Ecommerce Profitability in 2023: A Guide to Thriving Online.

During the pandemic, many consumers turned to online stores for their daily needs. E-commerce sales have exploded, prompting many businesses to invest more money in their digital presence.

But you may be wondering, Is online shopping still profitable now that things have returned to normal?
Maybe you have a solid business idea and are wondering if you should test the waters of online shopping.
Well, you are in the right place. We find out where e-commerce was at the end of 2022 and what the future looks like for merchants interested in selling online.
After that, we will share a step-by-step e-commerce strategy guide on becoming an entrepreneur or startup owner.

The Business Landscape of E-Commerce in 2022 and Beyond

According to Insider Intelligence’s 2022 report, global e-commerce business sales will reach $5.72 trillion by the end of the year. This is 9.7% more than in 2021. According to the report, online retail sales account for 19.7% of total retail sales.
Experts estimate that e-commerce sales will reach $7.53 trillion by 2025, accounting for nearly a quarter of all retail sales.
 This positive trend is influenced by communities that prefer mobile phones, such as Asian and Latin American communities. Many of these communities have traditionally only had access to fixed broadband connections due to infrastructure or financial constraints.
 People living in these areas can now enjoy  cheap mobile broadband, including m-commerce.

According to a 2022 Insider Intelligence report, US retail sales are expected to more than double between 2021 and 2025 to a total of $728.28 billion. This means that in 2025, online shopping will account for approximately4.2% of US retail sales

In 2022, the three largest e-commerce markets were:

China (the share of e-commerce in the country’s retail sales was almost half of that).
Great Britain (36% of total retail sales were online sales).
South Korea (32% of retail sales were e-commerce sales).
A Not 2022 Insider Intelligence report found that Brazil and Argentina are the fastest-growing e-commerce markets in Latin America due to increased digitization during the pandemic.
Millennials and Generation Z shoppers are the dominant users of online shopping. According to a 2022 report by the National Retail Federation, 58% of Millennials and 56% of Gen-Zers will buy mobile apps and a web browser.
They make their purchasing decisions using internet search, social media apps, and influencer marketing.


top 10 ecommerce sales

Is online shopping profitable?

Yes, online shopping is profitable, and according to predictions, it will stay that way. Insider Intelligence predicts that by 2025, online purchases will account for 23% of retail sales. The biggest factors driving this growth are e-commerce, the demographics of e-commerce shoppers, and increased e-commerce in Asia and Latin America.

What are the advantages of online shopping compared to traditional retail?

Online shopping has exploded in popularity since the pandemic began. Apart from delivering products directly to your door, an online store also helps with accessibility.
From the remote shopper to the person who cannot reach the store, an online store offers people a better customer experience by improving the availability of products and services.
Online shopping also gives shoppers more choice than they would ever get in a store and access to information not found in traditional retail stores.
Reviews and feedback from previous customers increase brand credibility and help online shoppers make better purchasing decisions.
Online sales are also a more cost-effective business model. It requires fewer tangible resources and offers small businesses greater coverage than a physical store.
In short, online shopping saves time, money, and effort compared to traditional retail.

Which products sell well through the online store?

Here are some of the trendiest business segments in digital business:

Food Delivery 

As the world becomes faster, people want food delivered to their doorsteps.
Not surprisingly, a 2023 study by The Business Research Company predicted that the global online food delivery market will reach $13.05 billion by the end of the year. The study assumes a compound annual growth rate (CAGR) of 11.5%.
Hungry shoppers have more options than ever, from ready meals to meal prep.


Fashion products such as clothes or jewellery are always in high demand in the online store. And while the competition can be tough, you can create your own brand identity with items like handmade jewellery and custom-printed shirts. The main customers for these products are
Millennials and Gen-Zers The good news is that they want to shop online.
In fact, the National Business Federation’s 2022 survey shows that 64% of these customers prefer to shop online or both online and in-store.
To increase your company’s online visibility, you need to create and build your brand identity. Some ways to do this include selling gender-neutral clothing or jewelry.

Natural products 

The demand for natural and organic products is increasing due to the growing desire to be healthy, use fewer chemicals, and take care of the planet. Take the organic skin care market, for example. The 2022 report by the Business Research Company predicted that the global market will reach $9.78 billion in 2020 with a CAGR of 9.9%.
Experts expect the market to grow by 10.2% and reach $14.42 billion in 2026.

Creative or technical services

Do you have a unique talent? Why not turn it into a profitable business venture? Whether you are a writer, designer, photographer, or coder, you can start your own freelance business and sell your services.
The number of freelancers in the United States is on the rise. A 2022 McKinsey report found that 36 percent of the U.S. workforce is self-employed, including freelance and gig work. This is 27 percent more than in 2017.


Do you want to initially invest only a small amount in your online business? If yes, then dropshipping is a great and profitable e-commerce business idea. According to World Research reports 2022, the global dropshipping market will reach $621.1 billion by 2028. This is a CAGR of 20.7%.
Dropshipping allows you to work with manufacturers and distributors to sell their products.
All you have to do is display the products selected from the catalogues of drop-shipping suppliers in your online store.
When a customer orders a product, you send the order and shipping information to your supplier. Your dropshipping supplier takes care of everything from production to delivery.

In return, you pay a commission to the supplier but receive the wholesale price of the products from the online store.

What is a good profit margin for an online store?

According to a 2023 NYU Stern School of Business study, you can earn about 2.78% gross margin and 0.64% of your online business’s sales profit margin.
But remember that these are spherical shapes.
Your final profit depends on:

  • The types and prices of the products you sell
  • the size and popularity of your online store.
  • Your supply chain performance
  • Your e-commerce marketing strategy

Depending on the type of products you sell, you may also face stiff competition. This is evident in the cost of acquiring e-commerce customers through advertising.
The 2022 WordStream report shows that the cost per lead of Google Ads has increased annually in 91 percent of industries. The average lead price is rising by 19% per year across 23 industries.
This means that the demand to advertise online shopping products and services on the world’s largest search engine is constantly increasing as competition in the industry intensifies. Every digital marketing business wants to stay at the top of search engine results to grab the attention of buyers.
Add to that Apple’s stricter privacy policy updates in iOS 14.5, which prohibited sharing data between apps without user consent. This has made advertising on social media platforms like Facebook and Instagram much less effective.
To improve the profitability of your online store, you need to focus on selling quality products and establishing a strong presence among your target audience.

How to Start a Profitable E-commerce Business?

Now that you know that e-commerce is profitable, let’s see how you can start your own e-commerce business.

How do I start online sales?

There are several factors that you need to think about before you start selling online.
Some questions you should ask yourself before purchasing products:
What electronic products or services do I want to sell?

  • Who are the intended buyers of my products or services?
  • How do I receive my products before I can sell them?
  • Also ask yourself the following:
  • What are the values and vision of my brand?
  • Why Should I Call My Online Business?
  • How do I register for business permits?
  • Where can I sell online? Should I have my own online store or sell through a marketplace?
  • What are my e-commerce marketing strategies?

Why do you need an online store?

Marketplaces like Amazon and eBay make it relatively easy to start selling. But there is little room in the market to stand out from other brands. The competition on these platforms is tough, and brand loyalty is low.
So creating your own online store is a better idea to grow a loyal customer base.
You can also combine sales in your online store with the presentation of your products in larger stores, such as those mentioned above.
To choose an online shopping platform, look at the usability, scalability, security, technical support, marketing plans, payment options, and shopping cart features of each option. Some of the best platforms to run your e-commerce business are WooCommerce, Nexcess StoreBuilder, and Magento.
Of all these options, WooCommerce is the most popular. A 2022 Datanyze report shows that WooCommerce dominates e-commerce with a market share of 36.68 percent.
WooCommerce is free, easy to configure, and easy to scale with many essential plugins. This is a great option for small and large businesses.
How do you make sure customers visit (and keep visiting) your online store?
One of the most important factors that determines the profitability of an online store is how it looks and feels to its customers.
Imagine walking into a brick-and-mortar store where the clerk is unresponsive or rude, the counters look dirty and dusty, and the products are haphazardly displayed. Would you shop there again? Of course not.
And the same principles apply to digital businesses.
Some things that can turn off potential customers are:

  • Your online store loads slowly, is difficult to navigate, and doesn’t look professional or aesthetically pleasing.
  • Your product images are blurry or poorly detailed.
  • Your product descriptions are unclear.
  • Product categories are random or illogical.
  • Your customers do not have enough payment options.
Studies have shown that even a small improvement in the user experience can improve the traffic to your online store. Focus on creating a store that is a joy to visit and navigate.
For example, a 2023 Baymard Institute report found that a large e-commerce website could improve its conversion rate by 35.26% just by improving the checkout design.
But your work is not limited to creating a professional and easy-to-navigate e-commerce website. You need to build customer relationships to keep buyers coming back for more.
Some ways to attract new and repeat customers to your website:
  • SEO optimization for your website, product descriptions, and URLs
  • Email marketing, newsletters, and social media updates
  • Pay-to-click ads. 
  • Branding in social networks
  • Effective content marketing strategy.
  • Optimising an e-commerce platform for mobile users.

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