I Built an E-commerce Store That Earned Me Over $500,000 in 3 Years

Building a successful e-commerce store is one of the things in life that I’m most proud of. I built it from nothing and ended up selling it for around $250,000.

It was hard work at times and sometimes quite stressful. But I stuck with it and made it into a great success. I know some others will regard this as a minor success. But for me, coming from my background, it was more than I ever imagined I could make.

On top of the $250,000, the store made around $100,000 a year profit for three years. That takes the total I made to $550,000 in just three years.

Note that I did this in the UK. I have made a very rough conversion to $USD, as most readers here are American. The figures can never be accurate because of the huge currency fluctuations between the USD and GBP.

It started with a simple thought

I didn’t start with an idea to build an e-commerce site. One simple thought led to an action, which led to another action, which led to building the store.

It all started when I bought myself an expensive electrical product. I have a curious mind, so I wondered how much profit the business owner I bought it from made.

As the product cost around $300, I figured they must have made anywhere from $30 to $100 profit. That then made me wonder if I could sell them and make a nice little side income.

The product is in a small niche that I can’t divulge because of an NDA agreement I signed with the buyer.

I took action

Next, I used Google to try to find some wholesale suppliers. I emailed and phoned a few to ask about their prices. I was quite discouraged because I was either ignored or told to call again when I had a real business up and running. It seemed they only wanted to deal with existing businesses. I assume they wanted to keep their wholesale prices secret.

I got one interesting reply from a guy though. He suggested I try selling his products on eBay. He said I didn’t need to buy in advance. I could put up the listing, and once I got a sale I could email him the order and he’d post it to the customer. This is a basic dropshipping model, although he didn’t use that term, and I’m not sure it even existed at the time. This was over 10 years ago.

Dropshipping

I already had an eBay account, as I had been selling off items that I no longer needed. So it was straightforward to list a few of the products on eBay. And guess what? I got my first sale the very next day. I can’t remember the exact figures, but I sold the product for around $300 and paid the supplier around $250. It seemed like easy money.

I continued doing this for a month or two. I calculated that I could make around $3,000 a year if things continued as they were. That would pay for a nice vacation I thought. That was the only expectation I had at the time.

This then got me thinking again. What if I could double that income? If I could make $3,000 a year, then surely $6,000 a year shouldn’t be too difficult. All I had to do was get more customers. It was then that I decided to create an e-commerce store. I figured out that with profits coming from both the store and eBay, I should be able to increase my profits.

No Shopify, no WooCommerce

Back in those days, there weren’t any simple e-commerce solutions like there are today. No Shopify. No WordPress with WooCommerce. Back then it was a case of getting a developer to build a site and integrate an e-commerce script.

It didn’t seem easy and wasn’t something I was able to do myself, despite my background in IT. These days almost anyone can set up an e-commerce site in an hour or two. That is good in many respects. But it lowers the barriers to entry and creates a huge amount of extra competition.

Once my site was built (using my eBay profits), I started to share it on forums. These days it is more difficult to share your site. Many people will consider it to be spam. But people didn’t mind when the internet was in its infancy. People were more excited to learn about new sites and find new places to buy from.

I got a few sales early on, and I was on target to make around $6,000 a year. This had all gone so smoothly that I then realized that I could build a real business. Maybe I could also give up my day job. While I did enjoy my day job, I’d been doing it for many years and I liked the idea of doing something different. I love re-inventing myself from time to time.

Getting More Traffic

My next task was to figure out how to get more traffic to my site. I joined a few forums where people were discussing e-commerce sites and got a lot of very useful advice. People seemed way more helpful back then than they are these days.

Taking the advice into account, I realized that I needed to do two things. One was to try to drive more traffic to the site using Google AdWords, and the other was to add more products to the site. Both combined would surely bring in a lot more sales.

Next, I re-contacted some of the suppliers I had emailed. Two of them let me have a dropship-type relationship. The understanding was that I would work towards ordering in bulk. Ordering in bulk meant better pricing as well. I also contacted some other suppliers and started to build up my product line.

For the first two years, I was pretty much always looking for new suppliers and new products. Some products worked out very well, while others didn’t sell at all. There was a lot of trial and error. Often products that I thought would sell well wouldn’t sell at all. Others that I didn’t think would work became a big success. What I learned is that you should always test your ideas. Don’t assume you know the answer beforehand.

As well as finding new products, I went about building up my AdWords account. This was all new to me, so I spent many weeks and months learning the ins and out of how it all worked. I got to the point where I was spending around $3,000 a month on AdWords, but I still felt that I could improve on that.

Paying $3,000 to learn AdWords

I bought a Perry Marshall AdWords course. Through this, I was introduced to an AdWords master. He agreed to teach me how to use AdWords more efficiently. I paid $3,000 for this, which seemed quite a lot of money at the time. But after 6 weeks, my monthly spend was down to $2,000 a month AND I was getting more sales. So the $3,000 training saved me $12,000 a year, as well as making more money from extra sales. That $3,000 training turned out to be a real bargain.

It was using AdWords to drive traffic to the site that transformed my business. I don’t think I would have been able to build such a successful business without it. I did try other advertising, such as with Bing, Yahoo, shopping comparison sites, and offline advertising. But it was AdWords that got the bulk of sales. Some of the shopping comparison sites were well worth it as well.

Getting fed-up and burned out

I got to the point where I wasn’t able to grow my sales at all. It’s at this point that I got a little fed up, as I hadn’t had a proper holiday for three years. I did go on holiday, but even then I had to sort out the orders for the warehouse every day. I also needed to answer customer emails, etc. It felt like I couldn’t get away from the business even for a few days. I was getting burned out.

I did once hire an assistant to run the business while I was away. She ended up being so hopeless that I ended up even more stressed. Not only did I end up having to do the work myself, but spent a lot of extra time cleaning up the mess that she’d created.

Time for a fresh start

It was at this point that I decided I needed a clean break and decided to put the business up for sale. I found a broker and they advised that it might take up to a year to get a sale, or I might not get one at all. But luck was again on my side. A few people showed an interest and one of those bought the site a few months later.

Some other useful information

There were other aspects to the business that I haven’t mentioned above. In the beginning, I was accepting credit card payments via some online company (I can’t remember the name of it). Their fees were so high that they took a big chunk out of my profits. They charged around 5–10% and kept my money for around 30 days. That wasn’t great for cash flow, especially as the business started growing. I approached about six local banks to ask about getting a credit card merchant account. One of those banks gave me a great deal. I paid around 1.25% to 1.5%, and the sales income got transferred to my account the next day.

Another interesting thing that happened was that four of my suppliers offered me the exclusive rights to sell certain products. That meant that if any other sellers wanted to sell them, they needed to buy them from my company. That sounded great, but in reality, not many people bought wholesale from me. Competitors usually sold similar products but different brands.

There is much about the business that I’ve now forgotten, as it all seems a very long time ago. I also lost all my notes when my hard drive crashed a few years back.

The business is still running and still pretty successful. I noticed that a few of my old competitors are no longer around. It makes me feel proud to realize that I build such a solid and sustainable business.

Some Lessons Learned

Choosing suitable products is the toughest part of starting an e-commerce store. Choose wisely. There are several reasons that this store was a success. The main reason is that I used the products myself. That meant that I understood the ins and outs of how they worked. I was able to answer questions from potential customers, and give tips based on my usage.

Another reason for the success was that competition was limited. I sold specialized products, and there were only around five or six major competitors.

I was also responsible for repairing any products that broke down, as most had at least a 5-year warranty. Most people do not want to deal with repairs, and so wouldn’t choose to sell products like this.

A new e-commerce store

I mentioned on a forum last week that I was thinking of starting an e-commerce store selling mirrors. One person advised against selling mirrors. They said they could break too easily during shipping.

But for me, that means fewer people will bother selling them, and so there will be less competition. I spoke to a supplier about this issue. They told me it is rare for their mirrors to break during shipping. They are packed properly to ensure they are as safe as they can be. I am now seriously considering this for my next venture. Less competition sounds great to me.

E-commerce Quick Start Guide

My E-commerce Quick Start Guide is now live. This includes more up-to-date information on how to get started. Note that this is currently a link to Medium. I’ll be updating this soon.