Which business model to use?

It is one thing to know of the different business models, but it’s another to really understand what the terms and advantages are for each.  This week we learned about buying inventory directly from brokers, wholesalers, and manufacturers, as well as learning about the drop shipping program and affiliate program.  Here are a few of my main take-aways from this week:

Inventory:

Pros – Lower cost by buying in bulk.  Physically have the product, so you know what you are sending to the customer.

Cons – Must store the product and keep it free from damage.  Demands on shipping the product out to the customer quickly.  High initial costs.  Possible returns and chargebacks.

Drop Shipping:

Pros – Receive profits without ever having to physically store the product.

Cons – Rely on the manufacturer or wholesaler to make sure the product is free from defects.  Possible returns and chargebacks.

Affiliate Program:

Pros – No inventory to worry about.  Once your link is up, there is nothing more needed to do.

Cons – Lower profits.

Looking at this list, it’s hard to decide which of these options is the best way to go.  I think it will partially depend on what content you have out there for your site.  It needs to be a proven market that people are searching for, but it also needs to have some feature or service that draws people to you rather than the competition.