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“People don’t want a quarter-inch drill. They want a quarter-inch hole!” - Theodore Levitt
Turns out people ARE actually looking for the best drill. Brian Lam figured this early on when he founded Wirecutter back in 2011 which he sold the company to The New York Times in 2016 for $30 million.
But how do review sites actually make money? Let's find out 👇
The TL;DR
The Business Model 📝
- Review sites make commissions from the product purchased based on their recommendations
- When a customer clicks on a link on their site, that site brings them to an e-commerce store
- Cookies register where that traffic came from and the sale gets credited back to the review site
- The seller then sends a cut of the sale to the review
- That means in order to have a great review site, you got to have these 2 things - traffic & click-through
- Traffic x Click-Through x Conversion x Commission = Earnings
Players 🏁
Opportunities 🔨
- Explore new channels. TikTok reach is insane. You may not be super early but there are still some opportunities to explore the platform
- Explore new products. The only way to compete against incumbents is with new products that drive new search interest. Previously we wrote about the 80s making a comeback so stuff like film cameras, retro games or vinyl players could be the perfect candidates for specialized review sites
- Instead of creating all the content yourself, create a platform where users could submit their own reviews (user-generated content). Like what Equipboard is doing with music gears and kit with photography gears
Now it won't be an easy journey. You'll face a lot of fierce competition but if you focus on these two things i) distribution ii) helping consumers make a decision, you'll be making money online sooner than you think.
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