sachac - 2:32 am on May 1, 2011 (gmt 0)
You cannot wake up one morning and decide you want to go into business, then try to determine what type of business you should go into. While there are exceptions to every rule, it simply does not work like that.
I have a manufacturing business with over 130 employees, selling in several markets. I started the business 30 years ago and began selling online 12 years ago. To us ecommerce is not core business, so we have had the luxury of making baby steps and getting whacked from time to time, without damaging our bottom line. We have stuck it out because we could afford to and this is an incredibly profitable side of the business.
In business, the key is to differentiate. Be known for something other than low prices. Identify an unfulfilled market niche and aim to satisify it. The narrower your niche, the higher the price you can charge. Competition forces you to lower prices. If you want high margins, look no further than niches. This is what you should be aiming at. Instead of looking at China to lower your costs, aim sell your niche product at a higher price. When the business starts growing, then you can look at lowering your cost of goods.
When you think about it, the price you sell a product for has no relevance to what it cost you. You sell it what the customer will pay for it. Once you understand this and identify a niche product, build a killer (but functional) online store, try to get whatever free traffic you can and buy traffic. If you have the margins you will be able to afford it.
Hope this helps and best of luck to you. PM me if you would like to check out my website and online store.