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One of the most potent ways I can think of to make money on the internet is with an online store. There’s a lot of work involved in setting one up, but once you get your site up and running the effort needed to keep you’re virtual cash register ringing is minimal. All you need to do is keep advertising, keep link building, and route your orders. You don’t even have to carry inventory if you don’t want to! You can have products drop shipped. Once your site is up and running, it just takes a few clicks to process your orders and collect your money. The hard part is setting your site up. So how do you set up a profitable online store? What is it that separates the money makers from the money pits?

Product

The primary reason that most online stores fail is poor product choice. I don’t mean that the product is bad, I mean that either there isn’t enough demand for the product being offered, or there’s too much competition. Take computers for example. If you search for computers in Yahoo! Shopping, you’ll get over 1.7 million hits! How are you supposed to compete with that many stores! You need to find a product that has a high demand without a lot of competition.

Sounds easy in theory, but the logistics of it are much more complicated. First you have to find a product, then you have to research the demand behind it, and then you have to research how much competition you have. Most people wouldn’t even know where to start all this research.

If you’re serious about starting an online store, there’s a site I want you to check out. It’s called Worldwide Brands. This site offers a great product called OneSource. You get access to literally thousands of suppliers. You can choose whether you want to search drop shippers, light bulk wholesalers, bulk wholesalers, or all of them. There are literally millions of products in their database.

The best part is that the OneSource program includes a built-in product research tool that automatically checks demand and competition for the product you chose and tells you on a 0% to 100% scale how well your product is expected to sell. Worldwide Brands charges a one-time set up fee. After that, you never pay again. The database is constantly updated too so you’ll have a continuous supply of new suppliers and new potential products and we’re talking a lot of products! Every time I start searching for something new to sell, it takes me a few days to sort through them all.

If you follow the recommendations of OneSource’s research tool, you can be assured that your online store will not fail due to errors in product choice. Once you have a list of four or five different products, it’s time to make sure your products will turn a profit. Check the web to see what your competitors are charging and make sure you’re able to compete and still stay in the black. I would shoot for 30%+ markup on the items you choose to sell, that way you have a bit of leeway for credit card processing fees/paypal fees and the fees your e-commerce site charges.

Setup

After you’ve chosen your product, you’ll have to set up your store. There are a couple of sites that offer e-commerce solutions, but the two that I found to be the best are Yahoo! small business and Prostores.

When choosing an e-commerce provider, remember that you need to keep your costs as low as possible. That’s why I prefer Prostores over Yahoo! small business. Comparing the starter packages for example, Prostores charges $29.99/mo. whereas Yahoo! charges $39.99 per month. Prostores charges 0.5% per successful transaction and Yahoo! charges 1.5% per successful transaction. Prostores also offers the ability to accept credit cards and paypal payments as well as integration with ebay, Fedex, UPS, and USPS. Yahoo! offers the ability to accept credit cards and integration with UPS.

In addition, the more advanced Prostores packages offer the ability to offer products with recurring billing and affiliate programs. Obviously I recommend going with Prostores.

Once you have your store ready to build, there’s going to be a huge temptation to cut and paste your product description from your supplier’s site. Don’t do it! You need to show that you’re different from everyone else. What will your shoppers think if your descriptions are the same as the last three sites they visited? Take the extra time to make yourself stand out.

As soon as your store is up and running, it’s time to start thinking about advertising.

Advertising

For some reason a lot of people believe that all you have to do to make money on the internet is put up an online store, then sit back and watch the money come pouring in. This idea, which was probably started by someone selling turnkey internet stores, is totally false. You need to advertise your website to be successful. There are quite a few ways to do this, but here are a couple of ideas to get you started:

Google Adwords/Yahoo! Marketing

A word of caution here: Even though these are the most popular advertising choices, they’re also the most likely to lose your money. Successful pay-per-click campaigns take planning. There’s also a lengthy trial and error process to determine which campaigns are profitable and which ones are duds. The good new is that once you have a few profitable campaigns in place, you can spend hundreds of dollars with a smile on your face knowing that your investment will net you thousands.

Link Building

This was once much more popular than it is today. Link building is where you go to sites that have information related to your site and offer to trade links. Some people do this because they think it will help their search engine rankings. However, the real reason to link build is to get relevant traffic to your site. Here’s an example of the power of link building:

One of the first sites I ever opened was a poker chip site. I spent hours offering to trade links with webmasters of related sites. I got a few sales from some of the links, but there was this one site that gave me tons of sales! In fact, almost 1 out of every 8 sales was a result of traffic I received from this site. That fact alone makes link building worth the time.

Directories

 In truth, I’m not so sure about the value of this one but I thought I’d include it anyway since it’s a legitimate way to get your link out there. There are thousands of directories out there. Some charge, but most don’t. All you have to do is submit your link to the directories and you’re done. Like I said, I’m not sure how valuable directories really are (with the possible exception of Yahoo!’s directory) but it’s usually free and should only take a few hours of your time.

Article Marketing

There are those who would argue with me, but I really like article marketing. I believe that you have to offer more than just a product on your website. You need to offer your potential clients valuable, relevant information. One way to do that is with articles. Write about different things that would interest your readers. For example, going back to my poker chip shop, we could write about Sit-N-Go strategy, popular chip tricks, and poker chip care and maintenance. Article writing opens up other possible marketing avenues as well. You could start a newsletter or a RSS feed. Either one of these will keep you constantly in front of your client base and give you an edge.In addition, you can submit your articles to any number of the hundreds of article submission sites. These sites are free and usually allow you to put a back link to your site at the end of your article.Don’t worry if you’re not a good writer. You can always hire a freelancer to write your articles for you. Elance is a good place to start. Within a day or so you can have lots of bids from which to choose. Whether you decide to write your own articles or not, I definitely suggest you take advantage of article marketing.

Starting an online store is a lot of work. It takes lots of research and planning to get your site off the ground and if you decide to do pay-per-click advertising, you’ll need some additional cash to hold you over until you find which campaigns will be successful. But the good news is that once your store is running, the amount of effort required goes way down. All it takes is a couple of articles every few weeks, some time spent link building, and maybe an email a month to your client base and that’s it. You’ve got yourself an online cash machine.

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