Why E-Commerce Companies Need Many Income Streams

Why E-Commerce Companies Need Many Income Streams

You buy products, you sell them.

Based on the effectiveness of your business you make a profit.

Easy enough right?

For years this basic model has been enough to create billion-dollar businesses around the world.
If I want to make it easy for me, I could point to Amazon. With cash cows like AWS and the marketplace model they run.

But there are also a lot more companies doing it right and understanding the current environment much better.
Picnic as one example of an integrated delivery company is able to create superior metrics and customer experiences. In many ways similar to AO even though the execution looks different.

Zalando and AboutYou are also adding services. From the AboutYou Cloud Infrastructure to logistic and vendor services and helping local players. Even in the second-hand market and curated shopping where they compete with Outfittery in Germany.

But why is it so important?

With an ever-increasing amount of solutions that create a layer on top of existing businesses. E-Commerce is there no exception.
Price comparison pages like Idealo and Google Shopping are abstracting away the seller.
Payment providers like Klarna and others are creating unified interfaces for there vendors.
Shopify is also offering an aggregation app.

Those layers will push the underlying players to an ever decreasing profit margin. Something that already is happening due to advertisements in Social Media and Search or other gatekeepers.

At some point, there is no longer a reason to have traditional retail in between. When brands are using infrastructure themself and no longer need traditional e-commerce.
Adding additional income streams is not only giving you something to fall back on. It also shifts your mindset in a way that allows you to see innovation.

Offering solutions to problems that can't be replicated easily.