Are Ecommerce Stores Profitable To Grow Your Online Business?
Now that you can buy everything online with a click of a button, it has brought a new improved perspective to shopping for things online. But when you want to start your own online store or business, you wonder if it is worth it. Are ecommerce stores profitable?
With the advancement of the internet, more and more people are now driven by online businesses. Customers also now find it easy and convenient to shop for their favorite products online. And for numerous factors like these, the ecommerce platform or industry is growing steadily and is considered amongst the most profitable online business you can start currently.
Generally, ecommerce businesses are highly scalable business models and there is virtually no limit on how much money you can make via establishing an online store or business. Especially during the pandemic, people shifted their mindset about shopping and found online stores and businesses to be a more preferred and efficient way to do business.
As online sales went up multifold during the recent times and mainly during and after the pandemic, people started looking at online shopping as an easier way to shop online for their favorite products, without the hassle of visiting a physical store. For the same reason that the demand for online products and services increased, the number of online stores and ecommerce stores increased instantly.
Is Having A Ecommerce Store Profitable?
Yes, having an online store is very beneficial and profitable in current times, as people now prefer to buy things online. It provides them with a sense of ease and convenience over shopping from traditional physical stores.
Studies also show that by the year 2025, ecommerce businesses will make for upto 25% of all retail sales. This just goes to show that ecommerce is here to stay and is a highly lucrative and profitable business.
Factors That Influence Profitability
Your brand
When you own an online store, the first thing that catches your customer’s attention is your brand. By creating a memorable brand name, you can put your business ahead of the competition and strategize to make a connection with your customers and audience. Your business name should be simple, eye-catching, and in line with your products and services.
Your brand name is the first thing that your customers see and thus it should be synonymous with your business and niche. Your brand name becomes the identity of your store.
Design of the store and an easy-to-use interface
Customers are always looking for an easy to use interface, one that allows them to seamlessly browse through different categories of products and explore the varied options and services mentioned on your website. This experience should be a smooth one for the customer, thus make sure the design of your online store and the way it is laid out accordingly.
They should be able to maneuver the site effortlessly and find what they are looking for instantly. Make sure the details provided on the products, pricing, details, and shipping charges/policy are all described and mentioned correctly.
Cross-media marketing
When you have opened your ecommerce site or store, you will have to promote your products to the target audience. And to achieve this, you can take help from the various social media platforms. They can help you reach out to the masses and promote your products and services to the larger public.
Social media marketing is an excellent beginner-friendly opportunity to advertise your store and boost your brand’s online presence multifold. You can create a dedicated social media page for your business on platforms like Instagram, Facebook, Twitter, YouTube, Pinterest, etc. to get started and build an audience.
Creating regular content about different products and publishing them on your social media pages can help boost traffic to your website. You can also create content in the form of blogs and articles and publish them on your own website. Email marketing is also one of the best marketing tools that you can use to propagate your business.
SEO-friendly content
To rank higher on search engine results and get better reach for your website and products, you need to make sure that the content you are sharing on social media platforms is SEO-optimized. This will ensure that your content reaches the right audience and customers.
What SEO can do for your business website is provide your website or webpage when any customer searches for a particular product on the internet. Writing SEO-optimized content like detailed product descriptions, benefits, and engaging click-worthy content can bring the right audience to your website and help you get more sales. Using SEO tactics like targeted keywords in the product description will increase product visibility in search engines.
Good customer buying experience
When customers like buying from your online store or ecommerce business model, they remember this buying experience and can become your recurring customers. They should feel that their buying experience was pleasant, effortless, and worth their money. Customer satisfaction is key when it comes to any business, and for an ecommerce store, you need to satisfy global customer needs and requirements.
Offer regular discounts & deals
Customers are always looking for deals and discounts on their favorite brands and products. By offering daily/seasonal/regular deals with many offers and discounts will make your buyers happy and keep them coming back for more. You can consider this as a way of indirect marketing tactic to grow your business. This is a great way to get recurring customers to your ecommerce store.
This will also increase your chances of getting recommendations and referrals to your store from these customers when they tell about such deals and discounts to their friends and family.
Analyzing and working in line with your competitors
When you are working in a competitive market, you need to be on par with different trends and marketing strategies. You should know and observe your competitor’s marketing tactics to find out what is trending and what is working well in the market right now. This will help you gauge your own marketing efforts and make changes or improvements accordingly.
Easy payments and check-out process
Believe it or not, when your site has an easy, quick, and efficient payment and checkout process, customers are bound to love this experience and come back to buy more products from you. Online money transactions are easy, efficient, and becoming popular by the day. You can include numerous options for customer ease, like credit cards, bank transfers, PayPal, etc.
The two infamous buttons, Add to Wishlist and Add to Cart are principal features that are of paramount importance. Customers can easily choose and “save” their favorite products in their wishlist, and buy at their convenience. Having a single-page checkout, helps customers get an easy checkout experience. This is important because they can swiftly check out their products once they fill in their address, personal details, and other mandatory information like billing and shipping information.
Customer service
This is one of the most important parts of running a business, and when it’s online, it’s even more important to make sure you can have a way for your customers to reach out to you in case of any issues or queries. When you are a single business owner, it is difficult to have dedicated customer service for your business. But by even keeping a simple form for feedback or contact information for your customers to reach out to you.
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Profitable Product Niches
Ecommerce stores are profitable if done right. Different niches fair differently in the online marketplace, thus you need to choose a niche that best appeals to your target market and audience. When choosing a particular niche, make sure to do your preliminary research about the products and services you may want to provide on your website. Here are some of the best product niches that are very popular, and do relatively well online.
Dropshipping
This business model is very popular right now and one of the most easiest and profitable ecommerce business ideas to get started with. The investment is low with good returns. This business model allows you to partner up with leading manufacturers and distributors to sell their products, and you can present and showcase a variety of selected products from the dropshipping supplier’s catalog onto your ecommerce store.
Fashion and apparel
Apparel and fashion never go out of style and thus there is always going to be a great demand for such products and has a base for existing customers. Though this market does have tight competition, you can always carve your own niche and a unique brand identity for your store with items like social media famous products, jewelry, print-on-demand t-shirts, etc.
Beauty products
You can also choose to showcase beauty and wellness products that can help bring, and serve a lot of the female demographic. Natural beauty products are always popular with the young and mid-age crowd and thus can make a great niche to sell online.
Tech products
Technology and gadgets are always raving, and with changing technology and trends, new innovations and additions are always pouring in. By including the latest gadgets and tech products on your website, you can make a lot of profit from your products and services.
What Is a Good Profit Margin For an Ecommerce Business?
You must be wondering what are the numbers on a good profit margin for an average ecommerce business. Well, a lot depends on the niche, the clan of products that are selling on that particular website and the marketing efforts put in by the individual to promote their website or business.
The average profit margin for a profitable ecommerce business is said to be a net 10-40%. 25-50% profit is considered high and upto 5% of profit is considered a low-profit margin. Many online retailers see an average of upto 42% in their gross profit margins and about 8% in their net margins, according to the ecommerce website and niche they select for their business.
FAQS
1. How much money do ecommerce store owners make?
At the three months mark, a brand-new eCommerce store can make up to $60,000 as their monthly revenue. This can widely differ according to the niche and products sold on that website.
2. Are ecommerce stores worth the hype?
Yes, having and running an ecommerce store is a great side hustle and a highly scalable business model. You can grow your store and eventually make it very profitable in the long run.
3. How long does it take to make a profit with eCommerce?
Once established, it may take a couple of months before you can start making a profit from an ecommerce store. You need to pay attention to getting more traffic to your website to generate more sales.
Are Ecommerce Stores Profitable? – The Final Judgment
Yes, running an ecommerce store can be highly profitable in the long run. If done right, you can scale your business and website to get more traffic and sales by implementing good marketing strategies and providing high-quality products and customer support to get your customers to keep coming back for more.