Starting an eCommerce business can feel overwhelming. You’ve got ideas swirling around, but figuring out the right ecommerce business model? That is for sure a headache.
Trust me, I’ve been there—confused, overthinking every option, and worried about making the wrong choice. But here’s the thing: not every eCommerce business model is complicated or requires a lot of money to start.
There are several beginner-friendly models that you can start with minimal investment and low risk. In this article, we’ll discuss 9 different profitable e-commerce business models and their pros and cons.
What is an eCommerce business model?
Every eCommerce company you know of today has a business model in which they operate.
This eCommerce business model is the operational framework that defines how a business sells products or services online, provides value to its customers, and generates revenue.
There are several types of eCommerce business models, and choosing the right model as a beginner helps you identify your target market, value proposition, pricing strategies, and future expenses.
Here are the common types of e-commerce business models:
Business-to-Consumer (B2C) E-commerce business model
This is the most common type of e-commerce business model, where a business sells its products or services to individuals (consumers) online.
This type of business model is mostly what people always think of when they hear the word ‘e-commerce.’
It applies to most of the online retail stores you buy items from, for example, Amazon, Walmart, and Instacart.
These retail stores are examples of B2C businesses. But mind you, the B2C business model doesn’t only refer to the selling of physical products to consumers.
You can also sell non-physical products to consumers, like music, ebooks, movies, etc.
Examples of B2C businesses that sell non-physical products include Netflix, Spotify, and Amazon Kindle.
Business-to-Business (B2B) E-commerce business model
This e-commerce business model is where a business sells to another business. In this case, businesses are the buyers and not individual consumers.
For example, you might sell cotton wool to another business that needs this cotton wool to make sweatpants and sweatshirts for consumers.
Or you might offer a service like SEO to businesses looking to improve their online visibility. All these examples are B2B business models.
Examples of businesses that operate on a B2B e-commerce business model are logistic companies like FedEx, freelancers, Mailchimp, HubSpot, and Alibaba.
B2B business models can be highly profitable because you tend to receive bulk and repeat orders. If you offer services, you could receive recurring revenue from clients. However, the customer base is not as large as the B2C e-commerce business model.
Consumer-to-Consumer (C2C) E-commerce Business Model
Have you ever sold an item you no longer needed on Etsy or Craigslist? This is what we call a C2C business model.
This business model is the direct opposite of the business-to-consumer model and is also referred to as P2P (peer-to-peer) selling.
It is often facilitated by online marketplaces, where you, as an individual (consumer), sell your products or services to another consumer within the online platform.
Examples of these marketplaces can be Amazon, eBay, Etsy, Poshmark, or Facebook Marketplace, where individuals list products they already own or sourced from retailers to sell to consumers on the platform.
The platform or marketplace that facilitates the transactions between both consumers always takes a percentage of their sales. C2C is a profitable business model with low to zero start-up costs. However, it is a very competitive market.
Consumer-to-Business (C2B) E-commerce Business Model
This business model is far less common compared to B2B, B2C, and C2C. In a C2B business model, an individual (consumer) offers its products or services directly to businesses.
Think of freelance platforms like Upwork or Fiverr, for example, where individuals offer their services directly to businesses looking to hire talents for specific projects.
This business model is growing in popularity and is highly lucrative for beginners looking to start an online business with low to zero cost.
9 Profitable eCommerce Business Model Delivery Frameworks for Beginners
E-commerce business models have revenue models or delivery frameworks that outline how your business will make money, reach customers, and deliver value to them.
Here are fifteen profitable e-commerce revenue models you can try out in 2025.
1. Dropshipping
If you have little to no startup costs and you’re looking to start a profitable online business, dropshipping with your website is a lucrative revenue model to make money online.
This business model involves:
- setting up your website,
- connecting with suppliers or vendors who sell products you’re interested in,
- listing these products on your site,
- sending orders you get on your website over to the supplier you’ve connected with,
- and having them ship the order to your end customer on your behalf.
Pros of dropshipping
Streamline sales
The amazing thing about the dropshipping revenue model is that you don’t need to manage inventory or fulfill orders yourself.
Your supplier does all these for you. They’re responsible for packaging and shipping the order to your customer. Sounds great, right?
Low startup costs
Dropshipping comes with low startup costs. All you need is a simple, functional e-commerce website, which can cost you as little as $50-250 for hosting and prebuilt website themes per month.
Cons of dropshipping
Highly competitive
You might struggle to set yourself apart from the competition because other stores may have a larger inventory, and as a beginner with no inventory relying on suppliers, you aren’t in full control of your products and prices.
Heavy marketing
If you want to consistently make a profit off dropshipping, you need to do a ton of research and have a great marketing and advertising plan set up.
Find products with a high-value proposition, suppliers with at least negotiable and affordable prices, and consider shipping and packaging costs.
Don’t stick with one supplier. You need to get as many suppliers as possible because if a supplier decides to stop selling a product or a product is sold out, you can’t sell that product anymore.
Difficult to manage customers
Another downside of starting a dropshipping business is that running customer support can be a hassle.
If a customer happens to have a complaint about a product or they haven’t received their product because you’re the one they’re in contact with, you’ll have to take the blame for it, even though it’s technically not your fault.
Order fulfillment delays
Sometimes suppliers can delay orders and can be unreliable. This might hurt your brand reputation.
2. Retail Arbitrage
Now this model is different from dropshipping in that you tend to keep inventory; you don’t have to work with any supplier to fulfill your customer orders, and you don’t even need to set up a website to start selling.
Retail arbitrage is the practice of sourcing products on marketplaces like eBay or Amazon at a discounted price and then reselling them at a higher price on another marketplace to make a profit.
An example of this business model would be finding a product on Etsy that sells for $10, you purchase it, and then resell the product on Amazon for $25.
As customers search for products on Amazon, they can come across your product and be compelled to buy, leaving you with a profit of $15.
Initially, with retail arbitrage, you’re simply taking advantage of the price difference between two or more markets to make profits.
You can choose to do retail arbitrage using online marketplaces like Amazon, Walmart, or Etsy, where you’ll compare prices of products across platforms and resell them.
Pros of retail arbitrage
Low barrier to entry
In this business model, there’s zero overhead cost. There’s no website required, and the best part? You don’t need to fulfill the orders yourself or handle customer service.
No need for suppliers
You also don’t need to find suppliers. All you need is an active personal account on the platform you source and purchase products from and a seller account on the marketplace you want to resell the product on.
For example, Etsy is pretty well known for selling affordable items. You can create a personal account on Etsy to find and purchase affordable products and list them on Amazon with a seller account.
Faster to set up
Unlike dropshipping, retail arbitrage is faster and easier to start. You don’t need to spend hours, days, or weeks looking for suppliers to trade with.
Cons of retail arbitrage
Competition
However, the downside of this model is that you’re going to have to compete with other resellers of the same product to get the sale.
Overall, this business model is a great choice for cash flow compared to dropshipping but has very poor sustainability.
3. Manufacturing
Another profitable business model you can try out is manufacturing your products and selling them on your website or a marketplace like Amazon.
This revenue model is great if you already have a unique product idea or a modernized feature of an already existing product.
To do this, you can find manufacturers, pitch your idea to them, and have them make the products for you in bulk and brand them as well.
This way, you have control over the creation of the product and the quality, quantity, uniqueness, and branding of products produced.
Using the process to make your products is known as private labeling and is best for you if you’re looking to create unique products on a large scale.
If you don’t have the resources to produce products, you can source manufacturers with factory-made products on platforms like Alibaba or AliExpress and have them distribute their products to you, then place your brand label on the product to sell as your own.
This act is what we call white labeling, where the manufacturer has control over the number of products you get, the size, and the color, whereas private labeling allows you to have control over the entire design and features of the products.
If you want to take production into your own hands and start small, you can sell handmade products, like bags, crochet sweaters, candles, etc.
This allows you to dictate the quality of your products at lower costs compared to private or white labeling, which requires a much larger upfront cost.
Pros of manufacturing
Low barrier to entry
What’s nice about making products yourself is that it has relatively few barriers to entry. You don’t even need to worry about a website to sell or generate traffic.
You can leverage marketplaces like Amazon or Etsy, which is a platform known for selling mostly handmade products.
High profit margins
Another thing with the manufacturing of e-commerce business models is that the profit margins are super high as you get to set your price. The profit margin for selling your own-made products, like candles, ranges from 25% to 50%, according to Shopify.
Cons of Manufacturing
Inventory costs
However, the downside to making your products is you’ll have to keep inventory, especially if you’re private or white labeling, and your inventory investments can cost thousands of dollars.
Long production process
Manufacturing products can also be a long-winded process; from prototyping and sampling to refining and production, the process can be time-consuming, and each process requires upfront investment to get started.
4. Wholesale
Most people consider selling wholesale products on your website and keeping inventory as the traditional e-commerce business model.
This business model is the practice of buying products in bulk at a lower price directly from suppliers or manufacturers and then reselling them to retailers in smaller quantities.
Wholesaling business models come with high profit margins of up to 50% because you can buy these products in bulk at a discount from the supplier and then resell them at a higher price to retailers.
To run a wholesaling business, you’ll need a warehouse space to keep inventory. You can either sell your items on your website or marketplaces like Amazon, AliExpress, or Alibaba.
Pros of wholesale
Exposure to a wider reach
Wholesaling is highly scalable and has lower risks. You can reach a wider market and generate consistent repeat sales, as many retailers depend on wholesalers to get stocks.
Customer retention
As retailers depend on wholesalers to replenish goods, the customer retention rate is high, especially if your products have a high sell-through rate.
Cons of wholesale
Inventory management
The downside to selling wholesale is that you may find it difficult to manage inventory as you store items in large quantities.
Competitive
It’s also competitive because wholesale products are available to multiple retailers.
For example, some retailers may prefer to source products directly from other suppliers, making it hard to differentiate yourself and convince them to buy from you.
Managing suppliers
It can be difficult to manage suppliers, especially if you sell a variety of products from different manufacturers.
5. Print on demand
If you’re creative and would like to make some money off your creative skills, print-on-demand (POD) gives you the freedom to turn your creative ideas into profits without the high startup costs.
It’s a dropshipping model where you purchase white-label pre-order items like tote bags, mugs, and t-shirts from a third-party website.
Then, you set up a website or create a seller account on a marketplace where you’ll sell these products and then connect your online store to a print-on-demand platform like Printify or Printiful
After, you create mockup designs, apply them to these products, and have them list them on your website or marketplace like Etsy.
Once a customer places an order, the third-party print-on-demand service prints the product, packages it, and ships your customer’s order all on your behalf. Sounds cool, right?
This business eliminates the need for startup costs, purchasing products, keeping inventory, packaging, and shipping orders. All you have to do is focus on marketing and design.
If you do not have professional design skills, you can hire a freelance graphic designer to create designs for you, or you can get custom-made designs from subscription websites that you can use to print your products.
However, the best option is to use AI, especially as a beginner with no startup cost. You can create prompts to get an AI tool to generate the design for you without having to pay a graphic designer or a subscription service.
Before you start creating designs, you want to do market research to figure out what designs are trending and what your potential customers will like to buy.
If you aren’t doing product research, then the product designs you make aren’t going to be relevant to anyone, and you aren’t going to get any sales.
If you’re creating designs that you feel look cool and aren’t what your customers want, then your store isn’t going to attract the customers you have imagined.
Pros of Print-on-Demand
Lower costs
It’s easy to set up a print-on-demand business with little to no costs, and you also don’t need to keep inventory.
Scalability
It’s faster to create products in minutes. Your supplier also ships and fulfills orders. You only need to focus on customer service after you make a sale.
Cons of Print-on-demand
No control over order fulfillment
Because the shipping and fulfillment process is done by your supplier, you often have no control over the process to know what products are being shipped, the cost of shipping, or the quality of products before they’re shipped.
No control over product quality
You only make the designs, and your print-on-demand service provider handles the product creation process, giving you no control over the quality of products your customers receive.
6. Digital Products
Selling digital products is a beginner-friendly business model that you can set up in just a couple of hours with no professional skills and little to no startup costs required.
Selling digital products is one of the easiest ways to make money online.
Unlike physical goods, digital products such as eBooks, templates, audio, games, and online courses don’t require inventory, shipping, or storage.
I’ve seen creators earn five figures monthly by selling design templates or niche eBooks online.
You can do the same by solving a specific problem for your audience and creating a valuable digital product that customers would want to buy.
Pros of Digital Products
Low Overhead Costs
It doesn’t require heavy startup costs, and you don’t have to keep inventory or worry about shipping charges.
Scalability
It’s easy to scale, and you don’t have to worry about selling out or replenishing products. Once created, you can sell repeatedly.
Cons of Digital Products
Competitive
While selling digital products can be lucrative, the business model is highly competitive, as customers could have access to free alternatives to yours.
Risk of piracy and theft
There’s a risk of some people reselling your products as theirs.
7. Subscription
A subscription business model involves selling a product or service for a weekly, monthly, or yearly recurring fee.
This type of business model can be seen in SaaS, consumer application software, blogs, newsletters, movie streaming, or educational platforms, where a customer is charged a monthly or yearly recurring fee to have access to information, products, or services.
A good example of a subscription business model is an online streaming platform like Netflix, where you sign up to their platform and choose to pay a monthly fee to have access to their selected movies and TV shows.
Pros of Subscription
High Customer Retention Rate
A subscription business model is highly lucrative and can boost customer retention if you have a product that solves a problem and is valuable to customers.
Steady Cash Flow
It gives you a predictable, steady cash flow that allows you to plan inventory, manage, and scale your business.
Cons of Subscription
High Risk of Churn
However, the downside of the business model is that you can experience a high risk of churn because customers can decide to cancel their subscription and never return, so it’s important to keep customers interested and engaged to encourage repeat purchases.
8. Fee-for-service
This is a service-based business model where an individual or a company provides a service in exchange for a fee. An example of this is a business hiring a freelancer for a project on Upwork or Fiver.
They sign up for the platform and search for the best talent that provides the service they need. Then they pay a fee to the freelancer in exchange for their service.
The fee-for-service business model can be applied to several eCommerce business models, such as B2C (you paying a dental clinic for teeth whitening), B2B (a business paying a marketing agency to promote their products), and C2B (a business paying a freelancer a fee in exchange for service).
Pros of Fee-for-Service
You get paid for your time
Unlike selling physical products, this business model compensates you for the labor you provide and the time spent to complete tasks.
Low Startup Costs
It is easy to start up and requires little to no costs, depending on the services you want to provide. For example, a dog walking service may require a low to zero startup cost.
But, if you’d prefer to provide freelance service or perhaps a marketing agency, you may need to set up a website, which may cost anywhere between $300 and $1000.
Cons of fee-for-service
Difficult to scale
While starting a fee-for-service business might seem exciting, it also has its downsides. This business model can be difficult to scale on your own.
As an individual, if you want to increase your income, you might need to increase the number of clients you get, which can wear you out, and even if you want to get subcontractors, they can be difficult to manage.
Also, increasing your income may cause you to increase your rates, but some clients may not want to pay more.
9. Freemium
The freemium business model is somewhat similar to the subscription model. It involves providing a free and paid version of a product or service.
This business model is mostly common in SaaS businesses where the merchant offers customers access to its service for free or on a paid plan.
This free version allows customers to access limited features of its service and can choose to upgrade to its paid version, where they can have access to all advanced features at a recurring fee.
Pros of Freemium
High Conversion Rates
Because this model offers a free version of a product or service, attracting and converting customers is easy.
Cons of Freemium
High Risk of Churn
However, some customers may get comfortable and happy with the free version and may not feel the need to subscribe to a paid plan. It is also susceptible to high churn rates.
Conclusion
Choosing the right e-commerce business model depends on what you want to sell and your target audience.
Whether it’s the low-risk dropshipping business or the recurring revenue potential of subscription boxes, whatever business model you choose defines how your business operates.
The nine business models we’ve explored provide insights into their advantages and disadvantages.
You don’t need to have it all figured out from day one. The key is to get started, stay consistent, and learn as you grow.
