Models of E-Retailing: Comprehensive Notes & Concepts

Core Business Models of E-Retailing

• Online Marketplace: Platforms (e.g., Amazon, eBay) host multiple vendors

• ➔ Sellers pay fees/commissions

• ➔ High competition drives prices down.

• Brick-and-Click (Omnichannel): Traditional physical stores expand online

• ➔ Creates synergy between offline and online channels

• ➔ Main challenge is managing dual inventory/logistics.

• Direct-to-Consumer (D2C) / Direct Selling: Brands (e.g., Dell, Cisco) sell directly to customers via their own websites

• ➔ Complete control over branding, pricing, and data

• ➔ Achieves Disintermediation (cutting out the middleman)

• ➔ Permits mass customization.

• Subscription-Based: Customers pay a recurring fee for ongoing access to products/services (e.g., Netflix, Birchbox)

• ➔ Creates predictable revenue and strong loyalty

• ➔ Main challenge is churn management.

• Dropshipping: Retailer holds zero inventory

• ➔ Partners with suppliers who ship directly to the end customer

• ➔ Low upfront investment

• ➔ Thin profit margins due to supplier fees.

• Crowdsourcing & Crowdfunding: Customers pre-buy products to fund production (e.g., Kickstarter)

• ➔ Mitigates financial risk

• ➔ Engages customers in product validation.

• Social Commerce: Selling directly inside social media platforms (Facebook, Instagram)

• ➔ Highly visual

• ➔ Relies heavily on user-generated content and platform algorithms.

• Flash Sales & Daily Deals: Limited-time heavy discounts (e.g., Groupon)

• ➔ Creates a sense of urgency

• ➔ Drives high impulse purchases.

• Affiliate Marketing: Partners (affiliates) promote products for a commission

• ➔ Performance-based, low-risk marketing strategy.

• White Labeling & Private Labeling: Buying generic products from manufacturers to sell under your own brand (Private) or another brand (White)

• ➔ Offers exclusivity without the cost of manufacturing.

 Classification by Store Type & Specialization

• Generalized E-Store: Sells a massive variety of different product lines under a single, unified management.

• E-Mall: A digital space rented out to multiple independent cyber e-stores

• ➔ E-mall management only provides web hosting, marketing, and software tools, NOT product management.

• E-Brokers (Electronic Intermediaries): Middlemen connecting buyers with suppliers

• ➔ They take orders, provide comparison shopping, and fulfill specific requirements (e.g., finding the best price).

• Specialized E-Store (By Product Line): Sells only one specific category (e.g., only books or only clothes)

• ➔ Can cater to high-end brands (Gucci) or mass-market discounts.

• Specialized E-Store (By Function): Targets a specific buying behavior

• ➔ Example: Lastminute.com matches last-minute desperate buyers with sellers who have spare capacity (empty airline seats) to create a win-win pricing situation.

 Common Process Models in E-Retailing

• Web Store Linked to One Store: The website only shows the catalogue of one specific physical store in a chain

• ➔ Orders are executed through that store’s Point of Sale (POS) in batch mode.

• Web Store Linked to Warehouse: The online catalogue reflects bulk warehouse stock

• ➔ Execution happens directly from the warehouse

• ➔ Integration is real-time or event-driven.

• Physical Store with Web Storefront (BOPIS): Customers place orders online but pick up the item physically from the store

• ➔ Allows for pre-booking of new models.

 Operational Models for Web Stores

• Pure Play: Retailers that exist 100% online with no physical stores whatsoever.

• EBO (Exclusive Brand Outlet) on Popular Platforms: Launching a store on high-traffic portals (e.g., Rediff, Indiatimes)

• ➔ Quick launch and high visibility

• ➔ Difficult to sustain due to high investment costs.

• Store at the Marketplace: Setting up a shop within an E-commerce Hub (e.g., Amazon, MartJack)

• ➔ Provides scalable technology and moderate operating costs.

• Stand-Alone Stores: Mature retailers building their own destination platform (SaaS or owned software)

• ➔ Requires heavy integration with internal supply chain systems.

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