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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//
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...
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
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
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 inventoryNo fulfillmentLow 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
Less pricing flexibilityPaid ads are hard due to low profit marginsInventory and customer support is difficult as you're depending on a 3rd party to fulfillVendors 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
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 overheadNo website
no need to find vendorsCons
Brand owners will hate youAlways hunting for arbitrage opportunitiesHigh risk of getting bannedRating (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
How
1- Buy low cost merch at clearance/liquidation outlets
2- Sell at higher price on Amazon FBA
Pros
No websiteLeverage size of Amazon marketplace for fast salesMinimal startup costs except cost of inventoryCons
100% at mercy of Amazon
Need to invest time product huntingHard to scaleNew Amazon rules discourage this modelRating (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
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 costsNo website100s 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
Anyone can contact same distributor and copy youAmazon has strict requirementsHigh 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
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 websiteNo need to drive traffic No inventory issuesHigh 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
High upfront cost (have to make products in bulk)Not ideal for beginnersDependent on Amazon FBAAttracts copycatsRating (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
How
1- Find distributors with large product catalogs
2- Buy products and list on Amazon FBA
Pros
High marginsLow unit quantities Fast turnaround100s 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
Selling exact same product as other sellers Eventual price erosion as you're listing the same product as othersRating (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
How
1- Find wholesaler
2- Build website and sell
3- Manage your inventory
Pros
Control your own store and brandCons
Not easyRating (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
How
1-Build product
2-Build website
3- Drive traffic
Cons
Hardest model to masterHigh upfront investmentPros
Highest long term potentialYou 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
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
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
