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8 Online Business Models Explained

Online Business

8 Online Business Models Explained

As the internet gains more prominence in people’s daily lives, it provides everyone with the opportunity to be a business owner with more convenience and less financial commitment than ever. For instance, if you love baking and everyone around you loves the taste of your cakes, you can create and set up an online platform to showcase your work and persuade potential clients to buy from you.

However, there is always one concern after creating and setting up your business online. What will be the best online business model for your startup? While you may easily conclude that making a product, like delicious cakes, is the best option, it’s far from the only decision you’ll have to make.

To improve the odds of your success, you’ll also have to devote time to research an online business model that will be ideal for your business.

What is an Online Business?

An online business model is a firm’s strategy to become a lucrative business. Contrary to the traditional business model (brick-and-mortar business), online business models utilize internet space as their storefront. There are tons of buzzwords and subgroups associated with aspects of internet business, such as auction sites, content providers, and pure-play internet retailers in the B2C field.

For your online business to succeed, you need to get two these two things correct:

  • Select the best business model for you.
  • Determine the most effective traffic source.

Major Online Business Model Classifications


Business to Business Ecommerce (B2B)

A business-to-business (B2B) model aims at selling items from one company to another. Many firms in this sector are service providers, including software developers, logistics companies, hosting services, and other business models.

Business to Consumer E-Commerce (B2c)

B2C is the most common eCommerce business model. These eCommerce sales are the classic retail model, in which a company sells to customers, but the entire transaction is online rather than in a physical store.

C2C E-Commerce

Most of us understand B2B and B2C principles, but C2C is a little more complicated. C2C is where companies allow consumers to trade, buy and sell goods online and get a commission paid to their website.

Consumer to Business Ecommerce (C2B)

C2B is a business model that many individuals aren’t familiar with, but it’s becoming more popular. This internet commerce firm is similar to a sole proprietorship serving a bigger corporation in that it allows consumers to provide goods or services to enterprises.

Business To Government (B2G)

In this category, businesses have governments or public administration as their sole clients. An excellent example is Synergetics Inc., which offers contractors service providers for government institutions.

8 Online Business Models You Should Know About


1. Selling Digital Products

Sharing knowledge is one of the best ways of making money online. We are almost always online, and we’ll go to Google (or any other reliable search engine) whenever we want some information.

This is an excellent business opportunity, and you can reap good profit from it by selling digital products such as online courses and eBooks (content production).

The following are the primary things you’ll require to earn from selling digital products:

  • A product that adds value while also solving the real need of your audience
  • A website where you can sell your digital products, but you can use a landing page for a start
  • A strategy for locating potential customers

It’s ideal for venturing into areas you’re well conversant with when selling digital products. You can construct and offer online courses in your area of expertise or write an eBook on your experience.

Nathan Liao’s CMA Exam Academy is an excellent example of a well-executed digital product. The product has lots of information on being a certified accountant and strategies for preparing for the CMA test.

Nathan discovered that the then-existing digital products were not adequately preparing learners for the corporate world. So, he strived to solve the problem. In resolving this issue, he established a thriving online business which allowed him to travel around the globe while growing his business.


  • It has low entry barriers—anyone can sell digital products.
  • You can start small.
  • It’s scalable; if your clients want more products or an improvement on your product, you can readily add or improve.
  • It’s an excellent source of passive income.


  • It has no constant flow of recurring income; one-time payment.
  • It cannot be considered an asset.

Hack: Design a digital product that satisfies your client’s need, not want. Grasping user experience (UX) is an essential ingredient for success when selling digital products—so grasp the UX principles.

But don’t panic! Later in this article, we’ll discuss attracting traffic and paying clients.

2. Podcast Sponsorship

Advertising or podcast sponsorship can be an excellent online business model for you, especially if you want to make it yourself.

While podcasts allow you to work at your own pace, traffic is a significant drawback—you’ll need many listeners to get podcast sponsorships.

If you have a passion or a specific area that you are interested in, you should consider launching a WordPress blog or a podcast. For instance, if you’re into fashion, you can create a blog or podcast where you’ll share your unique ideas and start earning good cash.

All you need is a domain and website hosting. Blogs have, for a long time, been famous. Some hosting companies offer great deals to their clients. For example, the Bluehost hosting platform currently offers HTE readers a free domain and 60% off hosting.

The following are all you’ll need to start a podcast:

  • Broadcasting equipment such as headphones, microphones, etc.
  • Interview software such as Skype.
  • Software for editing and recording.
  • Podcast hosting platforms like Libsyn.

We’ll be a little biased and plug the HTE podcast. It’s an all-inclusive stop for entrepreneurs and those who are yet to join the party. It began as a passion project and has evolved into a renowned podcast full of interviews featuring entrepreneurs and covering topics ranging from digital marketing to Amazon FBA.

Focusing on whatever you’re passionate about is always a wise idea for podcasting. And if your preferred field is an eye-catching profile in public, sponsors will start following you in no time.


  • It’s scalable.
  • Relatively passive
  • Podcasts have endless growth potential.
  • Its demand is higher.


  • You’ll require plenty of followers, which may take a lot of effort and time.
  • Sponsorships come with one-time payments.
  • It cannot be considered an asset.

Another fascinating reason you should try the podcast business model is gaining authority. As you gain fame and traffic growth, your brand will gain credibility and establish itself as an asset in the field.

And when your brand gains authority, it would be breezy to diversify your revenue by creating other content or presenting as a guest in other shows and events.

Furthermore, as requests for promotions on your blog or podcast grow, so will the capacity to pick sponsorships that match your brand, potentially providing you with consistent cash and positive PR.

3. Selling App or Software Business Models

With the advent of software as a service(SaaS) organizations, online business models have become increasingly prevalent. Instead of one-time purchase for your software license, you may deliver value to your prospective clients and charge them monthly or annually.

Apps operate like software. The fundamental premise is to provide a product or service that your intended audience will find valuable and then charge them a monthly fee to optimize the revenue of your business.

When it comes to selling software and apps, the following are the three main payment models:

  1. Freemium: Customers will have limited access to your app or software features. But they can subscribe to a premium membership if they want to access more features.
  2. Free trial: Customers have full access to the app or software for a fixed length of time, and if they like the product, they’ll pay to continue.
  3. Free software business: Customers can use the software or app for free, generating money through advertising.

Ahrefs, an SEO software, is an excellent illustration of a software business model in action. It offers a 7-day trial for just $7 for access for one week. Throughout the trial period, you can utilize all functions, such as keyword research, content research, and competition analysis. If you think the software is useful, you can keep using it for $99 per month.


  • It’s scalable.
  • Has endless potential
  • It has a high demand


  • A lot of customer support is required.
  • High entry barrier.

Today, many companies are shifting their businesses online, making the software business model a lucrative opportunity in the current market.

They give a consistent stream of recurring income and are also products on demand, which is very handy if you want to make a shift.

4. Affiliate Marketing

Passive income is the desire, and affiliate marketing is a fantastic place to start your hustle. This e-commerce strategy often entails selling another brand’s items and receiving a commission on each transaction.

Commissions are usually in the 5-10% range, and they benefit the businesses because you execute their marketing for them. Typically, you want to rely on organic search engine traffic to reduce your overhead expenditures.

When making money with affiliate marketing, it is critical to choose a strong niche. Amazon Associates is one of the most well-known affiliate programs. Nevertheless, even though there is a high level of competition, a niche may be successful.

If you want to see an excellent example of an affiliate business plan, look no further than Skyscanner. This website promotes several airlines as a flight search aggregator. They also demonstrate how to scale up their company strategy and accomplish your profit goals.


  • You can scale it to any size
  • Its potential is enormous
  • Starting it is a breeze


  • Non-recurring income.
  • It is not a benefit.
  • You do not have total control over the product.

The secret to success in affiliate marketing is carefully selecting your topic, creating great content, and becoming renowned for excellent product recommendations.

5. Membership Sites

It takes a long time to go through web information to discover the gold resources you require. Membership sites take this out of the equation by putting all of the information a consumer needs in one location.

What exactly is a membership site? It’s a resource center. Customers pay a monthly membership fee and are assured access.

Tutorials, videos, blog entries, and other information that your target group finds valuable can be considered resources. We’re all utilizing them in some form, and if you already have a website, you may quickly build a membership section.

It’s considerably simpler to utilize a one-stop-shop like Podia, which you can join up for here.

You won’t have to deal with the hassles of building a website, and you’ll be able to offer memberships, courses, and digital downloads all from one spot.

The Showrunner Community is an excellent example of the membership site’s digital business strategy. It’s a subscription-based network where content creators can access essential resources like webinars and expert assistance. Members gain from the information and a supportive and engaging community.


  • They provide regular revenue (subscription-based).
  • Membership websites are adaptable.
  • They have good potential.


  • Membership websites are not a benefit.
  • You are not in control of the property.

Membership sites are a terrific alternative if you’re ready to provide content and are confident that customers will consider it beneficial. Ensure you research your competitors and figure out how to set yourself apart from them – especially if they’re giving out your premium material for free.

6. Coaching and Consulting

You can realize your ambition by regularly coaching and counseling people if you have experience in a field. Offering your knowledge to customers is what coaching and consulting entail.

You might utilize your marketing experience to work as a digital consultant or a consultant in another field.

Unlike other internet business strategies, coaching and consulting rely on human interactions. You can work on referrals and establish yourself as an expert in your field. Besides, most individuals need trainers whenever they lack encouraging statements to get back on track.


  • Low initial investment.
  • Reliable income potential.
  • The demand is very high.


  • It isn’t a marketable asset.
  • You are not the owner of the property.

It’s time to take action and establish your reputation if you’re skilled in a given field. Build yourself financially by assisting others in resolving their issues with your knowledge!

7. Dropshipping

Imagine making a sale without having goods in your online store? It appears to be a conventional eCommerce store, yet the company has no actual presence outside of a website, and you don’t touch any physical items. This is what dropshipping is all about.

You make an order with a supplier after selling a product to your customer, and the supplier delivers it to your client on your behalf. Dropshipping is a productive business, but the whole process requires considerable work to be on the right track and generate revenue.

Furthermore, it can also be an excellent way to learn about management. Even though mechanization is in place, things can get messy sometimes.

Your suppliers may run out of goods during the last minute or deliver using a sluggish approach, leaving you scrambling to work out a solution with your clients. Your payment service may then prohibit you due to a high number of refunds.

Dropshipping is one of the most profitable online business models to follow if you’re willing to run a long-term business and locate both successful items and suppliers. However, it’s not a specific online business, as many experts would make you think.

This can swiftly grow if you’re dealing in high-value products. Profit margins could be high because you will not need to own any stock.

8. Agency

The agency model solves one of the most pressing issues that most freelancers and consultants need: quick scaling up.

Customers choose most agencies since they offer a lot of services. Rather than coordinating with many freelancers to accomplish their respective pieces, agency clients prefer working with a single point of contact who oversees the whole project.

When it comes to SEO, advertising, web development, and many more, your online business will skyrocket in no time if you have the appropriate people on board.

Furthermore, being a content supplier to businesses who want to sell themselves online but lack in-house competence is a smart business strategy.

If you do not have enough capital, this is an excellent online business for you. But you must put more commitment into investing in your online business, and the money will follow.

The disadvantage of the agency model is that you may spend much time and money controlling your workforce rather than expanding it. This may be a huge problem for organizations that lack a proper management structure.

How to Get Traffic to a Website (And Build an Audience)

Although you may have a brilliant business concept, you must first identify the target market for your product or service.

Online firms use various strategies to grow their online businesses, drive traffic to their websites, and create audiences that convert into legitimate clients.

If you’re having trouble getting visitors to your website, please consider the following:

1. Content Marketing: Blogging and Guest Blogging

Blogging is still one of the most effective internet business models.

The purpose of blogging is to create content for an audience. You can create your blog and optimize it for keywords and SEO, and you can also generate sales leads by guest writing on other sites.


  • You can utilize other people’s networks
  • It establishes authority
  • It’s cost-effective.


  • It involves a lot of labor and might take a long time to have a steady income.

2. Podcasting

Podcasts are an excellent method of reaching out to your target audience and connecting with influential individuals in your field. Your main goal should be to provide unique insight and content to your audience.

Because you’re an expert, you aim to turn your visitors into customers by demonstrating that your business offers valuable services or products.


  • Increases your market’s authority
  • Cost-effective to start up
  • Other forms of revenue such as advertising and sponsorship are made available


  • It requires a lot of commitment to development.
  • When you’re just starting, finding interviewees might be difficult.
  • The majority of podcasts collapse.

3. YouTube Channel

YouTube channel is another ideal platform where you can upload your content to promote online business. If you can provide a visually appealing product or service, YouTube is an excellent place for your business. However, you have to understand that you will have more competition, so you’ll need to be consistent in producing valuable content.


  • Enhances brand recognition.
  • Increases your social media network.


  • For most businesses, there is a high-level competition
  • It takes time to attract a significant audience

4. Forums and Social Media

Forums and social media play a significant role in engaging your targeted audience. Platforms like Reddit and social media can help you get in touch with customers while increasing brand recognition and understanding more about your target market.


  • It extends your social network.
  • Improves your brand awareness.
  • Cost-effective.
  • The time involvement is minimal.


  • High level of competition.

5. SEO: Organic Search Traffic

Your company will be listed in the Google search network if you use SEO. You must create content for your essential audience and ensure that the correct individuals find it while searching for your themes.


  • Has a high level of impact
  • You can easily access your audience
  • SEO is affordable


  • High saturation.

6. Paid Traffic

Lastly, you can employ sponsored traffic to market your brand to your target audience. This is a great advertising strategy, and it can be in the form of PPC campaigns on Google AdWords or social media advertisements.


  • Exceptional reach
  • The quickest method to identify a good deal
  • Costs are relatively modest (depending on the platform)


  • Targeting has an impact on conversion.
  • Requires a lot of knowledge.

Wrap Up

Each of these business concepts can provide you with the possibility to earn a five-figure or even six-figure internet income.

While some are better suited to those learning about digital enterprises for the first time, all of them may be grown into highly profitable businesses as you get more and more experience.

The greatest thing you can do is choose a desirable niche and explore it. You may lose your initial try, but these losses are lessons that will help you build your specialty and keep pushing forward.

If you press on the links above, you’ll find information about the type of personality that works best in those industries. Read over them.

Identify what you like most and what you truly want from your online business, whether it’s to be a captain of industry and a global thought leader or to be someone who hangs out on the world’s coastlines while your sites work for you in the background.

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