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Despite the increase in individual personal debt, Americans
continue to spend record amounts for consumer goods. As Internet
retailers continue to thrive, enterprising entrepreneurs are
finding new ways to cash in on the online shopping phenomenon.
Over the past several years, there has been a sea change in the
way that website owners generate revenue from online retail
shopping. These entrepreneurs have never carried inventory; in
fact, they don't sell products at all. Instead, they have found
ways to capitalize on the online shopping habits of those who
visit their websites.
In the dot-com boom years of the 1990s, websites could generate
enormous revenue from banner advertising. Companies were willing
to pay top dollar to get potential customers to click on banner
advertisements and bring eyeballs to their websites. When the
dot-com boom went bust, the bottom fell out of the banner ad
business. Instead, website owners moved toward affiliate
programs, where they partnered with online shopping outlets. In
exchange for putting online retail shopping links on the owners'
websites, online retailers would pay owners a percentage of each
sale. Although that strategy worked for a while, it soon became
apparent that affiliate links took up a large amount of virtual
real estate with relatively little return.
Today, entrepreneurs look to two business models in order to
make money from online shopping. The first business opportunity
is incorporating pay-per-click ads into content pages on a
website. The website owner includes code in each web page from a
third party - usually a major search engine - and doesn't
actually sell or develop ads. Each time a website visitor clicks
on an ad, the website owner makes money. The amount of money
generated by this business opportunity depends in large part on
the number of visitors a website attracts and by the amount the
advertisers pay to the third party provider. The more the
advertisers pay, the greater the amount paid to the website
owner.
The second business opportunity is actually a hybrid of
affiliate programs and network marketing (also known as
multi-level marketing). In essence, the website owner has an
online mall that contains nothing but links to major online
merchants (such as Wal-Mart, Macy's, and PETsMart). The
structure for the site is provided by a network marketing
company, and the site owner works to generate traffic to his or
her site. When a site visitor clicks on a link and purchases an
item from a merchant, the site owner receives a percentage.
The difference between this and old-style affiliate programs
comes in the network marketing aspect. When the website owner
introduces the business opportunity to another person who then
signs up with his or her own website, the first owner generates
additional income from each sale of the second owner. This plan
can go on for several generations, thereby generating
considerable residual revenue for the original website owner.
The online mall owner can bring in additional revenue from
offering broadband services or Internet telephony, such as
Vonage.
The marriage of affiliate programs with network marketing marks
a new frontier in online shopping business opportunities.
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