Pros and Cons of Making Money With an Online Store

It’s been a secret desire of mine to run an online store for a living. The lure of being independent of answering to somebody else is an entertaining thought to have. Making money online has been a lifelong passion that hasn’t really matured to where I’d like to be. And after reading Steve’s post on eCommerce stores, I wondered to myself – why have I not started one a long time ago?

Then I realized – it’s not as easy as it sounds.

Big Commerce

BigCommerce – one of the easiest platforms for an eCommerce store. 

Having never ran an eCommerce store myself, I can only list some of the things I’ve learned while looking into this subject matter:

Pros of Starting Your Own eCommerce Store

  1. Low start-up costs – many eCommerce platforms host your website for you so there is no need for specialized servers. Different pricing plans are also readily available with some starting at less than $40 per month.
  2. No need to manufacture or carry products to get started. Drop shipping is readily available (although translating to lower profit margins) where products are shipped directly from wholesale distributors to your customers.
  3. You can be your own boss – who doesn’t love answering to anyone? You run the place – you’re the boss.
  4. Low overhead – granted you’ll need professional space much sooner than you think, an online store can be started from home (from that cozy couch you pet your kitty or your puppy).
  5. You can work at your own pace – it’s totally up to you how fast you want to grow your business and how much time you put into the work. If you’re as awesome as I’m pretty sure all of you are, you’ll be rich in no time.
  6. Potential of turning your small website into a large business that you can be proud of. Unlike the pesky little projects that have come and gone for me, an online store is not something you would sell for a quick profit. You build onto it until you can be proud of what you’ve accomplished.
How drop shipping works:
How Drop Shipping Works

 

Cons of Starting Your Own eCommerce Store

  1.  Takes complete dedication. I can’t imagine working another job and running an online store at the same time. You would have to dedicate yourself to it in order to succeed.
  2. Customer support – you’ll have to deal with customers. This means having to answer the phone no matter where you are. Can you imaging dealing with complaints day to day.
  3. It could take 6 months to a year to generate profit. Drop shipping products usually results in a low profit margin from what I’ve learned. With money in, expenses out – it may be a while until you’re profitable.
  4. It can cost a lot to get running. Sure, you can try to get away with a basic out-of-the-box design, but chances are you’ll need a custom website design and SEO to really get ahead. E-commerce Search Engine Optimization is more difficult than a simple website. There is a professional position for this task alone. Depending on the costs of such services, it can get expensive to tweaking your website just right.
  5. You’ll most likely have to spend on advertising. Many of you already know how long it takes to grow a blog, yet alone a business. You’ll have to spend money on AdWords, which can get expensive – assuming you already know how to best use the platform. If you’re new to AdWords, there’s a steep learning curve, which may mean money wasted.
  6. You’ll probably have to carry products on-sight for better profit margins. This means meeting with suppliers and or buying in bulk. There’s the risk of not being able to unload your inventory which could mean going out of business.
  7. It may consume all of your time and then some. Imaging doing all of the above by yourself! You’d have to spend money on hiring help or leaving enough time to do the work yourself (for most this is impossible with a day job).
  8. You’ll have to find the right product or risk losses. Not all products are created equally. You’ll need to know what sells well and what has a decent profit margin to be worth the time. I know electronics have low profit margins due to high competition.

Is it Worth the Effort?

I’m sure something is missing here or could be wrong, but this is what I’ve gathered so far from doing my own research.

Looking at the cons, it’s easy to dismiss the idea of starting an online store simply because of all the information you must know and all of what’s involved. However, after hearing from a friend who has worked for many eCommerce companies, it is difficult to simply say it’s not worth it as there are many people who have started successful multi-million dollar operations out of their homes.

For me, the stories of people who have succeeded and went on to describing making their first million dollars is what keeps me coming back to this idea over and over. Although I will most likely not be starting an online store any time soon after learning the ins and outs, there is still a chance that the online payday loan industry picks up and works out great as a business model.

HockeyGiant.com

HockeyGiant.com – highly successful eCommerce website.

What do you think? Would you consider starting your own online store? What’s stopping you from doing it?

44 Comments

    • Maybe I’ll pave the way with my failures and mistakes and report on them so you can have a smooth ride :) Lol. I’ll probably go bankrupt by then.

    • I ran into an online cigarette store just yesterday where they sell by the bulk. There’s a huge market for smokers :) And they probably make decent profit!

    • Something nobody has a lot of these days :) I imagine its more of a time suck than blogging. Still, I’d like to try my hand at it. Currently just trying to figure out how to re-organized my life so that I can have time to do it.

    • Pauline, if you were to consider it seriously, Steve from My Wife Quit Her Job has a really nice series of walk-through emails that introduce e-commerce stores.

  1. There are some great tools out there. I guess it comes down to the product you’re trying to flog and the amount of time you’re willing to put into it. I guess as bloggers we’ve dedicated a fair amount of our time to this already. I’d imagine how much more would be needed to control things such as marketing, orders, customer service etc.
    Jamie Dickinson recently posted..Terrible Money Saving TipsMy Profile

    • I thought much the same. But I’ve attended a few webinars where people have shared their stories of struggle and success and they motivated me to think big. Time will definitely be a huge issue, so will finding the right product, suppliers and shippers – but if there is anything I learned in business so far is that great things aren’t easy to accomplish.

  2. If you were to develop a store you’d obviously have to be closely related to that niche. Take for instance the hockey store you mentioned: they have to know all of the equipment that it takes to play hockey, they have to know the good brands and good quality products, etc., etc.

    I have no real interest in doing that, but it is a fascinating idea.
    Jason @ WorkSaveLive recently posted..Want to Win an iPad 3? Luckily for You, We’re Giving One Away…My Profile

    • Good point Jason. I wouldn’t want to give customers support on a product I have no clue about. Maybe I’ll go with umbrellas lol… how difficult can it be to figure out an umbrella.

  3. I did this for 4 years. I started, ran, and closed my online store all by myself. It is much harder than you could ever imagine. The advertising costs alone are high. Eventhough it doesn’t cost much to get started, it costs a lot to maintain. I lost the quality of life that I enjoyed because I was dedicated to making it work. I easily sold over a million dollars worth of merchandise after year 2, but it just wasn’t worth it to me.

    Dropshipping can be very tricky. There are only a few legitimate dropshippers out there. There are many websites, but their prices are ridiculous and they don’t ship on time. You have to rely on them and it doesn’t bode well for happy customers. I did do dropshipping, but it only worked once I found a reputable company to do it.

    There are so many things that I can tell you about running an ecommerce store that I can’t fit in this comment. If you have any questions, shoot me an email. I can probably answer almost every question because I had them myself.
    Grayson @ Debt Roundup recently posted..Save For Retirement or Pay Off Debt?My Profile

    • I’m thinking about it in terms of a full time job tbh. But if you find any good side income gigs that don’t have all the hassles involved with online stuff, I’m all ears :)

    • Indeed! One of the tips I’ve been seeing over and over in entrepreneurial community is that simple is best. Even 3 titles should do well if you have a very presentable and convincing storefront. Lucky for me, I have some knowledge about what works in online sales so it should be a good head start on most people.

  4. There will be pros and cons to everything in life but if it’s something you are passionate about and you can overcome the cons than I don’t see what should step in the way. We only have one chance to do what we want on this earth.. so we take and run, look back and wish or look back and say why didn’t someone hit me! Life is risk.. we all have choices. Great article.. I’d do it if I had the time and a great idea! Cheers Mr.CBB
    Canadianbudgetbinder recently posted..How to Earn Optimum Points Fast at Shoppers Drug MartMy Profile

    • Thanks Mr. CBB :) I agree, there’s always going to be risk, but we gotta try it even if to fail or else we can’t complain.

    • Thanks for your opinion Justin. I’ve heard of many people making full time income running an online store that’s why it sounds very appealing to me. I’m going to interview a few people who have ran their own stores to see what it’s like.

    • From what I’ve heard and read about, most people suggest finding a unique niche that everyone else is not pursuing. I guess electronics are out of the question and clothing can be difficult but very profitable. The markup on T-shirts is amazing. Shirts come from China at something like $2/per and sell for $20-25 over here. But with clothing, you have to carry inventory constantly because it takes so long to ship. I can’t imagine getting into international shipping though – sounds very involving.

  5. I only suggest starting an online store if you are an artist who selling your own products. Everyone else is doing it to make money, and that is a hard way to make it.

    You are better off promoting a top converting affiliate product with a high commission. High commission is the key, if you can pay for traffic and still make a profit, you have a winner.

    Make money now, not 6 months from now. Concentrate on ways to get traffic besides SEO, then you will make money with anything.
    Bob recently posted..Read this entire page Do it Now, if you are serious about making money.My Profile

  6. I’m very interested in starting an online commerce as well. This is an excellent business model that doesn’t require much capital compared to other startup models.

    The 4-hr Work Week by Tim Ferris and Startupbros have some great insight in how to develop and streamline your commerce. There is enough information on the net that you can learn how to hedge your risks. I have found a niche that interests me and have developed a business plan. My plan is to put this in action in 6-12 months when I have more time.
    Goldeneer recently posted..Goldeneer’s Hierarchy Of Wealth – Fallacy Of SavingMy Profile

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  12. I’m in the process of setting up an online store now. The problem I have (everybody has) is how to generate enough traffic. I really want to make this work so I’m studying everything I can. Thanks for this honest pros and cons list.

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