Family Finance

Internet Business Models Explained

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An internet business relies on the same principles as an in-person one, it just uses the internet channel to reach and serve customers.

The viability of all businesses depends on how whether they provide real value to customers in the good or service, which provides enough revenue to pay business expenses and make a sustainable profit.

Accessing customers via the worldwide internet means that for some products and services you can reach many more customers with higher levels of efficiency and more information (including customer relationship information) than was possible before the internet.

New business models have emerged, such being an intermediary for information-rich transactions, or offering 'free information' that is funded through advertising, affiliate or broker relationships or lead generation for other business.

There are nine Internet business categories, according to Michael Rappa, in his book Managing the Digital Enterprise: Brokerage, Advertising, Infomediary, Merchant, Manufacturer, Affiliate, Community, Subscription, and Utility.

Excellent descriptions of these nine 'digital enterprise' categories are available at the CrownBiz website: crownbiz.com/internet-business-models-explained.

Requirements may vary in the capital and time for the building and operation phases. These depend on how quickly a brand needs to establish to achieve a customer base and awareness in the market.

Some web businesses only require a simple inexpensive website or a presence on internet auction sites like

Ebay.com. Other online businesses may need years and many millions of dollars to achieve a sustainable and successful brand. Many successful internet businesses will have a strategy somewhere in between.

Focus on the problem the business is solving and a detailed plan on how to achieve measurable and profitable outcomes.

The specific model, pricing and marketing strategy may change over time as a business experiments with what works.

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