Home-based e-business - an option for the self-employed?
3.3. Selling Soft Products
Soft products are those that can be transmitted directly through the Internet to the buyer after payment is made. It can be in form of graphic images, documents (eg. ebooks), software programs, music (MP3 songs or even mobile phone ring tones), games, movies or pornographic photos and videos etc. Selling soft products through the Internet appears to many as the perfect business. The business can be based anywhere in the world and there is very little maintenance i.e. there are no articles to post, no services to provide, and unlike affiliate programs, little maintenance of the web site is needed. Indeed adult web sites are probably the most profitable segment.
The main disadvantage of selling soft products is that the merchant is much more liable to credit card fraud. It had been reported that as much as one-third of credit card transactions through site selling soft products are fraudulent. Although unlike physical products, there is no monetary risk in losing the product, the merchant is still liable for a chargeback fee of up to US$30 per transaction. Moreover, sites where a lot of chargebacks occur are liable to have their accounts terminated by the payment gateway provider. In this section, two opportunities will be reviewed: selling ebooks and setting up an adult site.
3.3.1. eBooks Re-seller Scheme
An eBook is a book published in electronic form. It can be downloaded readily from a retailer web site after payment by credit card. One can either create an eBook, commission one, or buy reseller rights from others. There are many ebooks re-seller programs available in the market. Most of the ebooks for resell tend to concentrate on business opportunities although there are others that deal with popular topics such as relationships, keep fit, and self-improvement. After surfing extensively through the web, the author found a particular e-book re-seller package that is going from US$10 to US$99 . One of the web sites is shown as follows: There are a total of 61 books, the majority of which deal with e-business opportunities. It is quite clear that it is the same scheme being offered again and again by people who have signed to it. Therefore it appears to function like a pyramid or multi-level marketing scheme where only the first few individuals are expected to make any decent money.
Although it may not be ethical to run a pornographic site, it is no doubt that it is by far the most profitable e-business. According to an unofficial investigation, Hong Kong people spent most of their time on adult site when they use Internet than anywhere in the world. In April 11, 2002 edition of Next Magazine, it had reviewed how a young man made make a fortune by running an online adult chat room in Hong Kong. The registered member of this chat room has grown to over 70,000 members in two year's time. The site offers online chat and real-time streaming videos of young ladies in a state of undress. Obviously, setting up a site of this sort requires a great deal of expertise. The bandwidth demand on the server would be enormous and one may have to buy a dedicated server. Setting up this sort of business in one's home may quickly lead to complaints by neighbors and potential trouble from the underworld. Another possibility is to construct a more passive site that consists of streaming videos that are not in real-time and also still images. Most frequently, instead of making or buying one's images and videos, they are usually stolen from other pornographic sites. It is also possible to act as resellers for established pornographic sites. As in the case of Vshop, the reseller is given a web site that he has to promote. More often than not, this is done through unsolicited e-mails or other unsavory means.
Although potentially carrying the highest rewards, running adult web sites carry a certain amount of risk. First and foremost, web-hosting company charge many times more for adult sites so that it may be more worthwhile to buy a server. Secondly, promotion of adult sites is much more difficult because the competition is so cutthroat. The use of unsolicited e-mails is the rule rather than the exception as are a number of other unethical techniques, like copying the contents of well-known non-adult web sites and have it redirected to the adult web site. Not to mention the possible legal ramifications since piracy and illicit activities may be involved. Therefore although the potential rewards are very high, this is clearly not a good proposition for most people.