8 Reasons to Choose an Online Business Model in 2020

Online business is arguably the fastest growing business model in 2019. That leaves many wondering:

Are online businesses a trend, or is it really the best business model out there?

Setting up an online business is the best way to achieve success quickly. Using other models often involves more risk with longer time horizons. There are many advantages that an online business has over other models. Here are eight of them.

#1 – It’s Cheaper

An online business is by far the cheapest business model out there. When you run a brick-and-mortar business, there are lots of inherent costs, such as rent, staff, and supplies. With an online business, you can start with the bare bones: a website and hosting. Using a tool like WordPress or Wix, it costs nothing to create your own website. These tools allow you to create and customize web pages without any coding skills or know-how. Then hosting your website on a web server with a custom domain address costs as little as $100 a year.

If you sell physical products online, you’ll have to cover the cost of inventory and storage. But there’s also the option of selling digital products, such as ebooks or other information, like an online course. These are next to free to create. Digital products also save you a lot of money and hassle on shipping. Publish them on your website and they’re available 24/7 for people to buy.

Here are some examples of digital products:

A service design guide from Modernist Studio:

Modernist Studio

Icon packages from designer Pixel Bazaar:

Icon packages from designer Pixel Bazaar

A collection of ebooks from freelance writer and consultant, Carol Tice:

A Collection of Ebook

Instead of selling products online, you can also sell services as a freelancer. Programmers, graphic designers, writers, editors, and consultants do this all the time to make great money with very little upfront cost.

#2 – It’s Easier

Managing and promoting an offline business is time consuming and expensive. You have to invest in advertising, in-person events, and other promotional initiatives in your store. But running an online business comes with a unique benefit that makes things a whole lot easier:


You can market to your target audience through your website, email, social media, and search engines. All you need is automation technology. Look at email marketing, for example. Email marketing automation tools can help you schedule emails to go out at a certain time to your target audience. You can also segment your audience into groups and target them with unique marketing messages. These should be based on their needs and interests.

Here’s an example of how a segmented email plan might look like using Convertkit, one of many email automation tools out there:


#3 – Earn Money While You Sleep

Unlike physical businesses, an online business is open 24/7. This means that customers can buy from your site or read your blog at all times. You can also work whenever you want, on your schedule. The site is never closed.

This is particularly valuable if you sell digital products, such as software, or infoproducts, such as ebooks or online courses. Using a payment gateway such as PayPal or Stripe, visitors can easily buy and download your products. They don’t even need to communicate with you at all! Say your website gets featured on a major news site. You could go to bed one night and wake up the next morning to thousands of dollars in product sales — no extra work on your part.

Even if you sell services as a freelancer, you can take advantage of this benefit by selling info products as well. Your website is a valuable platform you can use to automate marketing and earn money even when you’re not working.

Of course, online businesses do need some amount of hands-on management. But many of the low-value repetitive tasks can be outsourced to freelancers. Think creating marketing content, managing social accounts or managing your website. These and other tasks can be handled by affordable freelancers. This makes running an online business a whole lot easier.

Say you run an ecommerce business selling physical products, for example. You can hire freelancers to manage shipping and handling, as well as customer service inquiries. This frees you up to work on your business when you want, while earning money all the time.

It’s easy enough to find the freelancers you need using a site like Freelancer.com or Upwork. Here you can browse freelancers by category, or search based on relevant skills and expertise:


#4 – The Audience is Global

According to all the latest statistics, more and more people are going online to buy. In fact, an estimated 95% of purchases will be through eCommerce by 2040. With an online business, people can look at your site from anywhere in the world. This means that you have a massive audience and many ways to reach them.

This is especially valuable if you sell digital products. It doesn’t matter where your site visitors are located, they can buy and download your products from anywhere. Consider the difference in selling an ebook vs a paperback book. The customers you get for a paperback book are limited to which bookstores it’s distributed too. With an ebook, people from any country in the world can buy it.

If you sell physical products, your audience is more limited. But there still is a lot of potential to ship to different countries around the world. The simple fact of having your storefront visible on a global scale can do wonders for your business.

Having a global audience also gives you much more opportunities for marketing. You can promote your business on social media and search engines 24/7, knowing that some people around the world will be awake and open to making a purchase.

#5 – Speed and Scalability

Online businesses can grow very rapidly with the right marketing methods. Once, it would take decades to become a millionaire or years to simply acquire reasonable income. But it is possible to earn a good income using the online model in a respectable time frame.

Say, for example, you sell an ecourse on your website for $59. Your website attracts about 2000 visitors a month, and roughly 2% of them actually buy your course. That’s $2360 in monthly earnings.

But what if you were able to increase traffic to 5000 new visitors a month? That would grow your earnings to $5900/month! Increasing your website traffic is easier than you think. Finding even one or two quality traffic sources is enough to help you double or triple your monthly earnings.

Compare this scenario to what you’d get from a 9-5 job or even running your own brick-and-mortar business. Margins could never be that high, and most people bank on an annual raise to grow their income. Other kinds of businesses just can’t measure up to the kind of scalability you get when working online.

There are lots of other ways to scale your business besides traffic, also. You could create more high-value products, such as eBooks, courses, or software. It doesn’t cost you any money to duplicate these products and sell them. All you have to do is market.

Most online businesses grow their income through email marketing. First, you use your website to generate leads by capturing their email address. Then you can market to them long-term through email, increasing sales and revenue in the process.

Here’s an example of a lead magnet on DanFrigo.com. A lead magnet is essentially a valuable info product that you give away on your website to capture contact information:

Dan Frigo Site

Email marketing allows you to grow your income by giving you more opportunities to market to your audience. Nurturing leads through email can increase your conversion rate, getting you more sales from your site visitors.

#6 – Job Security

It’s true that running an online business comes with a certain amount of income instability. One month you can make a lot of sales and earn $8,000. But the next month you might earn only $2,000. That makes it difficult to budget and plan for your life savings.

At the same time, choosing an online business model actually has a lot more job security than traditional employment. Ever been laid off or fired before? Overnight, you go from making thousands of dollars a month to zero. Suddenly you have to scramble to find a way to pay the bills.

With an online business, there’s no way to shut down your income overnight. You’ll experience ups and downs, but you never have to worry about getting fired. You are in control of the business. As long as you build up a quality traffic stream and keep marketing, you have no reason to think that your income will suddenly disappear. As long as you have a traditional salaried or hourly job, you’ll never have that kind of job security.

#7 – Freedom and Flexibility

Online businesses are so much easier to manage as there are more options available. Most of them can be managed with nothing more than a laptop and an internet connection. This gives you much more flexibility to run your business how you want and where you want. If you want to get out of the house, you could work from a coffee shop for a change of scenery. A stay-at-home parent could work from their child’s soccer match. Or someone who loves travel could reasonably run their business from anywhere in the world.

Brick and mortar companies also have a limited customer base. Your audience consists of people in the immediate vicinity. They’re also limited to the skills of employees they hire. With online businesses, there is more that you can do to expand the business and it is possible to hire freelancers on short term contracts. With an online business, you can esure you constantly hire the best workers for the job at hand.

#8 – It’s The Way of the Future

Online shopping already has a huge impact on how people do business today. The growth of Cyber Monday is an example of this. And there’s no evidence suggesting this trend will slow down or change. As mentioned earlier, it’s estimated that 95% of purchases will be online by 2040.

Most people today think an online business model is one of many options out there. But the truth is, just about every business today needs to have an online presence to survive and thrive. Even brick-and-mortar businesses need to invest in a website, social media marketing, and online advertising.

Despite this fact, a surprising 46% of small businesses didn’t have a web presence in 2018, according to the Balance Small Business. So there’s still an opportunity to get ahead of the competition by investing in online marketing now. No matter if you want to run a 100% digital business or pursue another model, online business marketing is essential for success.

The Bottom Line

Why should you pursue one business model over another? Ultimately it comes down to your personal interests and goals. If you always wanted to open your own hip coffee shop, then that’s the business you should pursue. If your passion is sharing your knowledge, then selling digital products online might be the right choice to grow your business. No matter what direction you choose, just know that online marketing will be an essential tool for success in 2019 and beyond.

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