If you’re interested in online business models, and you’re wondering which to pursue, this post is for you!
When thinking about online business models, I think it’s most helpful to take a macro perspective, looking at:
- service providing and product-selling business models,
- and which model and path within that model is best for your situation.
I’ll discuss the difference between service-providing and product-selling business models in the section below.
Product-Selling Vs. Service-Providing Online Business Models
In general, businesses either sell products or services.
Businesses that sell services typically start bringing in money more quickly than businesses that sell products.
However, they can be more challenging to scale than product-selling businesses.
On the other hand, businesses that sell products can typically scale more easily.
To take a simple example, someone who sells an e-book puts a fixed amount of effort into writing the e-book, whether they sell five or 500,000 copies.
Because you can get paid over and over again for a fixed amount of work with a product selling business, they tend to scale more easily than service-providing businesses.
But product-selling online business models have their own set of difficulties.
For instance, unlike someone who sells services and could get paid immediately, someone who publishes a product like an e-book must typically do a lot of upfront work (like write the entire book) before receiving any payment.
Furthermore, whenever you create a product, there’s a risk that no one wants your product and that you never make any money from your effort.
There are ways to mitigate this risk.
But the risk of not getting paid for your efforts is usually greater selling products than selling services.
As you consider the below online business opportunities, keep these pros and cons for each model in mind.
Product-Selling Online Business Models
In light of the pros and cons mentioned above, you might consider pursuing a product-selling online business model if:
- you can be very patient, reaching profitability in years instead of months,
- you are confident you can build something people want or are willing to do detailed research to figure out what people want and make that,
- The prospect of building a scalable business with theoretically unlimited upside is extraordinarily motivating to you.
Let’s discuss some of the paths available for those pursuing a product-selling online business model.
1. YouTube Channel
Some find it hard to classify ad-monetized content into a product-selling or service-providing business model.
However, I think ad-monetized content like a YouTube channel, blog, or podcast actually fits nicely into the product-selling business model.
Like most product-selling business models, ad monetized content typically takes a long time to bring in significant income.
Plus, ad-monetized content also scales well like product-selling business models.
In other words, their strategy of publishing whatever content they want may not work as well for new YouTube creators today.
Instead, I recommend a timeless YouTube strategy of using keyword research to figure out what content to create.
If you can:
- find topics people regularly search on YouTube and,
- create better content than the currently ranking top results for those topics,
you have a high likelihood of:
- ranking your videos in YouTube search,
- receiving recurring traffic to your videos as a result,
- and earning recurring income from those videos.
If you want to learn more about how to pursue this strategy, check out Brian Dean’s YouTube guide.
Blogging is my favorite online business model!
It’s the OG way to make money online with countless examples of successful bloggers.
Owning a blog is like owning the internet version of a brick and mortar.
You can sell your own products like my wife does with her digital photo prints on her website.
You can also monetize with display advertising like my wife also does with blog.
Many bloggers sell other people’s products, collecting a commission on products sold.
This business model known as affiliate marketing is very popular.
In short, blogging is an online business model with incredible opportunity to scale and grow.
3. Drop Shipping
Drop shipping allows you to advertise and sell inventory that you don’t physically have.
The inventory comes from a third-party seller, and you aren’t charged for it unless you make a sale.
When a purchaser buys an item from you, the supplier ships that item directly to the buyer.
You make the retail price for the item and pay the supplier the wholesale price, keeping the difference.
The primary benefit of dropshipping is that you have little to no startup costs because you don’t need to buy any inventory upfront.
However, this model isn’t without its problems.
Imagine you source the widgets you sell from Alibaba, and someone else starts sourcing those same widgets from Alibaba for their business!
Then your businesses can get stuck in a race to zero profitability as you compete with one another to offer a more competitive price (since your products are identical).
This isn’t to say that there aren’t successful dropshippers like Matt Scott, or that you can’t succeed doing it.
However, I think there are online business models with a higher likelihood of success.
4. Web or Mobile App Development
While I’m not crazy about drop-shipping, SAAS is one of my favorite online business models!
Don’t let SAAS (Software As A Service) confuse you into thinking this is a service-providing online business model.
Plus, you can create web apps and other software types without writing a single line of code today!
Check out my no-code article to learn more about how this is possible.
Although I love this example of an online business model, you can easily create something that no one wants.
However, there are ways to mitigate this risk.
I recommend using SEO to find topics related to a product idea you are interested in and creating blog content on those topics.
Once you have an engaged audience of readers, you have a potential customer base for your SAAS product.
Here’s how Jordan O’Connor, founder of the SAAS product, Closet Tools, describes this concept.
5. Amazon Kindle Publishing
My friend Matt and I actually co-authored two e-books and published them on Amazon.
We made ~$200 each from the books and learned a lot in the process.
However, we ultimately realized that many of the most successful kindle e-book authors publish prolifically.
Also, we realized that prolifically publishing wasn’t exactly our skillset.
We didn’t continue publishing e-books.
However, if this something you’re interested in, check out this post from Tim Ferriss.
The post describes the amazing opportunities available to Kindle publishers who are willing to put in the work!
6. Digital Stock Products
I like how digital stock products can be uploaded once and sold forever.
This is what my wife does with original stock photography on her website.
Plus, there are countless markets for different types of stock content.
Besides stock photography you can sell:
- virtual sewing patterns,
- graphic designs,
- and much more.
However, I can’t find as many examples of people making a living from stock content as I can for other online business models in this list.
7. Subscription Boxes
Subscription boxes are an interesting business model.
They work well for people who have already established audiences like Dave Asprey with his Bulletproof brand.
Plus, there are no-code tools and themes specifically designed to sell subscription boxes like this Shopify App.
However, I only recommend pursuing this online business model if you already have an audience.
8. Print on Demand
Print on demand is a huge business, enabling creators to print their designs on t-shirts, mugs, ball caps, bags, and so much more.
Like dropshipping, print on demand businesses don’t need to hold any inventory or manage order fulfillment.
My buddy Matt and I actually created a paleo-diet themed print-on-demand t-shirt brand.
We made a total of one sale.
One of the reasons we didn’t succeed is because we didn’t have an audience of potential buyers.
The only thing we did to market our shirts was haphazardly grow an Instagram account associated with the brand.
Looking back on this business pursuit, I would have created a blog first.
And only after having successfully grown an audience would I then try to market a product to them.
Although Matt and I didn’t experience great success, there are plenty of success stories for inspiration if this is a path you want to pursue.
Although you can do print on demand with Etsy, you can also sell your own hand-made or assembled products.
This is what Megan Whittington does with her Etsy shop, making sensory kits and accessories for kids!
(Fun fact: my agency is building an e-commerce site for Megan so she can expand from Etsy to her own site.)
Although there are certainly Etsy success stories like Megan’s, it’s not one of my favorite online business models.
In other words, typically only a handful of products will succeed on a product search engine like Etsy.
However, this isn’t necessarily true with an information search engine like Google.
Countless information search terms could lead prospective customers to your products on a search engine like Google.
This is why I prefer creating content for information search engines instead of relying solely on a product search engine.
10. Domain Flipping
Domain flipping is an interesting online business model.
You certainly have the one-off success stories like hotels.com which was purchased for $11 million USD back in 2001.
However, as you can tell from Wallet Squirrel’s description, this business model requires:
- capital to buy domains,
- hustle to market them,
- and some degree of luck, hoping to buy some that become valuable in the future.
With Exploding Topics, you can find brands and businesses whose popularity is exploding.
These niches are likely great opportunities to find domain names that will be valuable to prospective businesses who are moving into these niches.
Service-Providing Online Business Models
If you are less interested in optimizing your business model and more interested in quickly monetizing a skill set you already have online, a service providing business model or freelance opportunity may be for you.
I’ll discuss some online business models providing services and service-providing online freelance opportunities in the below sections.
11. Online Teaching
There are plenty of opportunities for those who like teaching to make an income online.
One of the platforms where you can do this is called Outschool.
The platform is free to use, but Outschool does charge a 30% commission fee.
However, Outschool prices per learner so each student is individually charged your price.
Imagine that you have a class with 9 learners and each learner is charged 5 dollars for a 30-minute class.
If you take out the 30% commission, you still make $31.50 for one 30-minute class.
In other words:
Outschool also allows you to create classes on a one-time basis or ongoing basis.
You can set your own prices, availability, and teach without a degree.
This could be a great opportunity for those who love teaching.
Ghostwriting is where you write something for someone else.
But you let them have ownership over the writing piece.
That might not sound ideal, but it is an easy way to get writing experience.
It’s also great for people who can write well, but have trouble coming up with topics to write about.
Plus, this freelance gig improves your writing and researching skills.
I have spent thousands of dollars hiring freelancers on Fiverr.
And I know that many others have spent much more than I have on Fiverr.
Thus, I know it’s a great platform for freelance opportunities!
13. Speech Writing
Speech writing can be a freelance or regular employment opportunity.
Most companies require at least a bachelor’s degree in order to become a speech writer.
This degree may be in English, Business Communications, or Writing and Editing.
However, you can get started for free on your own and gain experience without going to school through online freelance platforms (again like Fiverr or Upwork).
14. Online Research
This is another popular freelance opportunity.
Again, a popular platform for this kind of freelance opportunity is Fiverr.
15. Web Development
This is a great side-hustle or full-time gig for anyone who’s tech-savvy with no-code tools or coding and ready to hustle for clients!
16. Social Media Management
Social media is critical to most online businesses.
And if you’re social media savvy, it is possible to get paid to manage social media accounts.
My first jobs out of university involved management of social media profiles for clients.
If this sounds like a good role for you, check out flexjobs.com for full and part-time opportunities that you can do online.
17. Online Therapy
This is one of those niche business opportunities that’s perfect for someone with the right educational and professional background.
These requirements actually differ per platform.
However, expect to need a license to provide therapy services on any platform.
Popular online therapy platforms include TalkSpace and BetterHelp.
At Better Help, you need to have:
- A CSW, LMFT, LPC, or PsyD license
- More than 1,000 supervised clinical hours
And to join TalkSpace, you must:
- Have a LCSW, LMFT, LPCC, or PhD in Clinical Psychology
- Have an individual professional malpractice liability insurance policy
- Submit a fully completed, signed CAQH application
- Have an Individual NPI number
- Have a reliable internet connection
18. Virtual Assistance
Small companies may not be able to afford an entire staff dedicated to customer service or easily atomized tasks like writing, marketing, etc.
Instead, they may outsource the work to freelancers.
That’s where you can come in.
This is a good one if you’re tech-savvy and ready for part-time work.
19. Call Center/Chat Operations
If you have the personality type for customer service, this could be a good online freelance opportunity.
Some virtual positions may also require you to work as both a phone and a chat agent so keep that in mind.
20. SEO Services
Anytime you search something on a search engine, web pages come up based on the search terms you used.
In fact, you probably stumbled upon this article by searching something on a search engine and clicking the result that led to this page.
As you can imagine, SEO is an important industry for online businesses.
For those interested in starting an SEO services business, check out SEO expert, Ryan Stewart’s, Blueprint Training.
21. Graphic Design
Companies need to develop their brand.
And graphic design is an important part of brand development.
You can find plenty of freelance graphic design opportunities on (you guessed it) Fiverr.
If you’re good at graphic design, with a little bit of skill-building, you can also transition into no-code app building.
22. Online Translation
Being multilingual is a special skill set!
Many companies will pay you a high hourly rate for translation with native competence in more than one language.
You can also be a translator from home.
Check out Gengo for online translation opportunities.
It’s not game-changing money.
But it’s a great side-hustle!
These are just a handful of online business models and opportunities you could pursue.
However, I hope this list has given you some ideas of where to start with an online business today.
If you still don’t know where to start, let me know in the comments!