What Is It?
There are several different types of online stores a person could use to make money online. One way is to take leverage an online marketplace, such as Amazon , EBay or Etsy, while you take care of the inventory and shipping. That is called Fulfilled By Merchant.
How Does It Work?
Traditional online stores are the ones where companies run all three parts of it; selling products, inventory management and shipping. If you want to leverage an online marketplace for it’s already existing large number of shoppers but either the marketplace doesn’t ship good for you or you don’t qualify, then this would by a Fulfilled By Merchant situation. You would take care of keeping track of the inventory and shipping orders.
To start you will first need an to register for the marketplace. Much like running your own online store, this is also one of the most easiest to initially setup, with the only difficulty being registering products for the marketplace. The top three marketplaces most people use are are Amazon, EBay and Etsy. Of those three, Amazon has the greatest number of rules to register products while EBay has the least.
Once everything is registered and inventory numbers are set, then you will need to set your shipping strategy/charges. This is an important decision to make. Charge too little and you can lose money. Charge too much and you lose business.
Once that is all setup you will start to get notifications when goods are ordered and you need to ship them out. As you are taking care of the shipping this can be quite time consuming and expensive to maintain. Also it is hard to easily scale up if the demand for your product increases.
How Much Money Can You Make?
Much like every other online store, this is not a get rich quick gig. When leveraging an online marketplace you can get far more business than your own store however at a cost of competing based on cost (unless you have unique products) which drives down margin. The one big difference between this model and Fulfilled By Amazon is that FBA has the ability to scale up quite quickly and is much cheaper to ship. If you do get more successful, you should look at shifting over to that model if possible.
Most stores that are just starting out make less than $200/month profit the first couple months once you factor in all the expenses.
More successful, well advertised ones can eventually make $5,000-$10,000+/month in profit. There are cases of people making $20,000+/month in profit but they are very rare.
- Compare shipping strategies for competitors on the online sites. Test creating an order (but not really purchasing) for both in country and out of country to see the costs they charge. This will give you an idea of what you will be compared against by customers.
Categories: Long Term Payoff