Let’s say that you make the meanest Egusi soup in Lagos and your friends tell you that you should turn it into a business. What business model are you likely to use?
“Well,” you say, “I’ll make the soup and get people to buy it.”This is one option, but certainly not the only one.
Take the time to consider the best business model for your new idea and you will dramatically increase your odds of success.
There are three basic business models that would work for online businesses in Nigeria.
- Sell your product
- Sell your service
- Sell your information product
1. Sell your product online
This is probably the first model that comes to mind. Create a physical product and market it online. It could be sold via your own e-commerce storefront or as a third-party seller in an online mall that sells products from different vendors.
Benefits to selling products online: Compared to selling from a physical location, there are several benefits to selling your goods online. First of all, customers can check out your product offering without having to go to your physical location (if you even have one). Customers get to see all of your options including things like customer reviews, ingredient lists, and related recipes or uses.
Videos and photos of your product in use and FAQ sections can give customers more information than they would ever have in a brick and mortar store in some choice location in Iyana-Ipaja.
2. Sell your service online
Services are ideally suited for online sales. There are two basic ways services are sold online.
- Site as a Sales Tool: Offline business use their site as a sales tool for services delivered offline. Many offline businesses use the internet as a sales tool for their service. Their site serves as more of a company brochure than a storefront. You can find (and qualify) a carpenter, dentist or massage therapist all through their online presence. The one thing they have in common is that you physically receive all of these services.
- Site as a Storefront: Services are sold (and delivered) online: Examples of these services include web marketing, travel, and entertainment. All these items are sold and delivered via the vendors server.
Benefits to selling a service online: It can be much less expensive to capture leads and customers via a well built and marketed website than through traditional, offline methods.
Customers receive lots of information about your product and don’t have to travel to check out their options. Well built sites with lots of content will outperform weaker competitors every time. Regardless of if you use a brochure or storefront platform, this business model is faster and easier to setup than one selling physical goods.
3. Sell information online
This is the business model of choice for lifestyle-designers and internet marketers. When you sell products or services a bottleneck often develops. Business owners frequently hit a level of sales that they can’t grow beyond without changing their business – hiring more staff, buying more equipment, etc. With information products, you are limited only by the capacity of your web host’s server.
Products are almost exclusively delivered electronically and automatically. Payments and invoicing is automatically handled by your shopping cart and payment gateway. You can process one order per day just as easily as one thousand transactions.
Information sales can be broken into two categories.
- Downloadable Material: The most common downloadable material is an ebook. Other downloadable material can include audio (MP3), video (MP4) and worksheets.
- Membership Sites: These range from online access to newspapers/magazine to full blown training sites with video, audio and interactive forums all behind a membership gateway. These often bill monthly or annual membership fees. Sometimes they are set to automatically deliver a set amount of content to each new member – like course lessons – over a set period of time.
Benefits to selling information online: Many of these online service vendors provide ongoing information which means a recurring billing model. With monthly or annual billing, you’ll require a much lower number of clients to be successful. This business model requires very little maintenance time, once the product is actually created. Because of the scalable model, you can easily handle large numbers of buying clients without hitting the typical bottleneck that is common in product and service businesses.
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