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THE DIFFERENT E-COMMERCE BUSINESS MODELS - Coggle Diagram
THE DIFFERENT E-COMMERCE BUSINESS MODELS
3) RETAIL ARBITRAGE
Description
liquidation stores often sell products far lower than amazon retail prices
customers don't have access to liquidation outlets
Advantages
you do not need a website
you can leverage amazon's huge marketplace for instant sales
few start up costs except for your inventory
Disadvantages
business is 100% at the mercy of amazon
very difficult to scale because spending most of time for bargain
preventing sellers from selling certain brands without express approval from the manufacturer
retail arbitrage is at great risk
amazon supporting brands which does not favor those who sell other people's products
charging a large up front cost to sell certain brands on the order of $1000
Scales of its factors
ease of launch: 8/10
profit velocity: 5/10
sustainability and risk: 2/10
level of competition: 5/10
4) DROPSHIPPING ON AMAZON
Description
similar to dropshipping on your own website but the main difference is dropshipping directly to amazon customers.
its works when you find distributors willing to dropship on your behalf then you list the item on amazon as merchant fulfilled. Contact distributor when you get sales and the distributor ships product to customers
does not use fba or fulfilled by amazon
Advantages
no start up costs
no need for a website
have 100s of products
easy to start a dropshipping business on amazon
profit potential is good
Disadvantages
amazon has very stringent requirements on seller quality and on time shipment
amazon will ban your account if anytime if the shipment is cancel or delayed, you run a risk of getting banned
way to risky
anyone can contact the exact same wholesaler and get access to exact same product
Scales of its factors
ease of launch: 8/10
profit velocity: 7/10
sustainability and risk: 1/10
level of competition: 3/10
5) SELLING PRIVATE LABEL GOODS ON AMAZON
Description
private level is the act of placing your own brand or label on a product that you manufacture yourself
ship your goods off to amazon fba
much larger upfront cost
willing to invest a minimum of $1000-$2000
Advantages
few barriers to entry
no need for a website
no need to generate your own traffic
no inventory requirements
you own your product / brands and the margins are super high greater than 66%
can make it a lot of money very quickly
you can sell on your own website
most sustainable way on making money on amazon
Disadvantages
you are depending on amazon
attracting piggybackers & hijackers
encountered many unscrupulous sellers
Scales of its factors
ease of launch: 6/10
profit velocity: 10/10
sustainability and risk: 7/10
level of competition: 8/10
1) DROPSHIPPING WITH YOUR OWN WEBSITE
Descriptions
put up a website to take orders online without carrying any inventory
instead of fulfilling products yourself, send orders over to your vendor, vendor is responsible for shipping
Advantages
no inventory
no order fulfillment
low start up costs
simple to start
Disadvantages
margins are super low (others storing your inventory, profit margins from 10-30%)
not in control of your product mix (inventory & customer support will be an issue)
Scales of its factors
ease of launch: 8/10
profit velocity: 3/10
sustainability and risk: 6/10
level of competition: 3/10
8) SELLING PRIVATE LABEL PRODUCTS ON YOUR OWN WEBSITE
Description
highest long-term potential
upfront capital & investment
greatest long-term sustainability
you control everything
most secure way to run an e-commerce business
Scales of its factors
ease of launch: 4/10
profit velocity: 7/10
sustainability and risk: 10/10
level of competition: 9/10
7) SELLING WHOLESALE ON YOUR OWN WEBSITE
Description
traditional e-commerce business models
the way domestic wholesale works:
• margins are 50% range and sell using our own website
• handle your own inventory
• or use 3PL
Scales of its factors
ease of launch: 5/10
profit velocity: 4/10
sustainability and risk: 6/10
level of competition: 5/10
6) SELLING WHOLESALE GOODS ON AMAZON
Description
find distributors who offer a variety of products for sale to help you find them then buy those products & list them on amazon using fba and margins are typically on the order of 50%
Advantages
few barriers to entry
no need for a website
all you need to do is to find wholesalers with large product catalogs- often have to buy extremely low unit quantities
turn around time is fast!
Disadvantages
selling the exact same products as other sellers which will eventually lead to rolling prices
Scales on its factors
ease of launch: 7/10
profit velocity: 7/10
sustainability and risk: 3/10
level of competition: 3/10
2) DROPSHIPPING FROM AMAZON TO EBAY
Description
it works when someone find products in amazon that selling higher than ebay, then they steal the images and the product copy from the amazon product and post an ebay listing that's significantly higher in cost.
also known as amazon / ebay arbitrage
people who shop at ebay, tend to shop at amazon
Advantages
zero overhead costs
no website required
don't need to find vendors
very easy to get started
great on cashflow
Disadvantages
customers can complain about the image & copyright theft
ebay sellers have been banned for copyright / trademark infringement
this business model isillegal & against ebay's terms of service
has very poor long term business potential
Scales of its factors
ease of launch: 10/10
profit velocity: 2/10
sustainability and risk: 1/10
level of competition: 2/10