Selling Products/Services
The most obvious way that many websites generate revenue is from selling products and services. A perfect example of this is Amazon. They sell all kinds of products through their online store. Another example might be a travel agency that offers a vacation booking service.
Both of these examples are websites that sell products or services directly to consumers (referred to as business to consumer). But there are also many websites that sell products and services to other businesses (referred to as business to business). Some examples of business to business selling are a website selling spiral binders to book publishers or a fulfillment service offering product fulfillment for a vitamin company.
Drop Shipping
Don't panic if you don't have any kind of product to sell in your online business yet. One way to sell products on your website, even if you don't have any of your own, is through drop shipping. Here's how drop shipping works:
- You sell the drop shipper's product on your own website.
- You take the customer's money and process the order.
- Once you've received payment from the customer, you contact the drop shipping company with the order and pay them their drop shipping price, which is usually 40% - 60% of the retail price.
- The drop shipping company sends out the product, usually under your business name.
- You provide customer support.
The advantages of working with a good drop shipper are that you never have to worry about shipping orders or carrying inventory, you can carry a large inventory of product and you can sell big ticket items without actually investing in an inventory.
On the downside, however, you are the one doing all the work acquiring customers and only keeping a 40% to 60% of the revenue of each product sold. Unless you're selling expensive items, this arrangement probably won't be very lucrative for you… let me show you why.
Let's say that you're working with a drop shipper to sell a martial arts book that retails for $19.95 and that they want 60% of each product sold. That means that each time you sell one of the books, you make $7.98 and the drop shipper makes $11.97.
You'd have to sell a substantial number of books to produce a reasonable income from your website.
On the other hand, let's say that you're working with a drop shipper to sell plasma televisions for $2,000. Under the same 40/60 split, you would keep $800 for each sale and the drop shipper would keep $1,200. If you sold just 10 televisions each month, you'd make $8,000 per month… not too shabby.
You can learn a lot more about drop shipping, how it works, and what kind of products you can sell with this free ebook... it tells you everything!
Wholesale Products
Another option for selling your own products is to buy them wholesale from another company. In this kind of scenario, you'll purchase a "lot" of a particular product. The wholesale company determines how many products is included in a lot… it could be 10, 100, or even 1,000. You'll pay the wholesaler a reduced price for a lot of a particular product. Once you receive your new inventory, you'll sell it to your customers at a retail price.
Sometimes wholesalers will provide you with a suggested retail price and have other rules for how you can sell the products, but other times you are completely on your own as to how and for how much you want to sell the products.
In a wholesale situation, you generally get to keep more money for each product you sell… in other words, wholesalers generally sell products to you for better prices than with drop shipping, but there are other drawbacks.
- You've paid up front for products that you haven't sold yet.
- You may not be able to sell all your inventory.
- You'll have to shoulder the cost of storing the inventory and costs associated with fulfillment and shipping.
- You have to have more money to start a business with wholesale products.
Other Ways To Make Money Online
Selling Products/Services | Recommending Affiliate Products | Selling Website Advertising
Lead Generation | My Best Money Making Strategy | Basic Business Models
