E-Commerce, an abbreviation of Electronic Commerce, refers to buying or selling goods, products, or services over the internet. Transaction of money, transfer of funds and exchange of data also falls in E-Commerce. Also, it is the remote meeting of buyers and sellers on the internet. It involves all kinds of transactions regarding the transfer of goods, services, funds, and even data exchange.
So, when you log into FinmodelsLab and purchase your required financial template, it is a classic example of an E-Commerce financial transaction. In this transaction, you interact with the seller, exchange your delivery address, transfer the funds and receive the financial template with a few clicks while sitting at your home.
The internet has penetrated almost every field of our lives, and the same is with E-Commerce. As a result, E-Commerce has become one of the most growing industries in the global economy. As per estimates, its fastest growth ratio is nearly 23% per annual and its trading volume will exceed $23 trillion by the end of this decade.
What Is E-Commerce Financial Model?
The process of summarizing the company’s earnings and expenses in a spreadsheet is called financial modelling. This spreadsheet is used to calculate the impact of a future event and helps in the executives' decision-making. Financial analysts use the economic models to analyze the company growth and anticipate the company’s performance due to future events of by the executive decisions.
For simplicity, you can say, business plan template for E-Commerce represents a company's operation, performance and growth in terms of numbers and graphs. It reflects the company's past performance, present status and forecasted future. Forecasting Financial models are used as the decision-making tools by the company's executives and financial analysts. Also, such E-commerce business Model helps you estimate the costs and the expected profits of a proposed new project without investing potential money.
While financial analysts use such business plan for ecommerce business to explain the company's work and convince the investors of the expected return on their investments, it also helps to figure out the impact of internal factors such as change of any E-Commerce digital marketing strategy and external factors such as a change in economic policies or the government regulation.
Financial Models are also helpful to estimate the valuation of a business and compare any business to its peers in the industry. These are also used in strategic planning to see the impacts of various scenarios on any business, calculate the cost of a new project, prepare the company's budget and adequately allocate the company's resources.
For a successful businessman, time is the most precious entity required to do financials, satisfy your customers or develop your business. Our e-commerce business model saves your time and does the complex financial calculation in simple clicks, sparing the time you can spend to boost your business activities.
The e-commerce financial model provides you with various reports depending upon your little data inputs. Its all-in-one dashboard provides the core information about your business's current status. Not only the current status, but it also forecasts the growth rate and other parameters for the upcoming five years. All this information presented in absolute figures and graphical charts gives you quick business information without wasting time searching various accounts pages. Just for an idea, look at its all in one dashboard that provides you complete information about your E-Commerce business on one page, both with absolute figures and with graphs.
Types of E-Commerce Financial Models
E-Commerce Financial Models are classified into four main categories. If you are starting a new E-Commerce business, then you will fit in any of these buckets. Each category has its own benefits and challenges. Some companies may accommodate more than one category depending upon the nature of their work. Knowing your business category helps you think creatively to take full advantage of the opportunities and prepare yourself for the possible threats.
The four categories of E- Commerce business models are listed below:
Business to Business (B2B)
Business to Consumer (B2C)
Consumer to Consumer (C2C)
Consumer to Business (C2B)
Let us deep-dive into each of these categories to get clear knowledge.
Business to Business (B2B)
In B2B ecommerce strategy, one business sells its products or services to another business. The buyer may be an end-user, but a business often resells its products to end-users or customers. In this category, mostly manufacturers and wholesalers are involved. The involvement of two businesses at both ends results in longer sales cycles with higher-order values and recurring purchases.
Earlier B2B trades were made using catalogues and order sheets, but E-Commerce Financial Models have replaced those traditional ways with E-Commerce storefronts and spreadsheets.
In this model, a company or business sell their services or goods directly to customers or end-users. These models have evolved recently and capture the whole E-Commerce business. The customers visit the company's website, browse categories, select desired items and place their order. Then, with an exchange of delivery address, the company delivers the goods directly at the customer's doorstep after funds transactions. Most of the E-Commerce giants such as Amazon, and eBay are the best example of B2C ecommerce strategy. In short, anything you buy online as a consumer falls in the B2C category.
Unlike B2B, the decision-making process is much shorter in B2C models, especially when the item value is lower. Due to shorter sales cycles, it requires fewer dollars for B2C companies to make a sale. It also has a lower order value and less recurring orders than the B2B concept.
B2C E-Commerce business involves services along with goods. The best example of B2C is mobile service providers, internet service providers, cargo and delivery service providers and recently, hotels and restaurants, which use the B2B ecommerce strategy to facilitate their customers with delicious foods at their homes.
In C2C business models, consumers are in direct connection with each other. No company is involved in these business setups. This model helps the customers to sell their goods, services to other interested customers. Usually, goods involved in C2C business models include cars, mobiles, electronics, household items and used items.
A C2C business is also called an online marketplace, and OLX is the best example of C2C business models. The drawback of this business model is the lack of quality control and technology maintenance.
A consumer to business digital marketing strategy for E-Commerce is the reverse of the B2C model. In this model, consumers sell goods and services to companies. This approach gives consumers the power to name their prices or have businesses directly compete to meet their needs.
Affiliate marketing services is an example of the C2B business model, where customers provide business to a company. Further, many software developers sell demos and various apps to software companies that reflect the C2B business model. Freelancing is the concept which ideally covers the C2B model, where experts sell their services to clients, which can be businesses or companies. Also, C2B models help the companies meet their ecommerce budget requirements by offering projects for bid on such freelance websites.
FinmodelsLab has designed a lot of E-Commerce Financial Models to fulfil your business needs. C2B Financial Model Excel Template is one of those templates which helps you maintain your C2B business model and anticipate your business growth in the coming five years.
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Delivery Methods for Ecommerce Business
E-Commerce business is very much associated with the delivery methods used to deliver the sold item to the customer. You can think of its vitality as if your business is a car; the delivery method is the engine. Even a luxurious and precious car is useless without an engine; the same is with an E-Commerce business. Here are a few of the popular approaches that most of the market leaders have adopted.
White labelling is the strategy of branding the items that many E-Commerce companies use for selling. In this strategy, the seller removes their brand and logo from the selling items and instead uses the purchaser's branding. So, for example, if you go to a grocery store such as Walmart, you'll notice that you can buy all sorts of products sold under the Great Value brand.
In White-labelled products, the product's manufacturer sells it to you for a lower price than you will sell it. It means You are buying the product from a manufacturer to sell it as your own, at any price you want.
Private labelling refers to selling products manufactured by one company for sale under any other company's brand. It is the best example of a B2B ecommerce strategy, where one company manufacture the products and are sold to other companies.
From food to cosmetics, every product is available in private labelling. However, it is worth noting that Goods sold under a private label are subject to the same regulatory oversight as goods sold under a national brand.
Nike, for example, is a private label company. They buy bulk from a manufacturer, switch up a few things, put their name on them and sell it.
One of the fastest-growing methods of E-Commerce is Dropshipping. It is an example of a B2C business model where a company sells to customers but does not keep the products in stock. Instead, when a dropshipping retailer sells a product to its customer, it purchases the product directly from a third party, which may be a manufacturer, a wholesaler or a vendor and ships the product directly to the buyer’s address.
It is a combo model of B2C and C2C, and it helps the seller eliminate the warehouse charges to stock the selling products. In addition, little quality control is an issue in the dropshipping business as you have not seen the product physically before shipping it to the buyer.
Wholesaling or distributing is the sale of goods or merchandise to retailers, industrial, commercial, or other professional business users. In general, it is the sale of goods in bulk to anyone other than an end-user. In some businesses, a retailer offers its product in bulk at discounted rates.
Traditionally wholesaling is a B2B ecommerce strategy, but in the growing E-Commerce industry, it has become a routine practice by many companies to offer discounted rates for retail customers during bulk buying.
E-Com Variance Tracker Financial Model Excel Template is another useful Excel template designed by FinmodelsLab. This E-Commerce Variance Tracker Financial Model is a full 5-year financial planning template for a company operating in an E-Commerce variance tracker business niche. The template would suit both an E-Commerce variance tracker startup as well as a running small E-Commerce variance tracker.
Besides E-Commerce Financial Models, FinmodelsLab has developed more than 400 templates to help you manage financial activities by saving your time and efforts.