E-commerce vs Agency: Which Business Model Actually Wins in 2026?

Which one is better?

Both models are great, but e-commerce is harder for a complete newbie compared to a service business, for one simple reason: cash flow.

I've spoken to many young people comparing multiple models, and I usually discuss e-commerce and services. Only in the past two years have I formed an opinion on what it takes to succeed by building an AI-powered product.

Not surprisingly, the best model is the one you're willing to work on for long enough to see it grow eventually.

Each new year, the YouTube algorithm feeds new content, so I found myself watching those stock trading videos again after a long time. Each new year, I go through some fresh content that I don't monetize. It's not planned; the algorithm just feeds it to me. Just to see how deeply or shallowly my brain can understand new concepts.

Nothing truly is a shiny object; it's just invisible work hidden behind cool millions of dollars and a ridiculous amount of repetitions, effort, and business relationship building.

So this is a great reminder for people in their 20s to try as many things as they can and deeply involve themselves in the process, rather than just superficially gliding through activities. You have to try new things on your own on top of the jobs.

Many times, jobs do not allow people the freedom to shape their ideas. You might find yourself nodding to this: by the time you get approval, you could have done the same thing a few times over.

And,

This is a great reminder for people in 30s like myself to become even more consistent and systemise things that are important.

I now have a cash flow engine—an Agency model—and I'm fighting hard to let go of e-commerce because I love the game, or at least for now (it's a bit sad!). I’ve added building software products like thoughtforge, makevo, matchmyhome (co-founder), a complete free tool payoff.world to test how my SEO game tests against AI bots and few MVPs - which are my extra things on side. - more on this in the future articles.

After 10 years in e-commerce and founding my agency, I am confident that both models work just fine. I've experienced that my agency model has progressed much faster in terms of cash flow, with much higher margins than e-commerce. So, if you're just starting one of these two, I would recommend an agency over e-commerce. If you still have a full-time job, then it doesn't matter much—e-commerce can scale faster without as many skilled humans compared to an agency. You also almost never meet customers in person in e-commerce (less time-consuming)—that's a bonus.

1. E-commerce

Let's say you get your Shopify store sales to $10,000 selling x product at 20% net margin. Total take-home profit might be around $2,000 after all marketing, product costs, and shipping.

Double that, and you'll have funds to reinvest into occasional mentors/consultations, premium tools, etc.

In reality, monthly sales will fluctuate each month based on content you made, optimising post sales funnels, average order value, conversions, product supply-demand, delivery speed, pricing, ads, brand trustworthiness etc.

If you're a solopreneur, then having mid-five-figure sales can cover your monthly income, and six-figure sales, in my opinion, are a glimpse into a proper business and true freedom. This is when you can consider bringing talent on board, spending money to understand your market, and adding new traffic streams, etc.

You are essentially making someone buy a product without any human interaction online. It's based on the product itself first, then store impressions, then everything else.

If you are planning to go into a partnership, have both parties sign the agreement. Exciting times don't last long, and once misalignment in work or decisions starts nagging, you'll be distracted from building.

I ended up pulling the plug on my store after reaching $250K in revenue in addition to my job in 2018.

How do you learn e-commerce?

Maybe a job with an e-commerce brand? At least that is how i learned!

I used to get paid for learning all things e-commerce. I learned by looking at Google Analytics, Ads, Magento store data, then Neto store data, managing shipping, and having to choose which products to push from so many great branded options every day.

A small team of just two took care of starting and scaling to seven figures in revenue on a brand new website in 2016.

“Where do you start?” somehow seems like the wrong question. You should be recording which products didn't achieve consistent sales and why, until one hits. Use a simple spreadsheet of ads spend, ad creatives, costs, net margins.

Track it every day.

Imagine going to university for a year or two versus testing as many products in those few years! The difference is gigantic!

Inventing a product vs re-selling

I have dreamt of inventing a new product. One day I just might, because I love to build things. It is much easier to do this if you already have made some money first.

Almost all my sales were from reselling already-made products, and some might have carried my brand logo. So, see what sells a lot, and see if you can put a new spin on it or if it needs obvious, huge improvements.

Use AI for your idea and against it. Prompt it so many times that GPT remembers—here we go again… I would let AI research niches and micro-niches. Put an AI agent to work to find complaint themes within the niche where you want to find your first product.

Agencies produce cash flow from day one but consume time serving clients. In e-commerce, cash flow also starts on day one, but you have far more expenses than an agency model or any of the services you might want to try. It's way easier to give up on e-commerce sooner rather than later.

Not all traffic reported in Google Analytics is correct, as crawling bots show up there. See if you can learn to filter out your own IP to accurately calculate traffic versus conversions.

Using AI, you can spin up an amazing, trustworthy store in a few hours. Branding and logo should not take longer than a day or two.

Besides my full-time job back in the day, I sold multiple 6 figures on eBay across multiple niches and multiple 5 figures sales on my own Shopify store before starting my agency.

None of these are even close to where I want to be, but they are helping me stack more skills and meet high-value people.

The cost of paid advertising is absurd, so make sure your product has real users. Choose at least a medium- to high-quality product over cheap products that you won’t use yourself. I had a very low return rate, and usually it was because I didn't order a sample, or ordered a product too soon without enough thought behind it.

The market is the best validator.

Coming to service based business model:

2. Service Model

My first project brought me $7,000 for building a web app, all custom work, including building custom memberships for their giveaways. I partly used help tweaking an existing plugin to add more features and ensure it was production quality. My cost was my time, and they probably saved 40-50% before Claude could write code for me.

One-off projects are cool, but they won't build cash flow. Retainers and subscriptions are great for MMR—which is something I'm still not doing 100%. I genuinely enjoy getting results, and if it means stacking more skills, it's well worth the pain. Over two years now, I've systematized things and become much faster, so pricing is based on outcome and not hours.

Even with AI by your side for development, you still get to practice sales, negotiation, presenting information, onboarding, and so on when you choose an agency model. It's pretty much the same for the rest of the services other than an agency model.

My most recent website project involved even more epic work, saving money for the client. And thanks to Claude, I was even able to build a lightweight CMS—like WordPress, but exclusively for their website. These kinds of things would have cost so much just a few years back!

Learning how to apply AI skills in specific ways will be a huge advantage in 2026.

I recommend starting to build things instead of waiting for some stupid certificate or a course.

This is how I make things work:

build,

break,

fix,

improve,

systemise it.

That is the wrap.

Don’t overthink business models just because you can’t help but go on analysis mode. Choose one, and get as much work done as possible so you have something to share with your audience.

Theme on 2026:

Writing more content on ThoughtForge, looking forward to co-found a product with one of my client.

P.S. ThoughtForge is first of kind platform I am building where you can dump ideas in “write” feature and turn that into as many posts you want, publish them on LinkedIn (Live ) and X (coming soon), Threads (Planned for mid-late 2026). I would lose momentum trying to find ideas and dumping raw thoughts to make content and so thoughtforge came into play.

Also, writing from scratch for Social Media is hard. As of now, I have so much content that I can come back to and turn into social media posts.

See you on the next article.