Amidst the COVID 19 pandemic, it’s possible you have probably realised the new developments and opportunities in the ecommerce space.
If you haven’t realised it yet. You could study the trends to become abreast with where investors will be putting their monies in after the covid 19 is over. Ecommerce is a big field to look into hence this is just an introductory post highlighting the revenue models ecommerce businesses operate on.
(E) stands for electronic medium
Commerce is business
Combining the two
We get electronic business
So any entrepreneur who conducts transactions through electronic means thus internet or mobile softwares is doing ecommerce and they all operate using a system called payment gateways to run their transactions. Simply put, the act of buying and selling through the internet is ecommerce .
Ecommerce comes in different forms
Categorised into differing revenue models
Again, ecommerce can also be further categorised into products and services, which is sub categorised into niches like fashion, electronics, real estate or service niches like advertisements or content production/generation niches, agencies and educational platforms.
Most e-commerce business fall within any of these revenue generation models
I will end today’s series by explaining the categorizing of ecommerce based on revenue models
So Ecommerce or online businesses like facebook, search engines like google, twitter, and most social media apps, forums like quora, this includes some blogs and news site- generate their revenues through advertisements and sponsored links.
These apps heavily rely on advertisements as the main stream of revenue but there are other supporting streams of revenue.
Then, there are other models that generate revenue on commissions and delivery services, a typical example is the Jumia app for shopping. Most of the ecommerce that generate revenues through this model are either retailers that list products from manufacturers either through drop shipping or by keeping their own inventory.
Take note of drop shipping and inventory, they are keywords when it comes to this model. I will talk about them In future posts.
There are other apps like Netflix or most of these photo uploading sites for photographers that charge subscription fee, either monthly or daily or yearly subscription for users. This serves as a direct means of generating revenue. Other agencies like job boards also operate using this models
The is an option for one to operate ecommerce using a system called affiliate sites where the site owner enlists products from other sites like Jumia and Amazon, having in mind that you will write posts about them constantly and review them in order to attract massive traffic to convert the visitors into buyers. When the visitors buy these products, special codes are used which identifies the affiliate link through which the user bought it. Jumia and Amazon runs such affiliate programmes.
The site owner running the affiliate programme earns on commission after every product or service is bought. The cool thing about affiliate programme is that it works perfect for both products and services.
Uber and other ride hailing apps generate revenue on the percentage commission system. Where they charge a percentage let’s say 25% of daily sales on each driver. The Ghanaian app which serves as a good reference for percentage commission is Readerapp. A platform which created convenience for authors to upload books. Authors earn extra income and readers fill their minds with pleasure.
Since this is an introductory post, I will end it here. Readers should look forward to subsequent posts on ecommerce niches. Varying niches you can explore to diversify and to earn extra income. Some of these niches come with high profit margins and require high investments capital . Some too can start with as low as 3000 Ghana cedis
The writer is a blogger at www.floatghana.com
Reach him through [email protected] for further discourse and do well to comment below on any ecommerce revenue model you think has been left out.