Supersonic Playground Ltd
generating an incomes with an eCommerce website

How to generate passive income with eCommerce

All over the industry, we’re hearing more and more people earning a potentially limitless income through passive eCommerce. In this article, we’ll explore how you can take advantage, what passive income is, the benefits, and our 4-step guide to getting started today.

What is passive income? 

Passive income is any income you receive that requires very little or no effort on your part. An example might be a rental property or business that can run without your involvement.

It’s no surprise that passive income is the holy grail for many business owners and entrepreneurs. While passive income shouldn’t require any regular input, it often requires a certain amount of upfront time or financial investment.

What is eCommerce?

eCommerce is the act of selling something online. Whether it be through an online platform such as eBay or Amazon, or via a dedicated online shop.

eCommerce has grown considerably over the last few years, driven in large part by the shift in consumer behaviour away from bricks and mortar shops to purchasing online. It’s a trend that is only going to continue to grow, and it’s never been easier or cheaper to launch an online shop.

Our 4-step process to success 

Step 1: Choose your products

This step might sound obvious, but it’s the most important and often the most challenging step in creating an eCommerce store. Specific markets such as books, entertainment, clothing and general FMCG (fast-moving consumer goods) are understandably saturated, so unless you have a fantastic product you’re confident will stand up in highly competitive markets, it might be best to choose something a little more niche.

Now you might choose to use a site such as Alibaba to order 1,000 cheap Apple Watches and then sell them for a profit, storing these in your house garage. However, the likelihood is that this isn’t feasible long-term. Alternatively, fulfilment companies can source, store and package your items before sending them off for you when an order comes in. Or, if you want an even lower level of commitment, then drop shipping might be an option; where the order is passed directly to the manufacturer or wholesaler for fulfilment.

Both of these methods provide a very passive way of fulfilling the sale. They both work by charging you a per-unit fee, and your profit is the difference between that and the amount you sell it for – the retail price. The lower the number of items they keep in stock for you, the higher the per-unit price tends to be. As your eCommerce shop grows and the volume of stock you require increases, you’ll benefit from lower unit costs.

Step 2: Choose your platform

When it comes to where to sell your products, you might opt for a platform such as eBay or Amazon. These are well-established businesses that make it quick and easy to start selling. However, there are trade-offs; they are usually quite restrictive in terms of fees, and they are very competitive. Expect to be going up against a sea of low cost, low-quality products – you might get caught in a ‘race to the bottom’, making it hard to grow long-term.

If you want your own genuinely independent business, then you’ll need to choose a platform that will allow you to create an eCommerce shop as a standalone website. Here is where a CMS (content management system) comes into play with the best platforms for this being WooCommerce with WordPress, Shopify and Magento. We also wouldn’t recommend choosing a niche or bespoke platform, find out why here.

Shopify

In the last few years, Shopify has taken the eCommerce market by storm. Being very much geared towards DIYers who want to achieve a simple online solution, Shopify is the perfect starter-solution. The platform has a fantastic inventory system and a very user-friendly interface, so it’s understandable why so many are opting for it over other options.

The biggest drawback of Shopify is that in order to access the more advanced features such as scalability, further customisation and a dedicated support line, you’ll need their premium Plus option. Unfortunately, due to the costs associated with Plus, it’s only sustainable for enterprise-level businesses.

WooCommerce with WordPress

With WordPress as the most popular CMS, WooCommerce integration is a natural choice for many. With unlimited flexibility both technically and visually, as well as it’s easy to use interface, it’s no wonder it’s the biggest eCommerce platform. As the most prominent platform on the market, you’ll also benefit from access to infinite APIs for payment providers.

While it’s easy to spin up a website with little development experience, the biggest drawback is that to leverage the platform to its full potential, you’ll need to work with a reputable agency.

Magento

Magento is better suited for more established eCommerce brands as the enterprise package will set you back a fair. Its complex nature means you’ll also need an experienced developer to achieve even the most basic eCommerce site. That said, Magento’s out of the box functionality makes using payment processors such as PayPal a breeze, and you’ll have access to a host of customisable features.

All in all, the platform is perfect if you’re ambitious and looking to scale quickly. Still, you’ll need to take the time to master the platform and your time to market will be longer in comparison to WooCommerce and Shopify.

We recently carried out some comparisons of the biggest eCommerce brands to help you make a more informed decision about which is best for your business, check them out here:

Step 3: Choose a payment provider

Your payment provider executes the transaction between your website and the consumer; this is an essential step in the setup of an eCommerce website. When it comes to making the decision, the first thing you might want to consider is ruling out any providers that aren’t compatible with the CMS you’ve selected (unless your agency can build you an API, but you’ll need to speak to them first).

Other considerations include ensuring that the provider can process payments in your country and what fees they charge before you commit to something long-term. Datanyze gives us a better insight into the top providers with PayPal ranked first, followed by Stripe and then Amazon Pay. Their site will provide you with a good insight into which technologies are most popular in your target country and what their market share is.

Step 4: Choose a delivery provider

The delivery provider you choose can have a significant impact on the entire customer experience with your brand. Although not directly associated with you, a delivery provider’s actions will feedback on your decisions and therefore, your reputation. Therefore, it’s important to look at reviews and pricing before selecting your partner.

InXpress gives you the ability to compare couriers at a glance. Their tool can automatically register orders and then choose the courier best suited based on the size and weight of the item in conjunction with the delivery address and price, ensuring you always get the best deal.

Before choosing a provider, you should also consider your delivery offering. Will you ship internationally? Will you offer next day delivery? And what will your returns policy cover? All of these specifications need to be clearly outlined on your website too.

We hope this blog has proven useful to you, if you’d like to keep up to date with our hottest content, please sign up for our newsletter using the form at the bottom of the page.

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