E-commerce Business Models, Funnels and Growth Strategies

Posted on Jan 22, 2026 in Business Management and Marketing

8 Business Models in E-commerce

  1. Private Club / Flash Sales – Exclusive offers for members (e.g., Veepee, Showroom Privé).
  2. Super Flash Sales – One product per day or short time (e.g., Woot).
  3. Aggregators / Reservation Platforms – Connect suppliers and customers, take commission (e.g., Booking, ElTenedor).
  4. Marketplaces – Host multiple sellers; revenue from commissions and logistics (e.g., Amazon, Zalando).
  5. E-tailers – Online-only stores (e.g., ASOS).
  6. From Product to Service – Offer services instead of goods (e.g., Amazon Prime, Perlego).
  7. Subscription Model – Recurring payments for access or goods (e.g., Netflix, Birchbox).
  8. Curation Services – Personalized boxes or selections based on user profiles (e.g., Fabletics, Stitch Fix).

Buyer Persona and Customer Journey

Buyer Persona: A fictional profile built from real customer data, including demographics, interests, and buying motivations.

Customer Journey:

  1. Awareness
  2. Consideration
  3. Decision
  4. Retention
  5. Advocacy

Mapping the journey helps identify emotional triggers and touchpoints. Example: Spotify uses personalized playlists to move users from discovery to loyalty.

Business Model Canvas

The Business Model Canvas describes how a business creates value through nine key blocks:

  1. Customer Segments: Who you serve (e.g., B2B, B2C).
  2. Value Proposition: What problem you solve (e.g., Netflix offers convenient entertainment).
  3. Channels: How you deliver your product (website, app, store).
  4. Customer Relationships: How you interact (support, automation, personalization).
  5. Revenue Streams: How you earn money (sales, ads, subscriptions).
  6. Key Resources: Assets needed (tech, people, brand).
  7. Key Activities: Core operations (marketing, logistics, production).
  8. Key Partners: External collaborations (suppliers, delivery, payment).

Cost Structure: All expenses (marketing, logistics, technology).

Pitch Structure (12 Steps)

  1. Intro: Grab attention with a story.
  2. Problem: Define the pain point.
  3. Solution: Present your offer.
  4. Market: Show size and trends.
  5. Model: Explain monetization.
  6. Traction: Highlight growth.
  7. Competition: Show your advantage.
  8. Team: Present key roles.
  9. Financials: Provide projections.
  10. Ask: State what you need.
  11. Conclusion: Strong closing line.
  12. Q&A: Be confident and concise.

Start with a story, present facts, and close with a strong call to action.

Brand Integration and E-commerce Phases

Brand integration ensures consistent identity and values across all platforms. Combine strategic marketing (segmentation, positioning) with operational execution (4Ps). The strategy must cover: Awareness, Competition, Environment, Segmentation, Target, Positioning, and Value Proposition.

There are five main phases in the e-commerce process, each critical to building a profitable business:

  1. Attraction (Visits) – Getting traffic through SEO, paid ads, social media, and partnerships. Visibility drives potential buyers to the store.
  2. Conversion – Turning visitors into paying customers through trust, UX, and optimized checkout.
  3. Average Order Value (AOV) – Increasing the basket size via cross-selling and upselling strategies.
  4. Shipping – Ensuring fast, transparent, and reliable delivery. Poor logistics can ruin customer satisfaction.
  5. Post-Purchase & Loyalty – Following up after sales with CRM, email marketing, reviews, and support to encourage repeat purchases.

Keys to Success

  • Wide and relevant product range
  • Competitive pricing and transparency
  • Excellent UX and usability
  • Efficient logistics and partners
  • Building trust and brand consistency

Four Criteria to Classify E-commerce Models

  1. Type of Company:
    • Click & Mortar – combines online + offline (Zara).
    • E-tailer – operates purely online (ASOS).
  2. Type of Customer:
    • B2C – Business to Consumer (Amazon).
    • B2B – Business to Business (Alibaba).
    • C2C – Consumer to Consumer (eBay).
    • B2A / G2C – Business or Government to Citizens (tax portals).
    • B2E – Business to Employees (corporate programs).
  3. Revenue Generation Model: Sales, Subscription, Freemium, Commission, Leads, Ads, or Affiliates.
  4. Business Model Adopted: E-commerce, Lead Management, Traffic Monetization, Intermediation, SaaS.

Web Evolution (1.0 → 3.0)

Web 1.0 (1990s): The ‘read-only’ web. Users could only consume static content. Companies published information without interaction.

Web 2.0 (2000s): The ‘social web’. Users began creating and sharing content on blogs, YouTube, and social media. Marketing became conversational and community-driven.

Web 3.0 (Today): The ‘decentralized and intelligent web’. Integrates blockchain, AI, and data ownership. Users control content and identity. Example: NFTs and cryptocurrency marketplaces.

→ The evolution reflects a shift from passive consumption to active participation and ownership.

From Traditional to Digital Marketing Funnel

Stages of the modern funnel:

  1. Awareness: The customer discovers the brand through ads, SEO, or influencers.
  2. Interest: They visit the website or social media and explore content.
  3. Desire: Emotional connection grows through storytelling, visuals, and trust (reviews, social proof).
  4. Action: Conversion occurs—visitors complete a purchase or signup. Conversion optimization uses A/B testing, simplified forms, and trust badges.
  5. Loyalty: Brands retain customers via newsletters, exclusive deals, and customer engagement.
  6. Advocacy: Satisfied users recommend and promote the brand. Example: Apple’s loyal community creates organic promotion.

Conversion in e-commerce means turning traffic into paying customers, measured by analytics tools like Google Analytics or Hotjar. A visitor performs a desired action (purchase, signup, download).

Formulas

  • Conversion Rate (CR) = (Number of Conversions ÷ Total Visitors) × 100
  • ROI = (Revenue – Cost) ÷ Cost × 100
  • Total sales = site visits × CR × average order value
  • C(LTV) = average value of customer purchase × (1 – % customers who abandon you)
  • LTV : CAC Ratio → A sustainable business should have LTV ≥ 3 × CAC

Tools: Google Analytics, Hotjar, CrazyEgg, A/B testing, and heatmaps.

Shopping Funnel and Buying Process

1) Visit: Generate traffic with ads or SEO.

2) Add to Cart: Engage with product visuals.

3) Checkout: Simplify and minimize steps.

4) Payment: Provide secure, fast options.

5) Delivery: Be transparent and quick.

6) Post-Purchase: Ask for reviews, handle returns.

The buying process must be easy, transparent, and trustworthy. These 10 points ensure smooth user experience and higher conversion:

  1. Progress Indicator – Show steps (cart → payment → confirmation) so users know where they are.
  2. Attention Calls – Highlight key actions with clear, visible buttons (e.g., “Buy Now”).
  3. Back Links – Allow users to go back without losing data to reduce frustration.
  4. Miniatures (Thumbnails) – Display product images in the cart as reminders of what’s being purchased.
  5. Returns Policy – Display return conditions at checkout to increase trust.
  6. Security Signs – Include verified payment and data protection badges (SSL, VeriSign).
  7. Multiple Payment Options – Offer credit card, PayPal, Bizum, Apple Pay, etc.
  8. Save Cart Option – Let users save or recover carts later (reduces abandonment).
  9. Customer Service Access – Offer chat, phone, or email support at checkout.
  10. Cross-Selling – Suggest related items smartly (not intrusively).