How You Sell Is What You Sell: Rethinking E-Commerce Models

Most e-commerce reporting focuses on what’s being sold, such as clothes, furniture, or supplements, but the structure of how we buy is just as critical. This article proposes a practical classification of e-commerce models that is not based on product categories or fulfillment speed, but on the underlying transaction architecture. Whether you’re a founder designing your go-to-market or an investor evaluating unit economics, understanding these transaction archetypes helps make sense of the noise and spot opportunities.

1. Single Transactions: The Default Archetype

The original promise of e-commerce: a 24/7 store, open to anyone, no strings attached. This model still dominates in volume and reach. It favors breadth over loyalty and is often the easiest starting point for new brands. But it comes with the constant pressure of reacquisition.

Examples: Like Amazon, Zalando, NotOnTheHighStreet and virtually every other store out there…

Strategic Characteristics:

• High CAC sensitivity
• Weak LTV unless supported by brand or bundles
• Competes heavily on price and UX

2. Subscriptions: The Engine of Predictability

Subscriptions solve the volatility of single purchases by locking in frequency. From razors to toilet paper, this model thrives when consumption is predictable and switching costs are low. But retention is hard-earned, and churn often defines success more than growth.

Examples: Who Gives A Crap (toilet paper), Smol/Everdrop (household products), Dollar Shave Club (razors), Peachies (nappies), Tonic Health (supplements)

Strategic Characteristics:

• High LTV/CAC potential
• Predictable revenue makes financing easier
• Operational complexity in pause/skips

3. Membership Models: E-Commerce Meets Costco

Instead of charging per transaction, membership models monetize access. These brands flip the script: profits stem from membership fees, while products are priced aggressively to keep engagement high. The result? Strong margin stacking and loyalty, if the value is felt.

3.1 Closed Membership

Only members can shop—a structure popularized by Costco, one of the original success stories in this model. It creates a sense of exclusivity, drives upfront commitment, and encourages higher purchase frequency (The Acquired podcast has a great episode on how Costco turned this model into a moat).

Examples: Thrive Market (US), La Fourche (FR), Italic (US, early days)

3.2 Open Membership

Anyone can shop, but members get better prices, perks, or exclusive access. This model lowers the barrier to entry while incentivizing repeat purchases through tangible benefits. It balances reach and loyalty, offering brands a scalable way to drive recurring revenue. Italic, for instance, launched with a $10/month membership for luxury goods (waived in year one), dropped the paywall in 2019, and later reinstated a $100/year non-mandatory membership showing how brands experiment with closed vs open models.

Examples: Public Goods (US), Beauty Pie (UK), Italic (US, today)

Strategic Characteristics:

• Membership fees drive margin
• Works well with mission-driven or curated brands
• Loyalty > volume

4. Group Buying: Commerce as Coordination

Incentivize consumers to buy together, and everyone wins. Group buying compresses CAC through virality and price incentives. Made famous in China (Pinduoduo), this model relies on social sharing and logistical scale and is still underexplored in Western markets.

Examples: Pinduoduo (CN), Temu (CN), DealShare (IN)

Strategic Characteristics:

• Low CAC, high volume
• Requires operational sophistication
• Often gamified or social

Strategic Archetypes and Trade-offs at a Glance

To bring the differences between archetypes into sharper relief, here’s a side-by-side comparison. This table summarizes the strategic dynamics that shape each model, helping to quickly spot where opportunities and risks concentrate.

Transaction Structure Becomes One of the Few Levers Left to Build Demand and Keep It

Choosing the right transaction archetype is one of the highest-leverage decisions an e-commerce company can make. It determines not only how a brand earns revenue, but also how it builds loyalty, defends margins, and funds its growth. Just as product–market fit is foundational in startups, so too is model–market fit: the transaction structure must align with how customers want to buy, and how a business can sustainably scale.

Think of Dollar Shave Club: it wasn’t just razors that changed the game. It was the subscription that created recurring revenue, predictable growth, and a massive acquisition. Or look at Public Goods and Thrive Market, who built defensibility around memberships rather than margin-heavy product pricing. In a world where logistics, sourcing, and branding are all increasingly commoditized, transaction structure has become a core competitive advantage.

As Yoni Rechtman recently pointed out, AI is flooding traditional channels, rendering them increasingly ineffective: “The distribution models of the future will all be based on some combination of captive/proprietary distribution, virality, and organic growth, and inbound demand.” That’s why choosing the right transaction archetype isn’t just a branding or pricing decision, it’s a distribution decision. Models that rely on proprietary distribution (like membership), virality (like group buying), or habitual engagement (like subscriptions) are becoming essential defenses against the rising tide of noise.

The most successful brands today don’t just differentiate through product; they differentiate through how they get paid. As paid channels become saturated and product differentiation shrinks, the mechanics of the transaction become central to how a brand grows. Founders who understand transaction design as a strategic lever will build brands that scale with intention and defend with structure.