HomeBusiness3 Most Popular Online Business Models

3 Most Popular Online Business Models

If you’re wondering what kind of different online business models there are, you’re in the right place. Before starting your online business, it’s crucial to understand which category it falls into.

It’ll help you understand how everything will work, what’s the proper way to set your business up, and how to research competitors in the same industry in order to come out on top.

Here, we’ll discuss three main online business models, complete with their benefits and overviews on how to start.

Let’s dive right in.

Physical Products

Physical products are the most common type of online business model. They are tangible products that sellers will ship when a customer makes a purchase online.

Both enterprises and small-to-medium businesses crowd this business model. Renowned brands with storefronts such as Apple, Nike, and IKEA use their websites to sell physical products online.

Examples of small and medium businesses selling physical goods include Neuro, Soylent, and Hardgraft, just to name a few. The industry is booming, and for a good reason.

This online business model is a great income-generating opportunity as the number of digital buyers is steadily rising. People nowadays turn to online marketplaces and other online shopping platforms to find anything they need, including kitchenware, fashion items, and even pet supplies.

Benefits of Selling Physical Products Online

Compared to the traditional brick-and-mortar stores, there are the benefits of selling physical products online:

  • Global market. Online stores overcome geographical barriers and let you sell from anywhere in the world.
  • Open 24/7. This increases sales opportunities for merchants, especially since most people prefer to do their online shopping late in the evening.
  • Low cost. The minimum requirements for starting an online business are a laptop, internet connection, and the products to sell.
  • Easier management. Online selling platforms help automate inventory management by using tools and services.
  • In-depth information. Merchants can display detailed product descriptions with many variants. You can also let customers know if products are out of stock right away.

How to Sell Physical Products Online

The first step to selling physical goods online is to decide what kind of products you want to sell. You can browse for trending products or brainstorm other ideas that you find interesting.

However, keep in mind that you need products that have a demand. You can gain insight into different products using tools such as Google Trends, Trend Hunter, and Owler. Additionally, visit online marketplaces to see popular and best-selling products and get some ideas.

Once you’ve decided on the products to sell, it’s time to set up an online store. To appear professional and credible, consider setting up a website for your business.

An important aspect of creating a trustworthy website is a custom domain name. With it, not only will your business look well-established, but it will also be memorable and easy to discover.

To make sure your desired domain name is available, check it with a domain name tool first. If available, you can purchase the domain name right away.

After that, choose a platform to set up your online store. Popular options include WordPress, site builders, and eCommerce hosting sites.

Each platform comes with its pros and cons, so make sure to research them well. Once you make your decision and create a website, publish and promote your online business for the world to see.

Digital Products

Opposite to physical products, digital goods are intangible. They exist in a digital format, which is typically available to download or access through the internet after the customer places an order and completes the payment.

Unlike physical items, a single digital asset can be sold and distributed repeatedly. Examples of digital products include:

  • eBooks and other informational products
  • Apps
  • Games
  • Digital art and designs
  • Music samples and loops
  • Stock photography and footage
  • Website mockups and document templates
  • Themes and website design templates
  • Plugins

Some popular websites that sell digital products include the premium website template provider ThemeForest and the global stock images site Shutterstock.

Benefits of Selling Digital Products

Digital products can be highly profitable because of their low overhead costs. Other advantages that make this online business model attractive are:

  • Saves cost. Digital products don’t require physical storage space or inventory management.
  • More sales. There is no shortage of products, so you don’t have to worry about running out of stock.
  • Less hassle. Merchants can save time and money from packing and handling shipping because digital products are immediately accessible after download.
  • Easy to start. Selling digital products online has a low entry barrier as it eliminates the need for product stocking and shipping.

Additionally, you can sell digital products to complement the main product of your business. A great example of this would be How to Cake It, which sells eBooks in addition to their physical cookbooks.

How to Sell Digital Products

To successfully sell digital products, you first need to understand your skillset – what digital products can you produce? What is your expertise? And which industry interests you the most?

Answering those questions will help you build a solid foundation to continue the business in the long run.

Once you get that down, decide on a suitable platform that will complement your products. For instance, if you want to sell music samples, consider signing up to platforms like Splice and Loopmasters.

Other alternatives for selling digital products are as follows:

  • WooCommerce. This is an eCommerce plugin for WordPress. With it, you can install add-ons to help sell specific digital assets such as paid courses and software.
  • Easy digital downloads. This is a WordPress plugin specifically for selling digital products. It allows users to set download limits, feature discount codes, and assign expiration dates for the links.
  • Memberpress. A WordPress plugin that is best for selling digital products with a membership subscription system.
  • Gumroad. Best for visual artists and authors as the platform is tailored for those niches.
  • Sellfy. This eCommerce solution features buy now buttons, product widgets, and the ability to sell on social media platforms.

Besides understanding which platform is suitable for your business, it’s also essential to understand licensing and ownership. When selling digital content, customers are buying a license for usage, not ownership.

You can limit the way customers can use your content depending on the license you offer. With digital art, for example, you can limit the number of times the piece is used for marketing purposes.


Selling services means trading your time and skillset for a price.

The most common way of selling services online is called freelancing – a contract-based profession where clients pay for the freelancer’s time and skills.

There are endless types of services that freelancers can offer. However, here are the highest paying jobs according to Indeed:

  • Software consultant. A software consultant’s average salary is over $92,000 per year.
  • Web developer. Developers may earn up to $78,000 per year.
  • Copywriter. The average salary of a copywriter reaches $62,000
  • Social media specialist. On average, SMSs earn up to $53,558
  • Writer. Freelance writers can earn over $60,000 per year.
  • Editor. Revising clients’ written material before publication, editors average around $54,697 per year.
  • Virtual assistant. A virtual assistant’s average salary is $56,860

Other jobs on the list include computer programmer, graphic designer, accountant, and online tutor.

Benefits of Selling Services Online

If you’re skilled in a particular area and would like to work from home, these are the benefits of doing so:

  • Freedom. You are free to choose which projects to take and work from anywhere at whatever time you want.
  • Schedule flexibility. If something urgent comes up, you can rearrange your schedule.
  • Connection. Work with a large range of clients and a variety of projects.
  • Time-saving. No obligatory commuting or getting ready for work.

That said, selling services online requires soft skills such as good time management, excellent communication, and discipline. If not, freelancers can struggle to meet deadlines and deliver results.

How to Sell Services Online

First, identify your skill set and make sure it’s something you enjoy doing. This is to avoid burnout and losing interest in your business in the long run.

If you’re a complete beginner to this business model, finding the first client can be challenging. Therefore, you need the right strategy.

Start with freelance platforms such as Flexjobs, Upwork, and Fiverr. Sign up, create your profile, and start looking for clients.

Additionally, utilize social media to get freelance clients. Show off your work, be it from past clients or personal projects. Show visuals on Instagram, add value to Facebook, and network on LinkedIn.

Another great practice is to offer free services. Reach out and pitch to small-to-medium businesses about your services. If they like your work, ask for testimonials or endorsements to help you gain momentum.

Also, network in person. Join co-working spaces, attend local events, and add value in forums.

Besides honing your skill set, learning how to market yourself is also an essential part of selling online services.


This article talked about the three most popular online business models to help you strategize a successful business plan. We also provided information about each model’s benefits and steps to start.

Here’s a summary of the mentioned business models:

  • Physical products. Selling tangible products such as sports equipment, health and beauty products, or household goods.
  • Digital products. Intangible assets that can be sold repeatedly, such as eBooks, graphic designs, or stock photography.
  • Services. The products are the merchant’s skill set and time, such as designing, writing, or marketing.

Once you’ve understood which model suits your business best, all that’s left to do is start. Good luck with your online venture.

Popular posts

All Categories

My favorites