Best Online Business Models, Part 2: Selling Physical Products
Last time we introduced the concept of a business model, what it is and why you should have one.
Here is a quick look at the components of a business model.
Remember that a business model is a specific way of doing business and provides helpful guidelines, boundaries and descriptions for the businesses purpose, strategies, structure, policies, processes and more; particularly how the business will actually make its money.
Have the right business model in the right place at the right time and you will succeed. Don’t and you won’t.
So, this time we will start looking at specific online business models that have been very successful for many people for a long while (in Internet time).
Bring Your Offline Business Online
In the U.S., about 95% of people have access to the Internet either at home, work or both.
Telephone directories are having serious financial problems because more and more people are searching the Web to find businesses.
Companies like Service Magic get you almost instant access to local service businesses of all types from cleaning services to plumbers.
Google’s Local search provides extremely targeted access to businesses local to your current location.
One advantage of being online is the ability to make changes to your marketing material, instantly and whenever you wish.
The latest numbers I heard were that about 7 out 8 eight people research online before making most purchases whether that purchase is online or off; and just slightly less than that have made online purchases — the dollar amount of online business transactions exceeded $100 million years ago and it will exceed $1 trillion in just a few more.
Even my retirement age mother has become a Google queen. At the slightest thought or question she’s rushing to Google to get the answer including where to buy what she wants and needs.
It makes sense, why go from store to store finding what you want, comparing features and prices and whatever when you can just get the information right online.
And, if they find it online they’re more likely to buy there because their confidence level is higher since they did the research.
Minimally this type of online business should describe your business, the benefits of using you, what products and services you provide, your contact information (every way you can be contacted and can respond), your location, directions, maybe a history of your company (if it has one), awards or distinctions you or your company has received, licenses you have, organizations you’re a member of (chamber of commerce, professional, etc.), seals (like Better Business Bureau), sales/special/coupons.
Like you do offline you need to create a relationship and build trust. The most common way of doing that is by providing valuable information: helpful hints and tips, special care techniques, how-to’s, recipes, etc. — whatever is appropriate to your business. Make it fund and interesting.
Make the “feel” of your Web site be an extension of the feel/culture of your offline business.
That’s the minimum.
Every offline business can have an online e-commerce component.
If you sell products, of course, you can probably sell those online but even if you don’t or the products can’t sell well online you can still sell things.
Sell related products, sell information products, you can even sell services if you approach it right.
The key is to create your online presence and the move to e-commerce, no matter what your business is. Just get started.
Business Model Components
Partners: You’ll retain the same partners you already have and add some additional partners that will provide you products and services for the online component of your business. Examples include: Web hosting companies; Autoresponder companies; technical design, development and maintenance companies; etc. You’ll also have the option of having a large number of partners marketing and selling for you on a pure commission basis.
Key/Core Activities: New key or core activities will be getting prospects to your online stores.
Key/Core Resources: You may not have any new key or core resources although you may develop some online specific ones depending upon your business and your goals.
Costs: New costs will be for Web site and customer management services as well as shipping and online traffic generation and, obviously, commission payments if you utilize marketing partners.
Offer: You may or may not choose to offer items that is not part of your offline business but being online means that you can expand your offerings with little or no additional cost; think of everything that Amazon sells and compare it to even the largest offline store.
Client Relationships: Because of the less personal nature of online business the relationships with your customer demand a greater attention to detail.
Distribution Channels: You can get a large number of new distribution channels, many more than you currently have available, greatly increasing your reach into your marketplace.
Customers: You customers can literally be anyone, anywhere and you need to be aware of this and act appropriately.
Revenue: Your revenue will not be tied to your local economy or the limited number of products and services you can offer. You can also easily have multiple streams of revenue that were impossible to do with just an offline business.
Sell Physical Products
When you have an offline business selling physical products you can bring it online but with the Internet brings an entire new opportunity to sell physical products even if you have no physical location.
Today, you can open a business on the Internet without having a physical store; in fact, it is usually desirable not to have one.
Why?
You have to find, pay an expensive lease for, setup and insure the physical location, all which take time and money.
You have to find, buy and stock the inventory, all of which takes time and ties up your cash until you start selling.
You will either have to be working at the store for long hours every day it is open or spend more money hiring, training and managing employees; or both.
For all that you will have a physical store that limits your potential customers to just those people who can and are willing to travel to your store.
You will need to spend lots of money on newspaper, radio, television and other forms of advertising to let those people know about your store and to try to convince them to come to your store.
It all adds up to big bucks and boatloads of time both to set up and every month.
Say you want to sell the physical (maybe the same) products online.
You will have to find, (maybe) pay a very inexpensive lease and setup your online store none of which costs much or takes much time.
You will have to find your inventory but there are Web sites that have thousands of available products so this is easy and rarely costs anything.
Most companies will take orders and ship to your customers so you don’t need to pay for inventory until you sell and you don’t need to worry about shipping the products to your customers.
You don’t need to spend much, if any, time at all working or minding the store and you can very inexpensively find people to do all the work for you if you wish.
Your customers can, literally, be anywhere on the planet that companies like UPS and FedEx will ship to.
You will need to “advertise” but it won’t be nearly as expensive and you can set up an Ultimate Free Traffic Network to get floods of traffic for little direct cost.
It all adds up to little initial investment, depending upon the business, it can easily cost under $100 to set up and less to run every month.
All this shows the strength of using a business model that sells physical product without a physical location is a fast, easy and inexpensive way to start a business online.
Business Model Components
Partners: You’ll have partners that will provide you products and services for your online business. Examples include: Web hosting companies; Autoresponder companies; technical design, development and maintenance companies; etc. You’ll also have the option of having a large number of partners marketing and selling for you on a pure commission basis.
Key/Core Activities: Key or core activities will be online branding and getting prospects to your online stores.
Key/Core Resources: You may not have any new key or core resources although you may develop some online specific ones depending upon your business and your goals.
Costs: Costs will include Web site and customer management services as well as shipping and online traffic generation. There will also be some accounting and sales tax costs and, obviously, commission payments if you utilize marketing partners.
Offer: Your offer may be anything you can find that people will want to buy and vendors will provide to you to sell. You should though select specific products in a small niche and not try to sell everything to everyone.
Client Relationships: Because of the less personal nature of online business the relationships with your customer demand a great attention to detail.
Distribution Channels: You can get a large number of distribution channels, many more than are available offline.
Customers: You customers can literally be anyone, anywhere and you need to be aware of this and act appropriately.
Revenue: Your revenue will not be tied to your local economy or the limited number of products and services you can offer. You can also easily have multiple streams of revenue that were impossible to do with just an offline business.
Conclusion
We looked at two very successful business models that you can use to start your online business.
They were both tied to selling physical products either as an extension of an existing offline business or as a completely new business.
If they attract you then these are options you should research and strongly consider. If they don’t then next time will be provide more successful online business models.
Do you have an online business you’d like to bring online?
Do you want to sell physical products online?
What challenges do you see that would stop you from using the two business models presented here?
Leave me a comment and let me know.
Talk soon,
The “Shameless” (but “Ethical”) Marketer
http://www.Twitter.com/DavidHusnian
http://www.8-8-8Sale.com
http://www.MusicForInternetMarketers.com
http://www.SecretsOfGoogleAdwords.com
http://www.MadMondaySale.com
http://www.2ForTuesdaySale.com
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