Making Money by Selling Products Online

Selling products online is a much more complicated way to work from home, but it is an option that suits some people better. Back in the day, physical sales required you to rent a storefront, but sites like eBay, Etsy, and Amazon have lowered the barriers to entry considerably.

Of course, to make this work you need a product to sell. Fortunately, there are many options for the aspiring salesperson, and we’ll cover a few of them.

Ways to sell online

If you’re an entrepreneurial type, starting your own online business is a great option. E-commerce is a well-established industry, and, especially since the pandemic, it is one of the main ways most of us do our shopping. While the space is dominated by a few huge tech giants, there are lots of niches for small businesses to eke out an online presence.

For the creative and industrious, sites like Etsy give you a way to sell your handmade products like clothing, plushies, enamel pins, or quilts. For the less crafty, there’s drop-shipping, where you serve as a middleman between the customer and a massive wholesaler like AliExpress. There are also ways to sell digital goods that don’t require such complex logistics. There are pros and cons to each of these approaches. Let’s take a closer look at some of these major categories of online shops.

E-commerce

With a standard e-commerce site, you sell and ship items out to customers when they order them online. If you want to make this a sustainable business, you have to be able to make or buy a constant supply of your product, maintain a big enough inventory to keep up with fluctuating demand, package orders, and ship individual purchases.

The simplest example of this model would be selling a product you make yourself. While it’s definitely nice to get to do something you love, selling something like knit scarves involves an awful lot of work that isn’t knitting. Fortunately, there are a lot of tools out there to simplify the process of selling your wares online.

The easiest way to set up an online shop is to use a site like Etsy geared toward small businesses selling handmade items. Setting up an Etsy shop gives you both a website to post your items and the payment processing tools to handle customer transactions. There are even third-party companies that work with Etsy to provide other services like shipping. Etsy also handles some customer acquisition since people already go there to look for handmade or custom items.

If you want to sell your products from your own website, there are platforms like Shopify and Woocommerce that you can integrate into your website to handle financial transactions. In fact, many web hosting services offer packages with e-commerce tools already set up.

Of course, if you want your online store to become your primary income and not just a side hustle, you need to calculate how much money you’re making for the amount of time you spend working. If the scarf that took you four hours to knit only earns you a net profit of twenty bucks, you’d earn a much better living working at Taco Bell.

Starting an online store can be a very challenging way to make money online, but it can be very rewarding. Make sure that you’re careful when calculating your time and expenses and that you price your products accordingly so that you can create a sustainable business.

Drop-shipping

Drop-shipping is a business model where you sell the products, but the inventory is held and managed by another company. In contrast to building your own store from the ground up,  drop-shipping essentially lets you step into the role of a middleman, outsourcing basically all your logistics to a larger company. This approach has a lot of advantages, but some notable disadvantages as well.

Pros of drop-shipping

Low upfront investment. You don’t really need much to start up a drop-shipping business. Many drop-shipping suppliers even have apps and tools to help you set up your online storefront and manage your business. While a successful drop-shipping business requires some planning and forethought to connect to its customers, anyone who can afford the first month’s subscription could technically start a new store right now.

Outsourced logistics. Probably the biggest advantage of drop-shipping is that you don’t have to handle inventory management or shipping yourself. This means you don’t have to buy or make a huge amount of your product in advance, store it, or package and send it out. This allows drop-shippers to spend their time focusing on interacting with their customers.

Many product options. If you really want to open an online store, but you don’t make anything that you’d want to sell, drop-shipping can be a good solution. There are numerous drop-shipping suppliers, each of which has a catalogue of products from different brands. Savvy drop-shippers can plan out a product line that aligns with their interests and targets an underserved market niche that is eager to buy.

Cons of drop-shipping

High competition. Because it’s so easy to get into drop-shipping, there’s tons of competition. The internet is overrun with low-effort drop-shipping companies all selling the exact same items. If you decide to sell one of these products, why should anyone buy from your store when there are hundreds of others selling the same things?

There are ways to set yourself apart from the crowd, even when drop-shipping, but it requires planning and effort, which may not be the part of business that everyone enjoys.

Limited product control. It’s nice to have another company manage your inventory, but this also means that it can be hard to verify the quality of products. If there are problems with the products your customers are receiving, they’re not going to be mad at the drop-shipping supplier. They’re going to be mad at you. And you’ll have to figure out how to resolve the situation.

Nothing unique. While there are a lot of drop-shipping suppliers to choose from, you’ll never be able to offer a unique product in the same way as someone who creates their own product. This means that ultimately, the defining feature of your business will never be the product itself, which is a challenge for attracting and retaining customers.

Drop-shipping is all about connecting with customers

Drop-shipping is, in some ways, the opposite of your typical Etsy store. Whereas Etsy handles the business side for creators who want to focus on crafting their products, drop-shipping is a good fit for people with strong marketing skills who excel at dealing with customers. Since your product isn’t unique, your success depends on finding a niche with unmet demand and connecting with those customers.

To start a drop-shipping business, you need to sign up with a supplier like AliExpress, Spocket, or Doba. Different suppliers offer different products, have different pricing models, and offer different e-commerce tools. Choosing a supplier is a big decision that requires a lot of research, but if you’re a marketing whiz who enjoys analyzing market trends and assessing competitors, you should be in good shape.

Starting a drop-shipping business is easy, but turning that into a business that you can support yourself with can be extremely difficult. Additionally, many drop-shipping suppliers are based in China, and with the current escalating U.S.–China trade war, even the most successful drop-shippers might suddenly find their business model obsolete overnight.

Selling digital products

A nice middle ground in terms of complexity is selling digital products. Digital products avoid the overhead costs and labor of physical goods like materials, inventory, and shipping, which makes it much easier for those just starting out. And unlike drop-shipping, it allows you to sell something you made yourself, giving you both a creative outlet and a unique selling point.

Digital products range from designing print-on-demand T-shirts to creating online courses to self-publishing e-books. With such a huge variety of ways to create and sell digital products online, finding a niche that fits your particular interests and skills is easy. And because you only create your T-shirt design once, regardless of if you sell ten shirts or ten thousand, the sale of digital goods can translate into passive income streams.

Just as freelancers have to stand out from the crowd to get clients, those selling digital goods have to catch the eye of potential customers. Fortunately, the latter is a bit more straightforward as the value you’re offering customers is just the thing you’re selling. In many cases, your storefront essentially doubles as your portfolio, further simplifying the process.

But note: Lower barriers to entry mean more scams. Even if you do have unique talents and a creative vision you want to share with the world, you’ll be wading into a sea of self-proclaimed coaches and gurus, oversaturated marketplaces, and AI-generated slop.

While digital products are, in many ways, easier to make than physical products, their intangibility makes them a harder sell for customers and an easy target for theft. While selling digital products gets you out of dealing with inventory and shipping, you might have to spend time protecting your own intellectual property and copyrights.

Internet for online shops

Unlike many online jobs, running an online store doesn’t need the fastest download speeds. Most of your work will involve managing and updating your website, interacting with customers and suppliers, and keeping track of orders. This doesn’t necessarily demand more bandwidth than just surfing the internet.

Cost and reliability are the two things that you should look for in a home internet plan. Especially when you’re first getting started, you’re probably working with very slim profit margins. There’s no sense in spending $150 per month on your internet bill when you could get by just as well on a plan that costs $60. It’s a good idea to look out for deals on internet plans in your area.

A reliable connection is another important factor when running an online store. The last thing you need when updating your site or dealing with a customer service issue is to have your internet go out. In general, wired connections like fiber and cable experience fewer interruptions than wireless internet connections. However, depending on your location, wireless might be your only option.

Tips for online stores

Online shops are one of the easiest ways to sell a product. The great thing about creating an online store is that there is a relatively low barrier to entry. Setting up an Etsy shop or an eBay account doesn’t take much work, so these ventures are often attractive side hustles. It’s important to know what you need from a gig before you put any effort into it. If you’re just looking for a side hustle to supplement your income, you have a lot of flexibility with the work you do in your spare time. If you’re trying to make a living from your shop, you have to ensure that whatever you’re selling will pay the bills without consuming your every waking minute.

Value all the time you put into your business. People who make handmade products often fall into the trap of factoring in the cost of their materials but not their own time. Making a $10 profit on a pair of knit socks isn’t bad if it took you 20 minutes to make. If it took you two hours, you’ll probably not be able to pay rent with the profits from your Etsy store alone. You also have to account for time spent on other business tasks like updating your site and shipping orders when calculating your expenses.

Sell products you can keep in stock. Another popular bit of work-from-home advice I often see is to sell items like old furniture or vintage clothes. This is easy enough to do on sites like eBay, which are geared toward selling random stuff you found in the attic. Etsy even markets itself as a site for selling vintage items. That’s all fine and good, but what do you do once you’ve Marie-Kondoed yourself into unemployment?

If you want your online shop to be a sustainable source of income, you need a reliable inventory that can accommodate the ups and downs of fluctuating demands. If you can source a constant stream of vintage items, that’s great! But otherwise, you might want to develop a more viable long-term plan.

The bottom line: Online stores suit passionate entrepreneurs

There are certainly easier ways to make money online than opening an online store; however, it can be one way to turn a creative pursuit into something you do full-time. Alternatively, online stores can be a great fit for those with business acumen who are looking for a way to make money independently.

In any case, e-commerce is certainly not something to dive into on a whim. So, if you’re just mildly intrigued by the idea of opening your own digital storefront, you might want to try setting up an Etsy store as a side hustle in your spare time before you go all-in on e-commerce.