Product Revenue Models
Once you’ve identified who you are selling to and where, you need to think about what you want to sell. Some businesses sell a single white-label product, while others offer a full selection of niche-specific products. Yet another model depends on affiliate programs across a wide swath of categories. Before opening your store, you need to decide the type and number of products. Depending on your niche, you may also need to evaluate production practices and regulations regarding what you can and can’t say (organic, for instance). But first, what IS ecommerce?
What Counts For Ecommerce
Ecommerce is a broad term, but the simplest way to define it is the exchange of services, and products online. Affiliate, physical, and digital products all fall under this purview, as do services of all kinds that involve an exchange of funds online. Our focus is on product-based businesses, so I’ll describe a few of the top models for you here. I’ll provide a few examples, so you can see what they look like in use, too.
Single Product Model
Single-product ecommerce businesses focus on a single product, potentially in varying levels, offered to businesses or consumers. One example is Nvivo, a software package made by QSR international. QSR’s only product is the Nvivo software package, although the company also offers trainings and supplemental materials for purchase by users.
This is a good model if you know you have a solid product with high demand and limited competition. Otherwise, tread carefully. Remember the adage about putting all your eggs in one basket…
When you want to test the waters in an ecommerce niche, a single category site can be a smart choice. By offering a small selection of carefully chosen products, you can build your reputation and credibility without overspending. Several retailers started with a model like this, and many continue to use it today.
Keep in mind that you can always make subcategories – take books, for example. If you open a bookstore, your category is books. But what kind? Textbooks? Ok. What area? Defining single category ecommerce is challenging when you really start to think about it. Avoid overdoing it, and stay focused. The key to success with a site like this is to focus on a specific customer avatar and their interests, then pull a subset of those interests that seems most likely to turn a profit.
Examples of ecommerce sites in this arena include Mangelsen Nature Photography, Flowers.com, and The White T-Shirt Company.
This is a smart model for new business owners, and requires minimal effort and investment to manage. The main drawback is that you’re only likely to catch the interest of a very small portion of ecommerce shoppers.
Multiple category ecommerce sites are a good choice for established brick and mortar stores. Retailers who have tried a single category site successfully and are ready to expand their offerings might be ready for multiple category sites, too.
Product selection is one of the most difficult parts of managing this type of site. One bad product can ruin your reputation, and if you are sourcing from multiple suppliers, the larger your store is, the more difficult logistics become. Examples of multiple category ecommerce stores include Target, Cultures for Health, and REI.
Amazon.com, DoTerra Essential Oils, and dozens of other companies are boosting their sales with the help of affiliates. Often through blogs, but sometimes through dedicated ecommerce stores, affiliate sales benefit the original seller by providing additional visibility and the affiliate by providing an opportunity to monetize product reviews, a personal blog, or other site.
Most affiliate sites aren’t big money makers, but they can provide an additional income stream for sites that predominantly rely on other income streams. If you’re interested in affiliate sales and ecommerce, JVZoo is a good place to connect with vendors and other affiliates.
Hybrid [Single Category + Affiliate]
For businesses that have outgrown the income stream or the product confines of a single category store, becoming a single category and affiliate hybrid store can be beneficial. You can test related product categories in your niche, risk-free, to see what your customers like. This gives you the benefit of an additional product category without requiring you to commit to marketing and managing additional products.
There are many ways to make this category of ecommerce stores work, from listing affiliate links on your store’s blog to using widgets that allow affiliate products to look like the products sold on your ecommerce store, with a seamless checkout process that won’t disrupt the buyer’s journey.