Ecommerce Explained

So far, in our series about the best online business models, we have covered niche sites and affiliate marketing. If you haven’t seen those, definitely give them a look. Our third online business model has been around since the early days of the internet. Thanks to Shopify and Woocommerce, it’s having a huge resurgence. Of course, I’m talking about e-commerce.

We all jump online and buy from Amazon when we need something, don’t we? We all watch out for those black Friday deals each year. That is e-commerce. Going online to buy products that you are interested in, or that will solve your problem, whatever that problem may be.

Need a new TV, a new stereo, new bedsheets, Amazon leads this whole industry. They are proof of the fact that it is only going to continue to grow. Amazon made it normal to shop online. It wasn’t too long ago that people were afraid to put their credit card info on a website to make a purchase.

Amazon, with a little help from eBay, did away with that. They took the idea of shopping online and made it so that people who were afraid to have their credit card on the internet would start shopping online regularly.

If you haven’t decided what type of business you would like to start, e-commerce is a viable option. If you like researching products, dealing with distributors, and providing excellent customer service, this is probably the business model for you.

Maybe you’re a craftsman of some sort. Making your own soaps, candles, or woodworking items, etc. If this is something that you’re already doing, e-commerce is a no brainer for you.

Let’s suppose you just want to sell accessories for dogs. There’s a whole number of ways to do it. The most popular that has gained most people’s attention is called drop shipping. Dropshipping is where a person goes to your store online, and you sell the products on your store as if you have them in stock (even though you don’t).

Once the person makes a purchase from you, you will then turn around and order it from a supplier, (mostly Aliexpress or DHGate in China). So you never make an inventory purchase until someone has already placed an order for that item.

Then the supplier in China will mail it to the customer directly, so you never have to deal with the item that was purchased. There is never any storage required, no handling, and no shipping required on your part. Which is pretty cool.

You do have to deal with the suppliers, though. That’s not as cool, but in any case, the customer receives their item. Hopefully, they leave you a good review. Hopefully, they get the item they ordered in a decent timeframe. Then you move on to the next customer. That, in a nutshell, is e-commerce.

With drop shipping, there are some complexities to deal with. The main one is people not getting their stuff on time. That is par for the course when ordering from suppliers in China.

So the main issue that you will have as a drop shipper is going to be fulfillment. The other issues you may face will apply to any type of eCommerce you choose. Like getting good at running ads, making sure that you can service your customers, and getting good at email marketing.

Your ecommerce business will also be very dependent on your social media presence and knowing how to market your business well on the platforms you choose. The best social platforms for your particular type of business depends mostly on your niche.

The next e-commerce model is called Amazon FBA, and that means fulfillment by Amazon. The way that works is like this: let’s suppose you don’t want to be dependent upon some supplier in China sending your customers their stuff. So you decide to buy in bulk from Alibaba instead of going to Ali express. Alibaba is the parent company of aliexpress, and they deal mostly in bulk and custom orders. Bringing sellers and suppliers together in a marketplace of sorts.

This all assumes that you want suppliers in China because there are lots of suppliers in the United States, more expensive, but there lots of great suppliers. Not to mention suppliers in Canada and throughout all the world.

Instead of ordering a pair of slippers for every customer that comes to your slipper shop, in this case, you would buy a thousand pairs of slippers at two bucks apiece. Then you ship them to Amazon, and Amazon will store your slippers in their warehouse and sell them on amazon.com for you.

Then every time a sale is made, Amazon, of course, takes a cut. Then you recoup your money for advertising on expenses, whether that’s Amazon ads, Facebook ads, Google ads, or all three. Finally, there are things like the cost of the slippers in bulk, taxes, shipping, and your overhead. All the basic stuff you’re going to deal with in any regular brick and mortar business that sells to people.

There is one thing with Amazon FBA that I particularly don’t like. I say this knowing that there are tons of people out there making millions of dollars doing Amazon FBA. However, I don’t like the fact that 1) you never get your customers info that all belongs to amazon, and that is their customer. 2) If you have a popular item, Amazon is well known for keeping track of popular items. Then they come out with their own version, cancel your listings of that item, and then sell it directly like an Amazon basics product and cut you out of the loop.

That’s not cool, but that’s something that Amazon is famous for doing. Does that mean you can’t make money on Amazon? Absolutely not. You can have tons of items on Amazon making millions of dollars. Lots of people are doing that right now.

Another angle that I know a lot of people also do is called retail arbitrage. Retail arbitrage is when you go to thrift shops, Walmart, and dollar stores, searching for items you can resell. You can do this with the Amazon Sellers app or any number of similar apps that tell you what the price of that item is worth on amazon.com, and they tell you how much of a profit you can make.

So what you’re basically doing is you’re going about from store to store, and you’re finding deals. These items are underpriced at these retail locations when you send them to Amazon, and they sell you make a profit.

For example, a friend of mine was doing retail arbitrage a couple years ago with specific items she found at Big Lots. She was buying beef jerky treats for dogs. She would buy these beef jerky treats for dogs for 2-3 dollars, and on Amazon and eBay, they cost like $17 or $18.

She was buying the same exact jerky treat bags at Big Lots for like $3 apiece and getting $18 on eBay, but she had to do the fulfillment (handling & shipping). Had she sold them on Amazon, it would have been the same, but Amazon would take care of all of the fulfillment.

So, of course, every time she found these things, she bought all of them, and then she turned it around and sold it on eBay. She flipped these little doggy treats and some kind of Molasses that was also very popular and expensive online. She did this for several years as a side gig.

She was flipping those products on eBay, making a tidy little profit for just a few minutes of work because she shops at big lots anyway. I would have focused on Amazon and not use eBay but to each his own. This method has gained lots of popularity and even more so now with Gary Vaynerchuk promoting it a lot.

I also know a woman who without a car and without speaking very good English built a six-figure business online doing eCommerce. I know you’re thinking, “without a car?” Here’s how the car comes in. She would go to estate sales and garage sales. She’d have different friends take her, cause she didn’t drive. This goes to show you that if you have the desire and the drive, you won’t make excuses, you will find a way.

She would find different items of value, high-quality furniture, fine china, artwork, etc., things that have good resale value. She’d buy a $3,000 dining room set, and she’d get it for $500 or $600 at an estate sale because the owner is now deceased and the family doesn’t want it, so they let it go with a steep discount.

She would take that, and she made sure it was in good working order, and she would put it online through Craigslist or eBay, and she would flip these things all day. She was able to turn that into a six-figure business, without even being able to drive!

Because once again, she didn’t have a car, and she didn’t speak very good English, so she was dependent upon her friends to take her to do this. When they were available, she would go to the post office, and she would ship smaller items like crystal sets, antiques, and things like that she had bought.

She is the ultimate entrepreneur in my book. You know what I mean? She doesn’t take no for an answer. She doesn’t let things stand in her way. She doesn’t make excuses as to why she can’t be successful. She says, “I’m going to make money regardless of not speaking the language.”

Her mindset is, “I will partner with someone, I will pay someone, I’ll do what I have to do to turn a profit.” Now she has a six-figure business, and she also does taxes for H&R Block, which is how I came to know of her. Since she makes all of her sales online. As you can see with a little ingenuity and determination, she is clearly winning with e-commerce, even though she gets all of her products offline.

Those are some of the easy ways that you can get into this. Like I always say, you want to choose a sub-niche within a niche. Let’s suppose you’re interested in home decor. Maybe you decide, “I’m going to be the fine crystal person,” and you’re just going to sell crystal vases and stemware.Things that are for setting the table beautifully.

The point being is you pick a sub-niche, you choose a sliver of a niche. There will still be plenty of people out there interested in what you sell. There are literally people making tons of money selling linen napkins. So let’s assume you decided on your sub-niche, and then you start to promote that through a Shopify store.

There are two ways that you can do this. One is through Shopify, which is the way that most people are familiar with. Shopify has become a billion-dollar company by being WordPress for eCommerce stores. Their stores are easy to set up. They have a huge marketplace for different types of addons that add functionality to your store.

Things like translating currencies, sending automatic reminders to customers if there are still items left in their cart, countdown clocks, you name it. There’s just a whole bunch of different things that you can add to your store through the use of addons or plugins.

Shopify charges around $29 a month, and that allows you to have your store live on the web. It also comes ready for you to take payment from PayPal, Apple, Amazon pay, and of course, all the major credit cards. This saves you the hassle of having to set up a merchant account because it’s built-in using Stripe.

You do have to sign up with Stripe, and that’s super simple. It’s a bit harder if you’re overseas, but it’s still doable. There are several ways you can still get it done. That’s beyond the scope of this article.

There’s a guy, (I’m not an affiliate) that I watched a lot when I was running my store, his name is Adrian Morrison. I think he’s a good dude who has very good teachings and he’s been very successful in the e-com space. His brother is an expert email marketer. So between the two of those guys, if you were to just learn from them, you’d be off to a pretty good start.

Find a reputable supplier, set up your store, list your items with good pictures and good descriptions, at a competitive price. Please make sure each item sets a clear and realistic delivery expectation time. It will help cut down on the number of angry customers you have to deal with.

Finally, you have to promote your store. You have to promote the items that you’re going to be selling and don’t go crazy trying to fill your store up with a hundred items. Because the reality is, is that when you get past 10 items, you’re never going to sell most of them. It’s very unlikely.

Most ecommerce stores are entirely driven by one or two items. In my own store, we did six figures in six months, and the majority of those sales, probably something like 86% of those sales was off of one particular product. Then 12% was my second best selling product, and then all my other items combined, like 30 or 40 items on the store, made up the last 2-3% of sales, two to 3% of sales. So all the effort that I put in to add all those products was really a waste of time, to be honest with you.

I recommend that you just put 10 so that your store doesn’t look completely empty, but you’re going to know what those top products are that you’re trying to sell. There are several resources out there like thieve.co that have information about what’s popular.

You can also go onto the Amazon bestsellers list looking for products to sell. You can go to the eBay best sellers. There’s a bunch of different methods for spying on competition and figuring out what things are popular for ecommerce.

The best way to go is simply to know your niche well. Study your niche. Get into Facebook groups and Reddit groups and different internet forums. Listen to what people are talking about. What are they saying that they love? What are they saying that they hate? What are they saying that they want to purchase?

You get an idea, go to Amazon, and start looking these things up. Start seeing what the reviews say and basically whatever the reviews are saying, that’s your description for your product. Take the things that people describe; they enjoyed most about that product and use it in your product description.

These are the things that resonate with these customers’. That is how you do that. You connect to people’s emotions, and they will connect to your product. I recognize it’s a ton of information. There are literally courses out there with hundreds of videos teaching you e-commerce. This article is just trying to give you some exposure to it and let you know about what it is, how it works, and point you in the right direction if you want to learn more.

So I think that that covers the introduction to ecommerce. As always, if you have a question in particular. I can help by making a video or address it in a future article. I’m happy to do that. Just let me know in the comments.