How do eCommerce websites generate revenue
Our world is ever so changing and this includes the way people shop. Gone are the days that you need to visit your local shop 20 kilometres away just to buy one single item. You don’t have to rush to the shopping centre during your lunch break or after work just to make it in time before it closes at 5PM. Now, with a tap on your phone or a click on your computer, you can shop at the comfort of your own home, 24 hours a day, seven days a week. Thanks to the innovation of eCommerce websites.
There are an estimated 24 million eCommerce sites across the entire world, with more and more stores being created every single day. To say it is a tough competition is an understatement. If you are looking into putting up your own eCommerce website, this question might have crossed your mind already: Exactly how do eCommerce websites generate revenue?
There are several ways on how to make money in an eCommerce website but we will only discuss three: Selling your own products, Working with a manufacturer, and Dropshipping.
Selling your own products – If you already have a product you’re already producing, this is the business model for you. You can sign up to Shopify, Wix, or BigCommerce, and put up your online shop. You just need to make sure you take great photos of your products and arrange the logistics and you’re all set! This is a great business model in terms of revenue as you have complete control over every aspect, but it can also be the most difficult and time-consuming.
Working with a manufacturer – If you cannot produce your products yourself but know of a good manufacturer to partner up with, then this is the business model for you. If you want to avoid the complications of producing and manufacturing your own products, you can find a manufacturer that can give you the best prices. You just need to make sure you get the best prices from your manufacturer so you can make good margins. The rest is taking care of the online store and the logistics.
Dropshipping – If you do not want the hassles of production and manufacturing, then you can consider dropshipping. To be very brief, dropshipping lets you act as a middleman between your supplier and customers. You manage the online store and receive the orders from the customers, and then pass those orders off from the supplier. The supplier then fulfils the order and takes care of the shipping part as well. Because you are not involved in most of the order fulfilment process, margins can be a bit low. But if you are able to find a good product that is in demand, you can make up for it in terms of order volume.
These are still a lot more ways for an eCommerce website to generate revenue. It is indeed the future of retail and for any business owner to thrive and succeed in this tough market, learning about eCommerce is the best way to go.