12 Business Models Types to Consider For Your Business

The business model of your business is the structure that you plan to use to generate revenues. Choosing the right business model for your product or service is instrumental in capturing your business’ true revenue generation potential by extending product reach. It is important to also mention that many businesses employ several different business models, either separately or in unison to facilitate several revenue streams.

Like most articles, featured on this website, putting together a business model is part of the business planning process.

1. RETAILING

The retailing business model is where a business sells directly to the public after purchasing the products from a distributor or wholesaler.

Well known businesses with retail models are Walmart and Costco.

2. SUBSCRIPTION

The subscription model is when customers pay a fee at recurring, regular intervals to access a product or service.

Examples of world renown businesses with a subscription business model are Netflix, and Amazon Prime.

3. MERCHANDISING

The manufacturing model is when a business makes finished products from raw materials. It may sell directly to the customers or sell it to a middleman i.e another business that sells it finally to the customer, such as a retailer or wholesaler, etc.

World known businesses with merchandising business models are Macy’s and Barnes & Noble.

4. DISTRIBUTION

The distributor model is where the a business purchases products directly from manufacturers and resell to retailers or directly to the consumer. In some instances, distributors my obtain exclusive distribution rights for specific products or brands in a specified geographic location by entering into a contractual arrangement with the manufacturers.

5. ONLINE MARKETPLACE

Online marketplaces provide one platform where different sellers compete with each other to provide the same product/service at competitive prices.

Examples of popular marketplace business models are Amazon and Alibaba.

6. E-COMMERCE

The E-Commerce model focuses on selling products by creating a web-store on the internet.

A popular e-commerce website is Shopify.

7. FRANCHISES

In this model, the business owner uses another established brand’s business model, processes and intellectual property under its (the parent company) guidance. The parent company is paid to purchase these rights and are paid royalties for as long as the business operates under its brand.

8. AGGREGATION

The aggregation business model is a network model where the business collects the information about a particular good/service providers, make the providers their partners, then provides these services to consumers with their own branding.

Popular companies using this model are AirBnB and Uber.

9. DROP-SHIPPING

In the drop-shipping model is, in simpler terms, and order fulfillment model. The drop-shipper supplies products by partnering with manufacturers and sellers or warehousing the products. They then partner with retailers who receives orders directly from the end consumer and ships the products directly on the retailers’ behalf o the customer once an order is made.

10. WHOLESALING

The wholesale model involves selling products in the same way as a retail, except in large or commercial quantities.

11. AFFILIATE MARKETING

This business model is a commission-based, where the affiliate generates its revenues by promoting a partner business’ products and directs all its efforts to convince its followers and users to buy the same. In return, the affiliate gets a commission for every sale referred.

This model is used by influencers on Instagram, Youtube, etc.

12. BRICK & MORTAR

The Brick and Mortar model refers to the traditional business setup where the retailers, wholesalers, and manufacturers offers their products and services to customers on face-to-face basis in a physical office, shop, or store.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s