A complete guide through what it actually takes to build a profitable online shop

Oct. 15, 2020

Hey, and welcome to my complete guide on how to build a PROFITABLE online shop.

Let me just kick things off with something potentially discouraging, yet totally realistic for a huge majority of people who refuse to take the time to learn the ropes first.

You see, the cold hard truth is this:

IMPORTANT: Until you learn how to set things up correctly, there's a very good chance you'll end up LOSING MONEY with your (first) online store!

And it will happen because of any combination of reasons I'm about to reveal in this guide.

So, if you're serious about beating that snowball's chance in hell of ever making millions online, or at least take a realistic shot at earning a decent living from your online store...

Then pay close attention as you read this guide all the way through.

But before we dive in, here's a short roadmap of everything you can expect to learn here (use it to quickly navigate through this guide):

How to actually make money with your online shop?

At the highest level, there are literally only two things you can ever do to make (more) money with your online store:

  1. DRIVE DOWN YOUR COSTS - Mostly, this comes down to learning how to pay less money for advertising, so you can ultimately afford to bring a ridiculously high numbers of visitors to your shop every day. And more importantly, you'll need to select products that will actually be interesting enough to those visitors AND be able to buy or manufacture those products at costs that will allow you to make some profit).
  2. DRIVE UP YOUR SALES - This comes down to a hugely overlooked, yet extremely critical factor: optimizing the front end AND THE BACK END of your online shop. If I had to name two reasons why most people never make any profit, then selecting the WRONG product and never even setting up that invisible part of their online store (the backend) would easily be the two main issues.

In other words, your ultimate goal will be to reduce the costs of attracting fresh eyeballs to your online store and then keep optimizing it, so you can turn more and more of those visitors into lifelong customers of your ecommerce business.

And once you do that, once you finally reach that coveted point where your costs actually become LOWER than your sales, then there's just one last thing left to do:

You need to SCALE your online business to a point where your online shop starts bringing in more money than you'll ever care to spend.

Simple, right?

The devil, my friend, is in the details, so let's dive a little deeper.

Finding the perfect products

Take it from someone who's been there before.

I have personally wasted YEARS of my life trying to promote and sell a "bad" product.

The product wasn't a scam or a rip off, it just had a few crippling disabilities I was totally unaware of as a complete newbie.

In other words, if I could go back in time with the knowledge and experience I have today, I would NEVER have picked that particular product.

So, in order to help you avoid making the same mistake, I really need to stress this:

IMPORTANT: Selecting the right products for your online shop is absolutely vital for the success of your store.

Here are a couple of qualities you should look for in a "perfect" product:

The price tag sweet spot

When it comes to setting the price tag for any of your products, you have to find the sweet spot.

On one hand, the price can't be too high or it will be a much tougher sell than some normal-priced product.

But on the other hand, the price can't be too low, because...

Even though low prices might make it a bit easier on you to sell a huge number of products, low-priced products could also make it incredibly hard for you to make any meaningful profits.

Most of the time, you probably won't be able to charge a whole lot more for your product than what your competitors can.

but you also won't be able to charge a lot less, because suspiciously low prices can make your product look "cheap" and of questionable quality.

If you're looking for a rough figure, I'd look for products you can sell in the $30-$60 price range.

However, the final sales price of your product(s) is only one piece of the puzzle...

High profit margins

A couple of years ago, a friend of mine was (quite successfully) selling phone cases through his online store.

His final price tags for the cases fell between $10-$20, which can be a bit low when it comes to most products, BUT...

He was buying those phone cases at 50c-60c apiece (he could score such a price because he was importing them in bulk).

So, without any advertising or shipping costs, the profit margins on those phone cases could reach as high as 90%!

This is an extreme case and let me just tell you right off the bat that you're VERY UNLIKELY to score deals like this.

(Usually, your profit margins will fall into the 30%-40% range.)

But the important takeaway is that you MUST find products that leave enough room for profits (that's between the price you will pay for the product and the price you can sell it at).

A rule of thumb you can go by is that you need to be able to sell a product at AT LEAST a 30% profit margin - though, the cheaper the product, the higher your profit margin will need to be.

On to another expensive mistake I made with the first product I chose to sell.

Repeat orders

Another type of products you should most definitely consider, are repeat order products.

Just think about this.

If you're actually good enough to convince your customer to buy a product from you, then this is what will happen with most products...

That same customer, no matter how satisfied with the product, may not ever feel the need to buy anything else from you.

You'll be left with having to hustle hard to convince him to buy something else from you, or you'll simply have to work on attracting new visitors to your store.

But here's the magic that happens when you're selling repeat-order products - for example, a monthly or even weekly delivery of dog food (or anything else people regularly come back for):

Your customer will keep paying you for the same product or service you're providing them with for months, even years in the future.

This means recurring business, profits and brand building for you, as long as your customer still needs it - and doesn't become disappointed in your product/service.

There's a lot more to product selection and I can't cover all the details here. But if you follow just these three core rules, you'll already be WAY ahead of the curve.

One last thing about finding the perfect products for your online store.

Product sourcing

Well, unless you can manufacture the products yourself, you will have to "source" your products somewhere.

Sourcing your product means that you find a vendor, negotiate prices, sign a reseller contract, buy some of the product, and start selling it.

In this case, you have to deal with stock keeping, warehousing, shipping, billing, accounting, and all the legal stuff you need to take care of for your ecommerce business.

But especially if you're just starting out, there is a far easier alternative that will allow you to skip all that extra hassle, and just focus on your online shop at first.

So, if you just want to get started as quickly as possible, you can check out my guide on how to sell Amazon affiliate products through a Shopify store.

And while selling products from Amazon may be a lot less profitable than if you sourced products on your own, this will allow you to set up test some products on your online store within just a few hours.

(Which means that you can start worrying about sourcing, stock keeping, shipping, taxes, and all the other ecommerce stuff AFTER you've already successfully tested a product via Amazon.)

Now, let's take a look at how you can (and by that I mean you NEED to) optimize the front end of your store.

Optimizing the front end

Provided they didn't totally miss the mark with product selection, a lot of rookie online store owners make the mistake of starting out with a poorly designed front end.

This could mean any thing from bad product photos, poor product mix, lack of vital information (refund policy, etc.), or any other issues that can cause unnecessary friction in the checkout process - which in turn causes lower sales.

But before you can even begin to work on your front end, you need to select the right ecommerce platform for yourself.

Ecommerce platform

I'm sure you're familiar with many ecommerce platforms already, but here's a quick list of the most popular ones (in no particular order):

I won't go into more details and specifics on either of these ecommerce platforms in this guide, but I will say that my personal favorite is definitely WooCommerce.

That doesn't mean WooCommerce is the best choice for you, because to be able to take full advantage of the customizability of a WooCommerce shop, you need to be (or have someone on your team that is) a web developer.

Personal preferences aside, I've created a handy beginner guide to creating an online store with Shopify for you.

(The guide will make the advantages and disadvantages of choosing Shopify as the ecommerce platform for your online store perfectly clear, so make sure to take a look at it if you're still deciding.)

Now, let's take a close look at some of the things you should take care off on your online shop's front end after you set it up.

Content and design

The content of your online store includes everything that's visible to all store visitors:

The home page, the category pages, the product pages, the checkout pages, the terms and policies pages and whatever other content pages you might decide to publicly display on your online store.

Another hugely important factor here is that the design that NEEDS to give your online store that professional and niche-friendly look.

Now, unless you can afford a professional designer and a coder to have a custom theme built for you, you'll have to go with one of the free or paid themes.

(Here are some examples: Shopify themes or WooCommerce themes.)

And if you're just starting out without a budget, you can relax.

Even most of the free themes are professional enough for you to get the ball rolling.

Another hugely important factor are the product photos or videos. You could offer your visitors an otherwise awesome product they'd be extremely satisfied with...

But if all they see are some dark, unclear and overall low quality photos of said product, that's a virtual guarantee that your sales will be way below their true potential.

Then there are the optional, but very useful technical stuff you can take care of: SEO, page loading speeds, remarketing pixels, etc.

(Or one of the very first things Shopify store owners should take care of: remove the Powered by Shopify link.)

But now, let's take a look at another important part of front end optimization that a lot of store owners place large hopes in...

Apps and plugins

There are literally thousands of different apps you can install from the Shopify App Store or plugins that you can install for WooCommerce.

Some of these apps and plugins are free (and a lot of them not), but a huge majority of these apps were designed for just one purpose...

To add some sales on top of the sales you're already making in your online shop.

And this is very important...

These apps can actually help you make some extra sales (the good ones will more than pay for themselves), but you can't really count on apps to "save" an otherwise failing online store.

In other words, unless everything else is properly taken care of (the products, the rest of the front end, the back end and proper traffic) so that your online store is already capable of making a profit on its own, then apps and plugins most likely won't be able to turn the tables.

But once you do set up the foundations of your online shop correctly, throwing in a couple of conversion-boosting apps and plugins will deliver a nice boost of your sales.

On to another potentially profitable, yet widely overlooked (probably because it's literally invisible) part of your successfully profitable online shop.

Optimizing the back end

No matter how deep your competitors dig, they may never truly discover the full scope of a well-designed back end of an online shop.

In other words, the backend of your store includes all the stuff that you can set up to work in the "background".

(To try and make some sales long AFTER your visitor has already left your shop or even bought a few products from you.)

I call this the invisible part of your online shop, because your store visitors will not notice any of this back end stuff even exists, no matter how much time they spend clicking through your store.

Let's dive right in.

Boosting sales with remarketing

Remarketing is a heavily underutilized method you can use to convince the visitors that have already shown interest in some of the products in your shop (but then left for whatever reason) to come back and actually buy that product.

How does remarketing work?

It's pretty simple.

Once a visitor visits a certain product page on your store, you can automatically leave a tracking cookie on his computer.

And because of that cookie, whenever that same visitor goes to Facebook, YouTube, googles something or visits just about any other website, you can now show him the ads for the same product he was checking out on your shop earlier.

And the effect remarketing can have on your visitor can be quite impressive.

Because you see, quite soon after they were checking out a certain product on your online store, they're suddenly noticing that same product all over the Internet.

Not only does this remind them they should come back and order the product they were interested in, they're also thinking that your product and your shop must be quite popular and successful since they're being advertised all over the Internet.

And while you do have to pay for those remarketing ads, they're practically guaranteed to work a lot better on people you're remarketing to, than on people who've never been to your online store before.

But here's an even better and more powerful way to boost your sales without spending almost no extra money on advertising...

Sell more with email marketing

Email marketing is hands down the most overlooked, yet powerful method of increasing your sales.

(That works on people long after they have already left your online shop, or even bought something for you.)

The bloggers know this strategy well, because when properly set up, it can easily double, triple or even quadruple your sales.

Just think about this for a while...

As soon as you offer something of value to your visitors - discounts, special deals, free guides, etc. - so that they subscribe to your mailing list, most of them will stay on that list for months (if not years).

This means that you only had to pay for advertising once (to get their email), but after that, you can then email your subscribers over and over again and literally keep doing this for years to come.

And it's true.

You can take my car, my house and most of the other stuff I own, too.

You can wipe my bank accounts and take all my cash.

But as soon as I can get to a computer and send out a special offer to my email list, I'll be able to earn enough money to get back on track in no time.

Never underestimate the power and long term potential of email marketing.

At least for the time being, email marketing is still THE KING of online marketing.

So stay ahead of everybody else and learn how to use this wonderfully profitable tool alongside your online store as well.

Ok, so let's say that you've selected the perfect product(s) and that you've optimized both the front end AND the usually neglected back end of your online shop...

Now it's time to bring as many eyeballs as possible to your highly profitable ecommerce business.

How to attract lots of visitors

You see, when it comes to attracting people to just about any kind of a website (not just online stores, but your blog, your Facebook fan page, etc.), you can try to attract people for free, or simply pay for traffic.

So ultimately, your choice comes down to:

The so-called "on foot" promotion which has an awesome benefit of being free (it looks a lot less awesome once you actually try to do it at scale), but has a HUGE downside I'll tell you all about in a minute.

OR

The paid advertising, which has a huge downside of not being free, but as it turns out, it can make the most sense ba far - if you're entering this business to not only survive, but actually MAKE A KILLING.

Here's what happened when I made this same choice just a couple of short years ago:

Free traffic

When I started my first online business a couple of years ago, I made a rookie mistake of focusing way too much on trying to get "free" SEO traffic to my ecommerce business.

How did I do it?

By writing lots and lots of content and hustling hard to promote that content on other sites...

Just so Google would eventually start liking my content enough to bring lots of eyeballs to my website (at no out-of-pocket costs).

It took me a long time, but eventually I did become really good at it.

So after a couple of years, I started getting some pretty amazing results.

But looking back now, I can only still say this:

IMPORTANT: Whatever you do, don't rely just on "free" (SEO) traffic for your online business.

Why?

First of all, there's no such thing as free traffic.

Not unless you're willing to pretend that investing countless hours of your own time (and potentially having to burn through your savings for months before earning any serious money) doesn't count.

And second of all, if you can't make a profit with your online shop with paid traffic, then there's something seriously wrong with your product(s), your front end, your back end, and/or your traffic.

Which means that instead of massively scaling your business with paid advertising, you could waste a lot of time struggling to bring more free traffic to your "broken" (as in, not profitable) ecommerce business.

And don't get me wrong.

I'm not saying you shouldn't try to optimize your online store to hopefully attract some SEO traffic as well.

I'm just saying that unless your shop is profitable enough so you can afford to pay for advertising, you'll be facing a snowball's chance in hell of ever making it big with free traffic alone.

With that out of the way, let's take a closer look at your paid traffic options.

Because of the setbacks involved with free traffic (that mostly come down to the fact that it can take forever to build), a huge majority of shop owners opt for paid traffic instead.

And they're right to try and do so.

Investing a few hundreds of dollars (or even just tens of dollars in some cases), is a wuick and reliable way to test your online shop.

And it may take a couple of these tests before you know how to bring in the right traffic, how to offer the right type of products and how to properly optimize the front and the back end of your online store, before you actually start making some profits.

But I can basically guarantee this will happen MONTHS, IF NOT YEARS EARLIER, than if you tried to get to the same level with free traffic.

And like I said, once you have a profitable online store on your hands, all you have to do is scale the whole thing to massive levels of revenue!

Now, there are literally hundreds of different channels you can get paid traffic from.

But these days, most shop owners seem to be attracting people to their online stores via Facebook ads, Google Adwords or Instagram influencers.

Time to wrap this guide up with...

Summary (actionable takeaways)

I wrote this guide to building a profitable online store to give you a rough overview about how the whole process looks like.

So here's a short recap of everything that you'll have to do to make your online shop not only profitable, but massively scalable:

  • First, you'll need to research and pick products for your online store that your visitors will actually care about (or there's no way they'll actually open their wallets to you). Selecting the wrong types of products can mean the difference between failing to ever reach profitability and a smooth ride to profitability, requiring only minor tweaks and adjustments to your online shop.
  • Second, you'll need to make your front end (the visible part of your shop) attractive enough - with awesome design, product photos and a high-converting checkout process.
  • Third, unless you really nail it with your products, you'll need to use remarketing and email marketing to reach profitability by boosting the sales in the back end of your store (the invisible part). And even if your online shop is profitable without email marketing and remarketing, a well-optimized back end can easily DOUBLE or TRIPLE the sales you'd be making without it, so ignore this at your own expense.
  • Fourth, once everything else is properly set up, you'll need to bring in the right kind of people (ones that will be so interested in your products that they'll actually order a few). The difference between investing a few hundred dollars into paid ads and trying to attract free traffic to your online store can literally mean months, if not years of hard work for the same effect. So go with paid ads if you can.

ABOUT THE AUTHOR
Rok Sprogar

Hi, I'm .

I'm the guy behind all the useful and actionable ecommerce advice you can find on PreciseFunnels.com.