What has no physical presence and haunts every entrepreneur’s dreams?
No, I’m not talking about actual ghosts.
I’m talking about building a ghost e-commerce brand!
Many entrepreneurs dream of opening their own ecommerce store, selling products and services online, and growing their own businesses in the process.
However, one major barrier is that a physical inventory can be too much of an upfront cost, not to mention the issues that can arise with inventory management.
But what about exploring a simpler business model like ghost commerce?
Here, I will take you through the concept of ghost commerce business, as well as highlight some of the major upsides and potential drawbacks to consider before going all in on this unique twist on traditional ecommerce.
Short on time? Here are the key takeaways
- Ghost commerce can be an incredibly effective way to get into the world of ecommerce without taking on large volumes of inventory.
- Customer satisfaction must be a top priority to build trust and encourage repeat business.
- Common challenges of ghost commerce include high competition, reliance on third-party suppliers, limited brand control, and difficulties in customer retention.
- Success in ghost commerce requires a strong online presence, strategic marketing efforts, and a willingness to invest in marketing efforts.
What is Ghost Commerce? Everything You Need to Know
First, let me explain what I mean by the term ‘ghost commerce.’ Ghost commerce is the phrase used to describe running an online store that has no physical store for shoppers to visit or any physical inventory to manage.
Instead, a ghost commerce business sells products or services from third-party manufacturers.
The benefits of starting a ghost commerce business
When reading that description of ghost commerce, chances are a few benefits immediately come to mind.
First and foremost, the barrier to entry is almost non-existent! You have the potential to run a ghost commerce store from anywhere, without worrying about creating a product, managing inventory, or even fulfilling orders.
That means the upfront costs are significantly lower than traditional ecommerce businesses.
You can also act much quicker and adapt to changes in trends, rotating products in and out based on consumer behavior.
Rather than waiting for manufacturers to create new products and set up the line of production, ghost commerce business owners can simply host another third-party product at a minute’s notice.
Lastly, the ghost commerce business model is also ideal for anyone searching for the holy grail: passive income.
While no business venture is ever truly passive, ghost commerce requires minimal day-to-day maintenance, as you can automate the process of passing order information to suppliers and vice versa.
The potential drawbacks of ghost commerce to be aware of
Sounds pretty great, right?
Well, there are some potential drawbacks to consider as well.
For starters, ghost commerce means you have much less control over the quality of the products and shipping process, which means you’re relying heavily on the partners you work with.
In many instances, this won’t be an issue, but a bad customer experience could lead to negative feedback and a lack of repeat purchases.
As you’re not the owner of the products, you also need to adjust your expectations when it comes to profit margins.
As a ghost commerce owner, you’ll only be able to charge a small markup, meaning you’ll need to grow to become a large brand before the income earned becomes significant.
How to Create a Profitable Ghost Commerce Business Model
With that in mind, let’s take a look at the steps you need to take to give your ghost commerce business the best chance of succeeding. With tight profit margins, ensuring you put your brand in the best possible position is crucial.
Opt for a niche that you know well
First and foremost, look for a niche that you know very well or at least feel very passionately about.
Niching down can sometimes feel like a limiting decision as it cuts down your audience size, but as a new brand, it is often impossible to compete with a generalist approach. Instead, focus on trying to build a loyal customer base within your niche. The key to long-term success is repeat business and word of mouth, both of which can be achieved by choosing a specific niche.
Not only that, but picking a niche you know well will ensure you remain passionate about your business venture and also allow you to use your inside knowledge of current trends to promote products you know your target audience will want to see.
Optimizing now will make your life much easier later
Optimizing whilst you go through the online store setup is crucial for getting all your digital ducks in a row early. It can be tempting to quickly set up your store, skipping key aspects like meta descriptions and alt-tag text on imagery, in an attempt to go live as quickly as possible.
However, optimizing as you go ensures you won’t need to go back and troubleshoot issues after going live, which can be difficult to do and will cost you valuable time. Take the necessary steps to conduct search engine optimization during the setup process, and your future self will be very grateful!
Identify reliable suppliers
Another crucial step in ensuring your setup for success is to partner yourself with reliable suppliers. As mentioned above, as a ghost commerce business, you have minimal control over the delivery of your products, yet any negative customer reviews will impact your business and not the manufacturer.
Therefore, you must control the controllables! If a manufacturer’s rates or lead times seem too good to be true, it’s best to steer clear and stick to suppliers that have a strong track record for hitting their deadlines and meeting customer expectations.
Tailor marketing strategies specifically for your target audience
Laslty, ensure that all of your marketing strategies are tailored specifically to your target audience. It can be tempting to try and attract the most people with your efforts, but that generalist approach will likely mean you attract no one.
Instead, lean heavily into your niche, conducting targetted social media ads that reach them specifically, and focusing on PPC topics that they search.
One of the most obvious examples is via your SEO efforts. If, for example, your ghost commerce business is selling functional fitness sneakers, it can be tempting to write content for your website that focuses on the keyword phrase ‘sneakers.’
After all, as you can see below, there is plenty of traffic for that search term:
However, it is also a very competitive keyword (56) and you will be competing with leading brands like Adidas and Nike.
Instead, opt for a search term like ‘functional fitness’ which has less search volume (4.1k) but also much lower competition (23).
As a new website, your domain rating will be very low, so tackling topics with less difficulty is crucial as you grow your brand.
Learn All You Need to Know About Setting Up an Online Store for Just $1
Ghost commerce is one of the most low-risk, high-reward ways to start an online business—no inventory, no upfront stock costs, and no need to handle logistics. But to succeed, you need the right strategies, suppliers, and marketing tactics to make it work.
That’s where Foundr+ comes in. For just $1, you’ll get instant access to 30+ expert-led courses and 1,000+ lessons on eCommerce, branding, digital marketing, and supplier sourcing—everything you need to launch and scale your ghost commerce brand.
Start building your ghost commerce brand today for just $1.
Frequently Asked Questions About the Ghost Commerce Business Model
What are the cons of ghost commerce?
- High Competition
- Market Saturation
- Dependence on Third Parties
- Lack of Brand Control
- Limited Customer Relationship & Loyalty
How do I identify a target audience for my online business?
To identify your target audience, you must evaluate your competitor’s content marketing strategies, see who they’re going after, and identify common traits that you can then bake into your ideal customer profiles. As you start to make sales, you can then look for common traits in your purchasers to make more specific target audiences.
How do I get more people to visit my online store?
Ecommerce ghost commerce only works with a strong online presence and plenty of visitors. To get more people to your site, ensure your content marketing efforts are aligned, and you must be willing to spend on advertising through social media accounts or via PPC.
