by David Lim
Many people choose to start a business online rather than offline because of the many advantages of operating in the online environment. A business online can be operated from the home, saving up on the office rental. You also don't have to travel to the office, saving up on time, transport costs and even on your wardrobe.
If you are looking to start an online business, and have not decided on the actual structure of the business and the products to sell, then you should take your time and consider a business structure and products that takes full advantage of the online space, and have none of the hassle of many of the offline companies.
Affiliate Products
An affiliate product is a product that you sell as an affiliate. You sign up as an affiliate with the merchant's affiliate program and your role as an affiliate is to simply act as a middleman. Normally, you would presell and provide as much information about the product as your customer needs. Once your customer is ready to buy, you direct her to the merchant's website, where she will make her purchase.
The great thing about selling as an affiliate is that you just need to sell. The merchant will have to keep inventory, handle the delivery, returns, repairs and after sales service.
You will earn commission, which is usually a percentage of the value of the sale. Payments to you will usually be accumulated, paid out by the merchant on a monthly basis or when you have reached the payment threshold.
Affiliate Network
An affiliate program is a collection of affiliate programs across many product categories combined into a single network. The advantages in joining an affiliate network as compared to an affiliate program run by a single merchant include:
One Account. While you might need approval to join the various merchant's affiliate programs on the network, you only have one account and that's the account with the affiliate network. This will simplify administration on your part as you will need only one ID and password to access all your affiliate programs.
Faster Payouts. If you are promoting multiple products with multiple merchants, you will also be able to reach the payout threshold faster as payments from the various merchants are consolidated into your single account with the affiliate network.
Independent Reporting. There is less chance that your sales figures are manipulated since they are controlled by an independent third-party, namely the affiliate network.
Compare Advertisers. You can compare the metrics of merchants selling similar products to look for the merchant whose website converts best, in addition to comparing their commission rates.
Own Online Product
I would define an online product as a product that can be downloaded through the Internet, with no actual physical delivery required. Examples of such products would include:
Ebooks or Articles.
Computer Software or Website Scripts.
Website or Wordpress Templates.
Graphics or Photographs.
Having an online product is half the battle won. That means that you do not have to deal with inventory, shipping, delivery and returns. But you do have to collect payments, and if you sell software or something similar, there will also be after sales support.
Drop Shipper
A drop shipper takes away the headache of storing and shipping a physical product. Once your customer has paid you, you will send your customer's name, address and products ordered to the drop shipper. The drop shipper will ship the products directly to your customer. The parcel being shipped will contain your business's details, instead of the drop shipper's, so to your customer will not know that a drop shipper is involved.
With a drop shipper, while you don't have to deal with storing and shipping your product, you probably still have to deal with returns, repairs and after sales service and support.
Drop shippers will typically be located in a different country with cultures and business practices different from yours. The products shipped by the drop shippers goes directly to your customers, so you are unable to perform any quality checks. So, if you are going to use drop shippers, you will have to find a trustworthy one and, on an ongoing basis, ensure that they are doing their job properly.
Conclusion
At the end of the day, if you have the luxury of choosing your business, would you choose a business in which you can earn a lot of money, but you get a lot of sleepless nights dealing with multiple issues like product returns, product reliability, customer complaints and credit card charge backs, to mention just some of the issues? Or, would you choose a business with none of the above issues?
To put it another way, would you set up an online business that purchases widgets from vendors, stores them in a warehouse, sells them to customers online, delivers the widgets to customers, and manages returns and repairs? Or, would you set up an online business that make a commission by introducing customers to widget companies?
I don't know about you, but I'm going to set up the second company, the one that just earns commission. It will probably make less money per sale, but I'd sleep soundly at night, and have lots of spare time to set up a second similar company, and then a third....
David Lim is the webmaster of http://QuittingYourJob.com, a business resource for the entrepreneur looking to start, or grow an online home-based business.
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