There are various different types of Internet business models, and finding out which type of Internet business model you fall into will help shape your plans. Broadly speaking, the different types of internet business models can facilitate business in three ways: supporting an existing bricks-and-mortar business; selling physical goods and services; and finally, selling online services and information. Any Internet business models that do not have a supporting website are missing a trick. If nothing else, a well-designed site establishes credibility with your customers and tells them how to get in touch with you.
Note that qualification: the site must be well designed, or at the very least it mustn’t look as though it’s fallen out of a “10 “build a site in a minute” box from PC World or been put together in PowerPoint using every available font and color. Many businesses depend entirely on the internet. It’s the world’s biggest product catalogue, and the majority of e-commerce is now conducted through companies who have no physical shop front. If you have not yet started your own Internet business, this could help you identify the Internet business model you would like to use. Let’s take a brief look at some of the different types of Internet business models.
1. Selling Goods
The most common of the internet business models is the selling of goods. It’s in the selling of physical goods that the real-world benefits of using the internet as a marketing channel become so obvious. For example, if you want to set up your own small supermarket, there’s no way you could compete with the integrated systems that the big players such as Tesco now employ. The cost of fitting out a store in an attractive way, adding the stock management and EPOS (electronic point of sale) systems and then employing enough staff is a huge investment that excludes almost everyone. Compare this with setting up an online retailer.
All the infrastructure – including stock management, product display and payment processing of this internet business model – can be purchased or rented at a low price. Indeed, with services such as eBay shops and Amazon Marketplace, you can use the infrastructure of these companies to sell your products. That so few small online retailers actually create efficient sales processes is a pity, but it opens up gaps that you can exploit. However, simply putting together a slick, efficient “sales funnel” (the process from choosing a product to playing for it) is not nearly enough to ensure success. If the product isn’t right, the best shop and Internet business models in the world won’t succeed: what having the right software does ensure is that you don’t lose sales you should otherwise get.
2. Selling Downloads and Online Services
The advent of the internet, and specifically broadband, has given rise to a whole range of new commercial products. The internet itself is the natural home for these, and in many ways they represent the ideal internet business model. Having no physical products means you don’t need to buy any stock, store it or dispose of it if it doesn’t sell. It becomes possible to keep an enormous range of products at no cost. In fact, a whole new economy has been built around Internet business models like these, in which it’s possible to make money by selling tiny quantities of thousands of different items, adding up to profitable revenue.
Amazon is the most obvious case of these types of Internet business models: it makes much of its profit from obscure books that aren’t found in high-street bookshops. There’s also a huge market for online services. You might also use this internet business model to sell your own internet-related skills. For example, if you’re a copywriter, web designer or Google AdWords specialist, you’ll use a website to sell your service. This can be similar to the website of a bricks-and-mortar business, but will need to be much more sophisticated and to reflect current trends, because as well as being a brochure it’s a living, working example of your abilities.
3. Selling Information
Enroll in almost any internet marketing guru’s training course, and one of the Internet business models that will be pushed more than any other: information products. Products within this internet business model really do have a lot going for them. Usually created in the form of PDFs (such as eBooks), MP3s (such as seminars) or videos (the sky’s the limit), they tend to be products that can then be sold for years with minimal change. They can be very quick to get into place, and they can be naturally slotted into Google’s search engine so that for the information you want to sell.
Having said that, information products have their problems. The most fundamental of these is that web users increasingly expect information to be free. To charge for a product, you need to convince potential customers you can offer information that’s not freely available elsewhere and that you’re an expert in the relevant field. However, if you have specialist knowledge that you believe other will pay for – after all, this is the proposition behind most books, including the one you’re reading now – then an internet business model based on selling information can be easy to set up and highly profitable.
Payment Solutions
Nearly all of the Internet business models discussed require payment solutions. If you create a software product or download, you can either integrate your own shopping cart in a similar way to selling a physical product or you can use a specialist third-party application. Many different shopping carts include some support for downloadable products, but systems such as share-it offer sophisticated features such as registration and trial versions, so if you’re selling software there’s little reason to look elsewhere.
Costs range from 4.9% to 8.9%. You’ll need your own website to publicize your product and act as a link into the share-it system. This is also the case if you’re planning on selling information products and online services. An information product can be delivered using most standard e-commerce products, but billing for an online service can be rather more complicated. If you plan to base your internet business model and create your site using WordPress then there’s a range of plugins available that enable you to add membership functions easily.
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~ Nomadic Danny
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