In a little more than a generation, e-commerce has become one of the biggest industries in the world, showing the power of the internet and the appeal of convenience, fast delivery, and the ability to shop from the comfort of your home. While you have likely shopped online, you might not know the whole story behind e-commerce or how you can take advantage of online retail platforms to make money for yourself. Keep reading to learn more.
How do you make money in e-commerce?
You don’t have to be Amazon to make money in e-commerce. In fact, one of the things that are appealing about the industry is that even individual sellers can start e-commerce businesses, making online retail more accessible than traditional physical retail.
If you want to sell online, you simply need a product. From there, you can partner with any one of a number of e-commerce platforms, such as Amazon, Etsy, and Shopify, depending on your target audience and how much control you want to have over your e-commerce business.
Amazon Bedrock
If you sell on Amazon, for example, your brand will be subsumed within the broader Amazon platform, making it harder to draw traffic to your website. If that’s your goal, a website like Shopify would be a better fit since Shopify gives you the tools you need to sell online from your own website.
One way to run a successful e-commerce business is by selling a niche product that isn’t widely available or that consumers are often looking for.
Another idea is retail arbitrage. Retail arbitrageurs find cheap goods by going to closeout sales, thrift stores, and other such discount opportunities and then selling those products online for more money. The resale market through sites like eBay (EBAY -1.45%) offers a good platform for arbitrage.
Individual sellers can also take advantage of features like dropshipping, which means that they don’t even need to hold inventory. They can arrange for the product to be shipped directly to the customer’s address once it’s ordered.
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Investing in e-commerce
E-commerce isn’t just a good business for online sellers. It’s also been highly lucrative for investors as stocks like Amazon and Shopify have soared over their histories.
More recently, e-commerce stocks have struggled as they faced difficult comparisons with the pandemic boom, and consumer shopping habits have shifted back to stores and services like travel and restaurants. However, the online retail channel should recover since there’s still a lot of market share to be gained from brick-and-mortar retailers.
No one knows when the next bull market will start, but based on their long-term success and discount stock prices, it’s a good bet that e-commerce stocks will outperform when the stock market bounces back.
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