Home / DSers Blog / Do Not Miss This Essential One Of B2C Ecommerce: How It Works and Makes Money

Do Not Miss This Essential One Of B2C Ecommerce: How It Works and Makes Money

Ezio King

•

May 9, 2024

Let’s make this short: B2C E-commerce greatly shortens the path for consumers to make consumption decisions, it’s the core of the whole industry, also yours.

If you do your own e-commerce business, you need to know there’s a good chance that you are in B2C Ecommerce model. To make your business better, make sure you know all roles in this industry and the way they make their profit.

Just take these essential information, it’s a free meal:

B2C E-commerce Intelligence For Dropshippers

Roles	How It Works	Profitability (formula)
Product Sellers	Businesses showcase their offerings on virtual shelves and consumers purchase them	Profit Margin = (Net Sales - Cost of Sales) / Net Sales (AVG 5%~10%)
Service Providers	Businesses pay a recurring fee for access to services to increase efficiency	Profit = Number of Users * (AVG Subscription Price - Variable Cost)- Fixed Cost Tips: Variable Cost: cloud platform, cloud facility operation and maintenance cost, etc. Fixed Cost: customer acquisition cost, customer retention cost, etc.
Advertising Providers	Platforms always make traffic paid	Profit = Charge by Impression Revenue + Charge by Click Revenue + Charge by Convertion Revenue - Labor Cost - Technical Cost
Payment Provider	Charging transaction fees, processing fees, or monthly fees. High frequency of transactions but small amounts relatively	Roughly Profit= ∑(1, n) Transaction Amount * Transaction Rate - Labor Cost - Technical Cost Tips: 1. Transaction Rate: Debit cards: 0.25% to 0.6%. Credit cards: 0.3% to 0.9%. Commercial credit cards: 1.5% to 2.5%. 2. Σ(1,n)Transaction Amount = T1 * Transaction Rate+T2 * Transaction Rate+...+Tn * Transaction Rate T1= Transaction Amount NO.1 Tn = Transaction Amount NO.n
E-commerce Platform	Cut a percentage of each sale or a flat fee per transaction	(Take Amazon For Example) Profit = 8%~15% * GMV + 0.99 * Quantity of Items - Labor Cost - Technical Cost Tips: 1. 8%~15% for platform cut, rates vary for different categories. 2. $0.99 fee per item (for "individual" sellers only)
Logistics providers	Charge fees for shipping goods from one location to another, minimize costs and reduce lead times to increase profits	Profit = Total Shipping Revenue - Labor Cost - Equipment Cost Tips: Equipment Cost includes all expenses on land vehicle, aircraft carrier, sea vehicle.
Warehouse service	Charging a fee for storage, picking, packing	Profit = Total Storage Fee + Total Packing Fee - Labor Cost - Space Expenses - Material Cost

It is true that the businesses of each of the players mentioned in the table have long been interconnected, but the basic profit components given in the table can help you understand them better.

DSers dropshipping