Despite the increase in individual personal debt, Americans continue to spend record amounts for consumer goods. As Internet retailers continue to thrive, enterprising entrepreneurs are finding new ways to cash in on the online shopping phenomenon.
Over the past several years, there has been a sea change in the way that website owners generate revenue from online retail shopping. These entrepreneurs have never carried inventory; in fact, they don't sell products at all. Instead, they have found ways to capitalize on the online shopping habits of those who visit their websites.
In the dot-com boom years of the 1990s, websites could generate enormous revenue from banner advertising. Companies were willing to pay top dollar to get potential customers to click on banner advertisements and bring eyeballs to their websites. When the dot-com boom went bust, the bottom fell out of the banner ad business. Instead, website owners moved toward affiliate programs, where they partnered with online shopping outlets. In exchange for putting online retail shopping links on the owners' websites, online retailers would pay owners a percentage of each sale. Although that strategy worked for a while, it soon became apparent that affiliate links took up a large amount of virtual real estate with relatively little return.
Today, entrepreneurs look to two business models in order to make money from online shopping. The first business opportunity is incorporating pay-per-click ads into content pages on a website. The website owner includes code in each web page from a third party - usually a major search engine - and doesn't actually sell or develop ads. Each time a website visitor clicks on an ad, the website owner makes money. The amount of money generated by this business opportunity depends in large part on the number of visitors a website attracts and by the amount the advertisers pay to the third party provider. The more the advertisers pay, the greater the amount paid to the website owner.
The second business opportunity is actually a hybrid of affiliate programs and network marketing (also known as multi-level marketing). In essence, the website owner has an online mall that contains nothing but links to major online merchants (such as Wal-Mart, Macy's, and PETsMart). The structure for the site is provided by a network marketing company, and the site owner works to generate traffic to his or her site. When a site visitor clicks on a link and purchases an item from a merchant, the site owner receives a percentage.
The difference between this and old-style affiliate programs comes in the network marketing aspect. When the website owner introduces the business opportunity to another person who then signs up with his or her own website, the first owner generates additional income from each sale of the second owner. This plan can go on for several generations, thereby generating considerable residual revenue for the original website owner. The online mall owner can bring in additional revenue from offering broadband services or Internet telephony, such as Vonage.
The marriage of affiliate programs with network marketing marks a new frontier in online shopping business opportunities.
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Chris Robertson is a published author of Majon
International. All Rights Reserved. Copyright 2008 (Mon Jan 16 2006)
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