ways to get into e-com.

There is no "one" best model.

The model you pursue comes down to one thing....

Risk v Reward

Some models are easy to start but hard to make a profit....

Some models are extremely profitable but have a steep learning curve...

This thread outlines the pros and cons of each e-com biz model so you can make the right decision for your unique circumstance.

Each models is rated from 1-4 based on 4 key criteria

1) Ease of launch
2) Profit velocity
3) Sustainability and risk
4) Level of competition

# 1 Dropshipping with your own website

How

1- Contact wholesalers to get approved as retailer
2- Build website and list products
3- Drive traffic to website
4- Send orders to wholesalers for fulfilment

Pros
No inventory
No fulfillment
Low startup costs
Easy to start

Cons
Less pricing flexibility
Paid ads are hard due to low profit margins
Inventory and customer support is difficult as you're depending on a 3rd party to fulfill
Vendors can be unreliable
Business reputation is heavily dependent on vendors

Rating (1-10)
Ease of launch - 8
Profit velocity - 3
Sustainability and risk - 6
Level of competition - 3

# 2 Ebay/Amazon Arbitrage

How
1- Find Amazon products selling higher on Ebay
2- Copy&Paste images+product description onto Ebay
3- Post on Ebay at higher price
4- When auction closes on Ebay buy product on Amazon and ship to buyer

Pros
$0 overhead
No website

no need to find vendors

Cons
Brand owners will hate you
Always hunting for arbitrage opportunities
High risk of getting banned

Rating (1-10)
Ease of launch - 10
Profit velocity - 2
Sustainability and risk - 1
Level of competition - 2

#3 Retail Arbitrage

How
1- Buy low cost merch at clearance/liquidation outlets
2- Sell at higher price on Amazon FBA

Pros
No website
Leverage size of Amazon marketplace for fast sales
Minimal startup costs except cost of inventory

Cons
100% at mercy of Amazon

Need to invest time product hunting
Hard to scale
New Amazon rules discourage this model

Rating (1-10)
Ease of launch - 8
Profit velocity - 5
Sustainability and risk - 2
Level of competition - 5

#4 Dropshipping on Amazon

How
1- Find distributors willing to dropship for you
2- List item on Amazon as merchant fulfilled
3- Contact distributor to ship product for each sale

Pros
$0 start up costs
No website
100s of products to list straight away

Cons
Anyone can contact same distributor and copy you
Amazon has strict requirements
High risk of getting banned (A guy lost 7 figure biz overnight like this)

Rating (1-10)
Ease of launch - 8
Profit velocity - 7
Sustainability and risk - 1
Level of competition - 3

#5 Sell private label on Amazon
Private labeling: Place your own brand on a product you manufacture

How
1-Find manufacturer that white labels
2-Produce products in bulk
3-List on Amazon FBA

Pros
No website
No need to drive traffic
No inventory issues
High margins

Cons
High upfront cost (have to make products in bulk)
Not ideal for beginners
Dependent on Amazon FBA
Attracts copycats

Rating (1-10)
Ease of launch - 6
Profit velocity - 10
Sustainability and risk - 7
Level of competition - 8

#6 Selling wholesale goods on Amazon

How
1- Find distributors with large product catalogs
2- Buy products and list on Amazon FBA

Pros
High margins
Low unit quantities
Fast turnaround
100s of products at your disposal

Cons
Selling exact same product as other sellers
Eventual price erosion as you're listing the same product as others

Rating (1-10)
Ease of launch - 7
Profit velocity - 7
Sustainability and risk - 3
Level of competition - 3

#7 Selling wholesale on your website

How
1- Find wholesaler
2- Build website and sell
3- Manage your inventory

Pros
Control your own store and brand

Cons
Not easy

Rating (1-10)
Ease of launch - 5
Profit velocity - 4
Sustainability and risk - 6
Level of competition - 5

#8 Selling private label products on your own website

How
1-Build product
2-Build website
3- Drive traffic

Cons
Hardest model to master
High upfront investment

Pros
Highest long term potential
You control everything

Rating (1-10)
Ease of launch - 4
Profit velocity - 7
Sustainability and risk - 10
Level of competition - 9

Wrapping things up

Stop falling for whatever guru says is the "best e-com model"

Each has it's own pro and cons and it all depends on your personal risk/reward tolerance.

Final tweet

If you enjoyed this thread I'll leave you with 2 things...

1) Check out the full YouTube video where I go in depth into each business model ()

2) Share this thread by retweeting the first tweet