But Online Businesses Are All Scams, Right?

by Matthew on May 23, 2011

“Aren’t all those online business stories just scams?” Obviously there are big businesses online like Amazon.com which aren’t scams, but is the idea of owning your own Internet business just a pipe dream?

You’ve seen the ads, sometimes even disguised as news stories. They almost seem to claim things like: “Laziest Person In The World Accidentally Created A Website And Instantly Made $1Million OVERNIGHT!” Yes, those ads are pretty much all just trying to take your money. But just like the old classified jobs section in the newspaper, there are scams interspersed with the legitimate stuff.

I became a bit jaded by the promise of online business about six years ago when I started looking into selling products online. By that time, eBay was already huge and competition had already gotten pretty fierce. If you remember when eBay was young, it was quite an adventure to see what people were selling and what great deals you might be able to get. But after it had been around for a few years, margins got pretty tight as competition increased. I knew a few people who were rather successful at eBay businesses, so I thought I’d look into the whole drop-shipping model.

Some people can be successful selling products on eBay and either managing inventory or managing a drop-shipment arrangement. There are even courses by successful people on how to do this. I found that this wasn’t for me. First of all, there are lots of companies out there trying to sell you the promise of having your own eBay drop-ship business with very little work (red flag!). Secondly, you have to deal with a huge sea of competitors, razor thin margins in most cases, and constant changing policies which can upset your entire business. The Internet is full of former-eBayers who were forced out of their eBay business due to increased seller fees or changed policies. I work with a guy who’s wife found herself in this predicament. Things aren’t what they used to be.

Also, at the time I was researching Internet businesses I was focused on selling tangible goods, items which required shipping and dealing with customer complaints. This amount of overhead required careful attention to margins and return rates or your profits could quickly turn into losses. Then, if you do happen to succeed, what happens when you go on vacation? Either you shut down your store and lose the money you would have made, or you try and rope a friend or family member into carting large volumes of products to the post office every day. None of this sounded fun, so I wrote off the idea as a way for really motivated people to make a few bucks from home, provided they can focus full-time on selling products and trudging to the post office every morning.

I realize now that I was way too limited in my thinking. There’s a great podcast over at Internet Business Mastery discussing the success story of a young woman who created a new Internet business after getting sick of years of eBay selling.

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