eCommerce – Your Complete Guide To Earning Passive Income
Online businesses have been big money-makers since shortly after the internet became widespread. While big names established themselves in the Dot Com Boom, there’s still space in the market for little fish to make big profits. How exactly you carve out your own slice of the pie is theoretically up to you. There’s a lot of decisions to make and choices available. However, with the right skills and the right answers, you could be making a steady passive income.
TL;DR
- Passive Income – get the right plan and your business can effectively run itself, making money for little effort
- Low-cost – with limited requirement for physical stock, initial costs can be kept to a minimum
- Varied – you can make virtually any idea or interest into an online business these days
- Competitive – the more popular niches, with greater profits are likely to have more competitors, but if you choose the right niche, it is still very possible to do well
- Up-front work – you will need to do a lot of research (or ask us) in advance to find a profitable niche for your business
What Is eCommerce?
The world of eCommerce has been a staggeringly successful one for many years already, with simple ideas growing into world-famous, multimillion-dollar businesses. But the question of what exactly eCommerce is requires a somewhat complex answer. The literal definition is simply ‘a business that conducts transactions on the internet’, but that can take a remarkable number of forms.
We’ve already covered quite a few approaches to eCommerce in previous guides;
– Ebooks – Online courses
These are all sold online, and are examples of eCommerce. As forms of passive income, each has its own advantages and disadvantages, but these are discussed in detail in their individual guides.
Two important points emerge from that list of examples we just gave:
1. The types of product you can sell online is extremely varied.
2. The one common feature of all of them is the need for skill in sales and marketing.
What makes eCommerce really stand out when compared to bricks-and-mortar businesses is that you can sell things to you personally created (such as ebooks, courses and stock photos) as well as things you don’t even personally own (as is the case with dropshipping, affiliate marketing and print-on-demand). There are even additional options like eBay and other digital marketplaces that allow you to flip products that you do own, but didn’t personally create.
In each of these cases, the profit comes from the purchasing price being lower than the selling price – that’s the basic concept of commerce, as you doubtlessly already know. How exactly you achieve this price disparity depends on which approach you are using. You can either create a product using your own skills and experience (which, while hard-earned through years of practise, are essentially free to use) or re-sell someone else’s product, and using marketing and sales techniques to add value.
Where does that perception of extra value come from? Just telling someone that a product is more valuable than it really is won’t cut it – customers will see right through that lie. You add value by adding a little something unique to the deal.
Think about this: why is a bottle of soda more expensive from a vending machine than it is in a supermarket and why is it even more expensive than both in a restaurant? It’s the same product and the three bottles cost exactly the same to manufacture. Logically, the vending machine should be cheapest because it has the fewest running costs, right? You just need one person to stock it every now and again and a bit of electricity to keep it running. The others require much more staff, property rental, materials and dozens of other costs.
The difference is in the value. In a supermarket, that soda is one among dozens of other brands, each competing for your attention and all similarly priced. The only way it will win your purchase is through your personal taste and preference, encouraged by the quality of the product. Of course, even your perception of the brand can be influenced by marketing, which is why each soda comes at a slightly different cost.
The vending machine adds value because it’s convenient – it’s right where you need it most, when you’re most thirsty. You pay a little extra, but given the choice between slaking your thirst right now or having to walk a mile to the nearest supermarket, it’s a small price to pay.
Finally, the restaurant adds value with the atmosphere and setting. You could go out and sit on the curb, chugging your vending machine soda for less, or you could sit in plush, luxurious surroundings, enjoying a peaceful ambience and first-class service. And a soda. So, that’s commerce at its most basic – the fundamentals of sales and marketing. The only difference added with eCommerce is the fact that it’s all taking place online.
The supermarket might be Amazon or Lazada, where lower costs are more likely to net a profit as your product is competing against hundreds of others that are effectively identical. The vending machine might be selling though Facebook or Instagram – the item you want most, popping up as you happen to be passing.
The restaurant would be a specialist website, built exclusively for the purpose of selling that product. There is no doubt at all that eCommerce can be a very effective and low-risk way to make a solid passive income. However, if mishandled, it can also become a new full-time job. You need to proceed with extreme care.
How To Get Started in eCommerce
The first and most pivotal part of the process for getting into eCommerce is choosing the right business model. Pick the right one, which plays to your strengths and interests, and it’ll be a breeze. Pick the wrong one and it’s a chore. Or worse, a failure.
The only tip we can give you here is to take a detailed look at each available model and see which suits you and your strengths the best. Do not heed the advice of anyone assuring you that any one particular model is a guaranteed hit and immeasurably better than another – there is no one-size-fits-all solution here. Take the time to do the research and make a single, well-reasoned decision. It’ll save you time, effort and money later when you dodge having to constantly re-invent your business until you find the right formula. Once you have found your model, you need a niche.
Every single established business model already has hundreds of entrepreneurs exploiting it, so you need to find the one thing that you can do well that no one else is doing in order to stand out from the crowd. You don’t have to re-invent the wheel here – you don’t need to find a unique niche that no one has even considered before. Going back to our soda example, remember that there are countless restaurants around, each selling the same soda in a subtly different way.
You just need to find a way that a lot of people want but few others are offering. Again, research is the key here. With so many competitors in the field of eCommerce, niches are getting smaller and smaller, so finding yours could take a while. You are looking for an optimum balance between popularity and competition.
If your niche is too obscure, you will have no competitors but also no customers. If it’s too mainstream, you won’t lack for customers, but you’ll struggle to compete against well-funded, well-established brands. Consider looking for “shoulder” niches – areas that are related to something popular, but just a little different. If you are successful on the shoulder, you may find the “head” wanting to try cross-promotion or affiliation.
Now you have a business model and a niche, you need customers. That doesn’t mean just randomly picking a product and starting to sell, though – you first need to know your customers. Yes, that means even more research! What do people in your niche lack? How do they want to shop? How much are they willing to spend? How are you going to relate to them and share your vision? The questions go on. Your goal is to create customer profiles, known as personas. With those, you can then start crafting your business plan to take each theoretical customer on a journey from stranger to customer.
Finally, you can start on some of the more technical process. You’ll need to register your business, create a brand and a logo, create online stores and outlets appropriate to your chosen model, start marketing to attract customers – from this point on, you’ll want to follow our guides on the individual business models for more specific advice .
Things to Consider before starting an eCommerce Business
Despite what you might hear, eCommerce is not a route to guaranteed wealth and success. For every Amazon and Alibaba, there are plenty of companies that never developed beyond mediocre profits and plenty more that didn’t even achieve that. It’s certainly not impossible to get a substantial income from it, but great success will only come from great effort.
That’s the other important point to consider. We stressed it a lot above, but it deserves further emphasis: If you don’t do the research before you start building the business, you are extremely unlikely to succeed. A good niche is hard to find, but will pay back your hard work with passive income investment.
How Much Does It Cost To Get Started With An eCommerce Business?
How much it’ll cost you to get started in eCommerce depends entirely on the business model you choose to adapt, making it impossible to generalise here. However, one of the key bonuses to running an online business compared to a bricks-and-mortar shop is that most forms of eCommerce do not require you to have physical stock. You can do, if your eCommerce business is a branch of a physical business, but using dropshipping, print-on-demand or selling digital products means you don’t need to find somewhere to store anything. If you don’t need to buy stock, you have fewer up-front expenses, meaning that you have less to lose if the business doesn’t go as planned.
Learn more about becoming successful in eCommerce
We have talked a lot about eCommerce in the last few days, even weeks, in it’s various forms. As a bit of recap, and to assist you, we have put together this master list of tools and resources, which we’ll continue to keep up to date over time.
eCommerce
Salehoo – Can be a great resource for getting ideas for products to create or replicate Shopify – build an online business, no matter what business you are in Ninja Seller – start your online store without the fuss
Resources
Fiverr – a great, low cost, resource for you research. Simply pay someone to do the research for you!\ ThriveCart – for me, the number one checkout platform on the planet. Increased conversions on one of my sites by 96%! Currently available on a Lifetime Deal as well, which just makes it even more of a steal. Envato – leading marketplace for sharing and selling digital creative assets including photography SEMRush – use this to identify potential niches to target
Stock Photography
Stock Photo Websites – a long list of stock photo sites to consider licensing your work Phone Photography Tricks – amaze your friends (and earn money) with these mobile phone photography tricks
Amazon FBA
Amazon FBA – learn more directly from Amazon on how you can use Amazon FBA Amazon FBA For Beginners – 7 Steps To Getting Started With Amazon FBA JungleScout – Number One Amazon FBA Product Finder and Research Tool
Dropshipping
Salehoo – One of the largest and longest running dropshipping resource platforms around (I had my first foray into Dropshipping here back in 2008) Salehoo provide resources for Dropshipping, Wholesale and e-Commerce websites. 2.5m Products and Over 8,000 Suppliers Spocket – Huge resource dedicated to high quality US and European products Inventory Source – provide automated inventory solutions, dropshipping supplier lists and US sourced products. Ecwid – a stack of free e-commerce and dropshipping tools. Worth checking out just for that
Affiliate Resources
Wealthy Affiliate – our biggest recommendation yet. If you’re wanting to make money online and don’t know where to start – START HERE– START HERE
Print On Demand
Printful – number one marketplace for Print On Demand. Low costs, wide product range and quick delivery in Europe and the US Merch Informer – A great tool to help you find untapped, profitable niches, stay ahead of your competitors and scale your Merch like a brand TeePublic – a popular marketplace, with a particular focus on Indie Designers Zazzle – the ‘Make Engine’. Zazzle has the widest range of potential Print on Demand Merchandise CafePress – another popular marketplace for print on demand merchandise Teespring – create your designs and Teespring takes care of everything else – including marketing your merchandise Redbubble – 700,000 creatives worldwide – another marketplace focused on artistic talent
Online Courses
Podia – provides everything you need to sell online courses, digital downloads, eBooks, webinars and memberships – all in one place, rather than five platforms or tools that you might otherwise need. Udemy – is the leading marketplace for online courses and they do most of the selling for you Teachable – is more an online platform for teaching and courses, with many users having their own audience to sell too Best Tools For Online Creators – an excellent resource for all the tools that you made need to build your own course (many of which are free!) Camera Shy? – then this may be the solution for you