If you're looking to start or expand your own ecommerce business, the market is telling me that you are making good choices. Possibly thanks to the pandemic speeding up our online technologies, ecommerce in the US alone is already set to hit a milestone of $1 trillion in sales in 2022, something that wasn't supposed to happen until 2024.
If you want to capitalize on all of that action, you will need to know how to make money with ecommerce. Keep reading to learn about the top 5 ways that ecommerce businesses are serving their customers, and how you can start your own ecommerce store in 5 simple steps.
Before learning how to make money with ecommerce, I should probably make sure that you know what it is first.
Ecommerce is the process of selling products or services via a website. In some cases, you don't need any physical location to conduct your business.
Just consider how the pandemic changed our work environment: we are now entirely capable of working from home, and it has been proven.
On top of this, logistics providers now offer solutions that do not require ecommerce stores to manage their own warehouse. You basically leverage all of the online platforms that connect your products or services to your target audience, which enables your brand to go beyond the local bounds of brick and mortar shops.
If you want to know how to make money with ecommerce, you will need to understand the different business models that you might use for your venture.
Up next, you will find out how to make money with ecommerce using the top 5 business models in ecommerce today.
There are many ways to get products from A to B, and the differences really come down to how involved you are in the production process. Knowing how to make money with ecommerce starts with understanding which of these business models you should employ to enact your vision.
This is very common with small entrepreneurs who are just getting started, and it can be scaled up once the 'hype' hits.
Building your own products means that you control the entire production process. While this can be time and capital intensive in the long-run, you can ensure a level of quality that commands a high profit margin.
As an example, I actually recently met a young entrepreneur who is currently building out his site and working out the kinks in his business plan for selling his hand-crafted leather accessories, and plans on retaining control over his process as he scales, to focus on quality.
Dropshipping is a business model where you sell products that you do not produce or ship yourself. You are essentially picking out products that you think are going to trend high and marketing them to the moon, using your site and a network of backend integrations to trigger a shipment from your various suppliers to your end customer.
While this allows you to focus solely on marketing, you are going to have to go through rigorous research to ensure that you don't end up with a sloppy supplier that either delivers shoddy products or fails to deliver in a timely manner.
One bad experience with a major supplier and you could see your ratings tank.
Finding a solid manufacturer is going to be a lot easier than finding a reliable dropshipping supplier on AliExpress, and this allows you to build your own custom products, if that is what you are going for.
This is especially prominent in the fashion and apparel industry, and allows for you to sell branded products that no other store will offer.
Especially effective if you see a section of a marketplace that is underserved, you can find you niche within a market and buy products that appeal to a narrow target audience that hasn't been discovered for some reason.
Like dropshipping, you select products that fit your brand's niche and sell them at a profit. However, in this case, you are actually purchasing the products and handling the logistics yourself.
Private labeling is something that can be done alongside any of the other models that we have discussed so far, or on its own entirely.
What you are doing is purchasing products from a wholesale supplier and rebranding them to fit with the rest of your company's offer.
This works especially well if you are just starting to build out your own in-house production process, but need to supplement your existing product catalog with items that fit your niche.
When it comes to making money with ecommerce, the big bucks are all online. Everything revenue generation is going to be conducted through your various online channels, all leading back to your website.
While that sounds simple, if you want to really want to know how to make money with ecommerce, you need to have a solid understanding of how these channels interact.
Your website is likely where most of your sales are going to be conducted. That should be the long run goal, anyway. Therefore, it is imperative that you scrutinize your site's user experience (UX) and how you communicate with your audience at every step of the way.
While your website might be able to convert sales, you need to be able to drive new customers to your brand in order to grow, which will grow your profits.
You should consider this as a key component of your customer journey and ensure that your messaging is consistent from the moment they view an ad to the moment they land on your page and all the way to their purchase.
You can drive visitors to your site by flooding your pages with keyword-rich content and distributing content throughout social media. Optimizing your site for search ensures that you will continually grow your ROI in the long run, and supplementing your organic growth with paid ads is a great way to get ahead in the short run.
You will need a full-fledged strategy and a strategic growth map that keeps you on the right track, taking all the right steps at the right time.
You need to know your audience well, and understand the different factions within them, so that you can deliver messaging that is specific to them, across their entire customer journey with your brand.
Consider things like location, age, gender, and other key demographics and psychographics in order to categorize your customers and automate your personalized messaging throughout your site, and keep it consistent between the top of your advertising funnel to the bottom of your sales funnel and beyond.
Now that you now know how to make money with ecommerce, you should know how to start your business with haste. Here, I have laid out a quick and easy, 5-step startup plan that you can follow to go from zero to your first sales.
Before you begin researching, you need to know what market you want to enter. What is the to-be destination for your brand's trajectory? Consider some of the products or services that you would sell, and really try to narrow down some key attributes that point you in the right direction for further market research. Consider things like:
Check your competition to learn about how to position yourself in the market and gian key insights on precisely what your offer needs to encompass in that niche. Your competitor research should help you narrow down those 5 previous points.
There are a couple steps that you need to take in order to legally register your company.
Firstly, you will need to incorporate your company and submit your articles of association, outlining the company structure. Most ecommerce stores start out as either sole proprietorships or LLCs, each with their benefits and drawbacks. Learn more about the different methods of incorporating here.
At this point you will also need a business name that is unique and not used by any other company.
Finally, you can file for your business identification number and apply for any business licenses that will be necessary for your operation.
You could go the route of wholly building your website in-house, but there are plenty of all-in-one ecommerce platforms like WordPress, Squarespace, or Shopify, all of which allow you to choose website themes and drag and drop elements as you please, making it simple enough for you to build your own site.
You need to design everything from the homepage to checkout and beyond with the customer's next step in the journey in mind. The information and imagery that you provide, and the CTAs you use will determine how effective your site is at selling.
Building a high-converting website requires a lot of deep knowledge about how visitors need to be pushed to the next steps of your sales funnel. If you want to be sure that you are working with the highest converting site possible from the start, you should check out our Ecommerce Optimization Package.
The package comes with a project tracking checklist that includes an overview dashboard for keeping up on your site's progress, as well as an in-depth guide that explains more of the consumer psychology behind the tactics used.
Your site is the money maker of your entire funnel: you can't invest enough time and money into perfecting it.
At this point, you have already researched your shipping and logistics provider and strategized on your inventory management, which means you simply need to set up those relationships and get your inventory stocked, and integrated with your site's product catalog.
With your inventory integrated, you will be able to update your product listings in real time and automate actions, such as pulling a listing when inventory is wiped out.
It should be mentioned that your product listings are where the sale happens: you need to get into the habit of meticulously scrutinizing and updating them on a regular basis, to test different configurations for conversion rate gains.
To blow up your marketing channels, you need to know what your customers are searching for on Google, and the details of their psychographics and demographics. You can then load your site's content with trending keywords and organically post that content where your audience members frequent, via your social channels.
Engaging your audience regularly on social media is a must, and always be on the lookout for the opportunity to 1up your competitors in the comments of their own posts. This is how you really take the lead of your market.
With digital marketing, you can't simply blow up all your channels at once. Well, you can, but you will be spending a lot of time and money on channels or strategies that are dependent on each other's prior success: you need to build out a growth roadmap in stages.
Generally, you want to start enriching your site with keyword-targeted content and optimize your site structure for search. This will get you started on the never-ending journey of keeping up with the search algorithms, also known as Search Engine Optimization (SEO).
From there, you can distribute your content across your social channels and interact with your audience for increased engagement, all while running a paid advertisement funnel to supplement your organic efforts.
Now that you have learned how to make money with ecommerce, you know that it can be much simpler than running a brick and mortar shop, and you are only limited to the global market, at least until Elon opens shop on Mars.
Pick your business model, develop your plan, and execute your way into an ever-expanding online market.