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Like any small business, the goal of an e-commerce company is to make money. The key to succeeding in the e-commerce industry is to work with a sustainable revenue model. The e-commerce industry is booming, and sales from online retailers are forecast to increase a whopping 385 percent this decade. A successful e-commerce entrepreneur has business intuition, knowledge of the market, a flawless business plan, and a sound understanding of products and business models. The challenge for today’s e-commerce business owners is knowing how to model a digital business and what revenue model to implement.
What’s a Revenue Model?
A revenue model is a business’s plan to generate income. These models range from standard to complex and influence manufacturing, purchasing, distribution, marketing, and other cost decisions until a profit is made. A revenue model is an in-depth view of a business’s revenue structure and outlines the various revenue streams that are possible.
The right software helps online sellers better connect with their target markets and realize more revenue. With revenue operations
software from Configure One, you’ll have the business tools necessary to create better buying experiences, sales cycles, and manufacturing processes. Integrations with ERP and CRM solutions such as Salesforce and Netsuite CRM make it easy to stay current with accurate customer information and product pricing. Data analysis and metrics provide actionable business insights and better visibility into quoting and positioning activities.
Design and visualizations make it more efficient to go from concept to sale, no matter how complex the product. A CPQ platform allows you to optimize the sales to the production process and deliver a superior customer experience. Partner relationship management means closing sales faster with workflows that automate sales processes and increase partner channel engagement. When it comes to modern revenue management, leveraging the right software is the smart way for online business owners to succeed.
Common E-Commerce Business Models
Entering the digital commerce realm requires an understanding of business models. A business model not only outlines how your business will earn revenue but also considers all business aspects regardless of the type of e-commerce business you’re operating. The most common e-commerce business models include Business to Consumer (B2B), Business to Business (B2B), Consumer to Consumer (C2C), and Consumer to Business (C2B) e-commerce companies.
One of the best practices of e-commerce sellers is to understand the sales tax obligation of any goods and services sold. Understanding tax laws, deductions, tax credits, and how to prepare an income tax return is complex for business owners. The best way to approach business financials is to work with an e-commerce tax accountant. The experienced e-commerce accountants and bookkeepers at Fully Accountable specialize in industry niche solutions, multi-sales channel operations, omnichannel marketing, reconciliation of merchant accounts, and more.
Investing in financial services such as an optimized chart of accounts, forecasting, data analytics, CFO advisory services, financial planning, and cash flow management support is the best way to increase your bottom line. The professional tax preparers offer accounting services that include daily bookkeeping, reconciliation of all accounts, cash flow management support, company financial planning, and business growth planning and reporting. Working with a good accountant prevents surprises at tax time and allows you to focus on sales operations and revenue growth.
Common E-Commerce Revenue Models
There are five types of e-commerce revenue models that you can implement. The sales model is the most common, where profits are made by selling products or services online. All online sellers follow the sales revenue model, even if they have other revenue streams. Those online sellers who use the advertising model advertise their products and services on a popular platform for a fee. Platforms either charge a flat advertising fee or the cost is based on pay-per-click (PPC).
The subscription model charges users a recurring monthly or annual fee for products or services that are regularly delivered. The transaction fee model charges a fee for every transaction made on the platform, such as seller fees on eBay or transfer fees on PayPal. The final revenue model is the affiliate model, whereby online businesses earn revenue by promoting and selling another person’s product or services on their sites.