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What is an Ecommerce Model?

Katriena Knights
Katriena Knights

An ecommerce model is a way that a company or individual is presented on the Internet with the goal of making a profit. An ecommerce model can include a variety of strategies, including straightforward marketing such as an online store or a site used to increase the profile of an individual in order to sell that individual's products. The latter is more often used for those who produce an end product, such as writers or musicians. Their ecommerce model often is used to strengthen the relationship between the artist and the consumer rather than to sell a product directly.

In general, an ecommerce business can produce income through three major approaches. The most straightforward of these is the one chosen by online merchants. With an online storefront and a variety of available products, this ecommerce model functions through direct sales. This type of ecommerce industry is a rapidly growing trend, with more and more people turning to the Internet to make both special and everyday purchases from the comfort of home.

Man holding computer
Man holding computer

Another ecommerce model is to generate income through advertising or affiliate marketing. Ecommerce companies who use this model do not necessarily sell a particular product or group of products, but they instead tend to provide information or entertainment, then charge advertisers to place ads on the site. With affiliate marketing, the hosting site receives a small percentage of the sale if the purchaser buys through a specialized link.

Because setting up an online store to handle electronic commerce requires high-level programming skills, ecommerce hosting has become a booming business. Using a hosting company as the basis for an ecommerce model adds to the expenses of the initial setup, but it usually is less expensive than hiring a specialized programmer. Hosting sites generally provide templates and all necessary back-end coding to set up an ecommerce business without necessarily having to possess special programming knowledge. Typically, they require a flat fee for setup and a monthly subscription cost to continue using the service. Alternately, the software can be purchased, or an open-source code acquired, and the storefront is set up on an independent server.

As Internet commerce continues to grow, the ecommerce model will become vital for any new company. Along with traditional sales models, companies will have to put a plan in place to capture the huge and rapidly growing market of ecommerce business in order to remain competitive. Consultants specializing in putting together an ecommerce model for new or existing companies already see a good amount of business coming their way, and this market is likely to continue to grow.

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