E-Commerce Models For Business

The evolution of the web has resulted in the development of e-commerce business models to monetize web traffic. Several e-commerce models are discussed below:

Auction Based System:

eBay – The conventional auction house now has an internet counterpart. A centralized marketplace where sellers can list goods and buyers can purchase through the auction system. The goods are transferred to the highest bidder. Merchandise that is placed for auction by the sellers is subject to agreed time expiration. You can also list goods for retail sale at an agreed price. eBay charges a percentage of the transaction value.

Retailer – merchant:

Vendors provide goods and services online. This is a standard e-commerce model. A virtual storefront presents the goods for purchase. Interested parties provide payment through credit card and the goods are dispatched for delivery. Amazon is a classic example of this at the corporate level. Smaller stores are operated by organizations and individuals alike.

Affiliate: This model is operated by retailers or vendors of digital products. The transaction is conducted through a centralized exchange. The exchange takes a fee (usually a percentage), the vendor takes a percentage of the total sale price and the affiliate, the individual responsible for the sale, is paid a percentage of the purchase price. This is a popular model since the profit-sharing arrangement encourages owners of content rich sites to sign up to affiliate networks and promote relevant goods to the target audience.

Membership Site: This model is growing in popularity. Vendors offer an information rich site with valuable content in exchange to a regular monthly payment. The agreement continues indefinitely.

Pay on Demand: This model is for information or the use of a service on ‘as per need’ basis. Customers pay a one-time fee or buy credits that can be used when required. Research based sites often use this style of e-commerce model.

Advertising – Publisher Model:

Search engines and advertising networks charge a fee for listing your goods and services under appropriate search terms. This is usually through a keyword bidding process but may be a fixed fee, in the case of a banner, or a set charge for a specified number of ad displays. Owners of content sites can offer this service to enter into a publishing agreement with the advertising provider and earn a percentage of revenue generated from the display of the ads on their site. This is the most popular e-commerce model.

These are the most common e-commerce models. There are many hybrid models that use a combination or variation of the above frameworks.