What Are the Most Popular Types of Online Business Models Today?

Whether you’re thinking about selling your company so you can move into a different type of online business model or you are a prospective buyer of an online business, it’s important to be knowledgeable about some of the different types of online business models out there and which ones might appeal to you specifically or even appeal to your prospective buyer. The term business model is a word that is used to describe a way in which a company generates revenue.

In addition to the services or goods that a company might provide, you can think of the business model as an overall makeup and blueprint of a company’s operations. Business models influence a number of different factors necessary to run and grow an online business, like skills, experience, and time commitment required.

Types of Online Business Model

With so many people wanting to jump-start their new career path with an online business, your company can appeal to many potential buyers. If you’re a buyer, there are plenty of options that will certainly match your skills and passions.

Affiliate Marketing

Among the types of online business models, affiliate marketing is the most ideal for those just starting out with an online business. As a business owner, you may be targeting individuals who have the necessary skills to manage within a specific niche but are still new to the online business world. 

What attracts newcomers to this business model is that it eliminates the need to develop a product or service. They simply need to promote existing products, and when a sale is made, they earn a share of the profits.

Without the need to create products or services, this model stands out as one of the lowest-investment online business options. However, with so many creators in the market, gaining a competitive edge can be challenging. A deep understanding of the needs of the customer base and the ability to offer what they truly want that others can’t is the way to truly succeed. The content you produce also needs to be shareable on social media.

E-Commerce

In the ecommerce business model, earnings are generated from physical or digital products that are delivered to customers online or, more traditionally, through mail.

Ecommerce businesses have seen and will only see growth in the coming years. Amazon alone has millions of buyers and sellers. The impressive figures make ecommerce an attractive business model to pursue.

Four Types of Online Retailing Business Models

• Business to Business (B2B). Products are sold by a business to another business for reselling. The sales cycle of the B2B ecommerce model is longer, but the purchases are frequent.
• Business to Consumer (B2C). Among the types of online retailing business models, this is the most prominent. It is also the shortest sales cycle because products go directly to the end user.
• C2C (consumer to consumer) Ecommerce. Typically called online marketplaces, consumer-to-consumer (C2C) are transactions between consumers who buy and sell goods and services. They generally earn revenue by charging fees for transactions or listings.
• Business to Government (B2G). An ecommerce business model where companies offer and promote their products to various government agencies, including local, county, state, and federal levels. This model depends on securing government contracts through a bidding process.

Dropshipping

Dropshipping is a method within the ecommerce industry. It enables an online store owner to provide a diverse selection of products without the typical expenses of traditional retail, such as inventory storage and significant upfront investments. 

Many dropshipping suppliers operate with on-demand order fulfillment, meaning companies only pay for items once a purchase is made. This model has gained popularity in ecommerce due to its low startup costs and flexibility in product selection.

Software as a Service (SaaS)

Software as a service involves selling software on a subscription basis, which enables the customer to access it as long as the subscription is active.

One of the most popular types of online businesses sold today is software as a service because it has the potential for recurring revenue. When the subscription to the service expires, the customer’s access to the software is taken away. 

There is an important distinction to make between a software ecommerce model and a software service model. The SaaS model involves selling software on a subscription basis, whereas a software ecommerce model gives the user lifetime access to the software. 

Many companies have used the software ecommerce model, but today, in the world of digital business, where technology is rapidly ever-changing, software as a service has become much more popular.

Freelancing and Gig Economy Platforms

A common question among those in the freelance and gig economy is, “Can my services be sold as a business?” As their client base grows, many start thinking about the potential to sell their business in the future.

However, what many freelancers don’t realize is that their services need to be systematized and supported by strong branding to be marketable. The value of the business should extend well beyond their hourly earnings. 

Business buyers are often seeking an established operation where they don’t need to manage everything full-time, only stepping in for key decisions. If your freelance gig still requires you to put in hours of direct work, it likely won’t be considered sellable.

Here’s a scenario where a freelance gig has become a full-fledged business: You’re a freelance web developer transitioning to an online marketing agency, shifting from one-off services to structured monthly packages, and streamlining operations by hiring staff for specific roles. If this is what you’ve built, then you’ve already created a sellable business.

Digital Products and Online Courses

Among the online business model types that generate passive income is the creation of online courses and digital products. The beauty of this business model is that you can express your passion and creativity as you earn income. There’s no physical inventory involved because one digital product can be sold multiple times and can only be downloaded or sent to their email.

Why Consider Selling Digital Products?

Selling digital products offers a number of advantages over physical goods, making it an appealing option for many online businesses.

• One of the main benefits is the significantly reduced cost. With digital products, there’s no need to maintain physical inventory, cutting down expenses considerably.
• Since digital products typically come with minimal ongoing costs, they allow for higher profit margins. Remember to calculate your margins before listing a digital product/online course for sale.
• Selling on autopilot is possible with digital products as they are sent to the customer instantly.
• Digital products offer flexibility in how they can be integrated into the current business model. They can be offered as free downloads for growing an email list, selling subscriptions for exclusive content, or providing licensing options for others to use the creations.
• The e-learning industry is a lucrative market, and its projected figures are promising.

Challenges to Consider

While digital products come with plenty of advantages, there are some unique challenges to be mindful of.

• With the abundance of free digital resources available, standing out in an already crowded and heavily saturated market can be difficult. 
• Digital products are often more vulnerable to piracy compared to physical goods.

Advertising-Supported Content

An ad-supported model allows businesses to offer free content or services while generating revenue through advertisements. This model is particularly popular in mobile apps and online platforms. By hosting ads from other companies, the business earns income based on impressions, clicks, or other user interactions with the ads.

For example, Flappy Bird was a free-to-play mobile game that adopted the ad-supported model. Users could download and play the game without any upfront costs, but in exchange, they would see ads during gameplay. The game’s creator earned money from these ads based on how many users engaged with them, which worked well since Flappy Bird attracted millions of players.

The main benefit of this model is accessibility—it attracts a large user base by offering services for free. However, the downside is the reliance on third-party advertisers, making revenue less predictable and subject to fluctuations in advertising budgets. Additionally, excessive ads may impact the user experience. Despite these challenges, Flappy Bird demonstrated how an ad-supported model can generate significant revenue while keeping the game free for players.

Subscription-Based Content

A subscription model charges customers a recurring fee—typically monthly or annually—for access to services or content. This model provides businesses with a stable and predictable revenue stream, as subscribers pay directly rather than relying on advertisers. However, attracting and retaining subscribers requires consistently delivering high value, as customers can easily opt for free alternatives if they find them more appealing.

An example of this model in action can be seen with YouTube creators who have faced demonetization due to YouTube’s changing ad policies. In response, some creators have launched their own subscription-based streaming platforms. By doing so, they can offer exclusive content directly to their audience without worrying about ad revenue cuts or restrictions. This allows them to maintain creative freedom while securing a more reliable income stream.

Marketplace Platforms

Running a business on an online marketplace involves using a platform where various sellers offer their products or services to a broad audience. These platforms allow customers to browse and compare different options from multiple vendors, all in one place, making it easier for them to find what they need.

Popular online marketplaces include well-known names like Amazon, eBay, and Facebook Marketplace, as well as specialized platforms like Thumbtack and Angi.

Online marketplaces can be categorized into the following:

• Product-based. Often called ecommerce platforms, they are ideal for businesses looking to sell physical or digital goods. They cater to a wide range of items, from clothing and electronics to downloadable content.
• Service-based. These platforms focus on connecting service providers with customers seeking specific tasks, such as home repairs, photography, or other professional services.

Both types offer businesses an opportunity to reach a ready-made customer base while simplifying the buying process for consumers. And just like what we’ve discussed in the gig economy section, these businesses are sellable, provided that there is a system that keeps the company running.

Online Business Models Types: How We Can Help Attract the Right Buyer

WebsiteClosers.com connects business owners with a vast network of businesses interested in acquiring online ventures through various business models. We’ve represented companies from a range of industries, including websites, affiliates, SaaS, Amazon FBA, digital marketing, and ecommerce, among others.

Our process is entirely success-based—our team manages the entire sales process, from listing to closing, without charging any fees until your transaction is successfully completed. Our experienced brokers handle the negotiations, ensuring a smooth sale while you focus on what matters most.

Contact us today and see how we can help sell your business, no matter the business model.