Online Business Models

First, what is a business model?

There’s no set definition – it’s quite a fuzzy term, interpreted in many different ways – but for our purposes a business model is a high-level description of how a business works.

Identifying the business model of a business helps us quickly understand the “broad strokes” of how it operates.

Here at eBiz Facts, we’re primarily concerned with the business models of online businesses.

A pure online business is one which operates 100% online, to the point where the people running the business can decide to switch continents overnight and keep everything running smoothly. Doesn’t matter if they’re in Boston, Berlin or Bangkok; they can operate just as effectively from anywhere.

Of course, even in the modern world, few businesses can be considered “pure” online businesses. But in our view, the closer you can get, the better.

Running a pure online business allows you the freedom to work from anywhere with a laptop and an internet connection, whether that be at home in your pajamas, or from a beach-side coworking space in Bali.

List Of Online Business Models

To date, we have identified 8 distinct online business models:

  1. Remote Job
  2. Freelance
  3. Agency
  4. eCommerce
  5. Authority
  6. Marketplace
  7. Cloud Service
  8. User Generated Content (UGC)

Business model identification is one of five ways we analyze an online business, the other four being skills, lead generation, monetization, and niche.

1. Remote Job

  • Not strictly a “business” as you’re employed by a company, but you can work from home.
  • Some companies okay with remote employees traveling, doing the digital nomad thing.
  • Pretty much any job that’s traditionally done in an office can now be done remotely.

2. Freelance

  • All the usual online freelance businesses fit here.
    • Freelance copywriter, freelance web designer, freelance SEO, etc.
  • Also:
    • Online poker players – they essentially offer their skill up to “the highest bidder” repeatedly, which is the essence of freelancing.
    • Pro gamers – people who earn a living through Twitch, etc.
    • Investors – If you’re doing daytrading, investing in stocks, buying/selling crypto, flipping domains… all that is essentially freelance.

3. Agency

  • What many freelance businesses evolve into. Instead of building websites yourself you put together a team with a programmer, designer, salesperson, etc.
  • Examples:
    • Web design agency
    • Content agency
    • SEO agency

4. eCommerce

  • Any online store, selling physical or digital products directly to customers.
  • Within eCommerce you have:
    • Dropshipping
      • You need a store for this. The term “dropshipping” really just describes the fulfilment method.
    • Amazon FBA
      • Selling your stuff through someone else’s store, essentially.
    • Sites like VSTBuzz.com
      • Standalone eCommerce store.

5. Authority

  • What fits here:
    • Authority sites – AsianEfficiency.com, LLCUniversity.com
    • Influencers – MKBHD, Joe Rogan, Rationality Rules, Sam Harris
    • Companies like VICE, Lifehacker, The New Yorker, etc.
  • Some “Authorities” are bigger and taken more seriously than others, of course.
  • What defines an Authority is that the product/service/content they provide becomes almost secondary. People keep coming back to that company or that person because they know/like/trust them.
  • Membership sites and online courses also fit here. AsianEfficiency.com would be an authority site that has a membership component and an online course component.

6. Marketplace

  • Any online business that’s primary purpose is to connect buyers and sellers / freelancers and clients / etc.
  • Examples:
    • Online job boards like Upwork, Fiverr, etc.
    • All the Envato marketplace sites: CodeCanyon, ThemeForest, etc.
    • Ebay

7. Cloud Service

8. User Generated Content (UGC)

  • Any business that depends primarily on UGC for its business.
  • Examples:
    • Facebook
    • Wikipedia
    • YouTube
    • Twitter
    • LinkedIn

Notes

  • A business can use more than one business model, or a mix.
    • Example: Amazon uses eCommerce, Cloud Service, Authority, UGC (partners, reviews)…
  • “Productized Service” can’t be its own business model because you can offer that as a freelancer or as an agency.
  • What about a company like…
    • Uber
      • They’re as much offline as online. But Marketplace would be the best descriptor of their business model. They bring drivers and passengers together. Cloud Service also be a big part of it.
    • Google
      • Again, they depend on major offline infrastructure, but…
      • User Generated Content (SERPs, Gmaps reviews, etc.) + Cloud Service (Gmail, AWS, etc.) + Authority (maybe?)