Online Business Basics: Business Models

Many people find the startup process to be intimidating, especially when it’s based on tech. Starting an online business is actually less complicated than starting one offline, but that isn’t apparent when one begins researching. Instead, it looks like a scary, disorganized mess of choices and unfamiliar procedures that are impossible to put into logical order.

Outlining your business model is the first step towards navigating the online business world, especially if you’re a small business without experts at your disposal. Everything else will be built upon this foundation, allowing you to zero in on what you’ll need to learn to make it happen.

Online Business Models

In the digital world, there are three primary types of products you can sell, digital products, digital services or physical merchandise.

Physical Products

A physical product is tangible merchandise that a consumer can order from you online, and have it shipped to them in a typical eCommerce scenario. It could be something you make or manufacture yourself, or a white-label product you purchase and sell under your brand name. You can also source wholesale inventory, or have someone drop-ship orders direct to your customers. From food to electronics, anything that can be shipped at a reasonable cost can be sold online.

Our Checklist: How to Start an Online Store (eCommerce Business) in Canada will guide you through starting an online business selling physical products.

Digital Products

Digital products are usually one form of digital download or another. It could be an ebook, special report, online course, videos, software as a service (SaaS), apps, gated content (membership sites), printables, podcasts, or what have you. This category technically includes tangible digital products, such as a course on a CD that’s sent to the buyer. However, that format isn’t often used anymore.

You can create your digital products yourself if you’re able. Ebooks, whitepapers and printables have a manageable learning curve, if you don’t have any programming skills. Software has made it easy to create other products as well, such as video courses or apps. The vast majority of those who create digital products, started by learning how to do it themselves. The bonus is, once you know how to do it you’ll be able to maintain and expand it without further expense.

If all of that sounds like more than you can handle, don’t worry because you don’t have to. You’ve got options!

  • There are all sorts of talented individuals out there who can take your idea for an info product and make it happen (for a price). From ghostwriters to programmers, anything you come up with can be created for you.
  • Licensing can apply to everything from Private Label Content (PLR) to software. You’ll have to make sure you’re purchasing the rights to change and distribute the product under your own brand.
  • Affiliate arrangements allow for you to sell the product for a commission. It works well as part of another revenue strategy or affiliate marketing may be your primary source of income.
  • You may also consider partnering with someone whose talents compliment your own. For instance, they can produce video courses while you do the writing or use your marketing expertise to promote them.

Get started:

How to Create Your Own Online Learning Products

Top 7 Ecommerce Platforms for Digital Product Downloads

Digital Services

If you like working with people online, digital services may be the perfect option for you. For example, if you have a high level of expertise on practically any topic, you may be able to offer consulting, coaching or virtual assistant services. Quite often, these services are delivered electronically through internet-based communication tools like Skype or Zoom.

Digital services are a natural extension of learning products, be they books or courses. They can also include paid memberships or a mastermind group.

Combining Business Models

The most sustainable and reliable internet business model is a combination of two or more or the above models. If you check out some of the most successful online businesses, you’ll find many of them offer more than one. Once you’re familiar with what’s out there, you’ll find yourself coming up with ideas that work well for your business.

Combining models is a strategy that has been around for much longer than the internet. There are many offline examples of tapping into several revenue sources, such as a rock band that earns from live entertainment, recorded music and branded t-shirts. Online business offers similar opportunities.

Selling these products can be your primary source of revenue, or compliment and support another source of revenue. For example, I could be in the business of selling computer parts online but also offer online courses on computer repair, along with books on the topic through an affiliate like Alternately, you might have an offline business that would benefit from the more diverse source of revenue that the internet offers. It’s a perfect expansion for speakers and authors as well.

It’s important to be comfortable with one business model before expanding, but you’ll find it naturally evolves once you know what your options are. Ultimately, you’ll end up with a diverse, multi-faceted model that has the most potential to thrive and grow.

The Next Step

The next step is to start building your web presence, beginning with your website and how you’ll deliver your physical or digital products. The following posts will help guide you.

Checklist: How to Find the Best Website Host for your Canadian Business

Checklist: How to Start a Profitable Online Business in Canada

Now that you know more about the foundation you’ll use to build your online business, you can accurately pinpoint your research and make a better-defined plan for building the business of your dreams.

Please share your experience or questions in the comments below, or join us in the Online Business Canada Facebook group.

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Digital Business & Marketing Manager at Online Business Canada | Website | + posts

Melody McKinnon is an internet entrepreneur with 25 years of experience in a wide range of online business models, backed by a formal business education and enhanced by training and mentorship. She has owned or managed both educational and ecommerce websites. Her book, 7 Recession Proof Online Businesses to Start From Home, is available from all major ebook retailers.

Melody has worked with many businesses & brands in a multitude of capacities. She can often be found on,,, and, as well as other quality digital publications. Her content has earned reference links from highly-respected websites, magazines and university textbooks.

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Bin Rentals Ottawa

Starting an online business can open up endless opportunities, allowing you to reach customers worldwide and pursue your entrepreneurial dreams.

Last edited 11 months ago by Bin Rentals Ottawa
ETech 7

Most businesses must have an online presence, especially these days where most shopping is done online. Having an IT company manage your cybersecurity needs can help ease any worries related to your IT needs.

Glen Johnson

Thanks for sharing! This was really insightful 🙂

Roger Fox

Great post, thanks for your work! This is definitely a good article to learn and remember when doing business.

Kris Bogosian

I priced writers for an ebook and it looks like I’m about to become a writer LOL 🙂 The plan is to do consulting but agree having money coming in from all directions is ideal. Lots of work to do!!