Business models of online Retailing
A business model is not a plan for how you will run your business, it determines how you will create value – for your customers. Once you create this value, then you can decide the best way to generate corresponding revenue.
In the offline world, value is created by the goods and services on offer. Customers see value for themselves in a particular offering, and they are willing to pay to obtain this value. The classic offline model is the physical store where these transactions take place. Catalogues, mail order and telephone sales have added additional offline channels.
With the arrival of online e-commerce, possibilities for new ways of selling have expanded. Online stores can take many different forms and use different methods for conducting sales. In fact, in the online world customer value can be created by the business model itself. The books that Amazon sells are the same as the books in a retail store, often at similar prices, yet customers find value in the way Amazon conducts its sales.
Two new factors make online business models more compelling and more powerful:
Customers can Add Value
Because the Internet allows easy two-way exchange of information, customers now respond quickly and easily to business offerings. The information provided by customers is used to improve existing goods, correct service errors, and design new offerings. For example e-commerce websites routinely add customer reviews to their sites, knowing that reviews are powerful motivators helping new customers make a buying decision.
Multiple Models at Once
An online business can use several business models at one time, each contributing to the overall revenue. A site selling website designs, also provides hosting services, as well as shows advertisements for complimentary products and services. Startup companies frequently begin using multiple models, since they are not sure which will work in the long term. Those which do not meet objectives can be quickly ended, and the successful ones can be expanded.
Online Business Models
There are many ways to categorize business models, especially online. Here is a list based on who is funding the operation.
For channel pays, the end user does not pay, at least directly. A third party is willing to pay in order to have access to the end user.