Brick-and-mortar is great for big-box retailers and certain established brands, but it’s not a feasible option for most. While it’s nice to have a dedicated real-life space for shoppers to browse your product range, rents are soaring, overheads are only going up, and there’s the increasingly expensive cost of labor to contend with.
Selling products online is the best option for brands that can’t justify these added costs, especially because it’s quickly become one of the most lucrative ways to make money online. Last year, $5.7 billion was made in online sales, a number that’s predicted to shoot up to $8.1 billion by 2026.
If you want to take advantage of the rising popularity of ecommerce, you’re in the right place—we’re showing you how to make money online with ecommerce, running through useful tips, strategies, and methods for starting from the ground up!
Here's what we're covering:
- How to make money selling online
- Types of online sales channels
- How to make more money selling online
- How to build your ecommerce tech stack
- Make money in ecommerce with Peel
How to make money selling online: 3 key methods
These are the primary ways ecommerce sites make money.
1. Creating & selling a product
This is the most resource-intensive way to make money with ecommerce. Merchants essentially own the entire process—from ideating and producing a product to selling and marketing it.
It’s much harder to scale from the ground up because you’re in control of every little thing, but owning the entire process can benefit you in the long run. You’re not at the mercy of platforms changing their terms or service or at risk of your sole manufacturer putting an abrupt halt to your product line.
2. Dropshipping & Wholesale
Dropshipping and wholesale wholesaling offer a way to make money with ecommerce that’s a little less intense than creating your own product from scratch.
Dropshipping doesn’t require you to hold any stock. Instead, you list items on your website and forward customer orders to your chosen dropshipping supplier as they come in. It’s becoming increasingly popular as a way to avoid inventory costs and pivot quickly to changing consumer demands.
On the flip side, the wholesale model requires you to hold onto stock. You buy a load of stock in bulk from a manufacturer at a discounted rate and then sell it to retailers at a profit.
Dropshipping vs wholesale: What’s the best option?
The right choice ultimately depends on your goals and the resources you have available. Going the wholesale route requires you to have a lump sum of money to put forward upfront, whereas you can get started dropshipping with one payment to a dropshipping platform.
If you’re looking for a low overhead, lower risk business model, dropshipping is likely your route. That said, you’ll be giving up some of your margin to pay your dropshipping platform fees.
If you have the facilities to hold the inventory and take care of logistics, the wholesale route is incredibly lucrative because you have less additional costs than dropshipping.
3. White label & Private label
White labeling and private label ecommerce models essentially take products manufactured by other brands and repurpose them for other merchants to sell.
White labeling involves merchants buying a generic product and rebranding and pricing it based on their audience and niche market. It’s a quick way to grow your brand without the added time and cost of designing and producing products.
Private labeling is similar in many ways, but merchants or retailers can buy products that are exclusive to their stores. This gives your store a competitive edge since no one else will be able to sell the same product, but it’s a bit pricier than white labeling because you’re paying for that exclusivity.
White label vs private label: What’s the best option?
Again, it depends on the resources you have available. Neither model requires you to manufacture your own products, which saves time, but private labeling comes at a higher price point than white labeling simply because you’re paying for exclusive access to a product.
It’s important to note that the success of any of these methods hinges on your ability to market your products and brand. You’re in charge of getting eyeballs on your catalog and converting window shoppers to actual customers which, let’s face it, is the hardest part!
This brings us to sales…
Types of Online Sales Channels
Sales channels are the places you’ll sell your products online—basically, any platform, marketplace, or website where customers can buy your products.
Here are the most popular channels to sell products:
- Your own ecommerce site: This is your own, branded website that you have full control over.
- General marketplaces: Including Amazon, Walmart, and any niche sites that sell a range of different brands and products in one place.
- Auction marketplaces: Including sites like eBay where customers bid on products.
- Craft marketplaces: Including Etsy, where all products sold need to be handmade or unique in some way.
- Social media: Facebook, Instagram, and TikTok all have social commerce features that allow merchants to promote and sell their products directly through their social media accounts.
How to make more money selling online
You’ve chosen your ecommerce model, you’ve got your products ready to go, and you’ve picked out your sales channels. What next? Now, it’s time to increase the number of sales you get through powerful marketing tactics and sales strategies.
Wondering how to make money with ecommerce? Here are some effective ways you can earn more with your store.
1. Improve your website
Your website is like the digital version of a brick-and-mortar store. You want to make sure customers can easily find what they’re looking for, that you’re making a good first impression, and that the entire shopping experience is smooth from start to finish.
Use powerful conversion rate optimization strategies to tighten up the customer journey and ensure you’re maximizing profit at each touchpoint.
Here are some pointers to get you started:
- Keep your website clear and concise so that customers can find their way around
- Implement a search feature so shoppers can quickly find what they’re looking for
- Write detailed product descriptions that clearly explain the benefits of your products
- Make the checkout process a breeze to avoid any last-minute hesitations
- Use high-quality photos, videos, and graphics to create an enjoyable visual experience
- Include reviews, testimonials, and user-generated content for added social proof
Oliver Bonas’ visual search function makes it easy for shoppers to find what they’re looking for and creates an eye-catching experience.
2. Invest in Search Engine Optimization (SEO)
Search engine optimization helps Google understand what your site is all about, which will lead to higher ranking on search engine results pages (SERPs). Higher SERP rankings make for more relevant organic traffic to your site. Investing in SEO is all about ranking well for keywords related to your products and capturing people who are ready to buy.
Investing in SEO might include:
- Creating content that targets pain points your customers have
- Carrying out keyword research to discover what phrases shoppers are using to find products like yours
- Conducting on-page SEO to make sure you’re using the right keywords in the right places
- Conducting off-page SEO to ensure that your site is structured well for being crawled by search engines and that your meta data is optimized for search.
Huckberry has an on-site blog that it uses to attract traffic from search engines.
3. Create a balanced acquisition vs retention marketing strategy
Many ecommerce brands make the mistake of focusing solely on generating new sales. But don’t forget about your existing customers! Repeat customers spend an average of 67% more than new customers and are cheaper to market to—82% of companies say that retaining a customer is far less expensive than acquiring a new one.
While you obviously want to grow your customer base by adding new shoppers, balance this out with an effective retention marketing strategy to reward existing customers.
This might look like:
- Running ads to attract new customers but also creating ad campaigns that target existing shoppers with an exclusive discount
- Creating a loyalty program to reward existing customers
- Writing an email welcome sequence for new subscribers but also sending personalized product recommendations to existing customers
Dagne Dover has a loyalty program to reward its existing customers.
4. Cross-selling and upselling
It’s almost a certainty that a shopper likes your products if they add them to their cart. Take advantage of this by promoting other similar products to increase the average order value (AOV) and pump up your sales numbers.
Cross-selling and upselling are great for this. Cross-selling promotes complementary products at the point of sale or at the checkout, while upselling promotes a premium version of the product a shopper has in their cart.
You can also bundle products together to expose shoppers to your wider product range and, again, encourage them to spend more while they’re on your website.
Aesop recommends products that are complementary to the one a shopper is interested in.
We just recently added a new Cross-selling report in Peel!
It analyzes what customers are buying over time and shows you what products they’re purchasing across multiple orders. It helps you dig deeper and find not only common product combos, but also the combos that may not have an inherent correlation to each other before you realize that customers buy them from purchase to purchase.
This is great fuel to know which products to feature in personalized emails to your customer audiences as well as what to try and cross-sell on product pages and checkout screens.
How to build your ecommerce tech stack
There’s a lot to juggle when you’re running an online store—you need to upload products, update descriptions, send emails, track your performance, and market your brand at the very least. Creating an ecommerce tech stack will help you automate certain processes so you can save time while selling more.
Choosing the tools in your tech stack will depend on your budget, but you’ll also need to select tools that are compatible with each other. Here are some of our favorite picks:
- Ecommerce store builders and hosting: You’ll need a platform where you can upload your products and design your store. Examples: Shopify, Magento (now Adobe Commerce), BigCommerce, or WooCommerce.
- Analytics tools: These will help you track your sales and key ecommerce metrics. Examples: Peel, SEMRush and Google Analytics.
- Social tools: These tools will help you post to social media and create content to share with your followers. Examples: Buffer, Canva, and Later.
- CRM tools: These will help you collect, manage, and organize customer information all in one place. Examples: Klaviyo, Zoho, and HubSpot.
- Marketing tools: These will help you promote your products and increase visibility on your products. Examples: Recart, Attentive, and Klaviyo.
- Subscription tools: These will help you create and optimize your subscription offerings. Examples: Recharge, Smartrr and Bold.
- Shopping cart tools: These will help you optimize the checkout process and create an enjoyable shopping cart experience. Examples: OpenCart, ThriveCart, and SamCart.
- Chat tools: These will help you provide real-time customer support to shoppers who have questions and hesitations. Examples: Gorgias and Zendesk.
- Returns and shipping: These will help you manage, monitor, and optimize the shipping and returns processes. Examples: AfterShip, Returnly, and Rich Returns.
How to make money with ecommerce with Peel
Your ecommerce tech stack is the backbone of your ecommerce business. But perhaps the most important tool in any stack is your ecommerce analytics. This is where you’ll be able to see who’s buying your products, what products they’re buying, and how many customers come back for more.
With Peel, you can analyze customer behavior (like our new RFM analysis feature) and use powerful shopper data to create informed retention strategies and marketing campaigns moving forward. The best part is, you can access it all in one place.
Find out who your best customers are, segment buyers into hyper-targeted groups based on their unique wants and needs, and continue to deliver personalized marketing messages with data at your fingertips.