public_pages:new_sellers:ecommerce_business_models_explained [LDR Knowledge Base (Keep it ISO)]

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====== Ecommerce Business Models Explained ======

This is far from an exhaustive or comprehensive list, but this page illustrates some of the most common ecommerce business models and how they work.

===== Dropshipping Business Model =====

Basic idea: the seller is listing inventory for sale they don't actually own. They buy the inventory once a customer pays, and then ship it to the customer.

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===== Arbitrage (aka OA or RA) =====

Basic idea: Seller buys inventory at a discount from a retailer or online store, and then sells it at a higher price somewhere else.

Many 3PLs charge extra or refuse to handle arbitrage. This [[:public_pages:new_sellers:challenges_with_online_arbitrage|article explains why]].

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===== Wholesale =====

Basic idea: Seller negotiates a deal with a wholesaler, distributor, or manufactuer to purchase large quanitites of products in bulk at a discount. The seller then sells them online.

[[:public_pages:new_sellers:advantages_of_wholesale_vs_private_label|Wholesale can have certain advantages]] over private label, especially getting started.

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===== Private Label =====

Basic idea: Seller invents their own product or innovates on someone else's. The seller then has it produced, markets it, and sells it online.

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