How Do eCommerce Websites Generate Revenue?

July 17, 2021

By admin

Do you want to go from owning a run-down truck to an Audi? Opt for eCommerce!

But as much as the eCommerce market is brimming with opportunities, not everyone who tries their hand at it is lucky enough to be successful. 

The reason? 

Lack of tactics that make money!

So, how do eCommerce websites generate revenue?

Today, we have summed up 6 ways in which eCommerce websites generate revenue, without fail.

7 Foolproof eCommerce Revenue Generating Tips 

Here are 7 tips to help your eCommerce business grow:

1. Multichannel Marketing

Multichannel marketing refers to reaching your target audience through multiple channels, whether it’s social media, email, or through an app. So, if you want to increase your eCommerce revenue, multichannel marketing is the way to go.

Not convinced? 

What if I tell you that multichannel marketing and selling increases revenue by an average of 38% with one channel, 120% with two channels, and $190% with three channels? And this is according to a report by Shopify.

A good example of brands getting success with multichannel marketing would be Burberry. The brand’s marketing is not only limited to Facebook, Instagram, and Twitter but has extended to WeChat and Line also, in an attempt to reach its Asian customers. 

Not only this, but Burberry also had a go at Snapchat and Periscope to engage with the audience in real-time. In addition, it has also made its website mobile-friendly, improved payment methods, and has stores on multiple eCommerce platforms including Alibaba in China. 

Burberry’s successful multichannel marketing strategy was a hit in the Asian market and is now being used by other brands also. 

2. Commissions or Referral Fees

If you’re looking for a guaranteed revenue generation method, set a commission! It’s quite straightforward; the buyer buys from the seller, and you make money out of it. 

But how’s that possible, you ask?

If you own an eCommerce website where various merchants sell their products, you can charge a predefined percentage or commission from the seller on each product sold. 

Like Amazon charges 8% to 15% referral fees from the sellers depending on the product category. 

Image source: https://sell.amazon.com/

You can set the percentage based on the current market rates or your business goals. In any case, charging commissions will give way to growing revenue streams.

3. Subscriptions

Charging a subscription fee is another primary revenue generation method used by eCommerce websites. It involves offering subscriptions or membership to the users to access your products or services. 

By 2022, 53% of all revenue will be generated from a subscription business model, says Digitalist Magazine

Netflix for instance provides its users access to unlimited movies and seasons for a nominal monthly membership fee. 

With their subscription business plan, Netflix has a $7.16 billion revenue as of the first quarter of 2021 with a 3.98 million subscriber growth. 

Image source: https://www.cnbc.com/

4. Strategic Partnerships

The credibility of your eCommerce website plays an important role in generating revenue. This is where strategic partnership comes in handy. Collaborating with other brands for the purpose of goodwill not only increases brand value and efficacy, but it leads to revenue gains also. 

In May 2016, Motorola chose Amazon as a platform to sell its range of G4 phones. When people saw both these companies coming together, hype was created among the customers as well as other competitor websites. 

The outcome? 

Motorola was able to sell their phones, while Amazon got an edge over its rivals due to this strategic partnership. 

5. Featured Listings

Another method to generate revenue through your eCommerce website is to offer the featured listings option to sellers. People are eager to pay more to display their products or services at the top, due to the tough competition. 

Like these popular gift ideas on Etsy.

Anyone visiting the online store will come across these products instantly, and would probably click on the one they’re interested in without going through the hassle of using the search bar!

6. Affiliate Partnership

An affiliate partnership is a simple way to generate revenue through your eCommerce website. It involves partnering with third-party websites to redirect visitors to their site and charge commission for every purchase made. 

Sites that offer deals and coupons are best for this purpose. Like Retail Me Not, a website that offers the best coupons, promo codes, and offers on high-end brands like Kohl’s, Bath & Body Works, and food brands like Papa John’s and Pizza Hut.

So if you partner up with another brand, you’re on your way to a steady cash flow!

7. CPC Advertising

And of course, letting brands post their ads on your eCommerce website is one of the most common and widely used tactics to generate cash flow.

You can either host the ads through your own website server or use Google AdWords or Bing Ads. Each time a potential customer clicks on the ad, you get paid for it. These ads are usually placed at the top, bottom, or sidebar. 

Here you can see the landing page of Single Tracks, a website that reviews mountain bikes and trails. They have displayed the ad for Deeper Sonar, a brand that deals in gadgets for fishing trips. Every time a fishing enthusiast or anyone clicks on this ad, the latter has to pay some amount to Single Tracks.

How simple is that?

eCommerce has become the new favorite business option for entrepreneurs because it requires less investment and yields better results than others. 

But obviously, like all businesses, there are some tips, tricks, and secrets for this to work too! Making an online presence, collaborating and partnering with other brands, and offering to display ads of other businesses are some sure-shot ways to generate revenue through your eCommerce website. 

Simply incorporate these methods in your eCommerce business model, and soon your website will give way to steady revenue streams that will benefit you for years to come!

You found the answer to your question “How Do eCommerce Websites Generate Revenue?”
Check out Strategies that Help Famous Brands Reach Consumers. I’ll definitely help you reach your goals.

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