Editor’s note: This article was first published in August 2017. Its data are from 2017; ePacket rates and availability, Shopify pricing and Facebook advertising conditions have changed since then.
When we publish business ideas, some of them sound too simple, and perhaps it’s that very simplicity that keeps many entrepreneurs from taking on such a low risk.
A few months ago we laid out the steps to build a business that could bring in a few thousand euros a month, a business idea that more and more entrepreneurs are applying successfully. At least that’s what Trevor Chapman did. In just three months (92 days, to be exact), this 33-year-old managed to make more than $1 million after investing only $200 in his idea. His case (one of many that follow the same pattern) was covered by CNBC.
Chapman was working 12 hours a day for a solar panel installation company until one day, while reading about Warren Buffett, he decided it was time to make money another way: to build a business that would generate passive income or, failing that, at least one that didn’t demand so many hours of work.
These days that shouldn’t be hard to achieve with e-commerce.
So Chapman got to work. His idea was to open an online store selling original products, most of them from China. One way to make opening an online store quick and simple is to use Shopify.
*I’m not mentioning Shopify because they pay me or anything like that, but because their service is good and it’s genuinely easy to open an online store with them. In fact, it’s where most entrepreneurs go to test whether their business idea will succeed.
Chapman’s store is LDSman, and it sells everything from cheap electronic accessories to an assortment of all kinds of products, including Kevlar trousers.
Chapman shaped his project in his spare time, not wanting to quit his job at first in case the idea didn’t work. The only investment he made to get started was $3 for the domain and $14 to set up his Shopify account.
From his wide range, he chose some products on Alibaba and AliExpress that cost only $5 and that he could sell for $60. And with no inventory risk, because he used AliExpress’s ePacket shipping (we covered this in our previous article): the buyer purchases through your website, but the manufacturer ships the product directly to the buyer’s home. In other words, the product never passes through your hands.
(See: How this Colombian woman living in Spain makes money)
Once all that was done, all that remained was to find out which product customers would like. Chapman admits that the first product he chose to promote didn’t take off, so he quickly moved on to another one. In his case, the product that started bringing in large amounts of money was inflatable chairs.
How does Chapman promote his products to reach customers?
If you didn’t read the article where we set out the steps to build a business this way, I suppose the question is an obvious one: how do I reach potential customers?
Easy. By using Facebook Ads (Facebook’s promoted posts).
In Chapman’s case, he says he spent up to 100 euros a day to reach hundreds of thousands of potential customers through Facebook.
This was the biggest risk Chapman took, because he didn’t know for sure whether this expense, or investment, would pay off. After the first few days of testing, he was clearly running at a loss. But he says he started getting the odd order, and two weeks later he generated $10,000 in orders in a single day.
Once he saw that he was making thousands of dollars in sales every day, Chapman followed Tim Ferriss’s advice and outsourced certain tasks to a team of freelancers in the Philippines, so they could provide thorough customer service, from the moment a customer places an order to answering the most frequent questions.
The business model was now solid, so he increased his Facebook ad spend and refined his target audience on Facebook even further, that is, the interests of the users most likely to make a purchase.
Exactly 92 days after launching his business, Chapman made his first million. A company offered to buy his business for a little over $3 million, but Chapman turned the offer down, thinking he could take the company to the next level. And he wasn’t wrong: his business brings in around $300,000 a month.
Not bad for a man who got into building a business with no idea about the world of companies. And that, in essence, is what e-commerce combined with a bit of creativity can offer today.
See also: The future of business: change is happening faster than expected
See also: How to make your business more profitable in less time and double its returns
Featured image: Yercaud-elango, CC BY-SA 4.0, via Wikimedia Commons.
