The eCommerce industry was one of the few businesses that took off during the pandemic. A lot of people took it as an opportunity to make money.
But is it worth the hype? and Can Ecommerce be profitable?
Yes, Ecommerce can be a profitable business if done the right way. So, if you have the right product, a nice online store, and a very good marketing strategy, you will most probably succeed. There are surely other factors too but the above 3 are the most important ones.
In this article, you will know the 3 ways how people start with eCommerce and some of the factors that influence the profitability of an eCommerce business. You will also be able to decide whether to start one or not at the end of this article.
Ecommerce: The 3 Ways
If you have been researching about eCommerce for a while, you must have already have come across a lot of ads promoting different eCom courses. And almost all of them will fall into these 3 categories – Dropshipping, Amazon FBA, or Selling your own product.
Dropshipping is probably the most popular one simply because it’s the fastest and the easiest way to get started in the com industry.
Just so we are all on the same page:-
Dropshipping is a way by which you act as a middleman between the customer and the manufacturer. You will have an online where your customer can order the product. When a customer purchases the product, You order it from the manufacturer and ask him to ship it directly to the customer.
In Amazon FBA, you will have to buy some products beforehand and send them to Amazon’s warehouse, Your product will be listed on Amazon’s marketplace and when people order them, Amazon fulfills those orders and send them.
The last one is to sell your own products through an online store, this might be the hardest one if you do not have any products to sell.
7 Factors That Affect Ecommerce Profitablility
1. Product Selection
Production selection is very important. It’s probably the very first step you take before starting an eCommerce business.
Most people look at the following factors before they select their product:
- Ability to solve an existing problem
If the product you select has the above two factors, you have a higher probability to succeed. However, getting a product that has both the above factors is quite hard and challenging.
2. Marketing Method
Facebook ads and Google ads are 2 of the most used marketing platforms for eCommerce. However, lately, they have become quite expensive due to saturation in this industry.
If you are looking for free ways to promote, then your best bet would be to build a blog around your product. Write blog posts related to your product. But, this method will take time and you will need to know SEO and Keyword research so that you can actually write articles that people are already asking and then eventually rank on search engines.
3. Online Store
The online store that you build needs to be quite appealing and attractive. You can’t expect to make sales on your store if you have a bland and mediocre store design.
Shopify is currently the best platform for eCommerce businesses. It’s priced at $29/month and offers a 14-day free trial. You might want to check out this article where I discuss how much it would cost you to build a Shopify website.
They support a lot of apps and themes which will be required if you want to succeed in this business.
Talking about Shopify apps, you will need to install some of them to increase your sales and eventually to increase your profit. Some of the apps that I recommend are:-
- An upsell app – to increase your average order value
- Review app – to establish trust with your customers and eventually make them buy
- Affiliate marketing app – Customers can refer others which increases your sales
- Pop up and email marketing app – to establish a relationship with your customer by sending discounts and emails
Most apps are going to be paid and this can add to your expenses. So, make sure they are working great for you, or else, just uninstall them.
4. Customer Service
Customer service is absolutely important for an eCommerce business. You’re probably going to get a lot of emails and messages regarding your product. So, make sure that you are answering those questions.
Moreover, you would also need to handle the returns and refunds.
If you handle the customer service exceptionally well, the number of returning customers will surely increase.
5. Product Quality
If you are a dropshipping business and you ship from China, the number 1 thing to be concerned about is the product’s quality.
Chinese products, as we all know, are cheap and will come in the worse possible quality.
So, if you are doing something like this, then you will probably get a lot of returns or refunds from customers and eventually will start losing a lot of money.
One way to avoid this would be to buy the product yourself and see if it’s worthy enough to be sold online. You could also try different dropshipping suppliers other than Aliexpress.
6. Shipping and Taxes
Shipping and taxes are some of the other things that can affect the profitability of your store.
There are a lot of fulfillment companies out there. Choose one that’s reliable and cost-effective. Then send out the products to them and they will fulfill and ship your products to your customers when the order comes in.
This can be expensive sometimes and maybe you can reduce this by fulfilling the orders yourself and letting a shipping partner handle just your shipping.
Also, be wary of import and export taxes if you are planning to sell your products outside of your country.
Competition has been high for quite some time now. If you look carefully at the stock price of Shopify – it has 5X since the pandemic happened.
This indirectly can mean that a lot of people started eCommerce during this time period and Shopify is really making money from it.
Also, Competition has also led to increased ad spent for many.
So, Should you start one?
Now, the next thing that pops into your head is going to be:- Should you start one?
Yes, you should, If you have the passion to start one. It’s true that competition is high when compared to the past 4-5 years. But, that’s the case with every other industry. As time goes on, competitiveness increases.
If you can somehow find a perfect product, sell it in a professional-looking store, and you have the marketing skills to promote your product, then surely there’s still a lot of money to be made.
How to Start One?
So, ready to make the leap?
Follow this table to start your own eCommerce store:
|This can be your own product or a product manufactured by some other people.
|Store Creation and Setup
|Create a store on Shopify. Also, configure settings like payment methods, shipping, legal pages, etc.
|1. Shopify Trial
2. Shopify setup
|Themes and Apps
|Install a theme and add some of the apps that I recommended to your store. Also, try designing your store.
|1. Debutify Theme
2. Best Apps
|Start adding products to your store and price them accordingly
|Use any marketing method to promote your product
|1. Facebook ads
2. Google ads
|Handle Shipping, orders, and Customer Care
|Once your store is live, you may start receiving orders. Fulfill those orders, ship out the products, and try handling the customer care also.
|Best fullfilment partners
|when you start generating consistent revenue, try scaling your store. Also, try outsourcing some things.
|Scaling your online Store
The above table is just an outline of this business model. You can refer to the links that I have mentioned besides each step for more info.
So, Is eCommerce Profiltable? and Can it be a Good Career?
Yes, eCommerce can be profitable if you select the right product, create a unique-looking store, and market it to the right audience.
It can be a long-term, sustainable business. However, you will have to brand your product in order to achieve that. An example product would be – The Oodie founded by a 26-year old named Davie Fogarty. You have to check out his Youtube channel if you ever plan to build a branded eCommerce store.
So, go on, what are you waiting for? Start that online store that you have always been dreaming of.
Good luck and Peace!