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E-Commerce Revenue Models Paper
E-Commerce Revenue Models Essay
E-commerce entails digitally enabled business transactions among and between people and companies. It consists of features such as international reach, interactivity, personalization, ubiquity, information density, social technology, amongst others. E-commerce depends on various revenue models to gather money for services and goods provided in a particular period. The primary revenue models include advertising, affiliate marketing, subscription, transaction fees, sales, and freemiums. Advertising involves the fees paid by various organizations and people to market their products and services in an online platform. The revenue for advertising is indirect and based on the traffic and conversion rates. Subscription is a revenue model that charges users a specific amount of money periodically to access the services and goods (Chaffey 21). The framework is mainly used by internet service providers, publishers, special services, and content services. Revenue can also be earned through sales in situations where the retailers or wholesalers develop a site for selling their goods online.
Affiliate marketing is founded on the principle of commission. The retailers and merchants sell their commodities through links from partner websites. The model uses the pay-for-performance technique, which means that commissions are provided after measurable success or actual revenue. The transaction fee framework gives commissions for the number of business transactions that occur on the online platform. The revenue is gathered from the transaction fees paid by the buyers. Lastly, freemiums allow the customers to get the product free of charge but pay a premium for additional services and features (Lo and Lam 88). Out of these models, the subscription framework is the most effective because it guarantees a consistent and predictable source of revenue. It also ensures that the organization derives lifetime value from each consumer since the fees are paid periodically, unlike the one-time transaction fees, sales, freemiums, indirect advertising, and affiliate marketing.....................GET A PLAGIARISM FREE COPY