This week we are learning about ways to run an internet business without being a typical merchant or even digital storefront.
As we started thinking about how a business without a product could actually earn revenue, the 2 models we focused on were affiliate or drop ship. Drop ship would be a site that actually has items for sale, collects payment and then has a supplier or drop-shipper complete the sale. Depending on the margin of the product for sale, and the ability to get orders, this can be very lucrative, however each time a product or price changes, the website would need to be updated, and fees for accepting payment, return shipping and customer care all whittle away at profits.
When we started out the week I had the typical business model of buy something, put it in my garage and then try to sell it. While this may work for some, it made me think of having a garage full of items that don't sell and lots of money invested that you may never get back. While drop shipping gets your garage back, you are still tied to the business. I never want to be owned by my business again unless it is truly worth it.
In comparison, the affiliate model is elegant in being able to provide recommendations, blogs, youtube videos or any other content on your website and profiting from it through banner ads linking visitors to products.
A moral/ethical question I had was related to supply/demand. While the affiliate mode is ultimately the model I will choose for this class, in a merchant model, is it ethical to say a product is out of stock (because you don't have any stock purchased yet) and allow consumers to back-order until you know how many customers will actually buy?
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