Taking a Look at Various Types of Business Models

All businesses are based on a business model. Businesses need to choose the right business model to ensure that they are able to be profitable. Business models focus on a few different business aspects. Take a look at the most popular business models and decide which one is right for your up and coming business.

Direct Sales

A direct sales model is basically a company that makes products and sells them to consumers through retail outlets or online markets. There is really no middle man in this type of business model. This usually means that the business will be more profitable. A well known example of a direct sales model is Dell. They manufacture and sell their own products in both retail stores and online.

Franchise

A franchise model uses brand name awareness of the franchisor to help the franchisee to be more profitable. When businesses choose the franchise model, there is really no need for major companies to invest in outlets in order to sell their products or services. Instead, the franchisee pays to open up the business under the name of the franchisor. It is basically like opening up a store that has certain restrictions that are set forth by the franchisor.

Distribution

A distribution model is a business in which distributors buy products from the manufacturer in order to sell them in their retail stores. While they are selling the products made by different manufacturers, they are not required to operate under the brand name. They can operate their business under their own name. An example of a distributor would be a car dealership. They buy vehicles from the manufacturer, and they sell them under their own name.

Retail

A retail model is basically a business that buys goods from a certain distributor and sells them in their retail location. Retailers were once the most common place to buy products. With technological advances and online shopping, consumers buy many products directly from the manufacturer. This cuts out the middle man, and allows them to save some money.

Bricks and Clicks

A bricks and clicks model is the most recent business model. This is a model in which stores take orders over the phone and allows customers to come into the store to pick up their merchandise or have it shipped directly to their house. It combines a traditional brick and mortar store and an online store in one. This offers a lot of convenience to shoppers.