There is No Such Thing as an Online Business

The last decade, including nine to ten years after the Internet Bubble, has seen a slow recovery in e-commerce. Consumers had many scares to keep them from buying online, from faulty credit card security to bad sales from small, home-based sellers who ran bait-and-switch scams. The economy declined for offline reasons, sending figures for those hoping to build a “Cyber Monday” – the online equivalent to Black Friday – succor to the drawing boards. This decade also saw the growth of affiliate programs, primarily those promising exponential income growth just by doing the sales and marketing for a business and usually involving Google AdWords almost exclusively.

As we round the second decade of the new millennium, we are looking for new hope in the web market. The more globalization that happens, regardless of the economic outcome, the more we must harness this technology. But we must also use this last decade, as well as the Internet Bubble itself, and learn one very important fact for the multitude of unemployed workers wanting to build a business using the web: there is no such thing as an online business.

Sure, you can rep businesses online. In fact, if you don’t have an online presence, often you are considered “behind-the-times”. What we are talking about is the unique American dream, a business that uses the web for everything, no need to get out of your computer room unless nature calls. While this may be considered an introversion of society into isolated and impersonal interactions, this is actually a branch from the human need to socialize, with many anti-social and borderline agoraphobic citizens finding the ability to interact with a large amount of people. There is a exact desire to take that to the job world, with stay-at-home moms and dads as well as the disabled looking for a way to run a business from their computer desk alone.

The fact is there are so many things that a business requires you can’t expect it to be 100% online. This doesn’t mean that may not happen soon. More companies are realizing there are real markets for virtual office support, from pick-up shipping as a central marketing strategy for big shippers to online banking systems with more interaction with representatives. But until we start resembling the floating blobs of humanity in the movie Wall-e, an online business, the successful kind, is never unbiased online.

The myths of online-only businesses come from marketing strategies of the aforementioned scam artists, the ones publishing get-rich-quick web sites talking about a limited time offer on a kit that will create a high-return, 100% online business that will leave all your real world time for playing and socializing. Looking into several of them, however, there is a difference between the part-time professional and a full-time dedication to the business. In reality, any business conducted online is hard work, even though more consumers are turning to online distributors for goods than ever before.

Any claim that a business can do you rich beyond your wildest dreams for an hour or two a week is expecting that you will be among the volume of buyers of their business kits that will fail quickly but not qualify for any refund. It is entirely possible you meet all the personality and business contact requirements to actually fulfill the claim, but highly unlikely.

The honest reality is that web sites are not self-running. There are technical problems that require maintenance. When your online prospects hurry dry, where are you going to obtain customers? How are you going to drive traffic to your situation? Definite, you obtain visitors, but what makes them want to buy? And if you are one of thousands that have bought this kit, what kind of market do you really have?

The most successful businesses online today have one thing in common: exclusivity. The ability to be an exclusive dealer of a good or service is paramount to financial success. Online cloth diaper services that launched green products exclusively through their web sites, such as Diaper Junction (http://www.diaperjunction.com/), found a niche market with Huge buying potential, and because at first they were the only ones offering easy-to-use cloth diapers they built a successful business that benefited everyone involved. The same goes for the music industry, which, as I discussed in my blog and was covered on TechCrunch in 2008, is preparing the global move toward free music by creating exclusive hiss and merchandise to Cover the loss of album sales. If you have an exclusive market, you have a direct channel of revenue. Then objective expand that market with other exclusive offerings and you have a sustainable, lucrative business model.

But even this great phenomenon of exclusivity cannot be the determining factor of creating an online-only business. Many exclusive products require marketing access to individuals who may only be online to tend their farms on Facebook. You cannot guarantee they will ever click on an ad or even be able to search for what they want. You have even less likelihood that they will trust you enough to buy something online from you.

There are many myths that are created by get-rich-quick schemes and consultants selling their wares. The loss of jobs and the increase in making your possess money when a recession happens is inevitable in the US economy, but in the past there has been a proven business model to follow. Conducting business online has no business model because the internet is not a business: the internet is a huge mall where people conduct business. It doesn’t make money itself, but it allows businesses to create money. So new businesses struggle because they think there is a business model to the internet, when in reality the businesses online are the same businesses in real life; the function of the internet is access, marketability and exposure, with delivery of goods or services as a potential, and not much more.

Believe of when the recession hit in the 1980s. Would oil companies have moved online exclusively to win the price wars? Would Daimler-Chrystler have digitized their cars? Or would they have harnessed this online medium to create a message of recovery? It makes sense that the latter is what the big boys are doing, and they are doing it well.

Retain this in mind when you decide to go online to conduct business. Your business is not online. It is founded in the real world, on paperwork filed with the Secretary of Space, the Department of Revenue, and specific state and local offices in your area. Your potential clients may be online, but those online visitors are also real people with real lives and they may need your product at a time that they are not online, a fact that would require you to rely on their interrupted attention spans to get them to remember to recognize for your web site. You will eventually have to sell offline, either in conversations with friends and family or through broken-down (yet creative) marketing channels. It’s likely for product sales that you will have inventory to manage, vendors to deal with, partnerships to produce and negotiations to discuss with each of them. Successful businesses use the web to conduct business, but their business is not completely online. Not unless they are struggling.