Netregistry presents: can you get rich quick online?

• Jonathan Crossfield
• 19 November 2008
• Page 1 of 3 : single page

The illusion of effortless wealth has always been attractive. A flutter on the gee-gees, a scratch of a ticket – we are all susceptible to the dream of quick cash without having to work hard to get it. But whereas many of us have built a healthy cynicism offline, the internet has developed a reputation as being the digital equivalent of money growing on trees.

We’ve all seen the claims: websites, seminars or mailouts promising online riches and offering – for a fee – the answer.

“Do you want 30 million new customers that have money?”

“You can get your ad in front of 20 million people on the World Wide Web.”

“Remember, there are 30 million visitors cruising by all the time.”

The internet created a new playground for those chasing quick cash and automated wealth. With no shop to rent or furnish, no staff to pay and 24-hour traffic, the internet has lower overheads and greater potential than many traditional business models.

Thousands of online stores are launched each year, but shopping cart software is certainly not the only way to generate money through the web. Bloggers and webmasters continually look for easier and more effective ways to monetise their sites through advertising and affiliate programs and paid subscription models.

But is it all true? Can I launch a website tomorrow and start to see money flowing into my account while I do more important things like catching up on my telly? Is the internet really a shortcut to the world of luxury cars and beach-front mansions?

Building your net worth

First, the bad news. Claims that there are 30 million potential online customers are completely wrong. These statements are based on misunderstandings of how the internet works.

Even if the numbers are correct, and there’s no evidence to suggest they are, it is not reasonable to expect 20 or 30 million people to automatically arrive on your website, no matter how exciting it may sound. With 20 million people in Australia, you have the same chance of becoming rich by standing in your doorway and asking everyone who walks by for a dollar. The vast majority of your target market will never even walk down your street.

The internet is no different.

Some of these online schemes rely on selling novice webmasters a simple, mass-produced website and encouraging them to on-sell the same program to other keen online money-makers. In other words, pyramid marketing.

This results in thousands of virtually identical websites shouting the same offer with the same copy and same design – each one slowly fading away as the dream of easy money evaporates under the reality of web hosting bills. Except for the person who dreamed up the scheme; he’s sitting at the top of search engine results with thousands of purchased sites pointing back to him and their money in his pocket.

Now the good news. There are many who have become insanely rich on the internet. Then there are others who, although they may not have the mansions and private jets, are certainly earning enough to have a very comfortable income.

These are the online businesspeople who understand how the internet works and are willing to accept that any level of success requires effort.

It is certainly possible to get rich online. But something must separate the internet millionaires from the thousands of wasted websites, sorry stores and bust blogs.

Stores for cash

There is no doubt opening an online store can potentially reach more customers and achieve more sales than a bricks-and-mortar shop. You can sell online exclusively or use the web to develop a second revenue stream for your existing business. However, failure can be very costly.

“The same principles of traditional business apply,” says online entrepreneur Franco Lagudi. “It takes a lot of hard work using the right people and accessing the right experts with their input.”

Lagudi has spent the past few months building his online venture, The SOC Exchange.

“I don’t think having a great online business idea is enough,” he says. “You’ve got to provide a service. You’ve got to provide quality. That takes planning and that takes time.”

Lagudi’s business idea – offering a fair alternative to eBay that charges a simple flat rate instead of large commissions and fees – has garnered him a large amount of publicity in the United States.

“I have a philosophy of how I felt it should work. I wanted to offer a flat rate so people knew what they were up for.”
The business grows every day as more people discover the benefits of selling through The SOC Exchange, but Lagudi isn’t retiring to the Bahamas just yet. Having a service that customers want is not enough; they need to find you.

"The audience is out there, but trying to engage that audience is a hard job,” he says. “It requires continuous marketing and public relations. Success could take any length of time but I’m prepared for that.”

Lagudi is supremely confident in his business model but understands that a significant ramp-up period was needed.

No instant riches

Every business starts at the pointy end of the graph and works hard to climb slowly. Offline entrepreneurs have always known this and frequently plan the first months of the business around little or no profit. Yet many new online businesspeople, excited by the promises of internet millions, buy too much advance stock under the assumption of immediate, massive sales.

Sam Shetty, sales manager for Netregistry, helps hundreds of small businesses launch online every year.

“A lot of people get carried away with their idea,” he says. “The problem with websites is that if you don’t market them, no one’s going to buy from them. There are thousands of websites launched every day trying to make a dollar, but if you don’t have strong marketing strategies, you don’t get any exposure.”

Online marketing techniques such as search engine optimisation (SEO) and search engine advertising can, over many months, gradually build up the flow of traffic necessary to turn a profit.

“I talk to customers every day who have invested heavily in a website and stock but don’t want to spend that little extra on the marketing,” Shetty says. “These things have to be part of your online plan. For most sites to achieve traffic, they need to plan for at least six months of SEO, as well as other marketing and PR activities, before traffic flow converts into enough customers to make a profit.”