Online Business Models



Building an online business is no different than any other offline business. You have to provide value to your customers in exchange for the money they pay you.

That value is generally in terms of goods, services or a combination of both.

When you start an online business, you can follow the same business model. You can provide goods and services online or offline in exchange for the money you charge. You can follow any of the following models.

The 3 basic online business models

  1. Online goods/services to global customers.
  2. Online goods/services to local customers.
  3. Offline  goods/services to local customers where you use internet to market your business.

Though all these three types of businesses seem similar, the third one is merely an offline business entity using online services either to attract customers to its business or to build brand equity. This model is not truly an online business.

True online business model

The true essence of an online business is in its online nature. In such a business the goods, services or both exist online and the customers pay you for using it or accessing the information. They may also download the product from your website, which may be a software, an ebook, videos or audio tracks or something similar of value. The services you provide can also be located in an online server, which is accessible to your customer, 24/7, and they pay you for the services you provide them.

Advantages of an online business model

The advantage of this business model is that you create the product once and keep selling copies of it again and again in exchange for good money. The software or service you provide mostly demands an onetime investment and keeps giving you return again and again. Information products or membership sites are good examples of this. You may have to spend little money on maintaining your website or on domain and hosting expenses, but comparing to the return you receive this investment is very negligible.

Anything, which has the potential of being a good product/service is basically a solution to a pressing or passionate need.  People who buy your product actually buy a solution. So, before we can develop any product we have to find out a need first then finding the exact solution is just child’s play.

Any online business  “Product development process” must include all the essential market research first before investing valuable assets on final product development.

About Himanshu

I joined Indian Air Force during college and opted out after completion of 20 years of active service. I didn't join any job because I wanted to be an entrepreneur. After failing in 4 businesses in 10 years, I have started learning Internet Marketing. Thank God, I am doing well now!

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