Which Online Business Model Fits?
There are three basic business models for online businesses, and you can choose the one that best fits your vision. You can:
Sell a physical product.
Sell a service.
Sell a digital information product.
If you don't want to deal with the manufacturing, storage or shipping of a physical product, and you don't want to provide a service, you can try another form of business that has become very popular online, which is affiliate marketing. Affiliate marketing is the concept of promoting other people's products (physical or digital) or services and simply receiving a commission when a sale is made.
The following walks through each of these models in more detail.
Selling Physical Products Online
This is often the first model that comes to mind for many people. Create a shippable, physical product and market it online. It could be sold via your own e-commerce storefront, an auction site, or you can sell your products on a third-party site, like Amazon.com.
Benefits of selling physical products online.
Compared to selling from a physical location, there are several benefits to selling your goods online. First of all, customers can check out your product offering without having to go to your physical location (if you even have one).
Customers get to see all of your options including things like customer reviews, ingredient lists, and related recipes or uses. Videos and photos of your product in use and FAQ sections can give customers more information than they would ever have in a brick and mortar store.
Finally, as more and more consumers are switching their buying habits to online, you'll be able to reach more people and increase sales from an online presence.
Drawbacks to selling physical products online.
You have to actually make something. And warehouse it. Then ship it. Physical goods can spoil and are time-consuming to produce, inventory and ship.
And then there are the returns. With physical goods, inventory control is a challenge. If you make too much and it spoils, you lose. If you make too little and you run out of stock, you lose potential sales and maybe clients who will look elsewhere for a more reliable supply.
Note: Another way to sell physical products online without the hassles of having to create products, handle shipping, etc. is to start an online drop shipping business.
Selling Services Online
Services are ideally suited for online sales. There are two basic ways services are sold online.
You can use a website as your sales tool. Many offline businesses use their website as a sales tool for services delivered in person. Their site serves as more of a company brochure than a storefront.
You can find (and qualify) a carpenter, dentist or massage therapist all through their online presence. The one thing they have in common is that you physically receive all of these services. This is a great method for generating and qualifying leads for a service-based business.
You can also choose to provide services that are sold (and delivered) online: Examples of these services include web marketing, travel, and entertainment. All of these items are sold and delivered via the vendor's computer. Customers can get instant gratification by completing their purchase directly online rather than having to wait to speak with someone or make an appointment.
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