What is an Online Business Model?

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  • Written By: Lainie Petersen
  • Edited By: Melissa Wiley
  • Last Modified Date: 10 March 2020
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An online business model, also known as an online or Internet business strategy, is a plan for developing a profitable business on the Internet. While all businesses benefit from a solid business plan, an online business model is essential for individuals who wish to sell or market their products and services through the Internet. Components of an online business model may include website design and interactivity, the sale of advertising space, and the development of an affiliate program. Other aspects of an Internet business strategy include participation in pertinent affiliate programs as well as social media activity designed to attract new customers and retain old ones.

When developing an Internet business model, a business may benefit from considering whether its product or service is something that is easily sold through the Internet. For example, it can be difficult to sell food or beverage products through the Internet because potential customers cannot smell or taste the product. In such cases, the online business model may need to include an emphasis on providing very explicit information about the products being sold as well as some type of a guarantee or refund policy for dissatisfied customers. On the other hand, some types of software are easily sold online, particularly if they can be downloaded directly with no waiting on the part of the customer. When selling such products, the considerations can become very different and may include an emphasis on technology that can quickly facilitate these downloads.


The Internet as a business then you carries with it the benefit of the ability of consumers to quickly and easily share information about a product, service, or business with other Internet users. For many engaged in online sales, social media and affiliate programs can be very useful tools in building their business and gaining free or low-cost advertising and marketing promotion. An online business model should at least include some effort toward developing a social media presence in order to increase the credibility of a business or a business owner. Affiliate programs can be a great alternative to conventional advertising in that a business person only has to pay for actual results rather than advertising that may not result in new sales or new customers.

Another type of online business model is that of the information provider. Owners of this type of Internet business do not actually sell goods and services but rather provide information on a particular subject matter and then may allow other businesses to advertise on their website or blog. These online information providers may also participate in affiliate programs, which will allow them to collect revenue from sales made to their readers.



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