Thinking About Starting An eCommerce Business? Consider The Risks vs. The Rewards

As Wayne Gretzky so wisely said, “you miss 100 percent of the shots you don’t take.” This is a great mantra for new entrepreneurs because business owners, perhaps more than others, know that, in the end, they’ll most regret the chances they never took.

Of course, entrepreneurs also know that there are risks involved with every opportunity. But if you can acknowledge the risks, look past them, and see your way to the rewards, then you know you have a winning endeavor on your hands.

Kirk Cooper is very familiar with this risk vs. reward calculation. When he founded his eCommerce consulting firm, Ecom Automation Gurus, he knew taking calculated risks was all part of the entrepreneurial journey, so he was able to stay focused and grow his business to 8-figures. And now he teaches others how to build fully automated, profitable, and hands-off eCommerce stores.

Still, Kirk cautions anyone thinking about starting their own eCommerce business to weigh the risks against the rewards. So let’s take a look at what risks and rewards you should have on your radar.

Risks of Running an eComm Store

Before we look at specific risks, it’s important to point out that there are no guarantees in life. “It’s best to make flexible plans, set realistic goals, and then take things day-to-day,” says Kirk.

That said, running an eCommerce business can be a really great side-hustle or an incredibly lucrative full-time business. Success depends on your ability to eliminate, mitigate, or accept the risks. So, let’s dig in.

Amazon can suspend your account at any time

Account suspension happens to most eComm stores at some point and it isn’t much fun to deal with. So it’s not a matter of if, but when you’ll face this risk. All you can really do is hope it doesn’t happen right before Prime Day or during the holidays.

When it happens, your sales are suspended and Amazon holds onto your money. This can happen to you even if you’ve done nothing wrong. Someone could hack into your account, hijack your listings, make fraudulent seller claims against you, or issue unfounded complaints. Any of these can throw up red flags.

“If your account gets suspended, you should file an appeal right away,” says Kirk, “since it will take time for them to investigate and reinstate your account.” In the meantime, you may need to deal with expenses like storage fees. The important thing is to act fast and be decisive.

Overcommitting or overleveraging can sink your shop

“I’ve seen a lot of people who are new to eCommerce make the mistake of going all in on a single product or brand,” says Kirk. The problem is that while you can strike gold in the beginning, eCommerce is constantly changing, so before you know it, you might have a group of sellers competing against you.

For this reason, Kirk recommends diversifying, keeping your skills sharp, and scaling your business appropriately. “I see so many marketers treating eComm as if it’s a get rich quick scheme and it makes me sad for those who buy into the hype,” says Kirk. 

In reality, you need to manage your eCommerce business the same way you would manage any other type of business you’re starting. Remember, at first, you’re responsible for product research, building supplier relationships, product fulfillment, and customer service. It’s all you.

Revenues can be volatile

Because eCommerce is constantly shifting, it’s important for sellers to keep pace with the trends. This also means there’s some volatility involved. However, certain revenue streams are more predictable than others.

“One way to mitigate this risk,” says Kirk, “is to experiment with different types of stores on different platforms until you figure out what works best for you.” But you will need to be prepared for the ebb and flow of sales that comes with the territory here. Kirk works with clients and runs three types of stores himself: wholesale, private label and dropshipping. 

On the one hand, wholesale and private label selling tends to offer slower growth, but after the first 12 months, when you’ve established relationships with brands/suppliers, you will see more consistent and predictable profits. A challenge with wholesale or private label is that you need significant capital (liquid cash) to dictate the types of returns you want to see. 

On the other hand, with dropshipping, it’s possible to use your credit card to buy from the supplier and then use revenues from Amazon to pay down the balances. While dropshipping can be more profitable right out of the gate, it can also be a bit more volatile than wholesale selling.

Rewards of Running an eComm Store:

Despite the inevitable risks of any business venture, many choose eCommerce because the promised rewards for those with an abundance and long-term mindset are so incredible. So let’s turn to the rewards now.

Free-flowing monthly income

Yes, selling on Amazon, eBay, Walmart, Shopify, has its ups and downs, just like any other online or retail business. The key is learning the ropes and understanding the investment in time, energy, and money it takes to meet your goals.

“I can’t promise you that starting an eCommerce business is like installing an ATM in your living room, but I can promise you that the sky’s the limit,” says Kirk. What makes the difference? Well, Kirk will tell you the best part about running your own business is that you’re in charge. If you want free-flowing, passive, monthly income, all you have to do is work the system.

Time freedom

You can run your eCommerce business from anywhere, at any time. If you’re looking to replace your current 9-to-5, eComm is a great option. You can get started as a side hustle working a couple of hours a day and once you get some decent cash flow coming in, you can hire a team to manage your shop. Viola, time freedom! You’re making money while you sleep.

Play your cards right and sell your eCommerce store

“I have one client who we passively built an eCommerce store for, who found an investor and sold it for $1.5 million,” says Kirk. “Now they’re starting over with a brand new business and planning to flip it after three or four years.” The great thing about eComm is that you’re building a genuine business. If it’s profitable, you’ll have little trouble finding a buyer when you’re ready.

So if you’re considering taking the plunge, take it from Kirk, “it’s all possible. If you put in the work and commit to achieving your dream, you can make it happen despite the risks!”

Ecom Automation Gurus, founded by Kirk Cooper, creates a fully automated eCommerce store for its users to assist in making passive income. The founder and CEO has been featured in Success Profile magazine, and is an Entrepreneur.com contributor. To check out their services and book a call, visit their website here.