Top five delivery models for your eCommerce business

Retail eCommerce sales are predicted to grow by 39% over the coming years, surpassing $8 trillion by 2027.

There are no signs of online shopping popularity slowing down anytime soon, so it’s time to consider setting up an eCommerce business. 

Firstly, you need to decide on the best eCommerce business model – the strategy you use to sell your products or services to customers.

You can pick just one or integrate multiple models strategically. Here are the main six eCommerce business models: 

• B2C (Business-to-consumer). This is a business that sells products or services, such as clothes, groceries, and household supplies, directly to individual consumers.
• B2B (Business-to-business). This is a business that sells products or services, such as office supplies or car parts, to other businesses that use them in their operations or to complete their products. 
• C2C (Consumer-to-consumer). This is a consumer who sells or trades products or services with other individuals through marketplaces and online platforms, such as eBay and Vinted.
• C2B (Consumer-to-business). This is a consumer who sells products or services to a business. For example, freelance writers, guest bloggers, designers, and accountants.
• B2G (Business-to-Government). This is a business who sells their products or services to federal, state, or local government agencies. For example, an ammunition manufacturer that builds guns and missiles.
• B2B2C (Business-to-business-to-consumer). This model is a partnership between two businesses to sell products or services to consumers. For example, a food delivery platform such as Uber Eats partners with restaurants to deliver food to customers. 

Once you’ve chosen an eCommerce business model, it’s time to choose a delivery model.

5 eCommerce delivery models

So here are the top five eCommerce delivery models to choose from and their advantages and disadvantages:

1. Dropshipping 

The dropshipping model allows you (the retailer) to purchase a product from a third-party supplier (a dropshipper), who then delivers the product directly to the customer who placed the order through you.

For example, a retailer receives payment from a customer for a $250 pair of sneakers. The retailer then orders the sneakers from a third-party supplier for $210. The third-party supplier delivers the sneakers directly to the customer, and the retailer makes a $40 profit. 

Advantages of dropshipping

• There are low start-up costs.
• No inventory management is required. 
• It is a low-risk business model.
• Easy order fulfillment.

Disadvantages of dropshipping

• It’s a highly competitive market. 
• You have little control over shipping times and product quality.
• You have to abide by different selling channel policies.
• It’s hard to give excellent customer service.

2. Wholesaling 

The wholesaling model allows you (the retailer) to deliver products in large quantities to other businesses or retailers at discounted prices. This is based on the principle that the more you buy, the less the cost per unit. 

For example, a food supply wholesaler sells bulk orders of rice to restaurants, who use it to serve their own customers.

Advantages of wholesaling

• Buying products in bulk gives you a higher profit margin. 
• You don’t have to market or advertise your products.
• You spend less time on manual entry and admin tasks.

Disadvantages of wholesaling

• It requires a lot of upfront investment. 
• You have many responsibilities, such as managing inventory and fulfilling customer orders. 

3. Subscription

The subscription model allows you to deliver a product or service to a customer regularly. The customer will choose a recurring date, such as the 1st of every month, to receive their repeat order.

Replenishment subscriptions deliver essential or regularly consumed items to customers so that the customers never runs out if they forget to reorder them manually.

For example, a customer might select to have their new protein shake delivered every two weeks, as they know how long a packet lasts. The new protein shake will be at their door before the other has run out.

Curation subscriptions deliver a selection of curated goods to the customer on a regular basis. The customer often first sees these products when the package arrives.

For example, a customer in the US might choose to receive a curated box of UK-based treats and foods once a month. The company would choose a selection of choices for the customer each month.

Advantages of subscription eCommerce

• You’ll earn a consistent income.
• It boosts customer loyalty.
• You can easily forecast how many sales you will generate.
• It’s easy to plan what inventory you need.

Disadvantages of subscription eCommerce

• The market is highly competitive.
• Selling subscriptions can be tricky because it is a massive commitment for the customer. 
• Even a tiny mistake can lead to the cancellation of the subscription.

4. White labeling 

The white labeling model allows you to buy products from a third-party manufacturer and sell them with your company’s branding. When customers buy the products, they think they have been manufactured by you.

White-label products are mass-produced and then customized for several brands.

For example, a manufacturer might produce a generic water bottle and then customize some with your brand’s logo and others with another brand’s logo.

Advantages of white labeling

• The initial investment cost is low since you are not involved in the manufacturing process.
• It is effective for testing the viability and popularity of a trending product.

Disadvantages of white labeling

• You need to be sure that your product or service is in demand and ensure that you can sell it all.
• The same products are often sold by several retailers so there is lots of competition. 
• Since you are not part of the manufacturing process, you have no control over the quality of the products.

5. Private labeling

The private labeling model allows you to hire a third-party manufacturer to create a unique product for you to sell exclusively.

Once the products are made, the manufacturer can ship them directly to the customer or to your warehouse so you can manage the supply chain yourself.

Advantages of private labeling

• It is your own product idea, but the manufacturing is done by someone else.
• You have complete control over the product, including its specifications and packaging.
• You have the option to invest in a warehouse or not.
• You have more time to focus on growing your eCommerce business through marketing, branding, and customer service.

Disadvantages of private labeling

• You have to carry the losses if there are any delays from the manufacturer or if they make low-quality products.
• Most private label manufacturers have a minimum order requirement, so you have to purchase more than you might be able to sell.

Conclusion 

When choosing your business and delivery models, it’s essential to consider the people who will buy your products – your customers.

No matter what eCommerce delivery model you choose, you will face the challenges highlighted in this article. 

However, a range of eCommerce platforms, such as Shopify, Wix, and WooCommerce, allow you to set up your online store easily. You choose a theme, add your products or services, and start selling.