Recently, I’ve been wondering about how Shopify works. It’s something that has been on my mind for a while now.
Finally, when I had some free time, I did a simple google search and got to know all there is about how profitable Shopify is.
As you probably already know, Shopify is a commerce platform that allows anyone to create and sell an online store. With Shopify POS, merchants can also sell their products in person, which is pretty cool.
But what’s really the case? Is it too overrated or is it worth it? Are Shopify stores actually worth it? What’s the success rate?
Well, in this article, I will break down all that there is to know about Shopify stores beginning with how profitable they are to lucidly explain three top-notch tips which will assist you in running a profitable Shopify store.
Without further ado, let’s get into it. I want to make it as concise and to the point as possible so that all your questions get answers in a matter of minutes.
- Are Shopify Stores Profitable?
- How To Use Shopify Stores For Profits?
- 1. Dropshipping
- 2. Launch an E-commerce Store
- 3. Make Use of Digital Services
- Reasons Why A Lot Of Shopify Stores Aren’t Profitable?
- How Many Shopify Stores Are Profitable?
- What Percent Of Shopify Stores Fail?
- 3 Tips to Run Profitable Shopify Stores
- In Conclusion
Are Shopify Stores Profitable?
To put it shorty, yes. Shopify stores are profitable. They generate a good amount of revenue each year and the profit margins are high.
Everything is turning digital and business is the same. If there’s something that changed during the pandemic significantly was that major business owners, even the comparatively small ones realized that they should function their stores through an online platform as well.
Sustaining a business is tough and in this day and age where everything is turning digital, the business should be no different.
The pandemic has hastened the transition to e-commerce and created numerous potential markets for online merchants.
Business owners, large and small, can target a much wider target audience by shifting their stores online and retailing their products in this manner.
This is something I read online that I found particularly useful – according to Statista, retail e-commerce sales worldwide reached 4.28 trillion US dollars in 2020, with e-commerce revenues expected to reach 5.4 trillion US dollars in 2022.
So, even if you’re a newcomer to the market, Shopify dropshipping can help you earn up to $10,000 in just two months. This is what the statistics claims and I reckon that it must be true.
You know what’s great about Shopify? Shopify provides all of the tools you’ll need to run your online store apart from giving you a user-friendly platform.
Let me come down to the pricing structure of Shopify.
Shopify like most e-commerce platforms has a tiered pricing structure. This allows you to pick one which best suits your needs depending on what you are looking for and what kind of platform you are thinking about putting across and for what purpose exactly.
You can choose any of the categories depending on your price range and need. When you’re just starting out, you need to look at the platform’s pricing as well. You can’t be spending $500 a month just for hosting your store, right? And you should not be doing that, anyway!
So, it’s very critical to consider the plans first.
Here are the 3 basic categories that you can choose from and one additional that will help you curate a personalized platform greater than any of the other three.
For business owners that are new to the world of online retail, this is the way to go. Also if your products aren’t wide-ranging and you merely retail 4-5 products then this is apt for you.
In short, if you are just getting started then this plan will suit your needs.
Priced only at $7 per month, this plan allows you to add buy buttons to sites like WordPress, Squarespace, Tumblr, and a variety of other websites.
This increases your chances of gaining traffic from the different platforms as this is an effective manner of hyperlinking and interlinking. The SEO algorithm is such these days that if you are someone who is unaware of the basics then you will have it hard to grow even if your products are good.
To make yourself more visible, you should try Shopify Lite. Your competitors are getting smarter and the market is getting more saturated day by day so don’t wait around thinking that you are a beginner with little to no knowledge of running an online business.
Shopify Lite will be an ideal fit for you to get started with, in my opinion.
The next plan is Basic Shopify. It’s much more diverse than Shopify Lite and also costs more. If you are retailing a decent amount of wide-ranging products then this plan will suit you better.
Priced at $30 per month this plan is simple to use, extremely user-friendly and gives you the tools you need to create a dynamic user experience that is end to end.
Priced at $79 per month, this plant is meant for more established business magnates, people that are interested in upscaling their business by listing their products on several platforms.
The ones who are looking to expand and take their business to new heights are suggested to go for this plan.
You will be able to make beautiful themes that are easy to change and manage as per your need through this. It’s an effective plan that will satisfy your taste and give you a battery of sorted products making the user experience truly enriching.
This one is quite expensive and it’s something I won’t recommend unless you don’t mind putting in such an amount of money.
Advanced Shopify is priced at $299 per month. It hurts my pocket to just think about it and honestly while they claim that the user experience will be unlike any other, I doubt that it’s worth it.
Even if you are selling a wide range of products, the Standard program is enough to suit your needs.
How To Use Shopify Stores For Profits?
To put it in a straightforward manner, there are three ways through which you can use Shopify Stores for generating high profits for yourself. These three ways are:
- Launch an E-commerce store
- Make use of Digital Services
Now, I will elaborate on each of these three ways through which you can generate revenue by using Shopify stores.
Let’s come to the first one.
If you have just found out about Dropshipping then trust me it’s better to be late than sorry. It’s such a great and effective way of generating income online in a passive manner.
Dropshipping has become an online selling craze in recent years. Dropshipping allows business owners to outsource the fulfillment and shipping of orders placed through their website rather than purchasing and storing inventory themselves.
What does this do? Well, this eliminates the need to find warehouse space or lose money on unsold inventory.
It’s something that each and every merchant should know about and leverage to his/her advantage.
It’s quite simple and effective to launch a dropshipping business with Shopify, all you need to do is to choose a basic plan and decide on your niche.
Some popular dropshipping niches are jewelry, eco-friendly products, and kitchen utensils among many others.
You can do some research and pick one which suits your expertise. Another effective way to find out what product you want to dropship is by scrolling your Facebook feeds.
You will notice promotions of products like luxurious watches which will make you think that this can’t be a part of dropshipping since it looks expensive yet it’s neither branded nor of high quality.
After you pick a niche product, fill in the field information that is listed out such as product catalog, add prices, filter orders, etc. Then you are all set to go. Carry on with promotions.
This brings me to my next step.
2. Launch an E-commerce Store
If there’s one thing Shopify is famous for, it’s Shopify’s ability for users to set up an online store in an effective manner that is end to end in nature.
You can launch an e-commerce store that has a great UX listing offering a battery of sorting options that your customers can scroll by easily.
The more user-friendly and enriching experience you make for the customers, the higher the chances of conversion.
Make sure that your site is catchy and has effective CTAs that propel the customers into taking action. Here’s a pro tip – offer exclusive discounts and incentives to target them.
I suggest you try the Standard Shopify plan to make your E-commerce store.
3. Make Use of Digital Services
Well, Shopify is not just limited to physical products. You can also create membership websites as well as a portal to sell digital products on the platform.
There are hundreds and hundreds of people around the globe doing this and making huge profits on Shopify.
All you have to do here is create a store, create a digital product, set the pricing, and start advertising it to get sales and earn profits.
You can market your store either organically, or ever utilize the power of paid advertisements for faster results.
So, go ahead and take advantage of these three methods that I’ve listed for you. I’m sure one of them will work out for you.
Reasons Why A Lot Of Shopify Stores Aren’t Profitable?
Not all Shopify stores make money. Quite a lot of them aren’t very profitable.
To ensure that your case doesn’t become quite like that, I will tell you the reasons why a lot of Shopify stores are not able to generate a good amount of revenue.
You can learn from their mistakes and know what you need to do better.
Picking the Wrong Niche
If you go wrong here then nothing can go right no matter what kind of effort you put in. This is one of the most common reasons for your Shopify store to fail from what I’ve gathered.
You must conduct thorough research and select a suitable niche for yourself. Try to narrow it down.
Don’t go for a big category that encompasses absolutely everything. Instead, target small.
Check out the industry demand for the product and how much profit can you make per product that you sell.
Don’t leave any stone unturned as this is the most crucial part that most people tend to take for granted.
Here are some profitable niches that never get old – beauty, jewelry, gardening, kitchen, sports, outdoor products, etc.
Bad Product Selection
What kind of products you retail with has a big impact on the profits you can make. Try to ensure customer satisfaction by supplying high-quality products.
If your products are of low quality and don’t stand up to mark then your business on Shopify won’t sustain.
Not only will you get negative feedback, but these testimonials will also ensure that future customers do not purchase from you. After all, reputation is a big thing in this sector.
Unsatisfactory Customer Service
The idiom – the customer is your god is true for business merchants. That’s why big names ensure that the customer is wholly satisfied.
You need to ensure that their experience from using scrolling on your e-store to making a purchase is seamless.
Things like adding a detailed product description, verifying as a merchant, and setting up a FAQ that answers possible questions that the customers might have about this product will help you in building an awesome customer experience.
Even after they have made the purchase, you should cross-check and take their feedback. These small steps will build your reputation.
In case any customer is dissatisfied with the product, you should take prompt action and give them a new product or refund the money.
Not Optimizing Your Website
These days it’s not enough to curate a site but to optimize it. You need to know about SEO and you need to leverage the tools that Shopify grants you according to the plan that you choose.
Not Analyzing Your Competition
You aren’t the only one selling products and you aren’t the only one catering to a niche.
If you overlook this basic step of analyzing your competitors and the products they sell then it will be a heavy mistake that will cost you.
Ideally, you should know the prices at which your competitors are selling their products, the kind of revenue they’re generating each month, and whether they have a formidable reputation.
By knowing such things, you can get a better insight into the things you need to improve upon. Once you have figured this out, you can build a roadmap to success to outbid your competitors.
Skipping this crucial step will turn out to be an utter error on your part so I advise you to keep this in mind.
Sure, you have put your product out there but that is hardly the end of it. You need to constantly drive traffic.
The only way to achieve this is by having a full-fledged marketing strategy that will take your business to new heights.
Whether it’s organic marketing or digital marketing, you need to do it all. Owners often cut down their marketing budget to save money but this is a big mistake.
You need to constantly pull in new customers. This can only be done by spreading the word about your business.
So with this, you know about the various mistakes that can lead you to fail at generating wealth through a Shopify store.
How Many Shopify Stores Are Profitable?
Only 5% of the Shopify stores are profitable. This number is quite a small one but then again only a few stores that are constantly working on getting a good ranking have the chance of attracting customers. Even then this will just help to dive into traffic. The next step is focusing on conversation rate.
How many of the prospects get converted to customers is what counts in calculating the profit percentage of a Shopify store or any business outlet for that matter.
If you want to get into this then you need to outbid your competitors – put out the best quality products at competitive prices and market your products well. Having an SEO-optimized website is a major plus as well.
The market is getting saturated with increasing competition but with the right moves, you enter your business into the 5% of profitable Shopify stores that are out there.
What Percent Of Shopify Stores Fail?
A majority of the Shopify stores fail. This percentage is as high as 95%. Like I said before, there is so much competition. The market is getting saturated day by day. You need to constantly keep up with the trends. Putting your products and listing them on Shopify is just the first step.
You can’t afford to be lazy, complacent, or inconsistent if you want to succeed.
Keep a lookout for the changing trends and mold your Shopify store accordingly. From picking the wrong niche to selling poor products, there are a lot of reasons why Shopify stores fail.
I’m sure you don’t want your store to fail so in the next section I will cover three tips that will help you in running a profitable Shopify store.
So, let’s come to it.
3 Tips to Run Profitable Shopify Stores
Now that you’ve gone through everything you should know about the profitability of Shopify stores, let me provide you with some really useful tips to move forward with ease:
1. Make a SWOT Analysis
Wondering what SWOT is?
Well, SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It’s a simple yet effective method through which you can calculate the value of your business model.
Before launching your business, you should think about what it stands for – whether there is an audience out there that will benefit from this product. Check out the existing competition as well.
This brings me to the ‘PRO TIP’, I have for you – think about the supply and demand model.
If there is a demand for something in the market, there needs to be a supply for it as well.
The idiom, the customer is your god holds much truth and so before launching your products on your website, think about whether or not would the customers be interested in buying these.
2. Identify Industry Gaps
There is a lot of competition and the market is getting saturated fast yet this does not mean that you cannot build yourself in a niche that is already popular.
For example, beauty is a niche that has room for a lot of growth in spite of the fact that the competition is large. If your products are good then you can leave your mark.
Everything depends on marketing or whether you have any additional value to add.
Come to think about it, eco-friendly beauty products are getting in demand so here’s something that you can get started with. The key is to tap into the customer’s psyche.
3. Examine Your Customers’ personas
Consider your ideal customers – what is their age? What is their occupation? Where do they live?
Once you map out the demographic information of your target audience, a lot of things will come easily to you.
This will for one help you to narrow your niche and curate it with a specific audience in mind. It’s better to start small and concentrate on your approach rather than widening your targets and keeping it all so vague.
So there you have it. I’ve shared with you all that there is to know about whether or not Shopify stores are profitable.
I also covered the mistakes that most business owners tend to make while opening up a Shopify store. This is something which you must keep in mind. Don’t repeat these same mistakes.
I’ve also shared some statistics with you to give you an idea about the exact percentage of stores that have the chance of gaining profitability in this venture.
Last but not the least, I’m positive that the tips will assist you in making a cautious decision when you get into launching your own Shopify store.