Not long ago, if you wanted to sell something, you had to set up a shop. That meant paying rent, keeping regular hours, and dealing with all the day-to-day responsibilities of maintaining a physical location.
But in the last 30 years, eCommerce has gone from high-concept sci-fi to a $6.3 trillion global market. And it’s growing quickly too, with a growth rate as high as 10% – and possibly more – expected over the course of the year 2023.
But then again, a lot of that money goes to Amazon, Alibaba, eBay, Walmart, Wayfair and other huge companies. So that means so many small business hopefuls, kicking around the idea of setting up their first Etsy shops are very reasonably asking one big question…
Can you make money with an eCommerce store?
Yes, definitely! Ecommerce in general is a $6.3 trillion market. Even with big players like Amazon, Alibaba, eBay, and others taking a significant share of that, it’s hard to overstate just how common online shopping is now.
More than 1 in 5 retail purchases is expected to take place online in 2023. This is going to be almost 1 in 4 by 2025. Meanwhile, Shopify, one of the largest providers of eCommerce store software, supports over 5.6 million stores and is, in its own right, a household name.
That’s not to imply that it’s easy to run a successful eCommerce store. It’s actually quite difficult!
But starting one is easy and there is definitely a path to success. But in order to achieve the kind of success you want, you’ll need to understand how eCommerce works, what makes eCommerce stores successful, and the pitfalls eCommerce store owners need to avoid.
How does an eCommerce store work?
For consumers, eCommerce stores are simple. They’re like online storefronts where you can browse for items, put them in your cart, and check out when you want to make a purchase.
For eCommerce store owners, the story is a little different. First, any store owner will need to pick an eCommerce store platform such as Shopify or WooCommerce. They’ll also need to set up a payment processing platform like PayPal or Stripe in order to be able to collect payments.
Yet, building a store doesn’t guarantee customers. This is where marketing steps in. Digital advertising platforms, notably Google Ads and Facebook Ads, play a pivotal role in driving traffic. The objective is simple: get your products in front of potential buyers.
Once orders are made, it’s time to ship them. That means either personally packing and shipping items or pairing with fulfillment centers that can provide further assistance.
- Why, When, & How To Use Shopify For Your Ecommerce Store
- Why, When, & How To Use WooCommerce For Your Ecommerce Store
- When Should You Outsource Fulfillment?
- A Crash Course in eCommerce Order Fulfillment
Why are online stores successful?
Successful online stores usually do well when they play to the natural strengths of eCommerce. For example, eCommerce stores can sell pretty much anywhere. They’re not tied to a specific location or bound by geographic boundaries. That means even really obscure niches can do well online, even if buyers are scattered across the globe.
Vintage watches. Artisanal cheeses. Handcrafted furniture. Online platforms make it possible for entrepreneurs to really hone their distinct crafts around specific needs and passions.
There’s also the convenience element too. It’s really easy to shop online. You don’t have to go anywhere and you can shop at any time of the day. So successful online stores lean into this and make sure there are no obstacles between visiting and purchasing.
That means no account creation required. Easy checkout. Free shipping (usually). Every obstacle between visiting and purchasing can increase shopping cart abandonments, which are bad news for eCommerce store owners.
On the more financial side, eCommerce stores are also not burdened by physical store needs like rent, staffing, utilities, and so on. Shipping is expensive, but there are ways to mitigate this, and overall, with smart cost management, it’s relatively easy to scale an eCommerce business as demand grows.
Lastly, data-driven marketing is very powerful in eCommerce. It’s possible to know exactly where customers are coming from, what pages they visit before they buy, and where they get stuck. You can even see real-time information on which of your ads are performing best. The level of precision, compared to what was possible even 20 years ago, is practically surgical. Successful stores make good use of their data.
- How to Do Market Research for Your Ecommerce Store: 9 Helpful Steps
- This Is Why People Abandon Shopping Carts Online
- How Outsourcing Fulfillment Can Save You Money
Why do eCommerce businesses fail?
There are four basic mistakes that unsuccessful eCommerce businesses tend to make. These include: lack of adequate market research, poor website experience, insufficient marketing and promotion, and order fulfillment issues.
The most common of these pitfalls is likely the lack of market research. Because starting an eCommerce story is so easy, entrepreneurs can jump into business without a clear understanding of their customer’s needs, which is a foundational misstep. Add to that the mistake of venturing into an already crowded market space without any unique proposition or differentiation, and the business is set up for an uphill battle from the get-go.
Another major stumbling block is having a poor website and user experience. Consumers expect sleek, efficient, and intuitive digital platforms. That means slow loading times can quickly deter potential customers. Additionally, in our mobile-dominated world, not having a mobile-friendly interface is a cardinal sin. And even if a customer navigates through the site and decides on a purchase, a complicated or cumbersome checkout process can lead them to abandon their carts.
While setting up a store is a massive undertaking, promoting it correctly is equally vital. In other words, if you build it, people won’t necessarily come. Ineffective marketing strategies, driven by either inadequate budget allocation or misunderstanding the target audience, will leave an eCommerce business floundering in obscurity.
Lastly, shipping is hard. A lot of items get lost or damaged in the mail. Postage can be very expensive. And even successful eCommerce stores can collapse very quickly if their order volume goes up before they have the ability to ship all those orders out. That’s why we strongly recommend that eCommerce store owners outsource fulfillment once they start shipping about 100 orders per month.
What’s the difference between success and failure in eCommerce?
Successful eCommerce stores usually do four things right. First and most important, successful stores sell products to well-defined target audience based on thorough market research. These stores are also optimized to load quickly and be very easy to use.
Store owners make good use of the data collected and use that in marketing and promotion, which they spend a lot of time on. Lastly, successful eCommerce stores have an ironclad plan for order fulfillment, which helps keep shipping costs low and customers satisfied!
You’ve done everything by the book. Your Kickstarter campaign is almost ready to launch.
You made a great product. Built an audience. Set up a campaign page.
But how do you ship it?
We put this checklist together to help you get started. It's free.