Successful Online Business Models

1) Get business to pay, not the consumer.

Consumers visit Auto-By-Tell’s web site and fill out a form describing the car they want. The information is available electronically to dealers who have paid a fee. The dealers check their lot and bid for the buyers business. The dealers pay Auto-By-Tell from $250-$1500 per month, depending on the size of the dealer.

Happy.Puppy.com uses the same principle. They offer free demonstrations and reviews of new games. Computer and game companies pay Happy Puppy $30 per thousand surfers who view their ads.

 2) Web surfers are bargain hunters.

When users see that the Web can save them money over real world transactions, they flock to the site. Stock buyers are utilizing the stock brokerage Web sites after discovering they can trade stocks for as little as $12.95.

 3) Offer a huge selection.

Two successful sites on the Web are Amazon.com and CDnow. This is because of their ability to store and market massive amounts of information about their products.

 4) Don’t quit your day job; Web-link it.

Some specialty retailers have discovered the Internet does not provide enough income to live on, but it can enhance an existing line. Hot Hot Hot, a salsa shop, says its two year Web site now accounts for 30% of its revenue.

 5) Branch out.

The Web can give you a much larger customer base and it can allow you to branch out into new products and services much more cheaply than you could in the real world.

 6) Insert yourself in the transaction chain.

RoweCom makes money by making on-line purchasing easier. RoweCom allows university and corporate librarians to order magazines and technical journals over the Net without writing a check or giving out credit-card information. By using RoweCom’s software, which is free, librarians go to Banc One and set up an on-line corporate account. When a librarian orders, the software deducts the amount from the librarian’s account and deposits it into the publisher’s account. RoweCom receives $5 per transaction.

 7) Let someone else do the dirty work.

Rather than hire a flighty and expensive "Webmaster", companies are using a "host". ViaWeb charges $100-$300 per month for companies to pitch their goods on the Net. They create an on-line store in six minutes. The hosting principle also applies to buying ads. You are better off buying an ad on someone else’s site than creating one yourself. Look where your competitors advertise and buy one along theirs to lure surfers. Segrets, a maker of women’s sportswear, recently bought space on Internet FashionMall, a site that sells space to designers and fashion magazines. Surfers are more likely to stumble along a general interest site than your own web page. Segrets says they get five to 10 times more visitors at the Internet FashionMall than their own site.

 8) Selling subscriptions is a get-rich-slow formula.

The on-line version of The Wall Street Journal Interactive Edition had 500,000 registered users when it was free. They now have 30,000 subscribers, who pay from $29 to $49 per year. Expecting a profit from web publishing is unrealistic and may be a mistake of business strategy.

 by, Robert Genis,President, National Gemstone Corporation