While there are as many different types of online businesses as there are entrepreneurs, most online businesses fall into one of two camps: a business that is information-based, and a business that centers around an eCommerce site.
An information-based online business is usually built around the aggregation and distribution of information. Regardless of the niche, information businesses educate the end user through blog posts, eBooks, courses, podcasts, and other free and paid informational tools.
An eCommerce site, on the other hand, tends to focus on the sale and distribution of physical products. Sometimes an eCommerce site includes a brick and mortar component, such as a sporting goods company that has physical locations and an online store. Other times, eCommerce sites are strictly web-based businesses that use a website as a “storefront” to sell products.
So how do you know which type of online business is right for you?
Here are some of the pros and cons of each:
Information Website: Pro’s and Con’s
There are a lot of advantages to starting an information-based website.
With an info-based online business, you can….
- Save money on startup costs. Without physical products to ship, it’s cheap and easy to start blogging, create electronic content, and sell digital downloads.
- Run your business from anywhere – it doesn’t matter where you’re located, and it’s easy to reach a worldwide target market.
- Make money pursuing your passion. An info-business allows you to indulge in your favorite topics and connect with others who share your interests.
However, unlike an eCommerce store, an info-based online business has some drawbacks, as follows:
- It can be difficult to clarify your brand and message. When you’re selling physical products, it’s easier to find your target market because what you’re selling is concrete and tangible. Blogs and other info products can sometimes be a harder sell.
- With an info-site, you have to work harder to figure what, exactly, you’re selling. Info sites often give away a lot of content for free, whereas eCommerce sites are very clear in terms of what’s for sale and how the customer can spend money with the company.
eCommerce site: Pro’s and Con’s
eCommerce sites offer a lot of benefits to emerging entrepreneurs.
- An eCommerce site is scaleable – instead of trading time for dollars, you create a product once and sell it over and over again. The potential for passive income with an eCommerce site is very high.
- An eCommerce site creates the potential to expand your product line into physical stores and grow the business in other tangible ways. A strong online store can easily be transitioned into a brick and mortar operation.
But eCommerce sites have a lot of moving parts….
- You may have to worry about manufacturing, shipping, customs, taxes, and all sorts of headaches that info-business owners never have to think about.
- You will have to deal with refunds and returns on a regular basis.
- You will find yourself having to deal with customer requests and having to provide ‘customer service’ in order to promote your products.
- You’ll have a higher level of competition because anyone can create and sell a similar product at a lower price.
When deciding which type of online business is right for you, it’s crucial to consider your personal sensibilities, passions, and pet peeves.
In general, starting an information-based business is the simpler, more cost-effective choice.
However, for those longing to sell physical products, the bar to entry is lower than ever and the rewards perhaps even greater than with an info-based business.
Either way, starting a blog or signing up to sell products on an eCommerce site like Shopify is a great way to get your foot in the door.
Are you more interested in starting an info-based business or an eCommerce business? Why?
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