How To Start an Ecommerce Site (Part 1):

By | June 29, 2012

So far I have talked about producing streams of cash flow using different investments/businesses like dividend income, blogging, and vending machines. Today, I will talk about making an ecommerce site as a side business. The pros of running this type of business is that the profit margins are good, and +$1000/month is reasonable to obtain. The downside is that you will need to spend some time every day or every week trying to market the site, handle emails, contact suppliers, ect. If you design this business to be automated in the first place, then you can cut down on the time spent on each of the processes.

Once you get your ecommerce site up and running, you can produce relatively passive income through that business. Not only will I talk about how to make an ecomerce site, I also will bring up the example of the one I made this past month: The shopping cart allows customers to pick and choose the different consulting packages. I am selling education, advice, and consulting. 

If you want to make an eccomerce site, here are some questions you need to answer before you start.

What will I sell?
There are tons of things to sell such as iphone cases, wedding cards, office supplies, ect. The list goes on and on. In order to be successful in an ecommerce site, you need to choose the correct niche and list of products to sell. The product should be easy to ship and not fragile. Also, try to sell things that are not as bulky so that it is cheap/less hassle to ship. You also want to make sure that the profit margins will be very high. This will give you a buffer in times when costs may run a bit high in the beginning, I will talk about this when I introduce dropshipping. The most important thing is to do your market research. See what people are buying, but don’t get too caught up on the hottest gadget.

How will I sell it?
When selling products on an ecommerce site there are two ways to sell things.
1. The first way is to wholesale the product you are trying to sell. This means buying something in bulk and selling the units individually at a higher price.

2. The second way is to use dropshipping methods. This means selling a product and collecting the money from the client, and telling the manufacturer to ship the product to the client, and then paying the manufacturer. The client gets the package and everyone wins. I like this method because there is no large initial investment to make as I don’t have to buy inventory. Every order that is recieved is automatically processed and the dropshipper is notified to ship to the client. However, watch out as Profit margins are not as good as wholesale, and also you have less control over the speed in which the client gets the product. Also, there is a possiblity that the product may be out of stock, so it is good to watch out for that as well.

How do I get the product?
Since I chose the dropshipping route and had a product in mind after my extensive research, I went ahead and contacted the manufacturers directly. I basically asked them if they want to do a dropshipping agreement with headphonegroove. Many are happy to dropship, but some won’t, so make sure you contact several companies. There are middle men dropshippers online such as world wide goods, doba, and alibaba, where they don’t actually manufacture the product and instead connect you to the manufacturers, but often the high-priced goods and shipping costs kill any profit.

How would I market it?
This question can be answered through your extensive research on the product. You need to figure out what kinds of people would want to buy it and your niche. For example, selling finance ebooks is a lot easier when you target the like-minded entreprenuer/finance crowd. It is also much easier to rank up on the search engines if you target a few, focused keywords, than a general word. Figure out your niche and dominate it.

Here is Part 2 of How to build an Ecommerce site, where I talk more details about setting up your ecommerce site. Also, this article I made clearly explains more about dropshipping and automated websites: 4 Hour Work Week: Create Your Muse


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How to Start An Ecommerce Site (Part 2): Figuring out what to sell
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