What do online sellers on Shopify have in common?
The short answer is they all want to make money! Starting an ecommerce store on Shopify takes time and effort, all in the hopes of earning a profit (aka your income).
Whether you’re building an online business as a side hustle or full-time, the more important question is this: what are the different ways to make money on Shopify?
Each business idea and model has a different earning potential
When I was new to the ecommerce platform, I thought that dropshipping was the only way for Shopify merchants to make money on Shopify.
Boy, was I wrong!
Dropshipping is only one business model out of many options for Shopify store owners. Thus, this platform is the best option if you want to explore a business idea and set up Shopify stores to earn passive income online.
Would you like to learn the different online business models on Shopify?
Keep reading as I will discuss each model and the accompanying strategies that would make your ecommerce store profitable.
Article Overview
Key Takeaways
- You can make money on Shopify by setting up your own store to sell your own products or through white-label manufacturing.
- Dropshipping remains one of the most profitable business models on the Shopify platform.
- Print-on-demand businesses are also profitable and offer the same benefits as dropshipping.
- If you would like to create your own products, you might consider selling handmade products or making apps or themes that you can sell on Shopify.
- You can also make money selling non-physical assets on Shopify, such as digital products and subscription services.
What is a Business Model?
A business model is an essential framework once you start an online business. A profitable business model provides ecommerce store owners with a unique value proposition for operating profitably.
Therefore, aspiring store owners must pick a business model before setting up their Shopify site.
Business models are essential to taking advantage of selling opportunities online, but make sure to update them regularly to ensure that you remain competitive. Researching this business model and the prevailing trends allows you to stay abreast of those trends and adapt to changing market needs.
8 Best Ways to Make Money on Shopify
Shopify is an ecommerce platform that allows Shopify store owners to run all kinds of businesses. Indeed, several business models are available so you can set up an online business that fits your needs and money-making goals.
It is easy to set up an ecommerce store on Shopify because of its user-friendly interface, flexible pricing plans, and various tools that enable you to run a successful online business. You’ve come to the right place if you’re exploring various ideas to make money on Shopify.
1. Dropshipping
When most people consider setting up an online store in Shopify, their first idea is a dropshipping business.
Unsurprisingly, this is the most popular business model today.
A dropshipping business is popular among online store owners because it is a low-risk business model with minimal startup costs. It is one of the best ways to make money on Shopify with zero capital!
Aside from its low-cost startup, the dropshipping business model is popular as you won’t have to deal with the headache of managing inventory.
Instead, you must find a dropshipping supplier for your online store, and they will be the ones to fulfil the orders for your customers.
Thus, dropshipping is a suitable choice to make money online for anyone with a day job since you can run your dropshipping ecommerce store by yourself and without much work involved.
However, there are potential risks involved in a dropshipping business, which you must be aware of before you set up your Shopify stores. First, your dropshipping store’s success relies heavily on the quality of suppliers you can get.
You must carefully vet your suppliers to ensure they provide quality products and excellent customer service. These suppliers are your business partners; your own business performance and customer feedback depend on their products and customer service as they’ll fulfill orders for your ecommerce business.
Another note about finding suppliers for a dropshipping business concerns your pricing strategy. When you dropship through the Shopify platform, you must expect a low profit margin on most products due to the stiff competition.
In addition, it is rare to find a dropshipping supplier that can offer quality products for an affordable price. You must be willing to enjoy a low profit margin for your dropshipping Shopify business if you want to sustain that.
Another potential downside to a dropshipping business is the high competition. As mentioned, it is a popular business idea because of the low barrier of entry to this ecommerce business.
Therefore, you can expect high competition from many store owners engaging in dropshipping online.
How to Succeed with Dropshipping on Shopify?
Given the popularity and stiff competition of dropshipping on the Shopify platform, it’s crucial to develop a solid marketing strategy to stand out from the crowd. A good strategy for a successful dropshipping business is to do market research.
You can find many market research tools, such as ZIK Analytics, that provide real-time data and sales insights about the state of online shopping on top e-commerce platforms.
Market and product research tools provide a detailed insight into the best selling and trending products you can add to your store online. With data-backed insights, you have confidence that you will make money as these are high-demand products.
While making money online with dropshipping is not guaranteed, you can improve your chances of making sales when selling products your target customers want or are looking for.
In addition, ZIK Analytics not only provides insight into the latest sales trends and data about the best-selling products and equips you with search engine optimization tools. Leverage these tools to boost your online store’s performance on search engines, allowing you to rank higher by targeting popular keywords.
Pros of Dropshipping
- Low risk business model
- No need to deal with managing inventory
- Access to tools that can unlock top selling products
- The flexibility of selling full-time or as a side hustle
Cons of Dropshipping
- Business success is reliant on the quality of the dropshipping supplier
- Highly saturated with lots of competition
2. eCommerce Store
Setting up an ecommerce Shopify store is one of the best ways to make money online on Shopify. Shopify is an e-commerce platform and an online store builder that offers free hosting.
Thus, it has everything you need to build your own store, even if you have no coding knowledge or without paying a website designer to build your store from the ground up.
Setting up a Shopify store requires a few simple steps. First, you need a Shopify account.
With an account, you can choose from any Shopify store subscription level, which increases in pricing as you go up the tier.
With your online business, you can sell products through your Shopify store. It will require managing inventory, fulfilling orders, tracking financial reports, and shipping orders to customers.
Depending on the volume of products you sell online, you can run your ecommerce business by yourself or with the help of a team. Thus, it is crucial to pick the right Shopify pricing level to ensure you can get the features you need, depending on where you are in your online selling journey.
Of course, you can always start with the lowest pricing plan and move your way up as your Shopify store grows.
You can sell virtually anything in your Shopify stores but refer to Shopify’s list of approved products and avoid those that are not allowed.
When setting up your ecommerce store, make sure to consider third-party Shopify app integration to maximize the functionality of your online store and optimize the online shopping experience for customers.
For example, you can integrate Shopify apps to include product reviews to encourage potential buyers to purchase your product.
In addition, you can set up point-of-sale transactions locally if you want to attract local buyers within your area.
You can sell products online and then meet your customers locally, and they can pay you via a point-of-sale (POS) system to make it convenient for them to pay for the order, just like the ones you find in a brick and mortar store.
Pros of a Shopify Store
- Easy to set up and manage
- Flexible pricing plans
- Easy to scale
- Sell almost any product
Cons of a Shopify Store
- Requires monetary investment with a store subscription plan
- Must find top selling products to maximize sales and profits
3. Product Manufacturing
If you’re looking for more options for making money on Shopify, the next option is product manufacturing. As the name implies, you must develop and manufacture your own products to sell online via your Shopify stores.
This business idea works as a B2C or B2B concept but requires extensive market research to validate the demand for such products. You have two options if you want to venture into product manufacturing for your Shopify stores.
The first one is to develop a private-label product. A private-label product is created by another manufacturer but is sold under that brand’s name.
Therefore, you have no control over the creative and manufacturing process, such as the type of material used and how the products are manufactured. Even the packaging is beyond your control.
However, private label manufacturing is growing in popularity because it provides owners of Shopify stores access to products without developing them.
You can also leverage the popularity of the manufacturing brand name to increase sales volume, which is why it is one of the top ways to make money on Shopify.
On the other hand, you can consider a white-label product manufacturing venture. This process involves a company responsible for creating the products.
These products are available to various retailers and Shopify stores, enabling the latter to sell them using their own brand names.
The manufacturing business model on Shopify also applies to those who sell handmade or custom products. It is the best model for entrepreneurs with a winning business idea and can develop highly demanded products.
It is also the best option for store owners who want maximum control over the product quality, the manufacturing process, and packaging to align with their brand and online reputation.
Pros of Manufacturing
- More control over product quality
- Business agility as you control production based on demand
- Boost business brand
Cons of Manufacturing
- Product manufacturing is limited by available skills and resources
- Higher investment is required to procure materials and labor
- Time- and effort-intensive
4. Print on Demand
The print-on-demand business model is another popular option for sellers making money online with Shopify.
So, how does the print-on-demand model work?
It is the process of selling custom products featuring your designs.
The advantage of this business model is that it works for B2C and B2B clients. For example, you can sell it to consumers as gift ideas or be suited for corporate giveaways for business clients.
With print-on-demand businesses, you can offer customers a customized design on various products. You can sell designs custom-printed on swag bags, mugs, caps, keychains, and more.
This business is constantly in demand, as customers always look for unique handmade or custom products. They make great gifts for various holidays or corporate events.
In addition, you only have to take care of the designs. You will work with third-party Shopify partners to print the specified products custom.
Once the orders are created with your designs, they will pack those products and ship them to your customers. There are many similarities with a dropshipping business, so it is popular because you won’t be managing inventory as your printing partner will handle it.
However, it is essential to understand that while this is a low-risk business model (like dropshipping), a print-on-demand business usually has a low-profit margin.
Your profitability varies according to your pricing strategy and costs to acquire new customers (whether you paid for advertising, etc). Therefore, it would be ideal to choose print-on-demand as an online business for an additional revenue stream rather than rely on it as your primary ecommerce business scheme.
Pros of Print-on-Demand
- Low upfront cost
- No inventory management
- Flexibility with design offerings
Cons of Print-on-Demand
- Lack of control with packing and shipping of orders
- Limited to the availability of products with printing partners
- Low profit margin
5. App or Theme Development
Nowadays, there is an app for almost everything. Therefore, app development is a profitable business venture and a great way to make money online on Shopify.
Even if you don’t have a website, you can sell your apps to the Shopify App Store, wherein you can earn up to 80% of the total revenue for your apps. The transaction sale for every sold app you’ve developed will depend on your chosen pricing plan.
The higher-tiered your pricing plan, the lower your transaction fees (and the more you can keep in your pocket!).
On the other hand, you can also develop and sell themes on Shopify to make money for online stores. With themes, you can keep all the earnings for every Shopify store owner who buys and uses your theme.
However, you can keep 85% of your revenue once you’ve hit the $1 million sales mark.
Even though apps and themes are in high demand, you must know that you will cover the development costs. There is also a risk that your app won’t be approved in the Shopify App Store.
Consider these when you venture into this business model to make money on Shopify. Plus, it is worth noting that there are many other app and theme developers out there, so you have to double up on your marketing efforts to highlight your product’s unique value proposition.
Pros of App/Theme Development
- High demand for apps and themes on Shopify stores
- High revenue
Cons of Apps/Theme Development
- High cost of development
- Risk of being turned down
6. Subscription
Another best method to make money on Shopify is through a subscription-based business model. This model works by charging a customer a recurring fee, either monthly or annually, in exchange for a service or product.
Subscription-based businesses on Shopify rely heavily on customer relationships to maintain business.
When a customer pays, it shows their confidence in your products or services that they are willing to pay for them over a set period of time. On the other hand, customers can cease their subscription if they no longer see the value in your products or services.
The most common forms of subscription offering for an ecommerce business include subscription boxes, streaming services, and food services (i.e. weekly meal plans). This business model can be lucrative if you develop a winning product or service.
A recurring subscription is one of the best ways to make money on Shopify. You can generate steady revenue and increase profits over time as you solidify your customer relationships.
The more customers subscribe to your products or services, the more value they place on them. Thus, many customers continue their subscription even if you increase your subscription fees slightly.
Pros of Subscription Models
- Predictable revenue stream and cash flow
- Cross- and upselling opportunities
- Foster customer loyalty
Cons of Subscription Models
- Must consistently churn out value
- Lack of product variety
7. Digital Products
Selling digital products is one of the best ways to make money on Shopify. A digital product is any non-physical asset or media you can distribute online or digitally.
Digital products can be sold in downloadable formats, such as PDF files, templates, videos, MP3s, online course, and plug-ins.
The main advantage of selling products on Shopify is that you can sell them repeatedly without worrying about running out of inventory. However, depending on the type of product you make, the upfront costs to develop the digital product content might be high.
The secret to selling digital products successfully online is to focus on creating value and proposing that value to your target customers. You must convince your target buyers that your product is worth having and paying for!
In addition, it is vital to develop numerous product offerings. You can also utilize the freemium business model, wherein you offer your customers a free product or upgrade when they purchase your digital products.
Pros of Digital Products
- Easy to scale
- Easy to distribute
- Potentially profitable with the right product offering
Cons of Digital Products
- High competition
- Risk of piracy
- High restriction level
8. Affiliate
The affiliate marketing program is one of the most popular ways to make money online, even before Shopify entered the picture. As an affiliate, you will earn a commission for every sale you refer to your affiliate partner.
It is a customer-to-customer selling model because it involves the affiliate recommending a product or service to another customer.
Your success as a Shopify affiliate relies on building relationships with your audience. You must foster trust and influence among your target audience to successfully recommend a product or service and earn a commission through that recommendation.
You can set up your Shopify e commerce store or create a blog where you can create content. You can use any of your preferred platforms to promote the affiliate partner’s products, as long as it is among their approved platforms (and yes, it can include social media!).
You can explore the Shopify Collabs feature to learn more about how to become an affiliate for various ecommerce brands and make money on Shopify.
Pros of Shopify Affiliate
- Passive income potential
- Opportunity to work with numerous brands
Cons of Shopify Affiliate
- Commission fees are usually small
- Requires customer loyalty or affiliate network
Conclusion: How to Make Money on Shopify
Several business models are available if you want to make money on Shopify. The business model you choose depends on your business goals and the time you can dedicate to running your Shopify stores.
If you prefer a hands-off approach to your ecommerce store without managing inventory, dropshipping or print-on-demand business models might suit you best.
On the other hand, you can manufacture and sell products you’ve created if you like to showcase your creations and build your ecommerce brands.
No matter which model you pursue for making money on Shopify, you must develop a solid marketing strategy for each model.
This will allow you to understand market trends, analyze customer preferences, and take advantage of selling opportunities.