The success rates of the most popular online businesses are:
- Local lead generation - 35%
- Online Courses - 25%
- Print-On-Demand - 24%
- Digital Marketing Agencies - 23%
- Subscription Business - 20%
- Blogging - 20%
- Freelancing - 20%
- Online Coaching - 19%
- Podcasting - 18%
- Amazon FBA - 17%
- Shopify Dropshipping - 10-20%
Only 10% of all online businesses are successful. Models with below 10% success rate show that effort alone is not enough. These businesses usually require some luck and longer periods of work without reward. Meanwhile, businesses with over 20% success rate have a better effort-to-reward ratio. They may have a higher barrier to entry. But they also have less competition and more opportunities to make money online.
In this article, we’ll go over the success rates of the most popular online business models. We’ll look at how good these models are. Then we’ll analyze why they have a higher (or lower) success rate. By the end of this article, you’ll know what makes a good online business idea. You’ll also know what the best online business models to go for are in 2024!
1. Local Lead Generation Success Rate: 35%
Local lead generation has a 35% success rate. It has lots of opportunities, with hundreds of thousands of potential customers. The competition is also relatively low because it has a higher barrier to entry. Local lead generation has a steep learning curve, but it has a high effort-to-reward ratio for those who stick to it.
Local lead generation works by building websites, ranking them, and then renting them to local service businesses. Local businesses like tree trimming or plumbing rely on leads to operate. That’s why most will pay $500 - $3,000/month for a website that generates leads.
The primary cause of failure for local lead generation is the shiny object syndrome. This business model takes time and several websites to work. Most successful local lead gen businesses have several websites generating passive income. Impatient people usually venture off to other business models, causing their local lead gen business to fail.
Pros
Low Competition
Lots of potential clients
Highly scalable
Creates passive income
Cons
Steep learning curve
No instant results
Higher barrier to entry
2. Online Courses Success Rate: 25%
Online courses have a success rate of 25%. A study by Sellcoursesonline.com reveals that 75% of Udemy courses make below $1,000/year. The study also revealed that only 4% of courses earn above the poverty line ($14,850/year). Finally, only 1% of Udemy course creators make a full-time income from the platform. These numbers are for Udemy. Outside the platform, courses have a harder time marketing since they’re not as established as Udemy.
You can pick just about any topic you enjoy and create an online course for it. Being an expert on your topic is great, but it’s not necessary. As long as you know something that others don’t, you can teach it in a course. The secret is to sell an outcome, not a technique. For example, you can sell “Lose Weight While Eating Bacon,” instead of just “Keto Diet.” To publish your course, you can put together a detailed PDF, or you can record video lessons. You can also sell a standalone course, or you can create an exclusive student community. The best courses always have video lessons and support communities. Finally, you can publish your course through a platform like Udemy, or self-publish it using tools like Kajabi.
Online courses usually fail either because there’s too little demand or too much competition. The most popular topics, like “How to Make Money Online,” have huge schools already. On the flip side, super niche digital products don’t have enough demand. Finding a big niche and taking a unique angle is how to succeed - but this is a lot easier said than done. Building a solid course platform and community is also a challenge. Selling simple PDFs is great for a quick buck, but it’s rarely sustainable.
Pros
Make money from something you care about
Opportunity to build a community of like-minded people
Many course platforms to choose from
Cons
Difficult to find a profitable niche
Needs a pleasant personality
Hard to retain customers
3. Print-On-Demand Success Rate: 24%
Print-on-demand has a success rate of 24%. According to Dropshipping.com, that’s the percentage of stores that are still running after 3 years of operation. Print-on-demand works similarly to dropshipping. However, it requires more skills to get started, which may be why it has a higher success rate.
Print-on-demand is a great business idea for creative individuals. You can sell your art on shirts and mugs without having to run a manufacturing business. You first create your printable designs for shirts, bags, or mugs. Then you partner up with a print-on-demand platform (POD) like Printful or Gelato. Finally, you open an online store and send the orders to your POD partner whenever someone buys. Most POD sellers make about 30% profit on their designs. But the most successful ones can make up to 60%.
One of the main reasons print-on-demand businesses fail is a lack of design skills. People buy fun, creative designs. Producing these consistently is very difficult, even for talented artists. Another reason for failure is a lack of marketing skills. Choosing the wrong target market is common in POD businesses. Many artists also have a hard time learning the technical skills needed for online marketing.
Pros
Great way to monetize art
No need to worry about printing or inventory
Less competition because it requires talent
Cons
High-skill business model
Very difficult to keep a loyal customer base
Small profit margins when starting (you’ll need to sell in volume)
4. Digital Marketing Agencies Success Rate: 23%
Digital marketing agencies have a 23% success rate according to a profits study by Marketing Magazine. With more businesses going online, there’s a high demand for digital marketing experts. There is fierce competition for this online business model. However, there are many ways to niche down and avoid the big players. Smaller digital marketing agencies usually specialize in one type of service or industry to stay afloat.
Digital marketing is a catch-all term for various online marketing businesses. This includes services like SEO, content marketing, social media management, or email marketing. All these skills have steep learning curves. However, they are relatively easy to learn thanks to the many online resources available. Digital marketing also has a low barrier to entry, with little to no expenses required to start.
The main reason digital marketing agencies fail is failing to understand their clients' problems. Many agencies provide cookie-cutter services, which is not enough in today’s market. With intense competition from bigger agencies, freelancers, and specialists for hire, smaller agencies that don’t specialize are doomed to fail.
Pros
High demand
Many learning resources
Low barrier to entry
Cons
Intense competition
Not passive income
Constant learning to stay afloat
5. Subscription Business Success Rate: 20%
According to Gartner, subscription businesses have a 20% success rate. The subscription business is one of the fastest-growing business models. McKinsey & Company predicts its market to reach $2 trillion by 2025. However, almost 80% of subscription businesses can’t keep their customer base and end up failing.
The subscription business is an eCommerce business model where you send out products every month. This can be to replenish customer’s supplies or allow them to try many new things without buying individually. The main perk of doing this is getting a steady recurring revenue every month. When done properly, eCommerce subscription businesses can also build strong brand loyalty. Some popular subscription businesses include the Dollar Shave Club and Thrive Market.
The biggest issue with subscription businesses is customer retention. For things to work, you have to make your products a part of your target market’s lifestyle. It’s also very difficult to balance giving too many items (that customers don’t need) and too little. If it’s too much, customers will feel they are overspending. If it’s too little, customers will still have to buy individual products elsewhere. Finally, people tend to lose interest over time, leading them to cancel their subscriptions.
Pros
Regular recurring income
Can build strong brand loyalty
Easy to upsell customers
Cons
Difficult to keep retention high
Difficult to balance giving too much and too little
Difficult to provide new value for customers
6. Blogging Success Rate: 20%
According to SEO expert Luca Tagliaferro, only 20% of blogs survive over 18 months. This is out of the over 60 million blogs that start every year. There are roughly 1.9 billion websites in the world. Of that, roughly 600 million of them run blogs.
Starting a blog is easy. All you have to do is use a website builder to design your site, then you can start adding blog posts. There are many potential revenue streams for blogging too. The most popular ones include affiliate marketing, Google AdSense, and selling digital or physical products. The main strategy bloggers use to grow is SEO. They also utilize things like email lists or podcasts to keep readers coming back. Successful bloggers like Jon Morrow can bring in 6-figures a month. He makes money by teaching people how to start blogs. He has a few courses and also promotes his affiliate partners.
Most bloggers fail because they don’t come up with a good content strategy. Nowadays, it's not enough to just write anything you want. It’s very difficult to build an audience that way. Instead, bloggers need to choose a niche and write content that their target audience will enjoy. They also need to learn how to target keywords and do proper SEO. Because there are so many blogs out there today, these technical details are essential for success.
Pros
Many ways to monetize
Great for building a personal brand
Easy to get started
Cons
Many things to learn
Difficult to keep people coming back
Can’t just write what you want
7. Freelancing Success Rate: 20%
According to The Content Wolf, the success rate of freelancing is 20%. They also say that 50% of freelancers quit in their first year. An additional 30% give up before 3 years. Exploding Topics also says that there are about 76.4 million freelancers in the USA. There are also hundreds of millions more across the globe.
The most common jobs for freelancers are writing, web development, accounting, graphic design, and marketing. Freelancers have the freedom to work on as many gigs as they can handle. They can also price their services how they want. To find work, many freelancers sign up for job boards like Upwork or Fiverr. Others find ways to connect with business owners and offer their services.
The main reason freelancers fail is difficulty finding clients. Ever since the pandemic in 2020, millions of people have gone online to find work. Aside from this, freelancers in third-world countries can also offer much lower rates. This is why to land a freelancing job, you have to differentiate yourself and prove your value.
Pros
Big earning potential
You can work as much or as little as you want
You can work from anywhere in the world
Cons
Difficult to prove your value (vs cheap freelancers)
Difficult to find regular work
Not a passive business model
8. Online Coaching Success Rate: 19%
The success rate of online coaching businesses is 19% according to The Million Dollar Coach. Estimates say that this digital business model is worth $20 billion. There are around 109,200 coaches worldwide, and the number keeps increasing!
There are online coaches for just about every topic or skill people want to learn. The most popular coaching niches are skill, health, career, finance, relationship, and life. Coaches usually establish themselves as an authority on social media. They give plenty of free advice and charge people who want 1-on-1 coaching. Many coaches also release courses, allowing them to teach many people at once. Other coaches speak at conferences and events for a fee.
Most coaches fail because giving advice that works is very hard. Coaches gain a reputation by getting results for their clients. The more successful clients you have, the more you can charge. But if your clients don’t get results for themselves, this will paint you as a fake guru. So many people are skeptical of coaches because of the many scams out there. That’s why a solid track record is vital in this business. There’s also a problem of successful people not needing coaches anymore. Once you help your client solve their problem, there’s no reason to keep you around.
Pros
No need to sell a product (just your advice)
Simple business model
Once you gain a reputation, many people will come to you (snowball effect)
Cons
Very difficult to build trust
Low retention rate
Hard to keep up with best practices
9. Podcasting Success Rate: 18%
Podcasting has a success rate of around 18% according to expert podcaster Scott Curtis. The audience for podcasts is growing. Statistica says that around 38% of the US population listens (or has listened) to a podcast. That’s a whopping 129,653,590 people! However, there are also millions of podcasts to match. Exploding Topics estimates there are currently 3.2 million podcasts to listen to.
Podcasters make money by scoring sponsorships and brand deals. They make for a great advertising platform since podcasts target a specific audience. That’s why brands are eager to promote themselves through podcasts, even the smaller ones. For popular podcasts, making six figures is very achievable. Spotify even bought platform rights for the biggest podcast, the Joe Rogan Experience. The New York Times reports they paid Joe Rogan a staggering $250 million for these rights.
The biggest reason podcasts fail is the lack of consistency. To build a loyal audience, podcasters have to put out regular episodes. Many people get bored after making a few episodes, and they also get discouraged by low view numbers. Finding interesting topics and guests to talk about regularly is also an enormous challenge. For these reasons, 82% of podcasters stop their businesses.
Pros
Brands like advertising through podcasts
Exciting business model
Opportunities to become popular
Cons
Requires a likable personality
Difficult to find interesting topics and guests
Takes a long time to build an audience
10. Amazon FBA Success Rate: 17%
The success rate of Amazon FBA is 17%. According to Jungle Scout, 83% of established Amazon sellers quit before 5 years. However, this doesn’t account for the thousands of people who quit before making any profit. Amazon FBA expert Travis Marziani even says that the failure rate is closer to 99%.
Fulfillment by Amazon (aka Amazon FBA) works by selling products on Amazon. Amazon is a very popular online marketplace, so it’s a great place to reach customers. While you can create your own products, most Amazon FBA sellers are resellers. They use strategies like private labeling, wholesale reselling, or retail arbitrage to make money. Successful FBA sellers like Travis Marziana say they make about $5 million annually.
The 2 main reasons most Amazon sellers fail are not finding a good product and the intense competition. Success in Amazon FBA depends on finding a product that isn’t oversaturated. Finding something with a good supply-to-demand ratio is very difficult. And even if you gain success selling a product, many competitors will catch on and start selling it too. Wholesale suppliers from China even join the race, and they can sell their products at a much lower price!
Pros
Selling on a super popular platform
Low barrier to entry
High earning potential
Cons
Difficult to find a good product
Extreme competition
Constantly need to look for new product ideas
11. Shopify Dropshipping Success Rate: 10-20%
The success rate of Shopify dropshipping is 10 - 20% according to Shopify. Shopify also says that dropshippers handle 23% of eCommerce sales. This reaches up to $85 billion in yearly sales.
Dropshipping works by reselling products on a digital storefront. You first find a supplier with a low-cost product (typically from China). Then you create an online store with Shopify and sell the products at a premium. When someone buys from your store, you notify your supplier and they’ll ship it to the customer. Dropshipping allows you to sell products without worrying about inventory. You are essentially a marketing middleman between the supplier and the customer. Most dropshippers also rely on social media ads to get customers.
Unreliable suppliers and high competition are the main reasons Shopify dropshippers fail. Finding a cheap and reliable supplier is rare. Suppliers from China sometimes disappear without warning. A lot of their products are also low-quality, so you won’t get repeat customers. Dropshipping is also a saturated industry because the barrier to entry is low. Dropshipping Hustle estimates that there are between 3.2 and 6.4 million dropshipping stores.
Pros
Sell online with no inventory
Easy to get started
High earning potential
Cons
Difficult to find reliable suppliers
Hard to find high-quality products
High competition
12. SaaS Business Success Rate: 10%
SaaS businesses have a success rate of 10% according to Only SaaS Founders. There are roughly 30,000 SaaS businesses today, and around 59 million users. Fortune Business Insights also values the SaaS market at 237.48 billion.
To start a SaaS business, you’ll need to be a developer or hire one. There are a few ways to build a SaaS without coding knowledge. However, developers build and run most SaaS businesses. Some developers bootstrap SaaS applications. It’s called micro SaaS, and they self-publish these on app stores like the Shopify app store. Otherwise, SaaS applications tend to have a team of developers building and maintaining them.
The main reason SaaS businesses fail is because there isn’t a market for their product. Success in this industry relies on finding a brilliant idea that nobody else has thought of. With so many giant companies creating SaaS products, it’s very difficult to make a breakthrough. And even if you manage to find a unique idea, the big players will come at you if they see your success. That’s why 90% of SaaS businesses don’t make it.
Pros
Big potential income
Passive income
Cons
Very difficult to find a good idea
Extreme competition from large companies
Expensive to produce
13. YouTube Success Rate: 6.25%
The success rate of YouTube businesses is only 6.25%. There are currently around 38 million active YouTube channels. Of these, only 2 million channels are part of YouTube’s Partner Program. These are the channels that are eligible to make money through ads on YouTube. There are no official numbers on how many of these 2 million channels make significant money.
There are several ways YouTube channels can monetize. The most common is by joining the Partner Program. This allows YouTube to display ads on their videos. The more views a creator gets, the more they make. Other YouTubers land brand deals - they get paid to promote a product on their videos. According to Forbes, the most successful YouTube channel (Mr. Beast) makes about $83 million a year.
The main reason YouTubers fail is not realizing how difficult the business is. Many people have an idea that YouTube is just posting what you want. While true, there is so much more than goes on behind the scenes. This includes creating enticing titles, thumbnails, and hooks, keeping retention up, and building a loyal target audience. Consistently finding amazing video ideas (and creating them) is also difficult and taxing. All of this leads to a high failure rate for YouTube businesses.
Pros
Fun, creative business
Opportunity to become popular
Very easy to get started
Cons
Takes lots of time and effort to work
Creating amazing videos consistently is difficult.
Lots of technical details (Titles, thumbnails, hooks, retention, CTR, etc)
14. Affiliate Marketing Success Rate: 5%
Affiliate marketing businesses have a success rate of just 5%. According to a survey by Rakuten, about 80% of brands use affiliate marketing to get new customers. However, few affiliate marketers build successful businesses promoting these brands. Especially when you compare it to the amount of people who try.
Affiliate marketing works by getting tracking links from brands. Marketers then promote these brands. If someone clicks on a tracking link and buys, the marketer gets a commission. Most people do this by creating a niche site and using SEO. One of the most successful affiliate websites is WireCutter. It’s a tech review site, where they test the latest tech products and recommend the best ones. The site is an Amazon Associate, so they get a 2 - 10% commission every time someone uses their link. The business became so big, the New York Times bought it for a staggering $30 million.
Most affiliate marketers fail because of the insane competition. Because the barrier to entry is so low, thousands of people try to create affiliate sites. Finding an untapped niche in affiliate marketing is practically impossible. Several online marketing professionals start affiliate websites. If you’re not already adept with SEO, you’ll have a hard time fighting these professionals. And even if things work, you’re still at the mercy of your affiliate partners and Google. If your affiliate partner closes their program, there’s very little you can do. Google is also notorious for changing its algorithm for affiliate sites. Recently, the Helpful Content Update wiped out dozens of affiliate businesses overnight.
Pros
Very easy to get started
Passive income
No need to worry about selling products (just promoting them)
Cons
Insane competition
At the whim of your affiliate partners
Can crash overnight (Google Updates)
15. Mobile App Development Success Rate: 0.5%
According to Zippia, mobile app development has a success rate of only 0.5%. This is one of the lowest success rates for any online business. There are roughly 8.9 million mobile apps that people can download today. Of those, only about 32% have over 1,000 downloads. The ones that get many downloads also aren’t guaranteed financial success.
To build a mobile app, you need to be a developer or have enough money to hire one. This is not something that anyone can just learn quickly. Once you finish development, you can then upload the app to the Google Play Store or App Store. You can put a price tag or earn through ads in the app. Once published, you’ll also have to market your product. One of the most effective ways to advertise an app is through influencer marketing. This is because people like using the same apps as people they look up to.
The main reason mobile apps fail is because they’re up against giant companies. Big teams of developers usually run the most successful mobile apps. Indie developers have a very difficult time breaking into the scene. And even if they have a great idea, they usually don’t have the resources to make it work. Big companies with huge budgets dominate the mobile app market. There is very little room for smaller players to get a slice of the pie.
Pros
Big potential income
Passive income
Cons
Very difficult business model
Hard to maintain an app
Fierce competition from big companies
Which Online Business Model is Most Successful?
Local lead generation is the most successful online business model with a 35% success rate. It’s not the most well-known model, which is why there isn’t much competition. Local lead generation is more difficult to start than other popular online business models. For this reason, people who push past this have a very big chance of success.
Local lead generation is also the most profitable online business model. You can charge $500 - $3,000/month for every website you rent to services businesses. Local lead gen is also very scalable. You can build as many websites as you want. Once you build 10 websites and rent them out, you can make up to 30,000/month on monthly recurring revenue.
Amazon FBA has the highest conversion rate for online retail business models at 10%. This is because Amazon is a highly trusted platform. When you sell on Amazon, people are more likely to buy vs when you sell on your website. People know that they won’t get scammed on Amazon. They know they can return the product if it isn’t right. Finally, they can easily read real customer reviews when your product is on Amazon.
What Factors Contribute to The Success Rate of Popular Online Business Models?
Why Do Most Online Businesses Fail?
Most online businesses fail because of a lack of business knowledge, operating a poorly built website, and skipping marketing research. Many people go in thinking online business is completely different from traditional business. While true, the fundamentals of doing business are the same online and offline. Failing to learn these fundamentals causes many online businesses to fail.
In online business, your website is your most important asset. A professional website shows potential customers that you are legit and professional. According to Zippia, 88% of people don’t go back to a website if they have a bad experience. That is why creating a good user experience (UX) on your website is critical. It’s also important to incorporate SEO so people can find it.
Finally, too many people start their businesses without proper market research. Market research entails studying your target audience and the competition. By doing this, you’ll get a better idea of your chances for success. Too many people go into a hyper-competitive niche without any market research. They don’t find unique angles to approach their target audience. Once they realize their mistake, they’ve already burned money and time on something that would never work. That’s why proper market research is vital for success.
Roughly 1,470,150 online businesses fail in their first year. Finding the exact number is very difficult. There are 5.5 million new business registrations every year (Chamber of Commerce). 29.7% of businesses in the USA are online businesses (Zippia). And 90% of startups fail in their first year (Exploding Topics). That’s why around 1,470,150 online businesses don’t survive for more than a year.
High competition, customer retention, and lead generation are the most common challenges for online businesses. These greatly affect their success rates. The higher the competition a business model has, the lower the success rate becomes. The same goes for businesses where retaining customers is difficult. Business models like subscription boxes usually see initial success. But over time, their customer base dwindles, and it's very difficult to keep them coming back. Finally, lead generation and finding new customers are difficult for businesses with lower demand. For coaching and courses, finding the right people to teach can be very difficult. Big players usually cover the biggest topics. Coaches with smaller businesses have to niche down. But it’s very hard to find an audience if they narrow it down too far.
Modern technology automates a lot of tasks, which has affected the success rate of some online businesses. AI can handle any task that doesn’t require creativity or pinpoint accuracy. That’s why online business models like freelancing have seen a bit hit in success rates. However, there are some positive effects from AI. For SaaS businesses, AI has brought in a flood of new opportunities. Since it’s new, many AI-powered SaaS ideas are just waiting for someone to develop them.
Conclusion: Which Online Business Model Offers The Best Chance of Success and Profit Potential?
Local lead generation has both the highest chance of success and the profit potential. There is no luck involved, and you don’t have to discover a unique angle either. People mostly fail local lead gen because they don’t stick to it. But those who do and build several websites have a nearly guaranteed chance of success. It also has a much higher profit potential because it’s a passive business. This means you can build as many local lead gen websites as you want, and they’ll each bring in $500 - $3,000 a month.
Local lead generation is also far less competitive than other online business models. This is because it has a higher barrier to entry. Not only do you need to learn SEO, but you also have to talk with local business owners. The fact that you have to call business owners already eliminates most international competition. On the SEO side, there is also far less competition for local SEO. That’s why you can succeed, even if you just know the basics.
Online businesses are one of the best ways to make money today. If you’re still having a hard time choosing, these success rates should help you decide. Local lead generation has the highest success rate, while mobile app development has the lowest. But regardless of what you choose, know that success ties directly to your effort. So go out there and work hard, and you’ll drastically improve your chances of success and profits!
