Funny story… I had been running my online shops for several years before I realized that e-commerce and an online shop were the same thing. E-comm was such a funny, intimidating word to me that I didn’t take it on. Looking back, I’m kind of thankful that I lived in my bubble and didn’t know some basic things…like the official name or even that there were different types of online shops.
My lack of awareness was actually a blessing because if I had known all this stuff, I would have likely been overwhelmed. And we both know when you’re overwhelmed, you tend to overthink it all, and ya don’t take action. Raise your hand…I know we are similar.
Do the Many Types of Online Shops Have You Feeling Overwhelmed?
Nowadays, there is way more information about starting an online shop than when getting into this thing. And the fact that you made it here to my blog means you’ve likely been researching how you can start your own online shop. Let’s take a moment and celebrate that thought though. Starting your very own online biz CHANGES lives, I tell ya. I see it time and time again!
Along the way to finding this blog post, I’m pretty sure you’ve come across a ton of information, haven’t you? Some good, some bad, some contradicting….and some just plain ol’ confusing!
Chances are, you just might feel overwhelmed right now, trying to decide which path to take. Dropshipping, affiliate marketing, FBA, Branded products – there are so many options. Head spinning yet?
In this episode, I’ve got your back! I want to help squash your overwhelm and get you started down YOUR path.
The Easy-Hard, Hard-Easy Rule
When you are starting your online shop, you are presented with so many choices and have to make decisions on more things than it seems you can handle. With all these decisions that you are making, you need to be aware of something called the Easy-Hard, Hard-Easy Rule.
It relates to how the decisions you make impact your business over time.
Easy-Hard: If you take the Easy-Hard path, that means that in the beginning, things will be easy to get going, but they’ll progressively get harder as your business grows.
Hard-Easy: If you take the Hard-Easy path, the choices you make in your business might seem more difficult or challenging now, but they can make your life easier as the business takes off.
Like I’ve said before, I realllllly don’t like using the word “easy” when talking about business because building a business is not easy. But the path you take can determine if it gets harder or easier as you grow your online shop.
Now, I’m going to do my best to give you an overview of these businesses, without bias. But I am human, and you might hear my favorite shine through as I go over them all.
Type of Online Shop: Dropshipping | Classification: Easy-Hard
Let’s talk about dropshipping! I’ve made it known before that I’m not the biggest fan of drop shipping, but that doesn’t mean that some people haven’t had success with it. Although I’m not a big fan of these types of online shops, I’ve learned a lot about them in the past 10 years of being in the e-commerce world. And you know what, it might actually be the perfect fit for you.
The first thing you need to know is that a lot of people drop ship their products from China. That means that if you choose this route, you need to be extra cautious due to the ever-changing trade regulations with China. You surely don’t want to spend your precious time building a business around products that you can’t get an inventory of later due to a spat between countries.
But let me back up a minute and tell you what drop shipping is. So, let’s say someone is browsing the internet, and they run across an online shop selling cute earrings, and they order them. If that store is a dropshipping store, then that order may come into the store owner and be sent over to a manufacturer in China (or any country). From there, that manufacturer would take the product, pack it up, and ship it straight to the customer – without you touching it.
This is the model that most people think of when dropshipping comes to mind but there are other ways as well. One of the most overlooked is the local dropshipping model. This is the same flow as above, but the manufacturer is in your city, state, or country.
So, why might you want to consider this model? Well, the biggest draw for most people is that you don’t have to hold any of the inventory and you don’t have to ship any products.
Sounds amazing, right?! Why don’t we just stop here and all open drop shipping stores?! Well, hold your horses and let me share some of the cons of running a dropshipping business.
Here are a few things to consider with this model:
- There could be tons of other people selling the same exact thing as you are
- The manufacturer often sets the minimum price you can sell the product for
- If they go out of stock, you just have to wait
- The average margin is 10-15%
- You have no control over them stopping the production of certain products
So, I say this one follows the Easy-Hard Rule because it’s super easy to get started but hard to keep the business growing due to all of the competition and lack of control you have.
Type of Online Shop: Affiliate Marketing | Classification: Hard-Easy
I’ve personally used affiliate marketing over on www.howdoesshe.com for the past 10 years, and it has turned into a multi-million dollar business per year, and we don’t have to ship a thing.
Buttttt – it took us 4 years to get to that point. If you did the math, we were probably making pennies per hour the first two years, then we started to get some traction. People get super interested about the first part. When I say how long it took, however, they quickly become less interested.
So, what is affiliate marketing, and how does it make us millions per year?
It’s actually kind of simple.
Affiliate marketing pays you a commission when you generate a sale. It could be a flat amount or a percentage of the purchase price depending on the company or affiliate marketing program.
Here’s a real-life example: We make a post on HowDoesShe for a kid's toy that is for sale on Amazon. Our post contains a special tracking link that Amazon gives us. When someone clicks our link and then purchases the product on Amazon, we get a percentage of the purchase price.
We work with many sites, not just Amazon, and the commission percentage averages between 8-10%.
This model works well for HowDoesShe, because we have an audience of over 2 million people. If you are just starting out, it is going to be difficult to get the ball rolling without an audience. That’s why I say affiliate marketing follows the Hard-Easy Rule.
Type of Online Shop: Traditional Shop | Classification: Hard-Medium
Yea, yea, I know I made up this variation of the rule, but I think it’s fitting here, so let me explain. When I say traditional shop, I don’t mean brick and mortar. I mean, an online shop that is selling both its own products and other companies’ products.
I've had a lot of experience with this model since it was the one I followed for my first online shop. It quickly grew into a complex machine that required a lot of website developers, accountants, and other people, just to make it run.
That’s not to say it’s a bad online shop model to follow, it just has a lot of complexities. That’s why I bucketed this one in Hard-Medium.
Type of Online Shop: Your Own Branded Product Shop | Classification: Hard-Easy
When you start an online shop with your own branded products, it can be hard. I know because I’ve done it several times now.
The good thing is that it tends to get easier as you go because you are building a brand around your products.
With this model, you have more control over the products, customer experience, and margins, but that doesn’t mean it doesn’t come with challenges. Most good brands get other people trying to knock off their products. I own a pillow-case brand, and I know I’ve experienced this first-hand.
But another benefit of owning your own brand is that you get to build a community, and if people try to knock off your products, you can leverage them to come out the other side stronger than ever.
Pick Your Journey
Whichever type of online shop you choose to start, it will be the right decision. Because no matter what path you take, you will learn so much about yourself along the way. You’ll learn things that you never knew existed, and you’ll become excited by things you never thought you would.
Business building is one of the most challenging yet rewarding things you will ever do. Period.
Maybe the path you choose now isn’t the path you are on 2 years from now, and that’s ok. That’s the beauty of building online stores, you don’t have to have it all figured out in the beginning. You get to grow as a person and as a business owner with each step that you take.
If you are ready to start your brag-worthy online store and provide a safety net for you and your family, then sign up now!
