Revenue Streams and How They Fit Different Ecommerce Models

As a top SEO consultant, I need to be able to show clients how to maimise revenue streams. It is sometimes exceptionally difficult to properly classify eBusiness models, simply because definitions are quite hazy and the Web is so very diverse. At the broadest level, any commercial website is an eCommerce web site.

Certainly we may think that at least broad classifications are easy to make. There are sites that sell products, sites that provide services, and sites that make money from advertising. However, the majority of successful eBusiness models often make use of several revenue streams, and could be claimed to fit into any or all of those broad categories.

So, in this article we shall focus on the revenue streams themselves, and look at how the varying revenue types fit into a variety of differing eCommerce models.


Revenue from Sales

Lets begin with Selling Products. For our purposes, selling a product shall include providing any successfuls or service where a single one-off purchase is made.

Naturally, the revenue from sales is most easily associated with online retail businesses. The idea of sales as a revenue stream doesn't end there of course. Any site that is able to build a brand is capable of building sales from merchandising and can build on the revenue.

Google offer quite a range of merchandise, and the revenue from the sales of those products is believed to be a rather substantial supplement to the primary revenue streams that come from licensing their technology and from advertising.

The Register is best known as a supplier of news, but they too have developed merchandising to supplement the traditional advertising based income of their business model.


Revenue from Commissions

Commission payments are the primary source of income for millions of affiliate sites and reseller web sites around the world. However, it is also the fundamental revenue stream for companies such as eBay.

Online advertising agencies may also use this source of revenue in their mix when they accept CPA (cost per action) payment deals, but they prefer CPM (cost per thousand) and CPC (cost per click) deals whenever possible.

Wherever commission payment deals are carefully chosen to match the message and audience of any web property, this can be an exceptionally powerful and lucrative source of income. Commission based revenue can be adapted to fit virtually all eBusiness models.

The commission-based revenue stream is massively under-used in the majority of retail and wholesale web sites. Very few of the millions of product-supply websites have thought to refer thier clients to other companies that provide complimentary products and services on a commission basis for added income.


Revenue from Advertising

Advertising has suffered greatly in recent times online, mainly due to the fact that the supply of prime advertising space far surpasses the demand. Advertisers have also had a difficult time in learning to evaluate the value of advertising space.

However, advertising online offers impressive value compared to traditional media, and the possibilities for accurately tracking and measuring the response to a campaign is superb. As a result, online advertising is certain to continue to provide an important source of income, and a potent revenue stream for all sorts of eCommerce ventures.

Again, the value of point-of-sale advertising is very much under-used by eCommerce websites of all kinds. Once a customer at a site has purchased something, the site should know more about that person, and therefore be able to match advertising to that person very effectively.


Revenue from Subscriptions

Whether it be subscriptions to information, or subscriptions to a service, the subscription-based revenue stream is as vital to eCommerce in general as sales are.

Everyone pays a subscription of some kind just to be online at all, so the acceptance of subscription itself is not an issue. However, people will only subscribe to something where they see the value and can find no suitable free alternative.

Subscriptions can be the most lucrative of all forms of revenue, and thus companies with all business models often seek to add a subscription based element to their offerings. Software typically comes with subscription-style licensing, information sites seek to offer subscription-only content, and Search Engine Optimisation companies ask clients to subscribe for ongoing maintenance charges and reports.

In general however, subscription-based income sources are often over-used, because while they prove the most lucrative for the company, clients percieve them has being more expensive. clients like to buy something and then own it. Renting is all well and successful, but ownership is generally preferred.


Mix and Match

So, having discussed the four major types of income, the basic revenue streams available, the most important thing to note is that none of them are necessarily unsuitable to almost any online business

No matter what your primary source of income may be, there are always possibilities to utilise other sources of income. Many sites can easily add one or two additional revenue streams without the need for extensive development, but merely by exploring existing possibilities from a fresh perspective.

A large number of innovative and successful online businesses have already learnt and explored the possibility of additional income from advertising or from merchandising. Is it time for you to do the same? See consultancy.


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