When considering how we will become Digital Nomads we first had to look through and research all the different online business models available to us. There are many other ways to make money online, we are just detailing 5 that most closely relate to our skills and ambitions.
Digital nomads are individuals who leverage telecommunications technologies to perform their work duties, and more generally conduct their lifestyle in a nomadic manner.
1. Drop Shipping
This is a method I have a lot of familiarity with since I just sold my previous drop shipping business. It’s a business model I would think of getting back into at another time but it might not be right for us at this moment. The main benefit of drop shipping is not having to store or ship your products.
You are basically a reseller for another company and when creating the business agreement, you can either become a traditional reseller or a dropship reseller, if that is something the supplier is willing to consider. There are large databases of companies willing to make dropship agreements, costs a couple hundred dollars for the lists but these products are usually found on many other peoples sites. What I have found, is that it’s best to find a niche that you will be come an expert in, find all the suppliers for your type of business, and then go about convincing those suppliers to drop ship for you.
Some helpful tips.. Look for a that costs between 50 and 500 dollars. Create a dummy website to present to the supplier and contact them and give them your pitch. Oh, and suppliers love to hear how much you are willing to spend on advertising per month for their products, so definitely figure this out before contacting someone. This is oversimplified of course, but I will touch on this more in another post. But a simple breakdown of the plusses and minuses of drop shipping are as follows.
- No physical inventory so no overhead
- No shipping and handling
- Low cost for starting up
- Time consuming in the beginning but not after it gets rolling
- Low profit margins (hopefully around 40%)
- You typically pay for shipping
- You have to create the website and fill it with content
- Customer service interaction falls on you. (Ways to automate/outsource this)
+or – May have to handle returns. (contract depending)
2. Virtual Job or Freelance
I could probably come up with a more accurate term for this but what I’m trying to describe is when you take what you are currently doing at your job and either do it offsite or strike out on your own and go freelance. Basically not going full on digital nomad but something in between it and the 9-to-5ers.
I first came across the idea of convincing my boss to work off site after reading The Four Hour Work Week. In one chapter, author Tim Ferriss breaks down a step by step strategy to follow for achieving this. I have used some of his methods myself and have nearly achieved this with my current employer.
What we fear doing most, is usually what we most need to do – Tim Ferriss
This works great if you already work with something online, for example websites, social media etc. The only problem with following this business model is that it wouldn’t completely achieve our goal of becoming a digital nomad and might be more of a compromise on our dreams.
- Can build upon the career you have already started.
- A nice mix of freedom and structure
- Paid vacation days don’t really matter anymore.
- Required to be on site more often than you might like
- Must be an expert in your field or inexpendable.
+or- Must create a name for yourself or constantly be selling yourself
3. Traditional Ecommerce site
This would be very similar to a drop ship company but instead of your supplier shipping the product directly to the customer, you handle the logistics. It’s a great business model for those who want more control over their production chain/sales channels and would like the possibility of higher profit margins. The difficulty would all be based upon the size of the company you create.
The company I work for is a traditional e commerce site but if I take their history as a learning experience, there is such a demand on their time that sometimes their business looks like it is owning them. I guess that is all depending on the market, growth potential and drive. My concern about having a business like this would be we are not going to be able to achieve our digital nomad dreams but I feel like I would have some insight into doing business like this since I have spent 4 years working for one of the most successful ecommerce companies Europe over the last 5 years.
- More control of the business
- Possibility of much higher profit margins
- Shopify makes worrying about website creation and maintenance pretty easy
- Must warehouse all your own products or pay for a logistics company handle it
- Employees are more than likely required
- Must handle shipping
- Must handle returns
4. Fulfillment by Amazon (FBA)
This is something I have only heard about recently and am most intrigued by. Fulfillment by Amazon, or FBA as it’s usually called, is a service Amazon offers where they will store your goods, ship your goods, handle returns, and best of all, handle customer service. Of course you pay them for this and it’s not always cheap but with a business model like this, we would truly be able to become digital nomads.
The main difficulty when doing FBA is that you need to have your own product to sell or sell a product that someone isn’t already selling on Amazon and that can be difficult. But if you have a product and are looking for a sales channel then you should already be considering Amazon even if you already have your own traditional ecommerce site. With over around 35 million amazon prime households you won’t be able to afford to not be on Amazon in the future.
So many members go straight to Amazon when looking for a product, that they won’t even search for the products on google search. It isn’t until they haven’t found their search criteria on Amazon, that they search elsewhere. A lot of missed customers. I bring this up because regardless of which business model we chose to focus on, we will probably need to be on Amazon in one form or another. Whether thats with an FBA account or a reseller for Amazon, we aren’t quite sure yet.
- They warehouse your products
- They ship your products
- They accept returns on your products
- They provide customer service
- 35 million Amazon Prime households in The US
- FBA members can sell with free shipping to prime members
- Ability to sell on the largest ecommerce store
- Best to have your own products to sell
- Cost per item shipped can be quite high
- Costs can eat heavily into your profit margins
- Your stuff better sell because you’re paying for that shelf space.
5. Affiliate Marketing
Affiliate marketing, for us, would be promoting other people’s products on our blog and making a small profit for those of you who click on the links and or buy the products. Basically all we would do is link to their products and drive traffic to those products. We would basically be an asset to these brands or products. It’s very simple to do and there are many many affiliate programs to choose from.
The only problem I see with this business model, is that we would always have to be selling something if we wanted to live off this. If we would focus on this, we believe, it would take away the joy we have with writing posts and traveling around the world as much as we can. We would spend too much time thinking about how we sound when discussing a new place we have visited and not let our true feelings and excitement shine through. Also, and this is the most important reason we won’t focus on this; we don’t want to review products for affiliate links that we don’t believe in or have never tried ourselves.
Affiliate marketing is something we will probably do regardless of what we choose but not something we will focus on.
- Make money without
needing a product yourself
- Promote what you like or what you love
- Seamlessly integrates into your site.
- Make money for years to come if you strategically place affiliate links
- Could ruin a blog like ours by becoming too focused on this
- Readers can see through a sales pitch and may never visit your site again because of it.
Besides these 5 online business methods, there are of course many others, we just aren’t considering them yet. One would be creating a membership site. Jess needs to become even more of an expert in marketing and social media before we even consider this business model. But if we ever do, wow is it profitable!!!
Lets us know any other online business ideas or if you’d like to know more, feel free to ask.
In this post we will explain what method we choose, why we chose it and how we did it…