What has no physical presence and haunts the dreams of every entrepreneur?
No, I’m not talking about real ghosts.
I’m talking about building a ghost eCommerce brand!
Many entrepreneurs dream of opening their own e-commerce store, selling products and services online and building their own business in the process.
However, a major obstacle is that physical inventory can incur too high upfront costs, not to mention the problems that can arise with inventory management.
But how about exploring a simpler business model like ghost commerce?
Here I will walk you through the concept of the ghost commerce business and highlight some of the key advantages and potential disadvantages to consider before diving into this unique twist on traditional eCommerce.
Do you have little time? Here are the key takeaways
- Ghost Commerce can be an incredibly effective way to enter the world of eCommerce without taking on large amounts of inventory.
- Customer satisfaction must be a top priority to build trust and encourage repeat business.
- The most common challenges of ghost commerce include high competition, reliance on third-party sellers, limited brand control, and difficulty retaining customers.
- Success in ghost commerce requires a strong online presence, strategic marketing efforts, and a willingness to invest in marketing efforts.
What is Ghost Commerce? Everything you need to know
First, let me explain what I mean by the term “ghost trading.” Ghost commerce is the operation of an online store that has no physical store for customers to visit and no physical inventory to manage.
Instead, a ghost commerce company sells third-party products or services.
The Benefits of Starting a Ghost Commerce Business
When you read this description of ghost commerce, a few advantages probably immediately come to mind.
Firstly, there is almost no barrier to entry! You have the ability to run a ghost commerce store from anywhere without having to worry about creating a product, managing inventory, or fulfilling orders.
This means the upfront costs are significantly lower than traditional e-commerce companies.
You can also react and adapt to trend changes much more quickly by switching products on and off based on consumer behavior.
Instead of waiting for manufacturers to develop new products and set up the production line, ghost commerce business owners can simply provide another third-party product at short notice.
Finally, the ghost commerce business model is also ideal for anyone looking for the holy grail: passive income.
While no business is ever truly passive, Ghost Commerce requires minimal daily maintenance because it allows you to automate the process of passing order information to suppliers and vice versa.
You should be aware of the potential disadvantages of ghost trading
Sounds pretty great, right?
Well, there are also some potential downsides to consider.
Firstly, ghost commerce means that you have much less control over the quality of the products and the shipping process and therefore rely heavily on the partners you work with.
In many cases this won’t be a problem, but a poor customer experience could lead to negative feedback and a lack of repeat purchases.
Since you don’t own the products, you also need to adjust your expectations regarding profit margins.
As a ghost commerce owner, you can only charge a small markup, which means you have to grow into a large brand before the revenue generated becomes significant.
How to Create a Profitable Ghost Commerce Business Model
With that in mind, let’s take a look at the steps you need to take to give your ghost commerce business the best chance of success. With profit margins tight, it’s crucial to ensure you’re positioning your brand in the best possible way.
Choose a niche that you know well
First and foremost, look for a niche that you know very well or are at least very passionate about.
Limiting yourself to a niche can sometimes feel like a limiting decision as it reduces your audience size, but as a new brand it is often impossible to compete with a generalist approach. Instead, focus on building a loyal customer base in your niche. The key to long-term success is repeat business and word of mouth, both of which can be achieved by choosing a specific niche.
Additionally, choosing a niche that you know well ensures that you remain passionate about your business and can use your insider knowledge of current trends to promote products that you know your target audience will want to see.
If you optimize now, your life will be much easier later
Optimization during online store setup is crucial to getting all your digital ducks into the market early. It can be tempting to set up your store quickly and skip important aspects like meta descriptions and alt tag text on images in order to get live as quickly as possible.
However, optimizing during operation ensures that you don’t have to troubleshoot problems again after startup, which can be difficult and waste valuable time. Take the necessary search engine optimization steps during the setup process and your future self will be very grateful!
Identify reliable suppliers
Another crucial step to ensure your success is to work with reliable suppliers. As mentioned above, as a ghost commerce company, you have minimal control over the delivery of your products, yet negative customer reviews impact your business and not the manufacturer.
Therefore, you must control the controllable elements! If a manufacturer’s prices or delivery times seem too good to be true, it’s best to steer clear and stick with suppliers that have a strong track record of meeting their deadlines and meeting customer expectations.
Adapt marketing strategies specifically to your target group
Also, make sure all your marketing strategies are tailored specifically to your target audience. It can be tempting to try to attract the most people with your efforts, but this generalist approach will likely result in you attracting no one.
Instead, bet heavily on your niche, run targeted social media ads that reach them specifically, and focus on the PPC topics they’re looking for.
One of the most obvious examples is your SEO efforts. For example, if your ghost commerce business sells functional fitness sneakers, it may be tempting to write content for your website that focuses on the keyword “sneakers.”
Finally, as you can see below, there is a ton of traffic for this search term:
However, it is also a very competitive keyword (56) and you are competing with leading brands such as Adidas and Nike.
Instead, opt for a search term like “functional fitness,” which has a lower search volume (4.1k) but also much lower competition (23).
As a new website, your domain rating will be very low. Therefore, tackling topics with less difficulty is crucial to growing your brand.
Learn everything you need to know about setting up an online store for just $1
Ghost Commerce is one of the lowest risk and most rewarding ways to start an online business – no inventory, no upfront inventory costs, and no need to worry about logistics. But to be successful, you need the right strategies, suppliers and marketing tactics to make it work.
This is where Foundr+ comes into play. For just $1, get instant access to 30+ expert-led courses and 1,000+ lessons on eCommerce, branding, digital marketing, and supplier sourcing – everything you need to launch and scale your ghost commerce brand.
Start building your ghost commerce brand today for just $1.
Frequently asked questions about the Ghost Commerce business model
What are the disadvantages of ghost commerce?
- High competition
- Market saturation
- Dependence on third parties
- Lack of brand control
- Limited customer relationship and loyalty
How do I identify a target audience for my online business?
To identify your target audience, you need to evaluate your competitors’ content marketing strategies, see who they appeal to, and identify common characteristics that you can then incorporate into your ideal customer profiles. When you start selling, you can look for common characteristics of your buyers to reach more specific audiences.
How do I get more people to visit my online store?
E-commerce ghost commerce only works with a strong online presence and lots of visitors. To attract more people to your website, make sure your content marketing efforts are aligned, and you must be prepared to spend on advertising through social media accounts or via PPC.
