What are the kinds of business models?

There are various kinds of business models. However, they are based on 4 basic types. Manufacturers, Retailers, Distributors and Franchises.

  1. Manufacturers: The manufacturer is one who takes raw materials and uses the raw materials to create a product. Manufacturers also assemble pre-made components and they convert it into products like what the car manufacturers do. Manufacturers either sell to the customers or they outsource the sales to other companies.
  2. Distributors: The distributors are those that buy the products from the manufacturer and sell them to retail outlets or they may sell them to the end customers. For example, there are car dealers who buy the vehicles from the manufacturer and they then sell these to the customers.
  3. Retailers: The retailers are those that either buy from wholesalers or distributors and they then sell these products to customers. The retailers usually have a physical location, but there are also online retailers.
  4. Franchises: The franchises are either distributors, manufacturers or retailers. The kind depends on the type of franchise that is purchased. The business model of the franchisee is the same as that of the franchise. There are different kinds in it.
    1. The company has an online and / or physical presence that is integrated.
    2. The company deals through the internet with the customer and they do not usually have intermediaries.
    3. The company may directly sell to the customers by use of product demonstrations
    4. There are freemium models where a basic product or service is offered for free and advanced or special features are available for a premium.
    5. There are online auctions which are conducted.

These are the basic models of businesses all over the world. All the different forms confine themselves to one of these types, though there may be slight variations.

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