Diversifying Your eCommerce Business
June 7, 2009 by Audrey Kerwood
Filed under Business Ownership, Diversification, eCommerce
“Don’t put all of your eggs in one basket!”
This is more of a long term success key than anything else, but it is very important. I would rather have 5 niche businesses that make me $1,000 each every month than one business that makes me $5,000 every month. Why?
Consider this: It’s easier, and for some people more realistic, to create a business that only makes $1,000 a month. I mean, if you sell 20 things through one store each month that make you $50.00 profit – you’re there! That’s less than one sale per day. If we sell one item every other day that makes us a profit of $60.00, how much time are we spending filling orders with our drop shippers? 10 minutes every other day?
It’s simply easier to create little businesses that generate modest profits than it is to create a mega-monster business that you and your family will live and / or starve by. Think about it! You only need to do this one business at a time.
The real genius of this business model is that you will always have one of your businesses generating money in the marketplace. Yeah, maybe one of them takes a downturn and your sales get cut to shreds. So what?! It happens, even to the masters! They simply get back up after the impact and create another revenue stream. If you have 4 other little business plugging along, you’re less likely to get hurt by a server outage, a market correction, a drop shipper flub, a merchant account error or any one of a hundred things that could crop up.
Diversify!
I own and operate 4 online stores. They have their slow and busy months. Sometimes they coincide, but most of the time one or two of the stores are in their “busy season” while the others are just bringing in regular sales. This way I’m making consistent profit all year long and I don’t have to worry as much about a market change because the chances that all four of my markets will change at the same time are extremely low.
Diversification is smart for business and your personal mental state.
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Wow, I wish I would have read something like this back in 2004 when I was just starting out.
It would have saved me alot of time and frustration. Imagine trying to make a living off of just bird houses in the winter. I niched but didn't deversify until a year later when I figured it was time to find something else to sell that I enjoyed.
If you are unable to come up with multiple businesses, at least have multiple traffic sources. Don't have only one source for new customers, like organic search results. If that ever disappeared, it would cripple your business.
cool advise! but the question is that whether the other business nature should be different from the existing one or not.
* If they are the same, then it should be easy, simply to just replicate the business model. Will this result in the same $5000/month or is still considered as 5x$1000/month?
* However, if they're coming from different nature, we might need to start from scratch again which might take necessarily the same amount of time & costs to setup the first business.
So, which one is more recommended?
It depends on how you want to run your business and also how many streams you already have feeding your pond. I have several 'separate but related businesses" and a couple completely unrelated ones. I believe when you're diversifying you need to create new sites and so you'll be starting from scratch no matter if it's related or not. You might be able to get a jumpstart with linking but it will still be from the ground up.
Diversifying isn't just about adding more products, it's about adding to your profit AND security. You could spend all your time diversifying your product line (all in one store) and have that store shut down or go under and you'll be left with nothing. Multiple sites generated multiple streams is the ideal.