E-commerce Business Revenue Models.

Business Revenue Models

What is Revenue?

• Revenue is the amount which a company receives from selling goods (उत्पाद) and/or providing any kind of services to its customers or clients. 
• On the other hand it is the income generated from any kind of business operations, includes discounts and deductions (कटौती) for returned any merchandise (व्यापार). It is gross income earned from which costs are subtracted to determine net income.
• Revenue Formula (Revenue = No. of Units Sold x Average Price)

Revenue vs Net Income

• Revenue is the top line of a company's income statement, net income is referred to as the bottom line.
• The difference between the amount of revenue and the net income is quite different. Here are some hypothetical amounts to illustrate the points

                 Revenue from sales of products $800,000

                       Cost of the products that were sold $700,000

                Expenses (wages, rent, ads, etc.) $88,000

Net income (before tax) $12,000

Types of e-commerce revenue models

• Advertising Revenue Model
• Subscription Revenue Model
• Transaction Fee Revenue Model
• Sales Revenue Model
• Affiliate Revenue Model

Advertising Revenue Model

• There is always a commission charged to advertisers to put up their advertisements in a well known online marketing platform to develop any business this principle that is being followed is known as Advertising Revenue model. 
• They take advantage of the huge traffic who regularly visit the chosen online platform to shop any product, click the image and they get redirected to the actual site. 
• The payments are also made to the hosting platform based on commission or decided according to the traffic density that is used to the business.
• Business following the Advertising Revenue Model at presents is an indirect way of earning revenue through a digital platform and the way by displaying marketing  banner, wallpaper, skyscraper or rectangular ads. 
• These are paid according to the traffic that is driven from the platform through the ads. 
• The general income is calculated against Cost per Click (CPC) or Cost per Action (CPA). 
• Google Adwords and Adsense are the most trending and reliable options that allow you to place your ads through the Google Search engine to grow your business because the business website are searched with the related keywords.

Subscription Revenue Model

• Normally you have heard of Amazon Prime, YouTube Premium, Netflix, etc who let you enjoy their unlimited services. 
• These e-commerce business models charge their users or subscribers based on a certain interval of time (daily, monthly or annual) to avail their services.
• The services offered by these companies include music,  special services, videos, TV channels, magazines etc. 
• Which is offered to the subscribers for a price to watch/listen the latest entertainment item.
• Some examples of basic subscription business models.
• Premium membership: Lots of social medias and business platforms like Xing, Linkedin, Instagram and b2adigitals, etc. offers subscriptions to avail of additional services that get the subscribers to access to daily updates, newsletters, short notices, etc. 
• All above information and updates are delivered to them directly to their account.
• Internet service providers: We all know about monthly and annual subscription of internet service providers or broadband connection enabling the subscribers to enjoy unlimited internet service. 

Transaction Fee Revenue Model

• All the e-commerce business adopting the transaction fee revenue model charges a fee to a seller for every transaction made by them. 
• These are the payment companies that provides the payment gateway service to other eCommerce business platforms.
• The operator provides a platform for the e-commerce marketplace through which the transaction can be completed.  
• The model has the proximity to the affiliate marketing but different in some cases.
• Let’s take the example of PayPal. The company charges a transaction fee to the sellers of the product once the transaction is completed. 
• Similarly, eTrade gains a transaction fee whenever a stock transaction is made with a customer. 
• The amount to be paid to the operator is either decided upon based on a percentage or a fixed amount with the vendor. 
• Amazon, Flipkart are some another examples of a transaction fee revenue business model.

Sales Revenue Model

• This is the most commonly used e-commerce business model where wholesalers and retailers sell their product over the internet intending to reach out to a larger target audience. 
• This model brings inconvenience for the customer as well as save time for them and the hassle to walk up to their physical store.
• The prices are often competitive in comparison to the actual store price.  
• The business following the online sales model mostly comes with marketplaces as common entry points that allow them to deal with different-2 products. 
• In certain cases, the sales are directly injected into the business where the profit is shared with none. 
• For example all the single shop companies selling their products over the internet using their online platforms.  
• Like Amazon, Otto, Flipkart etc are examples of businesses following such a model for their web catalog-based business over the internet. Also. Buy.com, Etsy are examples of such marketplaces.

Affiliate Revenue Model

• Affiliate Revenue Model deals with a business that is based on the principle of commission. Here merchants and vendors get together with well-known e-commerce platforms to advertise and sell their product giving them a percentage of the profit as a commission. 
• The process basically works as a link that is hyperlinked to the affiliate and is delivered on a host platform that gets regular traffic. 
• Any user who clicks to the affiliate link is redirected to their website where the product or service is listed or displayed. 
• The affiliate or the merchant thus pays an agreed commission to the host operator who’s carrying the link for every traffic driven.
• Amazon and Ebay are well-known examples that let you affiliate your product links and drive traffic. For each lead driven to your website, you need to pay a certain percentage to Amazon or affilinet as their commission. 
• There are a lot of other business models that are being used today to gain profit from the online marketplace. 
• So we can say that e-commerce business and digital marketing work together while delivering the business objective.