How Does an Ecommerce Website Make Money? (With Inspiring Case Studies)

How Does an Ecommerce Website Make Money

It’s a bit of a no-brainer that different ecommerce sites make money in their own way. But what this means for you is that there are options to make money online in whatever way makes the most sense for you. 

But how does an ecommerce website make money?

With a global market of over $13 billion, subscription ecommerce is one of the ways to make money in this space. 

Whether you want to sell subscriptions or not, you should consider how successful ecommerce businesses are making money.

Then, you don’t have to reinvent the wheel. Instead, you can use those successes to inform how you run your home business.

By the end of this article you’ll know all about:

Let’s jump into it!

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Ecommerce Models in General

When considering how to make money with ecommerce, you should look at examples of a successful ecommerce business. You can choose between a couple of different models:

b2bBusiness to business (B2B): 

Your online business sells products or services to other businesses. For example an online hardware store will sell tools to tradespeople.

b2cBusiness to consumer (B2C): 

Your business sells products or services directly to consumers. For example a yoga instructor will sell online classes to individuals.

c2bCustomer to business (C2B): 

Individual customers post jobs, and companies bid to complete them. For example, you might post a job on Craig’s List to have a landscaper create some designs for you.

c2cCustomer to customer (C2C): 

Individuals sell to other individuals through a marketplace. For example, you might list your house for sale on a website that cuts out the real estate agent.

Fortunately, you can find plenty of examples of successful online businesses to use for inspiration.

Consider how the following ecommerce websites have managed to make money. That way, you can use these ideas to make money in your own home business.

Ecommerce Success Stories

Warby Parker

Warby Parker is a popular online store that sells glasses. The business got its start when the creators launched the website for it in 2010. Amazingly, it only took the company three weeks to meet its sales goal for the first year. Wow!

If that’s not an ecommerce success story, I don’t know what is.

warby parker

Now, Warby Parker has grown into a huge brand that serves thousands upon thousands of customers. By using high-quality materials and working closely with manufacturers, they make sure they create frames that look good and are comfortable for consumers.

While the company does have a few store locations, their website is the driving force of their business. You can use it to order prescription glasses and sunglasses. And you can even order blue-light glasses with or without a prescription.

Edible Arrangements

Like Warby Parker, Edible Arrangements operates both online and in stores. However, the majority of the business is online. The company uses an email list to promote its products and get more orders.

edible arrangements

To help get people on their email list, Edible Arrangements has a great website. I may have licked the screen when I visited the site. Just once.

Customers can view the available products and place an order right on the site. And if they live near a store location, they can even pick the order up.

What also helps make Edible Arrangements a successful ecommerce business is the fact that they offer free shipping. That makes it easy for customers to estimate the total cost of their order.

Modcloth

Modcloth is another successful ecommerce business, but they sell clothing. It’s one of the oldest ecommerce stores, having opened in 2002. The company focuses on selling women’s clothing that you won’t find elsewhere.

modcloth

Their style is quirky and fun, and the clothes aren’t mass-produced or super expensive. That style has helped the company get and keep customers. If someone loves the style of Modcloth, they tend to buy a lot of the pieces.

Modcloth also makes it easy to view their selection on their website. The company creates names and stories for each of the items to make them feel more personal. That allows consumers to connect more with the clothes. Smart marketing if you ask us.

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Shopify

One of the most well-known ecommerce platforms is Shopify. An ecommerce business in its own right, the platform helps other business owners create online stores. Shopify brings in a ton of traffic, and more business owners are using it to make money online.

shopify

As of 2021, Shopify powers over a million businesses all over the world. The Shopify website itself attracts 58 million visitors per year.

That’s the sort of traffic that any ecommerce store owner would die for. Although what would be the point of that… hmmm.

Shopify makes it easy to set up a store and make money with ecommerce. Because it helps other businesses solve that huge problem, it’s able to bring in a lot of revenue. This B2B (business to business) company is one of the most successful examples online.

AppSumo

Another excellent tech-based ecommerce business is AppSumo. This ecommerce business works with other ecommerce businesses and technology companies. They find these businesses and ask to partner with them on discounts.

appsumo

AppSumo will then offer the discount to customers for a short period. That encourages people to sign up quickly to save money. Some of the deals are more than half off, so customers can get access to what they need at a fraction of the cost.

Also, since AppSumo looks for new partnerships regularly, they make you want to come back to their site to see the new deals. Not only does that make AppSumo money, but it also helps their partners make money.

Dollar Shave Club

Dollar Shave Club is probably the most successful example of subscription-based ecommerce companies. New customers can order a razor handle and a few blades to get started. Then, they place an order for new blades every couple of months.

To us, Dollar Shave Club really opened up the flood gates for what’s possible with an ecommerce subscription-based model. Geniuses.

dollar shave club

This subscription model makes it easy for Dollar Shave Club to keep making money. Once someone starts to use their razors, they will have to buy new blades. And since most people shave at least occasionally, Dollar Shave Club has a huge customer base.

The company is able to make good money despite the fact that they don’t make the razors they sell. Instead, they use white label razors. And they also sell other grooming products to help increase profits. You can buy from their website or find them on social media.

How Does an Ecommerce Website Make Money?

Now that you know a bit about some common ecommerce models, consider some other options you have when working out “how does an ecommerce website make money?”:

    • Finding the Right Niche – such as the shavers example above
    • Tapping Social Media – use Instagram to sell products
    • Commissions – work in sales for an ecommerce company and make commissions.
    • Fixed Subscriptions – such as the monthly payments that businesses pay Shopify (example above) to use their platform
    • Deep Discounting – sell a greater volume at a big discount through selected avenues

How Much Money Can a New Ecommerce Website Make?

A new ecommerce store has the potential to start making thousands of dollars within a few months after launching. Some businesses may be able to make over $60,000 per month within the first quarter.

Did you read the Warby Parker example above?

Amazingly, it only took the company three weeks to meet its sales goal for the first year. Wow!

Within a year, an ecommerce business may be able to make more than $120,000 in a month. And the numbers keep going up from there.

However, the exact amount you can expect to make will depend on many factors. The amount of web traffic, the price of the products, and the user acquisition cost can all affect the profit you will earn with a new ecommerce store.

Not to mentioned marketing!

As Peter Drucker, the well known management consultant, educator, and author said:

Peter Drucker

So here is how you can make money online through ecommerce by focussing on marketing. 

Marketing

How does an ecommerce website make money??? Marketing!

To actually turn a profit from your ecommerce store, you need customers. If you want to get customers, you need to get traffic (i.e. visitors to your website). Marketing is the best way to do that.

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Fortunately, marketing is relatively easy and can be cheap for ecommerce businesses. You don’t need to advertise in a local paper or on the radio. But you do need to consider the best ways to market your online store.

Here are a few options to consider.

ppcPPC Marketing

Pay-per-click (PPC) marketing uses ads where you pay a small amount every time someone clicks on the ad. You might have a set rate, so each click costs the same amount. This type of advertising is popular on social media and search engines.

You’ll need to use keywords and demographics to get your ad in front of the right people. On Google, for example, your ad will show up above organic search results. If someone clicks on your site, you’ll get a new viewer and a potential customer.

PPC marketing does require you to have some sort of budget. You can set a daily budget to keep from spending more money than you have. Then, you can still get clicks, and you can get as many clicks as you can afford.

emailEmail Marketing

Email marketing is an excellent method for contacting your current and former customers. When someone buys from you, you can add their email to your email list. The next time you have a sale or a new offer, you can send an email promoting the offer to your subscribers.

You may also be able to get email signups from people who haven’t bought from you. Maybe you choose to offer a discount code or a free gift to people who join your list. That can encourage people to subscribe, and you might make a sale with that discount code.

Make sure you give website visitors plenty of opportunities to sign up to your list. Add a signup form to the header of your site, within your pages, and at checkout. That way, you’ll be able to capture more emails for marketing later on.

seo marketingSearch Engine Marketing 

Search engine marketing can include PPC marketing and organic search engine optimization (SEO). Both types of marketing involve using keywords that are relevant to your products or overall business.

As you choose your keywords, you can write copy for the page or the ad. Over time, your pages may start to rank first for your chosen keywords.

Whenever someone searches for that keyword, your site will be the first to come up. Then, they can click on your site and browse. In some cases, the visitor might even buy something on their first visit.

FAQ

You may still be wondering things like, how does e commerce make money for businesses? Before you get into running an online business, you should consider if it’s right for you. That way, you can be successful.

Ecommerce sites can make money in a few different ways, and it depends on the store. Some businesses, such as Warby Parker, sell a product to make money. Other businesses, like Shopify, sell subscriptions for software or other products.

A lot of ecommerce stores sell different products to diversify their income. Selling more products can help increase orders and the average value per order. When you only sell one thing, you will need to get a lot more customers to make money.

Like any business, an ecommerce store needs to earn a profit. So you need to keep costs low and price products high enough to do that. Then, you can make money with your ecommerce site.

Ecommerce can be a good career for some people, but it’s not for everyone. If you’re willing to work hard to start and grow your store, you can turn it into a career. However, a lot goes into making your store a success.

You’ll need to spend time creating or sourcing products to sell. Once you have the products, you’ll have to spend time and money marketing your business.

If you’re willing to put in the work, ecommerce can be a fulfilling career. But if you want a career that’s easier and less time-consuming, ecommerce isn’t going to be a good option.

You should use whichever ecommerce method you like the best. For some business owners, it makes more sense to use a subscription model.

However, if you can’t maintain that, you may want to focus on selling one-off products. That way, you can still make money, but you don’t have to keep up with running a subscription product or service.

The time it takes to make money with ecommerce depends on your business. Some business owners can make money within a few months.

However, it takes other businesses years before they become profitable. If you sell mostly digital products, you might turn a profit earlier than a business that sells physical products.

Conclusion

How does an ecommerce website make money? If you want to start an online business in the ecommerce space, you can make it happen in a few ways. Depending on how hard you work and what you sell, you might make a lot of money over time. Or maybe quite quickly. Your destiny is in your hands!

Make sure you choose the right niche and that there’s a market for what you want to sell. Then, you’ll be able to own a business with sustainable growth that bring you all the time and financial freedom you could dream of. 

If you enjoyed this article we’d be endlessly grateful if you shared it with anyone you know. They’ll thank you for it 😉

P.s. If you’re looking around for online business ideas, check out our articles on creating online courses or starting a lead generation website. These will definitely get the entrepreneurial juices flowing!

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