Every business owner’s dream is to make money so, E-commerce is not left out in that race
E-commerce sites make money just like any other businesses do: sell a product at a price that’s higher than the cost and overhead combined.
The business model is pretty much the same as traditional retail stores. The biggest difference is that 90% of an e-commerce business operations are running online.
Three Metrics to Consider and Maximize E-commerce Revenue
1. CAC: Cost of acquiring a customer
The CAC is how much money you spend to get one customer. From money spent on a Facebook ad to PPC, content marketing, offline promotion, SEO and staff remuneration, CAC includes all the money spent over the course of the acquisition funnel.
The lower the cost of acquisition, the better.
2. Conversion Rate
Conversion Rate reveals the percentage of visitors to your website that is performing your core conversion activity. In the case of an eCommerce company, this is “buying”.
For you, Conversion Rate, then, is the percentage of visitors who buy from your e-commerce store.
3. AOV: Average Order Value (Or Average Market Basket)
The AOV shows you the average amount of revenue that orders bring to your eCommerce website. The metric tracks the amount of money that each order brings in and calculates an average to provide insight into your present and future revenue.
For instance, if you made N14000 from four orders, then your AOV is N3500 per order.
5 Best Ways to Make Money with E-commerce Site
1). Help someone else sell a product
Now, seeing company A selling product online, Company B also wanted to open its site. However, it would require a huge investment from Company B and it didn’t have that kind of money. Dejected, Company B went drinking at the local pub where he met Technical A. Now, Technical A was the same company which made the website for Company A. After hearing plea of Company B, Technical A came up with an idea.
2). Sell Your products- company A manufactured a product which was in good demand. It also had retail stores across the country. Many customers inquired if the company can deliver to their home? The company said yes. And then the customers started placing an order via call. However, this was possible only during office hours. And the company had to spend a lot on tele-callers. A few days later, customers asked if they could place order online at the time they feel convenient.
3). Sell somebody else’s products
Technical B upon seeing the business model of Technical A felt that it can have a dominance in the market in terms of sales and customer base if it invests in a warehouse which will hold all (most of the fast moving) items and crater to customers directly. This would eliminate the middlemen and Technical B can make more profits. Thus Technical B, in collaboration with Consultant A started a company where they invested heavily in technology, warehouse and delivery chain.
4). Localizing intelligent minds
Student A lives in a remote part of the world but is interested in learning about supercomputers. However, he does not have access to such teaching. Professor A of an Ivy league college finds his true calling in teaching the underprivileged. They both can interact with each other using a site which gives such a platform.
5). Help people in finding the services they need
Citizen A is new to the city. He doesn’t have any friends. He used an aggregating e-commerce site to reach and book a room. However, he has no idea about which restaurant to go for or how to get reservations. Customer A is also looking for some laundry service in the city or he wants to gift some flowers to a person he visited. Many e-commerce companies solve this problem. They help the customer in finding the right services.
The Truth About E-commerce is:
They started with solving a problem. Profits came later. Every e-commerce was started with intention of solving a specific or generic problem for a particular user base.
People are creating product each and every day but the question is, how many buyers are aware of that product
so if you solve that problem by creating an avenue for such to show their product online (your Platform) and reach a wider audience, you get paid on a long run