Different E-commerce Sale Models

Managing an e-commerce business means rightfully selecting a sales approach. Models range from Drop Shipping, Warehousing, TPA(Third Party Alignment)/SOR (Sales or Return), and Assured Fulfillment from Seller’s Location. Review your options carefully as each sales model has its distinct advantages as well as disadvantages.

Overview of E-commerce Sale Models

Drop Shipping: Inventory is kept at the seller’s premises and order shipment is done after receiving an order from an e-commerce portal.

Warehousing: Inventory is stored at warehouses of the e-commerce platforms such as Amazon, Flipkart, Myntra among others.

TPA(Third Party Alignment)/SOR(Sales or Return): Sellers can sell their inventory by using the facilities of third party agencies for storage and sales.

Assured Fulfillment from Seller Location: Sellers set aside a specific section of their warehouse exclusively for particular E-commerce platforms.

Drop Shipping

The drop-shipping model works quite well for starters. Sellers keep the inventory at their premises and process orders online. Orders are then shipped to the buyers’ addresses. As convenient as this sounds, delayed shipping serves as the greatest hurdle.

Example:

Buyers are able to place an order any day, thus assuming that someone buys something during the Saturday night.

The following Monday order is processed thanks to a Sunday weekly off.

Monday afternoon, the courier picks the purchase and hands it off on Thursday/Friday.

With such a added method, buyers are forced to grumble as this could take one to two of weeks.

This model is inadequate for products requiring expedited shipment.

Warehousing Model

Warehousing addresses the lag associated with drop shipping. E-commerce platforms have a dedicated warehouse and store products enabling processing and delivery in a timely manner.

Illustration:

A seller has 10 SKUs. Five have significant sales while five are sold less on a monthly basis.

The seller maintains an optimal stock of best-sellers and keeps the rest of the products at lower quantity levels in the warehouse.

All the orders within and outside the country are processed 24/7 leading to prompt delivery across the globe even on weekends.

Sellers are required to modify their GST registration and include the warehouse address as supplementary place of business.

The above is mostly preferred for products that do not spoil easily. Some items like live plants need not be housed in a warehouse and need drop shipment to be single sourced option. TPA (3rd Party Alignment)/SOR (Sales or Return) This model is an evolution of the one above with the addition of drop shipping services with a 3rd party. Sellers facilitate relationships with third party agencies who stock and sell goods on the seller’s behalf.

Example:

Third parties like Cloudtail, Retail Net, Green Mobile buy products from the seller.

These products are kept in the agency’s own warehouse or on the warehouse of the e-commerce platform.

They will pay for the amount of units they sold. Anything that isn’t sold stays with the seller.

This model works for sellers who do not have any expertise in e-commerce but have faith in their products.

Fulfillment from Seller Location Guaranteed

This model is suitable for businesses with increasing order volumes and several SKUs.

For instance

A seller achieves 50 orders a day with 150-300 SKUs.

Thus, storing all products at external warehouses is increasingly difficult.

This seller designates a particular area in his warehouse for orders received from the e-commerce platform.

Different platforms have attached different terminologies to this model.

Amazon calls it Seller Flex.

Flipkart calls it Smart Fulfillment.

The seller is required to guarantee that items held in a specific location will only be sold from that specific location. Occasionally, platforms will conduct audits FYI.

This model is ideal for rapidly expanding businesses that offer a vast range of goods.

To sum up:

Employ the warehousing model to solve problems caused by delays in drop shipping.

Use assured fulfillment from the seller location when the order volume grows.

Change GST registration details by adding the new business premises.

Consider e-commerce process outsourcing using TPA/SOR.

Different Models of E-Commerce Sales

Selecting the appropriate sales model is one of the critical parts of running an e-commerce business. Every model features certain advantages and disadvantages. The primary models are dropshipping, warehousing, TPA, or SOR, and assured fulfillment from seller’s location.

Summary of E-commerce Sales Models

Drop Shipping Model: The seller’s location is the datacenter, and it is a point of delivery after receiving orders from an e-commerce portal.

Metabox Model: These models are where products remain at the warehouses if e-commerce giants such as Amazon, Myntra, and Flipkart.

TPA/SOR: Vendors deal with third party organizations to procures and sell products.

Guaranteed Fulfilled From Seller Site: Vendors set a specific place in the warehouse for dedicated e-commerce platforms.

Drop shipping model

The drop shipping model is highly suitable for new comers. Vendors keep products in there premises and fulfill orders once they are placed online. The drawback to this is that delivery happens late.

Example:

Supposed a buyer places an order on a Saturday night

The order is processed on Monday due to a Sunday weekly off.

The courier picks up the order Monday afternoon and delivers on behalf of the retailer on Thursday or Friday.

The time frame for this method is 5-6 days. This period can be frustrating for customers.

This model is inappropriate for products that need to be shipped quickly.

Warehousing Model

Warehousing addresses the delays associated with drops shipping. E-commerce platforms hold onto various products at their warehouses which guarantees better processing and delivery.

Example:

A seller has 10 SKUs. Five best sellers and the other five are less frequently bought.

The Seller blindly allocators stock of best selling items alongside a much lower quantity of the remaining products to the warehouse.

The best part is that orders are processed 24/7 and orders can be fulfilled over the weekend too.

Sellers are required to change their GST registration to incorporate the warehouse as another business branch. However, some products such as live plants must be drop-shipped since they are not warehouse friendly.

This approach is an expansion of the warehousing business model. Sellers use third-party vendors that warehouse and sell their products.

Illustration: Cloudtail or Retail Net or Green Mobile can be sellers’ third parties. These third-party agencies can purchase goods from the seller s. The seller’s goods get warehoused in either the agency’s warehouse or the e-commerce platform’s warehouse.

The seller is paid based on the number of units sold. All unsold products continue being the seller’s products.

This model is very useful when sellers do not have e-commerce experience, yet trust their goods.

This model supports businesses which are dealing with increasing order volumes and many SKUs to manage.

Illustration: A seller has 150-300 SKUs and is completing 50 orders per day.

It can be difficult to store products in external warehouses when the amount becomes unmanageable.

The seller has a designated area in their warehouse for E-commerce orders.

Differentiating Platforms denote this model differently:

Amazon: Seller Flex
Flipkart: Smart Fulfillment

The seller must commit that products stored in the dedicated location shall not be sold elsewhere. This location might be subject to periodic audits by the platforms.

This model fits perfectly with scaling businesses with multifarious products.

To Conclude

Employ the warehousing model to mitigate delays that arise from drop shipping.

Consider assured fulfillment from seller location for increased order volumes.

Make alterations to GST Registration by adding supplementary business locations.

TPA/SOR can be investigated for eCommerce process outsourcing thereby simplifying eCommerce.

Different Models Used In Ecommerce Sales

To run an ecommerce business successfully, selection of the right sales model is crucial. Each model comes with its benefits and drawbacks. Some of them are drop shipping, warehousing, TPA (Third Party Alignment) or SOR (Sales or Return) and Assured Fulfillment from Seller’s Location.

Description of The Different Models Used In Ecommerce Sales

Drop Shipping Model: Where products are available at the seller’s premise and shipping is done after receiving orders form ecommerce portal.

Warehousing Model: Where products are kept in the warehouses of ecommerce platforms such as Amazon, Flipkart, Myntra, etc.

TPA(SOR): Where Sellers Empanel third-party agencies for storage and selling of their products.

The seller has assured fulfillment from their specified location: Sellers set aside a specific space within their warehouse for certain e-commerce sites.

Dropshipping Model

This model is perfect for someone just starting out. Sellers have product on hand at their location and fulfill orders after they have been placed online. One of the cons with this model is that the shipping speed is poor.

Example:

A buyer places an order on Saturday night.

On Monday, the order gets processed because they have weekly off on Sundays.

The order is collected by the courier on Monday afternoon and it gets delivered by Thursday or Friday.

This entire process takes 5-6 days, which is quite unreasonable and can worsen the buyer’s experience.

This model has its disadvantages with products that require swift shipping.

Warehousing Model

E-commerce business holding stock and being able to ship without extra delays solves the issues of dropshipping. E-commerce stores can have their own warehouses which ensures quicker processing and shipping of the product.

Example:

A seller has 10 SKUs. Five are bestsellers and five do not sell frequently.

The seller keeps stock of bestsellers and lower stock of the rest.

Orders are processed 24/7 and there is heightened availability of most products which lets them ship on weekends.

The sellers need to make changes to the GST registration in order to allow the warehouse to be treated as a secondary place of business.

Best suited for items that do not deteriorate over time, this model nevertheless does not accommodate for drop shipping, as live plants require more direct handling.

TPA (Third-Party Alignment)/SOR (Sales or Return)

This is merely a derived modification of the warehousing model. It enables sellers to outsource the storage and selling of their products to a separate company.

Example:

Cloudtail, Retail Net, and Green Mobile are examples of agencies that purchase items directly from the seller.

These items are either retained in the agency’s warehouse or the warehouse of the e-commerce store.

These products will be compensated for after a certain quantity has been sold. The seller still owns the unsold items.

This model could be viewed as a perfect fit for sellers who rely on make perfect products, but equally lack proper e-commerce skills.

Assured Fulfillment from Seller Location

Works best for e-commerce businesses with increasing numbers of orders and an expansive catalog.

Example:

A seller who has upwards of 150-300 different products can process up to 50 orders each day.

Acquiring and storing these products in additional external warehouses becomes increasingly more difficult.

The seller allocates a certain section of their warehouse to handle orders made through e-commerce platforms.

This model has different names on different platforms:

Amazon: Seller Flex

Flipkart: Smart Fulfillment

Make sure that once the dedicated storage location is established, these products will not be offered for sale elsewhere. Periodic audits can and will be performed by different platforms.

Businesses with a large number of products can scale-up effectively using this model.

Key Takeaways

Adopting a drop ship fulfillment model? Use a warehousing model to alleviate shipping delays.

Assured fulfillment from the seller’s location should be utilized when order volume spikes.

Change GST registrations to set up new branches of the business.

Consider TPA/SOR for e-commerce process outsourcing.

Different E-commerce Sales Models

Picking the right sales model is essential for any online business. Each model differs in its benefits and challenges. The more common types include drop shipping, warehousing, TPA or SOR, and assured fulfillment from the seller’s place.

Overview of E-commerce Sales Models

Drop Shipping: The seller holds products in stock. When an order is placed through an e-commerce platform, the seller ships the product.

Warehousing: The products are housed at the warehouses belonging to e-commerce platforms like Amazon, Flipkart and Myntra.

TPA/SOR: Sellers collaborate with other companies for the storage and distribution of products.

Assured Fulfillment from Seller Location: Sellers set aside a portion of their warehouse for specific e-commerce sellers.

Drop shipping Model

This business model is tailored to novice online sellers. The seller has the goods on hand and they are sent out once an online request is submitted. A notable disadvantage is that delivery times can be longer than ideal.

The order gets picked up by the courier on the Monday afternoon, and it is delivered by Thursday or Friday. In all of these scenarios, there is a delay from the order placement till the delivery. Notably, this model under study is not suitable for items that require expedited delivery. Allowing 5-6 days for the item to be received is sure to annoy buyers.

There is no notion of delivery time setting in the drop-shipping model under consideration, but there is in the warehousing model.

Having an e-commerce warehouse minimizes the delays from drop-shipping businesses. The E-commerce platform, as mentioned in the example, stores the products in their own warehouse, thus ensuring faster order processing and optimal delivery.

In regard to the example, we note that the seller of the 10 SKU’s includes both the best sellers and regularly stocked items. The five best-sellers move in larger quantities, while ICT products are kept in smaller quantities.

The main advantage of this model is that orders can be processed all week long during both the day and night. Additionally, sellers are able to change their GST registration to their principal place of business and include the warehouse address as a supplementary place of business.

Certain products, especially food items, cannot be stored in a warehouse and have an expiration time, along with certain items such as live plants, which also cannot be stored in the warehouse but use drop shipping. These are known as non-perishable items.

Sellers can go a step further than just utilizing warehousing by employing third-party agencies who will both store products and also sell them on behalf of the seller.

Such companies can be Cloudtail, Retail Net, Green Mobile, who buy those materials from the seller.

The products are either held within the agency’s warehouse or within the e-commerce platform’s warehouse. Payment is completed according to the amount of units that were sold. Any products that have not been sold are still owned by the seller. This model is perfect when sellers do not have the required knowledge in E-commerce processes but do possess faith in the product that they have. This model is best for companies that have increasing order quantity as well as increasing assortment. For reference, a seller that has 150-300 SKUs is able to fulfill 50 orders a day. Having a single external warehouse that holds all the required products would be extremely difficult. The seller sets aside a certain portion of their warehouse specifically for e-commerce platforms. By different names, this model is referred to as Flex Seller by Amazon and Smart Fulfillment by Flipkart. The seller has to agree to the fact that the products available in the aforementioned location will only be able to be sold from there. This specific location has the potential to be audited by the platforms. Scaling businesses that have an array of different catalogs will benefit greatly from this model. Minor points that require extra attention Try to avoid using drop shipping to reduce cut off delays with the warehousing model. No need to worry about order volume increase when assured fulfillment from seller location is utilized. For increase in business locations, applying and changing the GST registration is a must.

TPA/SOR Models Of Outsourced E-Commerce Processes Handling: Different Models of E-Commerce Sales

One of the key factors of starting an e-commerce business is selecting an appropriate sales model. There are multiple ways to go through different models, however, each one has certain advantages and disadvantages. Broadly speaking, these models consist of dropshipping, warehousing, third-party alignment sales, sales or return models, as well as assured fulfillment from the seller’s location.

Description of E-commerce Sales Models

Drop Shipping: The company’s products are in stock at the seller’s premises, therefore shipment is done only subsequent to an order being placed via an online sales portal.

Washousing: In this model, inventory is stored at the major e-commerce companies such as Amazon, Flipkart, or Myntra.

TPA (Third Party Alignment) /\ SOR (Sales or Return): Vendors enter into agreements with one or more agencies to store and sell the vendor’s merchandise.

Assured Fulfillment from Sellers Location: Sellers secure a specific area in the store’s warehouse for some of the platforms.

Drop Shipping Model

The most common model among beginners is the drop shipping model. In this model, sellers undertake to store the goods within their designated area. When goods are ordered online, sellers ship the goods to buyers. The process faces huge concern over delayed shipping times.

An example would be:

A buyer makes an order on a Saturday evening.

The order will be worked on Monday, as orders are not processed on Sundays.

The order is collected by the courier on Monday afternoon and sent out by them on either Thursday or Friday.

The entire order completion period lasts 5-6 days, which is a nuisance to buyers.

This model does not suit products with quicker delivery times.

Warehousing Model

Warehousing avoids the delays caused by drop shipping. The e-commerce industry solves these issues by combining business functions. They stock products in their warehouses which allows them to deliver fast.

Example:

A seller has 10 SKUs. Five sell the most, the other five sell the least.

The seller keeps sored in the Warehouse more stock of the popular products and less of the others.

Orders are accepted and processed all the time, so deliveries are made on sundays too.

Sellers also need to change their GST registration to include the warehouse address as a place of business.

This model is more efficient for non-perishable goods. Some products, however, such as live plants, need to avoid warehouses and be shipped via drop shipping.

TPA (Third Party Alignment)/ SOR( Sales or Return)

This model serves as a prolongation of warehousing. Sellers support new business models by hiring third parties that sell products on their behalf.

Example:

Like many third parties, sellers’ Cloudtail, Retail net, Green Mobile, buy their products.

The said goods are kept in either the agency’s stock or the stock of the e-commerce seller.

They are paid for sold goods only. Items that are not sold can only be used by the seller.

This model works best when the seller knows their products are good but has little knowledge of e-commerce processes.

Guaranteed Fulfillment from Seller Location

This model works well for companies that are receiving increasing order volumes and additional SKUs.

For instance:

Suppose a seller receives 50 orders per day that has 150 – 300 SKUs.

Using outside storage facilities is cumbersome.

The seller sets aside a section of their warehouse exclusively for e-commerce orders.

Different platforms refer to this model with varying terminology:

Amazon: Seller Flex

Flipkart: Smart Fulfillment

The seller must commit that the items that are kept in this specific area are not to be sold through other channels. This area is subject to platform audits at intervals.

Perfect for scaling businesses with complex catalogs – this approach delivers quality results.

Key Takeaways

capitalise on the warehousing model to eliminate delays in the process of dropshipping.

Consider fulfillment with seller location guarantees as the volume of orders increases.

Change the GST registration to add new locations for business.

Use TPA/SOR to delegate the e-commerce process. Various models of sales in e-commerce

When operating an online business, a salesperson needs to decide on the business model appropriate for his online business. Each type has its advantages and disadvantages. These main types are dropshipping, warehousing, third party alignment (TPA) or sales on return (SOR), and guaranteed fulfillment from the seller’s premises.

Types of Sales Models for E Commerce: Summary

Selling Made Easy Services (SMES) are kept at the seller’s place of business and are shipped after an online order is placed.

Using the warehousing model, e-commerce sites like Amazon, Flipkart, and Myntra fulfill drop shipping orders. Products do not get delivered directly to buyers, but get stored in the warehouses first.

In the third-party alignment model, sellers work with third-party agencies. These products get both stored and sold by the agency on behalf of the seller.

The assured fulfillment option allows a seller to pre-allocate a specific location in their warehouse. This facilitates direct fulfillment for specific e-commerce platforms.

Clearly, the drop shipping model allows for leisurely paced orders. Goods are stored at a seller’s location and are only sent out after the seller receives a purchase online. Although this is an easy process for a seller, the delayed delivery that stems from it is a major drawback.

A practical example: An order gets placed on Saturday, during the night. You would expect the order to be delivered within the week, however tracking shows the order being processed on Monday and the courier picking it up on Monday afternoon. This leads to an alarming 5-6 day wait.

As seen previously, this model poses a problem the e-commerce platform has to sort out immediately, as the product can unquestionably not be delivered in a few days’ time.

The drop shipping delays are captured by the warehousing model. E-Commerce platforms must take responsibility for storing products in their warehouses to expedite order processing and delivery.

For example, a buyer has 10 SKUs. The seller notes in their tracking that five of them are getting a majority of orders so they can assume five of them will sell less frequently.

In order to fulfill the continuous orders, stores should just put in a tad bit more effort. Orders can be processed 24/7, along with quick delivery on weekends.

Vendors are required to update their GST registration by including the warehouse address as a supplementary business contact.

This model is used mostly for goods that do not spoil. With the exception of certain goods like live plants, which cannot be kept in warehouses and require drop shipping instead.

TPA (Third Party Alignment) – SOR (Sales or Return)

This model is an expansion of the previous one but instead of owning the products, vendors store them in a warehouse owned by a third party vendor.

Illustration:

Cloudtail, Retail Net, or Green Mobile and other third parties purchase products from the seller.

The purchased items are kept either at the agency’s warehouse or storage facility of the e-commerce site.

Payment rests on a count of the items sold. Any items that are not sold stay in the possession of the vendor.

This model is optimal when sellers do not have the sufficient know-how of the e-commerce ecosystem but are confident with their product.

Obliged Fulfillment form Vendors Point of Sale

Most appropriate for businesses with increased order quantities and numerous SKUs.