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The Pros and Cons of Running an Online Business

The Pros and Cons of Running an Online Business
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These days, it seems like everyone and their dog is making money off the internet. Not a day goes by that you don’t hear of some new person making a boatload of cash from their new online store, so it’s quite natural that you might want to get in on the action as well. There are plenty of resources online that can help you get started, but you do need to learn about the pros and cons of the various online business models to see which one is best suited to your ideas and needs. In this article, we will compare and contrast the three most popular options online.

Affiliate Marketing

Affiliate marketing is a method by which you, as an affiliate, partner with a producer to promote a product and earn a commission based on the number of units sold that you have directly influenced. If you’ve ever watched a YouTube video in the last few years, or interacted with an Instagram post where you’ve been encouraged to use “Promo Code XXX to get XXX off next purchase”, then you know exactly how affiliate marketing functions.

When done correctly, affiliate marketing is a very lucrative moneymaker that requires very little to no initial investment. You don’t even need your own website, since you can easily use free blog websites or social media to promote your products. Furthermore, you don’t need to dedicate any time or resources to designing a product of your own. All you need to do is simply pick something that you feel consumers will buy and promote it. Affiliate marketing is also very flexible; you can run your business from the beach, your bed – wherever you feel most comfortable.

However, there are a couple of downsides to affiliate marketing. The biggest is that the commissions you can earn vary between products and profit margins are usually slim, meaning that to be successful, one needs to generate large numbers of sales or go for high margin products. Another con is that affiliate marketing requires patience; no one ever gets rich overnight. You need to build up a following, have large numbers of people who regularly see your work, whether it be blog posts, posts on social media etc.

Moving on,

eCommerce / Dropshipping

Running your own eshop is another popular way to make money online, and the method comes with a swathe of benefits over going the traditional route of a brick and mortar shop. If you sell online, through one of the many different eCommerce platforms like Amazon, eBay and the like, you can reach a much larger audience, sometimes even an international one. Anyone, anywhere can click a link and land on your page, see what you are selling and be inspired to buy. Setting up an eshop is also simple and inexpensive. Web companies like Linkeo Ltd, through their Deliver By Linkeo program, will provide you with templates and guidance in creating a store, all one needs to do is pay for a domain name and you are good to go.

If you don’t want to go through the trouble of making your own site, there is always dropshipping, where you can promote and sell products without spending anything.

However, there are some cons to this method as well. Setting up an online store is easy. Choosing the right products to sell is not. Competition is high, which makes it difficult for beginners to break into the market. Finding a niche market to corner can be helpful, but even then, there are no guarantees that you will see the sales levels you expect right out the gate, if ever. Another thing to remember, especially if you are relying on an overseas supplier, is that you might not always be able to guarantee the quality of the product. This can result in you ordering numerous amounts of a faulty item, or worse, a customer receiving faulty items and requesting a refund – meaning you would then lose money due to shipping fees.

Fulfillment by Amazon

Have you ever heard of this one? Basically, this is a system that was set up by Amazon, where you can rent out space in their giant warehouses to store your products for a small fee, and once you sell the product, they will take care of shipping it out for you, again for a small fee. The advantages of this system are quite apparent. As the largest worldwide online retailer, Amazon sets the standards for shipping times, as well as having the best warehouses in the world. Your items will be subject to Amazon’s careful storage regulations, ensuring safety and insurance in the unlikely event of product destruction.

However, this method also has some big drawbacks. The first is cost, obviously. For one thing, having lots of physical stock in one place is potentially a great way to lose money. If you purchase 1000 units of something and then are unable to sell, you are not only going to be losing money from the initial purchase but are now also going to be losing money due to Amazon’s storage fees, which whilst being cheap, are going to quickly add up over time. Another is the fact that Amazon tends to store several of the same types of items together. So, if a client orders your item, there is a slight chance that they may receive a different item from the one they ordered.

At the end of the day, each of these systems might have its pros and cons, but they have proven to be extremely effective overall. All you need to do is pick the right strategy for you, make sure it is something you are going to enjoy doing regularly over the weeks and months that it will take you to hopefully be successful.

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