Three Models of Shoestring eBiz Success

by Rob Spiegel

How should you set up your e-business? There are three primary models you can follow. Find out which is best for you!

Sometimes I feel like I'm the only Internet business journalist who follows the activities of small companies on the Web.  Most business writers rarely cover the subject, and when they do, they usually ask why small companies haven't moved more aggressively to the Net, or else they focus on the small company as a consumer of products over the Internet.  Apparently, they don't see the proliferation small sites as a big ecommerce story.

This isn't too surprising, given the dramatic stories of big enterprises breaking out all around.  Bertelsmann buys Napster.  Pets.com crashes and burns.  The result of this coverage is the impression that the Internet has failed to live up to its promise for anyone, let alone small companies.

Let me say it clear.  Let me say it again.  On the Internet, the niche entrepreneur rules.  Small companies have the best chance of grabbing a well-defined specialty line and making the Internet profitable as a means for finding customers and selling them products and services.

We're beginning to see some trends on the types of Net business models that work for small entrepreneurs.  Here are the leading business initiatives for small Web enterprises.  We begin with the least successful and move to the most successful.



The Net-only model

This is the toughest model for success, but its not out of possibility by any means.  The roughest aspect of the pure dot com is that it's usually launched by a business novice.  Lack of business experience is  the single reason this model is difficult.  The Net-only company is typically run by an entrepreneur who has little background running the functions of a small business, from budgets and marketing to staff management and customer service.

The solution to this challenge is to bring in a grown-up with domain and business experience.  In other words, for a fishing site, make sure you bring in a retired small business owner who is an avid trout fisher to serve on your management team.

The Web as a business addition

This is a play by a company already experiencing success as a traditional company.  Lands End is an example of a company that has successfully expanded its business onto the Internet.  Like most catalogs, the company began doing little more than putting their catalog pages online.

Over the past couple of years, though, the company figured out how to take its brick business and transform it into a successful Web effort.  This requires a real understand of how Internet buyers shop and what they expect from a great Web retailer.  Lands End wasted little time creating a site for Internet buyers that serves their needs with the right product mix and great service support.  The foundation for this initiative is the past successful experience of the company.

The site as business support

Using a Web site as a support vehicle for a business that is already up and going is no-brainer for small business. You succeed by using your Web site to serve your existing customer base while also reaching out to new customers and new markets.  The early examples of Internet success came in the form of Web sites being used to help customers interact more successfully with retailers.  Once you have a functioning service site in place, it's not difficult or expensive to utilize basic affiliations marketing to reach new markets.

By the way, if you want to see some of these business models at work, go to the Yahoo! shopping section and search under a niche topic such as chocolate or fishing.  All three of these business models are represented in the Yahoo! stores.  This is also true for stores in all other malls and Web sites out there independently in the cyber world.

You want to succeed on the Internet?  Start watching the activities of niche sites.  As for all the gloomy stories coming from the giant sites:  forget about it!

Rob Spiegel is the author of Net Strategy (Dearborn) and The Shoestring Entrepreneur’s Guide to Internet Start-ups (St. Martin's Press). You can reach Rob at robspiegel@comcast.net

 
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