Welcome to my series of generating passive income through creating an eCommerce business. This series will document my journey starting up and running an eCommerce store on the Shopify platform; a must read if you are looking for resources on ecommerce for newbies. You can think of me as your crash test dummy showing you what works and what doesn’t in the world of eCommerce.
Decades ago, if you wanted to start your own business, you would need a lot of money to set up a brick and mortar store. You would also need to buy an inventory and quit your job to man your store. Today the power of the internet has changed the rules of entrepreneurship where you no longer need a brick and mortar store, an inventory is not compulsory and the store being a website is able to conduct business in the absence of the founder.
One of the most common form of online business is known as dropshipping, the act of sending goods from the manufacturer directly to the customer without the retailer touching it. A lot of internet marketers merely set up a Shopify websites and dropship you products and work with a third party manufacturer to fulfill the order. Because they do not have to handle inventory, they focus their resources on the communication and marketing. One good example is Vat19.com (before they moved their production to the US).
A lot of stuff you see on line, you can actually buy from China but because a dropshippping business is working with large volume, they qualify for volume discounts.
I will be dedicating this series to investigate how easy or difficult it is to start an eCommerce store from Canada by starting our very own eCommerce store. Throughout this investigation, I will be documenting the steps I take, the challenges I face and its results. I will be sharing as much as I can without disclosing the website or the products I am selling as there has been reports of bloggers having their eCommerce stores attacked by trolls and haters. This will not be my first ecommerce adventure as I have set up two eCommerce ventures in the past as a side hobby activity; each attaining a place where it is able to generate a steady passive income without my involvement.
The game plan
There are couple items you need to take consideration of before setting up an online business:
- The niche
- The product
- The store (I used Shopify’s 14 days free trial to do this risk free)
The reason why I am dropshipping instead of buying an inventory and try selling it off is the risk involved in holding an inventory. I’ve heard of stories of entrepreneurial friends buying $2000-$10000 worth of products only to have them sit in their attic because nobody wants them (I call this the ugly baby/ ugly puppy syndrome). Dropshipping allows you to conduct business without having to commit to an inventory. While the margins are lower and the shipping time is longer, it does allow you to work lean and validate the market opportunity before scaling up and eventually doubling down for inventory.
The biggest problem about dropshipping from China is the shipping takes a while to get over to North America (You’re shipping by sea). While you have UPS and DHL, the cost of shipping through those service is 2-3x how much you’re selling the product. Luckily some products can be shipped via ePacket which is the sensible option but it’s only available to the US due to certain trade treaty between US and China. Sadly I have to turn down Canada, UK and Australia markets for now until this niche and product is validated such that I can afford to buy an inventory and start fulfilling over from North America.
Gone are the days where you can just set up a generic store and sell everything. If you want to succeed today on ecommerce, you need to go niche such that you can relate with your audience. There’s a reason why speciality stores are able to sell clothing and products at 50% more than products found at a big box store like Walmart. The extra margin from a premium pricing will go a long way with the development of our eCommerce store as we plan to reinvest the profits from the store to growing the store. We are going deep with a niche and depending on how it goes, we will expand to similar niches. It is also important that the niches cannot be trademarked (eg. no Pokemon or Harry potter) as tempting as it is to sell knockoff goods, you will be facing a lot of legal challenges for infringing on copyright and trademarks. Below are some good niches to go after:
- Sports – eg. Basketball, Boxing, Tennis (Avoid any organisations and associations)
- Professions – Nurses, Doctors, Teachers
- Pet owners – Horses, Cats, dog, hamster, bird etc…
- Cars & Transportation – Off roaders, truck lovers, street racers etc…
- Hobbies – drones, knitting, stitching, painting etc…
- Politics – from a satirical perspective
- Magic – sell magic kits
- fringe groups – Steampunk, Startup, etc…
Important note – It is important for you to pick a niche you are interested and passionate in because if you pick a niche because you merely see an opportunity (without strong passion), you will give up when your store goes through a rough patch. Choosing a niche that aligns with your value and interest keeps you going through that rough patch to success.
Picking a product should always come second because it is never a safe bet to start with the product in case if you started with a product that is unsellable because there’s no market for it.
The best places to look up what you can sell are Aliexpress, Ebay and Etsy. Type in your keyword and see what products are being sold to your market/niche, see if there are any products that you think you can make a markup on.
If you are doing your first few eCommerce stores, I do recommend starting with low costs items like clothing & accessories worth <$50 such that should anything goes wrong, you will not suffer a huge loss. Unlike doing a brick and mortar business, there are risks you will have to face from fraudulent purchases to manufacturer messing up the order and people asking for refund and paypal siding with them and you should assume that you will have to swallow the losses. It is much easier to swallow a $5 tshirt inventory loss as opposed to a $100 drone inventory loss. For my store, I plan to sell typical night market necklaces, rings and bracelet; all low risk items I can afford to lose to refunds and screw-ups on China’s side. Identify 4-5 items and maybe make an order to your place so you can inspect them yourself before putting them up online. Note the price, the cost of shipping and the time it takes to ship as you want to find the right balance between cost and shipping time. The shipping service I trust the most is ePacket which which allows products to be shipped to the US customers within 2-3 weeks. You should never go with any shipping service that extends beyond 20 days as your customers may get impatient and request a refund while your cargo is in transit (by then it’s too late to recall the product and they end up getting both the money and the product).
In order to conduct ecommerce, you need a website and shopping cart + payment processing system. Depending on your tech saviness, you can either build your website on wordpress or different platforms and use a shopping cart plugin or you can use a premade website + shopping cart solution like Shopify. You will need a domain and name (I will write a future article on how to pick a good shop/website name) that resonates with your niche. For this case study we are using Shopify (free for 14 days) as there is a lot less work than setting up a wordpress store.
With products identified and a website made, it’s time to start populating the store with products. It is important to have a variety of products and as having one product makes question your store’s authenticity. I started off my store with a necklace, a bracelet, a ring and 2 posters. The posters I’m currently selling through my other store using an automated dropship program. I plan to add in a few more products every few days to build up momentum. It’s important to have an excel spreadsheet to keep track of each product, its SKU, where you’re dropshipping from and pricing.
Before you launch your store, go over it once more and make sure it is COMPLETE. Meaning you have an about page, a refund policy, privacy statement, Google analytics installed, Facebook pixels, retargeting pixels and a layout that is in line with your niche. With all of these in place you can be open for business.
Money Invested So Far In The Site
Domain – $10
Sample Products – $10
Logo – $5 on Fiverr
Total = $25
Money Set Aside For Future Developments
Shopify – $29 (14 day runway)
Shopify Apps – $6, FOMO app
Preliminary Facebook Ads – $40 ($5 a day for 8 days)
Total = $75
- Running Facebook Ads
- Getting the word out
- Scaling up
- Fulfilling my first order
- Finetuning website and advertising
Setting up a store and selecting products sure takes some time but it’s only half the battle, now we have to drive the traffic over to it. Which I’ll be covering in part two.
Do note that I am an affiliate for Shopify and I will only refer platforms that I’ve used and recommend. The thank you from Shopify will also give me the coffee needed for these informative ecommerce tutorials.