It’s always difficult to answer budding ecommerce entrepreneurs when they ask: “How much money can I make with an ecommerce store?”
The reason for this is simple: While there’s no guarantee to make money, there’s also no limit on the amount of money you’ll be able to make. It doesn’t matter whether you’re looking to earn $10,000+ every month, or you’re just trying to save up some extra cash for a rainy day. As long as you’re running your ecommerce business effectively you’ll be able to reach whatever financial goals you set for yourself.
We’ve created this article to show you how to start making sales with your ecommerce business and we’ve included some free tools which you can use to help you manage your finances. At the end of this article you’ll be filled with ecommerce ideas to make money for your own ecommerce store.
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Generating Traffic Is Essential for a Successful Ecommerce Store
It’s critical that you’re able to drive a large amount of traffic to your online store. When your ecommerce business has a high level of traffic, there are plenty of potential customers who are visiting your store and viewing your products. If your ecommerce store is selling great products at an affordable price point then it’s only a matter of time until you start generating both traffic and revenue.
Unfortunately, there’s no guarantee that you’ll generate traffic to your online store straight away. You’ll likely need to take advantage of marketing channels to draw traffic to your store. Before making a decision about which marketing channels are the best fit for your ecommerce business it’s important that you’re aware of the amount of traffic which you’ll need to generate to reach your financial goals.
Understanding How Much Traffic You Need
The amount of traffic which you’ll need to generate for your ecommerce store will differ depending on the amount of money that you want to earn.
You can easily find out the amount of traffic which you’ll need to generate by using Oberlo’s Dropshipping Traffic Calculator. All you need to do is input the amount of money you want to earn and the number of days you want to take to earn it in. The tool will break down the number of visitors which you need to draw to your online store and the number of orders which you’ll need to generate.
We’ve provided an example below which gives you an overview of how the tool works:
Note that the calculations from this example assume the following:
- The average conversion rate for an ecommerce business is 2%. This means that for every 100 people who visit your store you can expect 2 people to make an order.
- The average order value for ecommerce stores is $45. This number is taken from Oberlo’s user statistics.
- You will be using a 2x margin. This means you’ll be charging your customers double the price that you purchase the products for.
- The average cost to acquire a user is $0.35. This statistic is based on ecommerce businesses using Facebook ads in the US.
Once you have an understanding of the amount of traffic which you’re going to need to reach your financial goals you’ll need to think about how you’ll generate traffic to your online store.
How to Generate Traffic Through Marketing Strategies
The fastest way to generate traffic to your online store is through marketing campaigns. There are a variety of different marketing channels which you can use to draw potential customers to your ecommerce store. Each marketing channel has unique benefits and works well for both multi product and single product businesses.
We’ve broken down the different marketing channels which you can use to help you make the right decision for your ecommerce business.
PPC marketing, or pay-per-click marketing, involves businesses paying for a better chance to generate traffic for their online stores. If you’ve ever noticed that a Google search result had a green ‘Ad’ logo next to it or a Facebook post with ‘Sponsored’ at the top, then you’ve already seen PPC marketing in action. Successful ecommerce stores typically have some PPC marketing campaigns running, as it’s a great way to make sales.
PPC is a great marketing strategy for generating traffic, increasing awareness for your brand, and ultimately increasing the number of sales you make. You’ll receive results from your campaigns quickly and you’ll only incur marketing fees when somebody clicks on your advertisement.
There are three main platforms which you can use for PPC marketing which are Google, Bing, and Facebook. If you choose Google or Bing for your PPC marketing you’ll be able to research the number of people who are searching for what you are posting, which will help to make your ecommerce stores advertisements more effective. The downside of using Google and Bing is that you won’t have exact information about your target audience, like their age, gender, or interests.
If you’re using Facebook for your PPC marketing then you will be able to obtain information about your audience’s age, gender, and interests, but you don’t know how popular your advertisements will be.
Email can often be overlooked as an important marketing channel but it is a platform that people are always logged into and checking. Furthermore, email marketing can drive a return on investment of up to $32 to every $1 spent, which is way higher than PPC.
Devising a great email strategy can turn into a sales channel that pushes existing and new traffic to your website time and time again. A good example of a campaign would be one that includes free informational content, giveaways, discounts or sales codes, refer a friend coupon codes, and invites to preview new products before the rest of the world. Helm Boots use a sales discount to entice website visitors to sign up to their email list.
Nurturing your subscribers is important in order to rely on your audience to increase traffic over time. This could mean sending out a bi-weekly email blast so your audience knows when to expect your email. Or you could segment your audience by demographics, psychographics, etc., and provide actionable information relating to people’s interests, beliefs, wants, or needs. Why will this prompt more traffic to your website? By giving your audience personalized content you develop social proof cases where your audience is comfortable sharing your products or services with their close-knit groups.
Social Media Marketing
Social media can be a great marketing channel to promote your business and generate traffic for your website without needing to spend money or create new content. Sharing blog articles, product and services, positive reviews, company news, and videos over social media in a non-sale way can help grow a community of avid followers who will share your content with others to help you grow your business.
But social media can be a great customer service tool also by allowing messenger communication and marketing. Companies like Chatchamp provide services where you can automate sales qualification, forward new products to followers, and remind customers of abandoned carts all through Facebook Messenger or WhatsApp. There are many services like this who cater for other social media platforms in the same way so it is good to audit your social media presence and spend time optimizing communication on the most important profile for your business. This can lead to not only an increase in website traffic but also improved online store profits.
Search Engine Marketing
SEO, or Search Engine Optimization, is necessary for every company to undertake regardless of their size. It is necessary as it is the optimum way to increase traffic hugely to your website without spending money on advertising. SEO, in its essence, is optimizing certain elements of your website so that search engines will rank you as close to the top of the search engine results page when users search for a group of keywords.
When a website is young it is best to spend time optimizing on-page elements like content optimization, meta-title optimization, and image optimization. But as your website grows in reputation off-page SEO like link building, and social media can be a great way to boost your search engine rankings and increase your website traffic.
Low-Cost Marketing Channels
If the thought of investing money into your marketing efforts sounds like a daunting prospect then you can take advantage of low-cost marketing channels. Low-cost marketing channels take longer to yield results than PPC marketing, so it’ll take longer to draw the necessary traffic to your online store, but if done effectively they can offer a cost-effective way to draw traffic to your ecommerce store.
Content marketing is a popular low-cost marketing strategy which you can use to generate traffic to your online store. You can create a blog and publish insightful SEO content which is related to your products to increase your organic search rankings and brand authority. You can use social media for your ecommerce business to alert your audience about new products, flash sales, or announcements related to your ecommerce store.
There are also discussion platforms, like Reddit, which you can use to generate more traffic for your online store. Reddit has a wide variety of niche-specific categories which are known as ‘Subreddits’ that you can use to engage with other users who are interested in your products.
If you’ve created any content marketing resources then you can also share them on Reddit, providing that they’re relevant to an ongoing discussion. As you already know that these users are interested in your niche, it’s a great way to draw high-potential customers to your online store whilst creating awareness for your brand.
Working Out Your Profits
When your ecommerce business starts to make sales it’s important that you can work out how much of the money will equal profit for your business. Oberlo has created a simple Monthly Profit Calculator on Google Sheets which you can use to work out the amount of profit that your online store is generating — all you need to use it is a Google account.
All you need to do is copy the form which we’ve created and paste it into your own Google Sheet and you can input your own figures into the sections marked in green. When you’ve input your figures into the sections in green the Monthly Traffic Calculator will generate your gross revenue, net revenue, and your profit. It’s important that you understand how the calculations for gross revenue, net revenue, and profit work, so we’ve broken them down below:
- Gross Revenue: You can work out the gross revenue which your online store has earned by multiplying the price which you’re selling your products for by the number of products which you’ve sold.
- Net Revenue: To work out the net revenue you’ll first need to multiply the cost which you acquire your products for by the number of products which your online store has sold. When you’ve completed that sum you simply subtract your result from the gross revenue and you’ll arrive at your ecommerce business’ monthly revenue.
- Profit Earned: To work out the profit which your store has earned in a month you simply subtract your marketing budget from your net revenue.
It’s Time to Start Earning Money
There is no doubt that ecommerce and dropshipping is profitable. And now you’re equipped with the tools and knowledge which you need to reach your financial goals — it’s time to start earning money. We just have one last piece of advice for you — make sure that you test your marketing campaigns and your product prices, it’ll really help you to grow your ecommerce store.
You may find that your Adwords campaigns aren’t successful, so you can then try out Facebook campaigns. You can also try adjusting the pricing of your products — if you find that your customers are willing to pay more then you’ll be able to spend more money on your marketing efforts.