When starting an ecommerce business, choosing the right business model is one of the most important decisions you’ll make. The model you choose will determine how you source products, fulfill orders, and make a profit. With so many options available, it can feel overwhelming.
In this blog, we’ll break down the most common ecommerce business models to help you find the right fit for your store. I’ve done a few myself – creating my own product, print on demand, and dropshipping. I prefer the latter two myself and my favorite is the print on demand since it's your designs on the products that you are able to see come to life!
1. Dropshipping
In the dropshipping model, you don’t hold any inventory. Instead, you partner with a supplier who ships products directly to your customers after they purchase from your store.
Pros:
Low startup costs (no need to buy inventory upfront).
No need to manage shipping and fulfillment.
Easy to test different products and niches.
Cons:
Lower profit margins (since you’re paying the supplier for each order).
Less control over product quality and shipping times.
High competition in popular niches.
Best for: Entrepreneurs who want a low-risk way to start an online store without dealing with inventory management.
2. Print on Demand (POD)
Print on demand is similar to dropshipping, but it focuses on custom products like t-shirts, mugs, or phone cases. You design the products, and when a customer orders, the supplier prints and ships the product.
Pros:
No inventory costs.
Ability to create unique, custom designs.
Flexibility to experiment with different designs and products.
Cons:
Lower profit margins due to the cost of custom printing.
Limited control over product quality and shipping.
Best for: Entrepreneurs with a creative flair who want to sell custom-designed products without holding inventory.
3. Wholesale and Warehousing
In the wholesale model, you buy products in bulk from a supplier, store them in a warehouse, and sell them at a markup. This model gives you more control over your inventory and customer experience.
Pros:
Higher profit margins compared to dropshipping or POD.
Full control over product quality, packaging, and shipping.
Ability to create a more personalized customer experience.
Cons:
Higher upfront costs for purchasing inventory.
Need to manage storage and fulfillment.
Risk of unsold inventory.
Best for: Entrepreneurs with capital to invest upfront and a clear vision for their product line.
4. Subscription Box
Subscription box models involve delivering curated products to customers on a regular basis (monthly, quarterly, etc.). This model creates recurring revenue and builds customer loyalty.
Pros:
Predictable, recurring revenue.
Opportunity to build a strong community around your brand.
Customers enjoy the element of surprise with curated products.
Cons:
Complex logistics for sourcing and shipping regular boxes.
Higher customer service demands.
Best for: Entrepreneurs who want to build a subscription-based business and have a knack for curating unique products.
5. Manufacturing Your Own Products
If you have a unique product idea, you can manufacture and sell your own products. This model allows you to have full control over your brand and the products you offer.
Pros:
Full control over product development, quality, and branding.
Higher profit margins.
Ability to create a unique brand with exclusive products.
Cons:
High upfront costs for manufacturing and inventory.
Need to manage fulfillment, shipping, and inventory.
Best for: Entrepreneurs with a specific product idea who are willing to invest in the manufacturing process.
Choose the Model That Aligns with Your Goals
Each business model has its own pros and cons, and the right choice depends on your budget, risk tolerance, and long-term goals. Whether you want to start lean with dropshipping or build a subscription empire, selecting the model that fits your vision will set your ecommerce store up for success. You may also find yourself playing with all of them at some point as print on demand may be a viable option to test the market on a new product that you don’t want to invest fully into yet.
Want help with your store on check out our courses or connect with us for a more one-on-one approach. Also, subscribe below to our newsletter to see stories of Women in Business along with business and financial tips. Want to highlight a woman in your life? Get in touch with us here!
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