There are numerous ways to make money online. You should focus on choosing the one which fits your interests and skills, not just the one everyone else says brings "easy money".
Here are some of the most common online business models:
1. Selling tangible goods
2. Selling information products (intangible/downloaded)
3. Affiliate marketing
It takes a certain personality to thrive in any one of these. Let's take a look at the traits associated with each.
The Seller of Tangible Goods
This type of entrepreneur usually possesses previous experience in the retail industry, though it is not totally necessary to have previous experience in order to succeed. However, an inexperienced online retailer faces the biggest learning curve.
In order to sell tangible goods, you'll need to learn the ins and outs of wholesale for product sourcing. You'll need to learn how to set the optimal price point for your products to remain profitable and competitive. You must deal with shipping and returns.
If you run a one-person operation, it will be near impossible to ship products in the necessary volume. In this case, you'll need to find companies which can "drop ship" your product. Drop shipping is a fulfillment service.
Your customer purchases a product from you at your retail price and then you order that product from a wholesaler at the wholesale price and they ship the product to the customer on your behalf.
This sounds ideal – but be forewarned. Most established wholesalers have minimum order requirements and will not ship single items.
Drop ship wholesalers often mark up their prices and you end up paying at least 10%-15% above the true wholesale cost. This isn't a small price to pay when your objective is competitive pricing. Even a small mark up can kill your profit margin.
If you choose this route, be prepared for a lot of hard work! Online retail requires persistence, patience, strategic planning and a high degree of risk.
The Seller of Intangible/Information Products
Information products present an ideal opportunity for small, home-based business owners. Your costs of development and overhead are low, while your potential profit margin is high.
Why? You can set any price you choose when you own your own product.
Your supply never runs out. You are limited only by your imagination and your ability to think up new and creative products to sell.
You will need a new skill set if you choose this path. Primarily, you will need to learn good copywriting skills and how to sell people on what they desire, not on what they think they need. It’s relatively simple to entice a visitor to purchase, say, an MP3 player when they're already looking for one. This doesn't require convincing sales copy.
An information product, though, does require good copy. You're asking your potential customer to invest in a product they aren't familiar with – something they can't see or touch or play with like a tangible product.
Information marketing is very much "all in the mind". It rests on your ability to stir up people's passions and secret wishes. If you pride yourself on seeing "the big picture" and have the heart of a teacher or communicator, information marketing could be the right choice for you.
The Affiliate Marketer
The affiliate marketer is an interesting breed. He makes a living selling products he does not own. His profit comes from commissions paid on sales he refers to other merchants.
As an affiliate marketer, you can 'sell' both tangible and intangible products. In other words, you could earn commissions on anything from a vacuum cleaner to an e-book.
Obviously, you have a great deal of latitude in which products you choose to market.
This breadth of options is both a strength and weakness. It's very easy to lose focus. It's also such a popular business that you face competition in the thousands – not just from other affiliates, but sometimes the merchants themselves.
The number one skill to develop as an affiliate marketer is the ability to generate highly targeted traffic. You also need to learn how to capture that traffic and do a bit of extra selling before they hit the merchant's site. If you don't capture the visitor's e-mail address, they're gone for good – and you'll get stuck trying to generate volumes of traffic over and over again just to capture enough "luck of the draw" sales to get by. It's like throwing your ad budget down a hole.
If you want to be an affiliate marketer, be prepared for stiff competition and be ready to innovate on a constant basis. Last but not least, have a back up plan. Many affiliates have been left in the lurch by unethical merchants or merchants who suddenly go out of business. Remember, your paycheck is in someone else's hands.
I've given you a lot to think about in today's lesson. Mull it over a bit.
