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.

ecommerce_business_models_-_dropshipping.jpeg

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.

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.

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.