Online Business Monetization: E-Commerce vs. Content
It is easy to quickly become confused with online businesses as there are so many different forms of monetization discussed. Dropshipping, affiliate, Amazon FBA, SaaS, adsense – the list goes on and on. However, by taking a step back, we see that online business is not as complicated and complex as it may appear at first glance. As we all know, most businesses earn revenue by selling goods and/or services directly. Other businesses earn revenue by indirectly selling goods or services. Almost all online business monetization falls under the umbrella of e-commerce, content, or both.
Simplifying Online Business Monetization
The basic definition of commerce is, “the exchange of goods and services.” E-Commerce is simply the term for online or internet-based commerce. Often, I see e-commerce referenced as a monetization method separately from things such as dropshipping or Amazon FBA. Both monetization methods involve selling goods and therefore fall under the umbrella of e-commerce. Likewise, monetization methods such as SaaS (Software as a Service) fall under e-commerce they are offering a service.
On the other hand, content-based businesses typically offer goods and/or services indirectly. Google Adsense, for example, empowers other businesses to advertise on your website. This is indirectly selling an advertising service. Affiliate monetization is indirectly selling goods or services; links lead to specific products or websites that directly sell goods or services, and commission is earned when a consumer makes a purchase through that link. Essentially, content only online businesses aim to drive traffic that is then re-directed to, usually, another business that directly sells goods and/or services. That business then provides compensation to the content business for directed traffic to their site.
It is important to note, content could also be classified as e-commerce as sending traffic to another site may be considered offering a service. Additionally, content on its own may be considered offering a service by providing useful information to consumers. The important differentiating factor is the indirect nature of content businesses. Content drives revenue as opposed to the direct sale of goods or services. The below shows a general breakdown of a few common monetization methods that fall under content or e-commerce.
Prior to starting or purchasing an online business, it is important to consider the over-lying monetization methods and determine which may be more appealing to you. Of course, each of the under-lying monetization methods have their own benefits and downsides. It is tough to make generalities about the over-lying, however, the following benefits and downsides apply to a majority of each under-lying method.
E-Commerce: Pro’s and Con’s
As shown above, e-commerce businesses do provide more monetization options. Although the basic concept remains, selling goods and/or services, there are many unique approaches to e-commerce. Dropshipping allows you to sell goods without directly handling inventory or order fulfillment. With Amazon FBA, you can sell products online without even having a website of your own. These are just a few of many different e-commerce businesses that exist.
Additionally, e-commerce sites typically generate higher revenue and profit than content only businesses. As you likely guessed, selling goods or services on your website has higher revenue potential than advertising other businesses products. Content sites may rely on affiliate deals to generate a significant portion of revenue, however, not all businesses offer affiliate deals. It may be easier for an e-commerce business to manufacture or source products than it is for content sites to find affiliate opportunities. Below is a list of the benefits of e-commerce sites as compared to content sites.
Benefits of E-Commerce Businesses:
- More monetization options
- Higher growth potential
- Greater revenue and profit potential
- Many different products/services that may be sold
Downsides of E-Commerce Businesses:
- More time consuming
- Website maintenance
- Finding new products and services to sell
Content: Pro’s and Con’s
Content businesses are typically highly passive once the content exists on the website. Depending on the specific industry or niche, you likely need to continue adding and refreshing content. Product or service recommendations, affiliate links, and advertising deals may need to be updated from time to time. However, unlike with many e-commerce businesses, you could take a vacation for a month and likely not have any day to day tasks to worry about. You might not even to touch the site for the entire month, but revenue and profit should be relatively unaffected.
Once the content is out there, it is out there forever; unless, of course, you decide to remove the content from the business. The 20 hours you spent on your recent blog post may have been a fair bit of effort up-front but could continue to generate revenue 10 years down the road without any further work. Similar benefits may exist for info products, however, they would fall under e-commerce as you are selling a product directly to the consumer, whether that be an individual or business.
Benefits of Content Businesses:
- Highly passive
- Content may still pay off 10+ years down the road
- Less website maintenance
- Easier to drive organic traffic
Downsides of Content Businesses:
- May be tough to find affiliate deals
- Content may become outdated over time
- Lower revenue/growth potential
Summary of Benefits and Downsides
As discussed, these are very general benefits for the over-lying monetization method and each specific monetization method may not follow this exactly. For example, selling info products may be highly passive, pay off years down the road, and not require significant maintenance or updates. However, in general e-commerce businesses have more monetization options and higher growth and revenue potential, at the cost of requiring more time to manage. On the other hand, content businesses are typically highly passive, requiring minimal maintenance and day-to-day tasks. At SaleAway, we believe the best way to build a truly great online business is by combining content and e-commerce.
Combining E-Commerce and Content: Building Platforms
This could be an entirely separate post, and likely will be down the road; for now, we wanted to provide a brief overview of why we believe combining content and e-commerce is the best way to build a profitable, sustainable business with massive growth potential. Content helps drive organic traffic to the website, while e-commerce helps expand growth potential and boost revenue and profitability. We refer to this concept as “building a platform.”
What Do We Mean Building a Platform?
Building a platform is a simple concept that may be executed easily by any online business owner. It does take some time, effort, and patience to execute well, but in the end may provide significant opportunities. A platform is, “a raised level surface on which people or things can stand.” The idea is that content and traffic are the platform that the e-commerce portion of the business relies on. Taking it a step further, the content should aim to drive high-quality, organic traffic to the e-commerce business; the content and traffic together are the “platform” to sell.
An Example of What it Means to Build a Platform
We stumbled upon the idea accidentally – a few years ago we started a BMW blog for one specific engine. Initially we expected to keep it as a content site only and for the first 18 months we worked on generating content, finding affiliate deals, and a few small advertising deals. Eventually several blog posts were ranked in the top 5 spots on Google, and we were organically generating 20,000+ unique visitors per month. We realized we built a platform that had way more potential than we expected.
In January 2019, we began considering how we wanted to enter the e-commerce space to grow revenue and profit. Come early February, we officially launched a website that sells BMW spark plugs, ignition coils, and vanos solenoids. We use our blog, or our “platform”, to drive traffic to the parts website, which managed a respectable $14,034 revenue and just shy of $5,000 profit in its first 4 months. The crazy thing is we are only selling a few BMW parts; this was kind of a test run in a way. We have not even scratched the surface of all the doors our platform has opened. There are opportunities to sell additional OEM BMW parts, gear/clothes, aftermarket parts, info products, etc.
To date, we are still working on expanding our platform prior to focusing further on e-commerce growth. The more we grow our blogs and the more high-quality organic traffic we gain, the easier it is to successfully expand our e-commerce portion of the business. Again, we will write in depth about building platforms in the future.
E-commerce and content businesses are the two over-lying monetization methods of online business. Under each umbrella is an expansive list of specific monetization methods. E-commerce businesses typically have higher growth and revenue potential at the cost of more work. Content businesses are highly passive, requiring little work once the content is generated, but may be tough to achieve significant revenue and profit. Combining content and e-commerce is a great way to build an excellent online business. Referred to as building platforms, content helps drive high quality, organic traffic to the site while e-commerce helps boost growth, revenue, and profit opportunities.