There’s a myth that permeates the business world: you must be passionate about a product in order to sell it successfully. While passion about a specific item can help, it’s far from necessary for business income success. In fact, many entrepreneurs use their business as a means to an end, and find great success doing so.
Dave Mason started The Knobs Company 18 years ago, not because he has a particular affection or interest in door knobs, but because he’s an author and he wanted a business that would support his writing habit. Ecommerce, particularly the dropshipping model, is appealing to many for this very reason: you can create a truly passive business.
“For me, so much of it was about creating business systems that wouldn’t require much of my oversight,” says Mason. “This has allowed me to focus on other aspects of my life, like family and my writing, while still making a strong living.”
Stories like this are a major motivator for me. I love to hear about the freedom people have achieved with their eCommerce endeavors—that’s why I created my companies, to make it easier for others to find success in passive income and have more time to do what they love. If that’s creating more businesses, wonderful! If that’s writing novels and spending time with family—also wonderful. Ecommerce offers people choices, which I find incredibly empowering.
Finding a Niche That Works
Before he started The Knobs Company, Mason was an environmental attorney in the US. “I loved the work, but quickly saw that I didn’t want the lifestyle of the senior attorneys,” he says. “I wanted to have a business that worked better with family life and that let me live anywhere in the world I wanted to.”
Mason recognized eCommerce was a direct pathway to accessing more freedom with his time and his location. Eighteen years ago, this industry was still relatively new, and Mason had his fair share of failures before he found a niche that stuck. “One of my first disasters was selling DVDs online,” he remembers with a laugh.
But, in a clear lesson about the importance of failure, another less-successful niche attempt ultimately led him to give knobs a try. “In 2003, I was selling a line of rustic beds and I saw that I received some large orders from cabin owners,” Mason says. “I wondered if it would be worthwhile advertising specifically to cabin owners, so I did a query for how many people were searching for cabins. Not many. But the term kitchen cabinets came up with a lot of results. So I started selling those. However, my cabinets didn’t have knobs, so I added knobs as an accessory.”
One great quality of this new item was that it shipped easily, without having to use complicated freight shipping to residential users like some of Mason’s other furniture products.
Simplify, simplify, simplify
Mason eventually decided to remove other products and focus exclusively on selling knobs to simplify his process and make his income even more passive. “The overhead in my business had gotten too high, partially because I was dividing my resources in so many directions,” he says. “Pulling back and just focusing on my strongest area allowed me to streamline.”
Mason’s story is a testament to the fact that eCommerce success is rarely linear—in fact, it’s often more of a zig-zagging line. The art of finding a perfect niche is just that—an art, not a science. While there are plenty of practical tools that can help, like the sell-through rates and other data provided on the SaleHoo Market Research Lab, entrepreneurs still have to do some trial and error to find what works.
Passive Income = Great Systems
The quickest route to passive success is to hone highly efficient business systems in every area of your company. The systems that you can “set and forget” are the ones that will save you time and ultimately, money. One example, says Mason, is “the creation of a knowledge base, where all new staff could very quickly understand how we liked to handle each type of issue that arose.”
The simplification of your inventory is another way to reduce labor within your business. Once Mason had landed on knobs as his profitable niche, he was faced with the issue of inventory. “My choice to go into internet retail was about being able to run my business from anywhere in the world,” he says. “Inventory would have been a giant anchor.” Enter: the dropshipping model.
Mason started by signing up for a catalog that would dropship all kinds of products, but there wasn’t much of a profit margin with this strategy. Once he had a specific product niche in mind, he started calling manufacturers and asking them directly if they’d dropship for him. Over the long life of his business, he’s had hundreds of suppliers—many worked, many didn’t. “I’ve had some that failed to stand behind their products,” Mason says. “Others that had no understanding that mistakes will periodically occur, and the first time we messed something up, they’d drop us. Many just couldn’t get me data in a way that would be useful for online sales—good images and spreadsheets are essential for me.”
While Mason started his business in a time of trial and error for eCommerce store owners, entrepreneurs today have plenty of resources to help them avoid bad suppliers. Supplier directories and online reviews have provided a barrier to entry for shady suppliers. When entrepreneurs use their resources effectively, they can avoid some of the fallout from bad suppliers.
Passive Income Takes Time
It’s also worth noting that nothing’s perfect, and you won’t do everything right the first time. Those new to eCommerce and seeking a passive income source need to be patient. “Don’t worry about making money on your first website,” Mason advises. “You’re going to have to go through a huge learning process, so I recommend starting with either an area you love or one where you already have expertise.”
Simon Slade is CEO and co-founder of Affilorama, an affiliate marketing training community; SaleHoo, an online dropship and wholesale directory, co-founder of Smtp2Go, an email delivery service and investor in SwiftMed, a virtual GP clinic. Through these companies, Simon provides the education and resources for ecommerce professionals to start their own businesses and achieve occupational independence. Simon can be followed on Twitter and LinkedIn and regularly comments for Forbes, Fortune, SMH and NZ Business.