If you are thinking of buying an internet based business, you are spoilt for choice! There are countless profitable online businesses you can invest in. If you are only considering it and would want to know how to navigate these murky waters, here are some quick tips. We’ll give you some insights from our experience.
Online businesses are vast and hard to classify. Technology changes fast, and so does everything that depend on the internet. However, there are about 3 main categories of items you can sell online for a profit. We realized that each category has its own opportunities and challenges. Therefore, it is important to choose a niche you are passionate about. There are three main categories you can consider.
• Physical goods
• Digital goods
This is the most common idea whenever anyone thinks of an internet based business. This category makes up the biggest part of today’s ecommerce market and online stores. While it presents a range of opportunities for both the financially endowed and the barely surviving entrepreneur, it has its own unique challenges. Some of those challenges include warehousing and storage, insurance, shipping and breakages. Selling physical goods appealed to us the most. However, we needed to know how to solve the challenges. We got a few good ideas, which we’ll share with you in this article.
While these may also need an online store sort of a platform, they are not physical goods so they do not require physical storage and warehousing. The most common digital goods include software, music, videos, images and e-books. We also discovered that selling digital goods has its own challenge: piracy. However, it has the best margins as one product can be sold multiple times.
This is not a common category, though it has steadily grown over time. Some of the services that make profitable internet businesses include consulting, content creation, web development among other services. While these services can be pretty profitable once credibility is built, the scalability of the business is limited. Additionally, unless you have the skills, or have a team with the required skills, it would be hard to sustain profitability after purchase.
We realized that acquisition of the products is one of the biggest parts of the internet business. It is imperative to understand the process of acquiring the products you wish to sell. The acquisition process depends largely on the product of choice. Here are some options that were open for us to explore.
• Making the product, mostly by hand, works well with items such as jewelry, natural beauty products and other fashion items
• Manufacturing the product works well when the warehousing logistics are in place. We discovered that if we wanted to, we could contract a manufacturer to handle the processing, storage and shipping of the products!
• Wholesaling is a fairly simple process; being a middleman. We were presented with the option of buying products at discounted prices and reselling at a profit.
• Drop shipping involves selling products that you do not own. This business strategy involves taking orders and forwarding them to the seller or manufacturer for shipping. The trick here is to sell at a price that is higher than that of the manufacturer or seller.
• Creating works well with digital products. We discovered that you need not be an expert in any of the creative processes. You can hire a professional to create digital products and resell at a profit.
Once we chose the product, and we knew how to get it, we had to understand who the target customers would be and how to get to them. The trick is to sell products to people who already want what we have, at a price they are willing and able to buy. As such, we discovered that it was important to define the strategy that would work for the internet business we were considering. Some of the strategies include the following.
• Operate as a business that is selling products to another business
• Operate as a business that is selling products to a customer
• Operate as a consumer selling to another consumer
The strategy to choose will depend on the product you wish to sell as well as your financial capabilities. It was interesting to note that there are some internet business owners who aim at working only with the government or other administrative institutions. While this is not common, it is still a viable option.
We had the option of buying profitable yet cheap internet businesses. The challenge, however, was to ensure that the business remained profitable even as we sought for growth. We can never deny that internet businesses face stiff competition, especially cheap businesses which require little capital to start. We had to make sure that the business we would buy would be competitive. There were a few factors we decided to play around with. If these factors wouldn’t work to make the business grow, then we considered it a bad investment. Here are some factors that we considered important.
• The price of the product as opposed to its quality and competition
• The variety of items we present to the customer
• The value we add to ordinary items so as to make life better for our customers
• The reputation of the business as well as the current marketing strategies
When we understood the opportunities and the challenges that each internet business presented, we were able to make a decision on the business we wanted.
The best thing about running an internet based business is that the ground is somewhat leveled for both the first timer and the veteran. There is a lot more liberty to experiment with a range of business ideas and models. After all, even if you buy a business today, as long as you maintain its profitability, you can always resell it at a profit tomorrow or turn it into something else. Internet has presented us endless business opportunities which we must use appropriately.
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