It fundamentally shapes what potential you have to earn. Critically, various models result in very different returns. A fantastic marketer with a poor business model will almost certainly fail. A mere mediocre marketer with a great business model is much more likely to succeed.
Recently I responded in a WF thread urging someone to consider the whole gamut of different business models within IM (typically people never even think about this and simply 'fall' into a model that appeared to work for someone else).
As a result i've since been asked, specifically, about different ecommerce business models for people thinking of entering this field. Here's my response:
Within ecommerce there are a lot of choices to make in creating your business model. Choose carefully and after some consideration. A few of the main elements include:
What do you want to sell?
1. Physical - the most popular choice, the key challenges include storage and shipping
2. Digital - many within IM sell digital, often the key challenge include perceived value and piracy
How will you acquire your product?
4. Make - often the route of the hobbyists, the challenges are around scalability and time spent.
5. Manufacture - find a company to produce your own product, challenges include sourcing.
6. Wholesale - buy from a middleman, challenges include subsequent profit levels and availability
7. Dropship - buy others' products to sell, challenges include thin profit margins and competition.
Where will you acquire your product?
8. Domestic - buy from the country you will sell in, challenges can include available range and margin.
9. Abroad - buy from another country, challenges include culture difference and shipping.
How are you going to compete?
10. Price - lower price, challenge includes small profit margins and price wars.
11. Quality - higher quality, challenges can include costs and quality control.
12. Range - wide selection of products, challenges include inventory management and storage.
13. Branded - unique added value, challenge includes positioning and set-up.
14. Service - competing on customer service, challenge includes infrastructure and costs.
How will you attract customers?
15. Ads - the placement of direct advertising and ppc, challenge is costs and skills.
16. Social Media - using social interaction sites, challenge is scale and time commitment.
17. Hybrid - a combination of above, ads for short term and social for longer term brand building.
There are many other elements to consider, for example should I sell on amazon and/or should i have my own online store and/or should i develop other routes to market?
Different selections from the different options will often build very different ecommerce models with very different financial outcomes. I've experienced this personally (thankfully now have a large and fully thriving business).
I hope this helps some people think strategically and logically, the different possibilities and positively impacts their income.
Good luck with your ventures.