Reasons why online business is popular:
Work from home
Flexible hours
Lower startup costs
High profit margins
Ability to make money 24/7
Uncapped income potential
Global reach
Online business is growing. With the world moving online, the market for online businesses is soaring. For example, take ecommerce. There are currently 2.4 billion online shoppers today, and that number is expected to grow to 2.85 billion by 2025.
The differences between online and offline businesses are many and diverse. Starting an offline business requires a large investment of time and money. Meanwhile, starting an online business is quicker and involves less risk. A good example of how starting an online business can lead to outstanding success is the story of Michelle Phan. Michelle was not a makeup or video expert, but that didn’t stop her from creating makeup tutorials on YouTube. Her videos took off, and she was soon the owner of a $500 million brand called Ipsy.
In this article, we’ll dive into the reasons online business is popular and why you should start one today. We’ll also go into inspiring stories like Michelle’s, and show you the top online business models you can go into with almost zero risk.
16 Reasons Why Business Is Popular Nowadays
1. Work from Home
Working from home is an attractive option for so many people. It allows you to save on commuting, work in your sleepwear, and increase your productivity. Here are other reasons people love working from home:
Since online businesses can be run from anywhere, it’s an attractive option for everyone who wants to work from home. There are multiple online business ideas to choose from, and most of them can be done in the comfort of home.
2. Flexible Hours
Popular author Tim Ferris wrote a book called “The 4-Hour Workweek.” In it, he describes the joy of having your own time in your hands. He talks about how the idea of retirement is skewed, and how we all can have micro retirements and enjoy living right now. To achieve this, he started an online business called BrainQUICKEN. It helped him take control of his life and achieve his dream of traveling the world while working.
In the book, Tim Ferris encourages readers to follow his path. He says that running an online business is the way to join the “new rich.” These people work flexible hours and have the luxury of not waiting for retirement to start feeling free and enjoying life.
3. Lower Startup Costs
Physical businesses are expensive. In fact, popular vlogger and boutique owner Alli Schultz says that it can initially cost around $48,000 to start a retail store. Costs add up quickly. Expenses like rental space, hiring and managing staff, and licensing fees accumulate. Altogether, you’d need $50,000-$100,000 to safely cover all costs of a new brick-and-mortar business.
On the other hand, starting an online business is affordable. Depending on your business model, you can spend as little as $100 initially. For example, if you start a local lead generation business, all you need is a website and hosting. You’ll use your site to gather leads, then sell them to local businesses who’ll gladly pay you $500-$3,000 to rent your assets. From there, you can scale and create even more websites. You only need $100 as an initial investment, but your income potential is unlimited.4. High Profit Margins
Running an online business costs much less than running a physical store. That’s because expenses are much lower. Online businesses don’t require renting out space, paying utility bills, and hiring a large roster of staff. At times, it won’t even require you to pay excessive licensing fees.
The low cost of running an online business leads to much higher profit margins. With a physical business, you can only earn around 0.5% in profit margins. Meanwhile, you can make 4.5% or more profit margins with an online business. According to ZonGuru, Amazon retail sellers can make up to 25% in profit margin from their sales. Compare that to the meager 0.5-3% of physical retail stores, and it’s clear to see why so many are choosing online businesses today.
Yes, online business is profitable. In fact, Apple Inc. states that it earns a much higher profit margin from its digital products than its physical ones. Its gross margin for digital products like the App Store, iCloud, and Apple music sits at 71%. Meanwhile, its gross margin for physical products is 37%. This shows how much profit can be made when business is taken online.
5. Ability to Make Money 24/7
Online businesses allow you to make money in your sleep. With a regular job, you need to be at the office 9 to 5 to earn your regular pay. Getting sick, having an emergency, or simply wanting to travel and enjoy life cuts your pay. But running an online business is different. Once you automate your systems, you’ll start making money around the clock.
One great example of this is Ramit Sethi. Ramit is an author and online business owner whose popular digital products earned him a net worth of over $20 million. But he doesn’t spend all his days glued to a computer. Ramit loves to travel, taking a minimum of 6 consecutive weeks a year to adventure and explore. He also spends a lot of time in the gym and trying out new hobbies. Because his online businesses are earning 24/7, he gets to relax and enjoy life on his terms.
6. Uncapped Income Potential
Earning a salary is inflexible. You are paid a certain amount per month, nothing more. To get extra, you need to work more hours on overtime or find a part-time job. But starting up an online business opens you up to uncapped income potential. You’re not tied to getting paid by the hour. You’re also not tied to a physical store, which means you can find potential customers and clients worldwide.
A great example is Sophia Amoruso. Sophia came from humble beginnings. She worked a number of odd jobs, even accepting a job of checking IDs at a local art school. But she was determined to make more out of her life. In 2006, she started an eBay store selling vintage clothing. The store quickly gained attention because of Sophia’s personal flare.
The business grew. Sophia moved away from eBay, and started an ecommerce website called Nasty Gal. The results were explosive. Nasty Gal earned a revenue of $24 million by 2011. The next year, it increased to $100 million. With online businesses, there are no boundaries and no limits to what an entrepreneur can earn.
7. Easy Access to Online Courses
Yes, starting a business is complex. There are lots of details that need to be worked out. You’ll need to learn about licensing, finding the best place to rent, hiring people, legal fees, and so on. The same is true with online businesses. You’ll need to learn about building a website, marketing your brand, setting up your platforms, and much more.
Luckily, there are innumerable online classes and online learning opportunities you can access. Here are a few examples:
8. Many Opportunities
Your hometown may not hold a lot of opportunities for a new business. Even if you have the skills and know-how for your dream company, your city might not have a large enough market to support it. In comparison, an online business has the whole world as a market. There are numerous online markets and business models you can choose from. Here are a few ideas:
9. Global Reach
The world of online shopping has grown exponentially over the years. This was heightened by the Covid-19 pandemic, in which people realized how easy it is to shop online. And this trend shows no signs of slowing down, even post pandemic. In fact, experts predict that ecommerce will be worth $8.1 trillion by 2026.
As an online business owner, you can grab a slice of this pie. There are no location limits with who you can sell to, giving you a diverse global audience. Of course, the immensity of the online business world requires you to stand out. You need to build brand awareness with a strong online presence. You also need knowledge of your target audience and an effective digital marketing strategy. Once you have these nailed, however, you can set yourself up for huge earning potential.
10. Low Entry Barrier
The hiring process is unfair. According to professor Francesca Gino of Harvard Business School, the interview process is skewed by biases. A study done by Harvard concluded that white applicants earn more interviews than their black or Latino counterparts. This is true even though they have identical work experiences. Popular YouTuber Je Hak Lee did an experiment in which he created two identical resumes. On one, he put a white male name. On the other, he put an ethnic female name. The white male name got 18 interviews and the ethnic female name got 10.
What’s more, even the fairest employers prioritize candidates with the most experience. 37% of employers say work experience is the number 1 priority when hiring. If you’re a fresh graduate or don’t have experience in the field you’re applying for, your chances of getting hired are slim.
But starting an online business is different. You don’t need to tweak your resume to impress employers. You don’t need work experience. All you need is a laptop, internet connection, and an investment of less than $100. A great example of this is entrepreneur Julia McCoy. Julia dropped out of college at 19 and started her online business Express Writers with $75. The company grew, and 10 years later, she sold it for a 7-figure sum. She succeeded with no degree, no experience, and no capital. Online business gives a fair opportunity to everyone.
11. No Boss
Micromanagement is a problem in the workplace. No one wants a boss who’s constantly peering over their shoulder. Unfortunately, there are many bosses like this. In a survey done by Accountemps, 59% of employees say they have experience with a micromanager. 55% said it decreased their productivity and 68% said it hurt their morale.
As a small business owner, you are your own boss. You can set your own hours, work when you feel most productive, and take breaks when you need to. According to Jeff Bezos, founder of Amazon, "One of the huge benefits of being a self-employed entrepreneur is that you get to chart your own destiny. You don't have a boss telling you what to do. You have to define your own path, which can be both exhilarating and daunting."
12. Introvert Friendly
The workforce population is basically composed of 50% extroverts and 50% introverts. In entry level jobs, the percentages are equal. However, that changes with the first step up the career ladder. In the role of first-line supervisor, the number of extroverts jumps to 88%. This number rises even more, becoming 97% in the role of executives and 98% in the role of top executives. Meanwhile, introverts turn in the same or better quality work. But they get less opportunities because it’s hard to climb the corporate ladder through a mass of extroverts.
Luckily, you don't need to be an extrovert to start an online business. You don't need to jump through the extrovert hoops like leading meetings, talking to strangers, and overseeing others. In fact, some of the world’s most successful people are introverts. These include Mark Zuckerberg, Jeff Bezos, Elon Musk, Warren Buffet, and Bill Gates.
13. Digital Tools Enable Online Operations
The vast array of digital tools available to your business make running it smooth and easy. There’s a tool for every aspect of your business. Here’s a sample few:
These are only a few examples of the many tools that make running an online business easy. With all the tools, apps, and software created for online businesses, it can feel easier and better than running a brick-and-mortar one.
14. Side Hustle Culture
Side hustle culture is on the rise. 34% of Americans say they have a side hustle. And the numbers get even higher with each generation. 50% of millennials and 70% of Gen Zs say they have a side hustle. What’s more, 24% of Americans say they plan to start a side hustle this year. In the U.S. alone, the side hustle market is worth $2.58 trillion.
Because of this culture, more and more people are starting online businesses. They’re realizing that it’s the norm, instead of some outlandish practice only a few can do. What’s more, starting an online business is relatively less demanding than starting a traditional one. According to a study by Zapier, some side hustlers spend only 12 hours a week on their online businesses. 60% spend even less time on their online businesses, dedicating only 5-10 hours per week on them. This makes it sustainable for people who can’t jump full-time into running an online business.
15. More Customers Shop Online
ECommerce is exploding. The latest online shopping statistics and trends are mind blowing. For example, there are 218.8 million online shoppers in the U.S. Globally, that number jumps to 2.4 billion. That’s 27% of the total population of the world.
When it comes to online shopping, Gen Z takes the lead. These young people spend 10 or more hours a day on their phones, especially on social media platforms. They are 2x more likely to make an online purchase than millennials. And since 93% of parents say Gen Z influences their buying decisions, this particular generation has $44 billion buying power.
In the U.S., the average shopper spends $5,381 per year online. People take to online shopping for different reasons. 30% of shoppers say they buy online because of lower prices. 22% say it is more convenient to shop online than to go to a brick-and-mortar store. 11% say it is because of the free shipping.
Altogether, the benefits of online business for customers are high. Those who start a side hustle don’t only enjoy a wide market of buyers, they also get to improve the lives of people around the world.
16. Ability to Outsource Work
A brick-and-mortar business requires you to hire people who are willing to work in the area. This limits your options, and you don’t always get to pick the most skilled employees. On the other hand, online business allows you to hire anyone from anywhere in the world. All you need to do is create an account on Upwork, Fiverr, or Onlinejobs.ph. This gives you access to millions of workers worldwide. For example, Upwork has 18 million skilled workers on its platform.
Once you outsource your tasks, you have more time to work on scaling your online business. It allows you to save both time and money. One of the biggest reasons companies outsource is reduced costs. For instance, outsourcing work to a country like the Philippines reduces cost by up to 70%. Even if your online business has a limited budget, you can hire skilled workers from anywhere in the world to help you scale it.
Top 5 Online Businesses to Start and Succeed in 2024
Not all online business ideas are good. Here are the top 5 online businesses to start in 2024:
1. Ecommerce
Ecommerce (short for electronic commerce) is the buying and selling of goods in the online marketplace. It works through people visiting online stores such as Amazon or eBay and making purchases that are then delivered to their homes. While ecommerce is dominated by large companies like these, anyone can tap into the $6.3 trillion market. Here are three types of ecommerce businesses you can get into:
2. Digital Marketing
Digital marketing is the opposite of marketing done through direct mail, billboards, and magazine ads. It’s any kind of marketing done through digital devices such as computers, phones, or tablets. There are many kinds of digital marketing. Some include social media marketing, affiliate marketing, content marketing, and email marketing. Here are three popular digital marketing business models you can get into:
3. Content Creation
It may sound surprising, but generating content on social channels is an online business. This is especially so if you create content with an aim for monetization. Creating videos on YouTube and TikTok has become a popular online business model today. In fact, there are over 321,000 YouTube channels that have 100,000 or more subscribers.
There are many examples of famous YouTubers and TikTokers. For instance, take Jimmy Donaldson, also known as Mr. Beast. Mr. Beast is a popular YouTube star whose content includes challenges, stunts, and pranks. Another thing that makes him popular is his extravagantly generous giveaways. Viewers love his content so much, he now has 245 million followers. And he earns the equivalent of such a large following, revealing that he makes around $500-$700 million a year.
4. Freelancing
Freelancing is a popular way to make money online. The total global workforce sits at 3.38 billion people. Of that number, 1.57 billion are freelancers. That means around 46.7% of the world’s workforce is self-employed. According to Absolute Reports, the global freelance market is worth $3.39 billion.
There are many inspiring freelancer stories out there. For example, take Elna Cain. In 2014, Elna decided to quit her job and become a full-time mom. But she still wanted to make money. So she looked around and found out that blogging was a popular side hustle. She plunged into it and got her first client, Wheels. She did great work for them, which helped her get even more clients. In only six months, she was able to earn a full-time income doing part-time work as a freelancer.
While finding clients can be a difficult first step for beginner freelancers, there are online platforms that make it easier. All you need to do is sign up for an account like Upwork or Fiverr. 10,000 freelancing jobs are posted on Upwork daily, putting you in front of a wide market for your skill. Once you build your portfolio with happy clients, you’ll have the capacity to go after even bigger ones.
5. Online Coaching and Courses
Online education is booming these days. Since 2000, the eLearning industry has grown by 900%. People love online courses and coaching. It gives them a self-paced way to learn real-world skills taught by people who've achieved them. Coaching is also popular because it takes the generic and makes it specialized. Individuals can get customized solutions to their problems from an experienced coach.
One example of a successful online course creator and coach is Joanna Wiebe. Joanna dropped out of law school and decided to become a copywriter. She became one of the best, and not long afterwards started Copyschool. Today, her online school has over 25,000 students. She teaches conversion copywriting and freelancing, and helps many reach their dream of making money online.
The good news is you don’t have to be an expert to create your own online course. All you need is knowledge or skills others want to have, and you can set about building your course!
How to Start an Online Business?
Here’s how to start an online business in 4 steps:
Starting an online business requires you to niche down. Building a business that appeals to everyone will appeal to no one. You need to focus on your business idea, including what problem it addresses. Then, you need to gather data on your market. Run surveys, explore online, and scrutinize your competitors. You’ll want to know what you’re getting into before you start. Lastly, you need to build a powerful online presence and a strong relationship with the clients you do attract. Prioritize clients even after they have made the purchase. Make them feel special. In the long run, this will help you retain them, which in turn makes your business more sustainable.
Conclusion: Who Should Start an Online Business?
Anyone who wants extra income, freedom, and uncapped opportunity should start an online business. Of course, not all business ideas are good ones. Between 80-90% of all online businesses fail in the first 120 days of operation. This means you should choose wisely before you dive into a business model.
Luckily, there are business models that require small investment and small risk. One of the local lead generation. Starting a local lead gen business is simple. All you need is less than $100 to start your first website. This website’s job is to collect local leads. Once you generate a large number of leads, you’ll go to local businesses that need them. A local business will be glad to pay you $500-$3,000 to rent your assets, giving you a nice side income to start with. From there, you can build more websites, collect more leads, and scale your business limitlessly.
