6 Types of Online Business and What Nobody Tells You About Them

Via FreePik

If you have ever considered starting an online business, you must have been overwhelmed with the amount of information available online. And if you are something like me, you probably went deep into some internet holes, done research for hours, and left with even less clarity than before.

While you can learn everything you need from articles, tutorials, and courses, most teachers tend to highlight the positives and leave out the challenges.

Some ‘gurus’ might tell you about the mistakes they make so you can avoid them. But at the end of the day, they want you to get their course or use the tools they are recommending.

I am not saying that is inherently wrong since their business model is creating content and recommending products and it is a legitimate one. But in this article, I want to tell you about the hardest aspects of each business model that are not mentioned enough.

Dropshipping

If you have ever bought something online, there is a big chance you have bought from a dropshipping store.

This is an online selling model where you buy a product directly from third-party suppliers and ship them to your customers.

Under this model, you create an online store and take care of the marketing and selling part while the supplier takes care of the fulfillment.

Naturally, you only place an order once someone has bought from you and sell the products at a higher price than the supplier to get your margins.

This is what every retailer has done for centuries. Buying products at a lower cost and selling them for a profit. But the rise of online commerce has made it possible that you don’t need to keep an inventory and can do place orders from anywhere in the world.

What nobody tells you about dropshipping

• Creating a store and finding a supplier are the easy parts. Finding a product and traffic source that allows you to be profitable is the tricky one since profit margins are very small. Your biggest challenge will be in finding a way to get people to your store that doesn’t cut away all your earnings.
• You’ll need to do a lot of testing and optimizing before you start making money. From trying different products, ads, and audiences, you will need to spend time and money before finding a winning combination. So don’t expect to get rich once your first store is ready.
• Shipping times will be an issue. In the beginning, you will need to work with suppliers based in China so your orders will take 10–20+ days. While you can reduce your complaints by stating the shipping time clearly, you’ll still get delays and refund requests. Ideally, you will move to a local fulfillment house once you find a successful product and are able to buy your own inventory.

Amazon FBA

Amazon FBA stands for Fulfillment by Amazon. This is a business model where you sell through Amazon’s website and keep your inventory in their fulfillment centers. They then handle the packing, shipping, and customer service, for a fee, of course.

Amazon has millions of visitors daily so you don’t need to worry about directing people to your product. They also have one of the fastest and most efficient shipping systems so you won’t have any problems with delays or customer complaints.

What are then the challenges you can expect in this business model? Let’s take a look at them.

What nobody tells you about Amazon FBA

• You need to rank your product on the first page of results if you want to be successful. . As you can imagine, competition is very high so you’ll be going against sellers with a long track record and thousands of reviews.
• There is a lot of sketchy tactics involved in getting your product ranked. Rankings, reviews, and sales are some factors that determine rankings. Since new vendors don’t have any, they often use ranking services that include buying groups and paid reviews.
• Your business can be gone at any minute. Amazon has great customer service when it comes to buyers but when it comes to sellers, they don’t care very much. I know cases where sellers received complaints made by competitors and got their account shut overnight. Some of them never got them back and those who did had lost all their rankings so had to practically start over.

Online Service-Based Business

An online service-based business is an evolution of doing freelancing work. In this case, you don’t exchange your time for money but have a team of experts that produce the work while you manage the marketing and clients.

This model can also be considered an online agency or what some internet gurus like to call “Dropservicing”. This type of business also exists in the offline world but the internet has eliminated the need for an office or in-house team.

While you don’t need to be an expert in every single service you offer, you should have experience with the industry. This way, you already have some authority and can gain the trust of your potential clients faster.

You can use this model for a wide variety of services, from graphic design and bookkeeping to web development, translations, and many more.

What nobody tells you about Online Service-Based Business

• You’ll have to work more than your team. It can sound like you’ll be hiring people to do the work, and be free to do what you want. But this is rarely the reality — especially at first. You will need to find clients, out-hustle the competition, be flexible, and adapt to what your target client or customer is telling you that they want. On top of that, you’ll need to review what your team does and sometimes do it yourself to avoid more delays.

Content Creator

This type of business model involves methods like starting a blog, a Youtube channel, or social media account. Your content is the ‘product’ you offer and your audience is the way in which you make money.

Content creation requires some time and effort until you start to get some traction. But once you do, you can monetize it in many different ways such as sponsorships, affiliate marketing, selling your own products, using ad networks, etc.

Each platform has its own learning curves and timeline as well as its own benefits and drawbacks but the principle is similar.

In the digital era where attention is one of the most coveted assets, you are building an audience happy to consume what you create or recommend.

What they don’t tell you about Content Creation

• It takes more time, effort, and consistency than you expect. Thousands of new content creators start their blogs or channels every day and the majority of them never succeed. Not because they were not talented enough but because they gave up before they could see any results.
• You will have to do a lot more than you think. Bloggers don’t only write, Youtubers don’t only film. You’ll need to learn about keyword research, web development, graphic design, email marketing, and many other tasks. Learning new skills is always useful but definitely, something not mentioned enough.

Affiliate Marketing

Affiliate Marketing is a type of business where you get a commission by promoting other people’s (or company’s) products. You will receive an affiliate link used to track your referrals and earn a piece of the profit for each sale that you make.

The benefits of this business model are that you don’t need to invest in inventory or spend time creating your own products. You also don’t need to deal with customer services or fulfillment since the merchants take care of that.

There are infinite ways you can use to promote your affiliate offers. Bloggers, YouTubers, and influencers make some of their revenue by promoting affiliate products. You can also use Facebook Ads, Google Ads, or other types of Pay Per Click Platforms to advertise your offers without a site or blog.

What they don’t tell you about Affiliate Marketing

• You need to invest either money or time. If you choose a method that involves paid ads, you will be spending money testing offers, targeting, and ads before you see a profit. On the other hand, if you choose an organic method, it will take a while to grow your audience and get traffic.
• You will need to learn about email marketing. The phrase ‘the money is on the list’ is famous among marketers but newbies are rarely aware of it. Regardless of the platform you use, you should turn your visitors into email subscribers and follow up with them if you want to have a profitable long term business.
• There are lots of poor offers that can waste your time and money. Most affiliate marketers gurus won’t reveal the offers they are promoting because they don’t want more competition. In turn, they will use bad and sketchy offers as an example and make you think you can make money with those.

Selling Digital Products

This type of business involves selling digital products of your own. These can include online courses, ebooks, software, printables, apps, and digital goods such as photos and videos.

The best aspect of selling digital products is that you only have to produce them once and then you can sell them forever. This can create a real passive income depending on where and how you want to sell them.

What they don’t tell you about Selling Digital Products

• You will need to choose between selling on established marketplaces or selling them on your own. Marketplaces have a consistent audience but also lots of competition, rules, and fees. Alternatively, by selling on your own platform you will have to build your authority and create your own audience.
• Most of your sales won’t come from the front end. People need to ‘hear’ from you 7 to 8 times before being ready to buy so the best way to succeed with a digital product is to create a sales funnels. This way you can provide value and gain your audience trust until they are ready to buy. This requires more work than just creating a digital product.

Bottom Line

Every method for making money online has its own benefits and disadvantages. You can find great information online but next time you are doing some research, remember that there is more to them than what most people will tell you since everyone has some sort of interest in selling you a course or a tool.

It doesn’t mean these methods are not legitimate, people make LOTS of money with them every day. It just means you need to be prepared to face the challenges and take an online business as seriously as you’d do with an offline one.