7 Low investment ideas to start online

Alibaba.com JULY 23, 202316 MIN READ
7 Low investment ideas to start online

Starting a profitable online business is often capital intensive – from buying a domain name, hiring a team, finding vendors, obtaining insurance, and integrating payment systems. Setting up an eCommerce store could set you back in the range of $200,000 or more.

However, a lack of startup capital should not hinder your dream of running a profitable online business.

In this article, we uncover seven low investment business ideas and how to start them in 2023. You’ll also learn how to conduct market research, map customer segments, and choose a profitable niche. Finally, you’ll get practical tips to grow and scale your eCommerce business.

Without further ado, let’s dive in!

The Growing Trend of Online Businesses

The eCommerce industry has been snowballing in the last few years. According to a recent report, the eCommerce market share will rise at a compound annual growth rate (CAGR) of 14.7% from 2020 to 2027.1 Even more interesting is the prediction for the global e-Commerce market share to hit $6.3 trillion in 2023.2

Even though many countries have removed all COVID-19 restrictions, there’s an increasing trend in the number of people opting for online shopping. Many customers still prefer the convenience and comfort of online shopping. A recent report by Raydiant on US customer behavior shows that 55% of US consumers prefer to buy online than shop in person. This puts it at a 10% increase from the 2020 report.

Unsurprisingly, 20.8% of retail purchases are speculated to happen online in 2023, with the number jumping to 24% in 20242. This indicates no sign of slowing down in the upward trend of online businesses. And if you’re wondering if it’s not too late to join the moving train, the answer is yes! Why? Because the number of digital buyers greatly transcends the number of sellers. In 2023, the number of online buyers is at 2.64 billion - 33.3% of the global population. Additionally, 96% of Gen Z in the US reported shopping online at least once per month. To put it in simpler text, one in every three people around you purchased an item over the internet at least once per day or more.4

There are many factors influencing consumers’ decisions to shop online. According to recent research on consumer behavior, five crucial factors have the greatest influence on consumer behavior. These include convenience, product diversity, trust, payment method, and psychological factors.5 As long as consumers still want to shop conveniently without the stress of visiting physical stores, online business will continue to grow.

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7 Low Investment eCommerce Business Ideas

One of the challenges many entrepreneurs and online sellers like you face is finding a business idea they can monetize without breaking the bank. Also, many sellers want a business that won’t take too much time and effort. Finding a perfect match can be difficult as only a few eCommerce business ideas can guarantee all these.

However, you don’t have to rack your brain or spend countless hours on the internet searching for the perfect fit. Alibaba’s research team has combed the internet to analyze the best eCommerce business ideas requiring low investments. Our criteria for selecting these include startup capital, ease of management, market demand, competitiveness, and return on investment.

1. Dropshipping: A Risk-Free Option

Dropshipping is a business model that allows you to sell products without buying any inventory. As a dropshipper, you serve as a bridge between enterprise eCommerce stores and fulfill orders to the end customers without incurring any financial risk. Currently, 33% of online stores use dropping as their primary sales model.6

Starting a dropshipping business ranges from $0 - $1000. If you’re low on cash and you want to do something, you can start right away. First, you have to decide what product to sell. After that, create your online store and find suppliers. You can check out our comprehensive guide on how to start dropshipping.

Note that while you can start with zero capital, dropshipping requires a lot of intense customer research, competitor analysis, and product review. We’ll cover all these shortly. If you’re ready to test the water, you can dive in immediately by finding your best products.

2. Print-on-Demand: Selling Without Inventory

Print on Demand (POD) allows you to make money online without facing the risks, time, and cost of managing inventory.

With POD, you can partner with creatives such as writers, artists, designers, and entrepreneurs to sell their products risk-free. That is, you won’t cover the cost of the items until you make an actual sale. Therefore, you don’t have to buy wholesalers or keep any inventory.

POD employs similar tactics as dropshipping. However, the main difference is that your supplier handles everything after sales - from digital prints to order fulfillment and shipping. This low-investment business idea is seamless, as you can fulfill an order by making just a few clicks after completing your first setup. You can start checking out your potential suppliers by exploring our demand printing section.

3. Affiliate Marketing: Sell without Selling

If you’re interested in promoting other people's products without facing the challenges associated with orthodox marketing, joining an affiliate program is your best bet. An eCommerce affiliate works the same way as every venture. You find a company or store you want to partner with, register your interest, get the tracking code, and start selling.

Affiliate marketing has many advantages. Firstly, it’s easy to find an affiliate program, as 80% of brands consider affiliates a critical aspect of their marketing strategy.7 Moreover, you don’t need any capital to become an affiliate marketer. Many brands will provide you with all the necessary support, knowing you’re marketing their brands.

And unlike multi-level marketing that shares a similar business model structure, affiliate marketing doesn’t require bringing people to earn. For instance, when you become Alibaba.com affiliate, you only have to inform someone that needs our services, and you get a commission for every successful transaction.

As a beginner, you can earn between $0 to $1000 monthly, while super affiliates can gross more than $100K per month8. However, the size of your network often determines your earning, so you must strive to build your online network.

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4. Social Media Management

Did you know? The average annual social media manager salary is $72,834 in the United States9. While there is no cap to the amount you can make as an independent social media, you can start earning as much as $1000 in your first full month.

Many small business owners and solopreneurs are too busy to manage their brand's social media accounts. If you possess social media management skills, you can pitch your services to them with zero capital. Most companies will offer to pay you a certain percentage in advance if they trust you. Assuming you agree to charge them $1000 monthly, you can negotiate for 40%advance payment. That means you have $400 to invest in social media management tools and resources.

However, due to the complexities surrounding different social media platforms today, you might have to invest hours of learning in honing your skills and building social media following. It can look complicated from afar, but the moment you start, it will become easier.

5. Sell Handmade Items

For people that love the craft of selling products, handmade items offer you the perfect opportunity to build and grow your marketing skills. Alibaba has over 4000 collections of best-selling handmade products customers are looking for. Yours can be the latest addition.

You can start selling your products directly if you're a creative artist. However, if you don’t craft handmade items, you can find people that do in your local area to partner with. Alternatively, dropshipping also works here; you can help fulfill orders for other sellers without managing your own inventory.

Note that it’s important to build your own niche as this is what people will know you for, especially if you run your personal store. That means you can create a name for yourself by focusing on certain item collections—for example, handbags, jewelry, women's accessories, baby products, and more.

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6. Create Digital Products or Courses

Digital course creation is one of the low-cost business ideas to try in 2023. Online education in the US alone has a projected market size of $166.60 billion, with an 8.48% CAGR10. Although online university education has the largest share, the good news is that you don’t have to be a professor to create a course.

You can teach anything online, from craftsmanship to language or even dancing. Also, course creation requires technical knowledge, especially if you’re hosting the course directly on your website. However, you don’t have to incur unnecessary costs as a starter. Platforms such as Gumroad, Udemy, and Skillshare allow you to monetize your knowledge for profit.

7. Digital Marketing

If you’re savvy in digital skills, digital marketing offers you the perfect opportunity to make money online without overshooting on startup costs. As a digital marketer, you can provide different skills, such as content writing, SEO services, and lead generation.

However, those skills require in-depth knowledge and experience, and it could take a long time to master them. Nevertheless, having digital skills can give you the financial freedom and opportunity to work anywhere, regardless of your physical location. You are good to go as long as you have a browning device and an internet connection.

As a digital marketing expert, you can choose to find your customers using platforms such as LinkedIn, Facebook, Instagram, Twitter, and many more. However, if you don’t know how to find clients, marketplaces like Upwork and Fiverr connect freelancers to business owners. You only have to hone your skills, take a few courses and create your freelancer account.

How to Start Low Investment eCommerce Business

Finding low-investment business ideas is one thing; knowing how to execute them to maximize profit is another. According to a report, 20% of small businesses fail in the first year of starting them, while 50% will fail within five years11.

Lack of capital, shortage of experience, and poor planning are the most critical factors contributing to why businesses fail. Fortunately, we have addressed the lack of funds by providing seven low-investment business ideas you can explore.

In this section, we will cover the three most important steps on how to start a low investment eCOmmerce business.

Conducting Market Research for eCommerce

Regardless of the item you sell, you will always have to compete with others. In situations where your ideas are unique, others are waiting to master the same skills, evolve and overtake you. That explains why you need to have in-depth knowledge of the market.

It might be tempting to follow your instinct without conducting market research, but we advise you not to. 35% of businesses fail due to a lack of market fit. In other words, they fail to conduct and identify the marketing needs 12.

Conducting proper market research will help you gather insights on many queries, including who are your ideal customers, their pain points, what products they need, and what services they yearn for.

5 Steps to Conducting Market Research

Here are five steps you can follow to generate the best insights from market research in your next eCommerce business:

  1. Identify industry trends

    Consumer preferences and customer behaviors change fast. As an online seller, you must be ahead of industry trends. Understand the hot products and analyze the purchase pattern. Assuming you sell handcrafted goods in baby product niches, you should now research new parents' preferences. One way to do this is by checking out trendy handcrafted products on Alibaba.

    Next, segment your products into baby items. Select the top five based on customer demands. You can now use Google Trends to check the curve pattern. Set the location to your preferred region, and we recommend setting the time range to 12 months so you can capture all the seasonal changes. Select the top-performing items (2 -3).

  2. Analyze your top competitors

    After picking your best two to three products, find customers who have made many sales and rank those with customer reviews higher. Pay attention to both the positive and negative reviews. What are the customers saying about the seller –supplier service, on-time shipment, and product quality?

    You can use the customer voice to build your service delivery. For instance, if over 50% of reviewers complain about a seller’s poor services, you must prioritize this for your own store.

  3. Interview your potential customers

    Competitor analysis is secondary research, but to get the best result, you must talk directly to customers. Sometimes, customers don’t disclose exactly how they feel about a particular product or seller. However, when you speak to them directly, you get to understand exactly how they feel, their pain points, and their desires.

    Finding prospective customers can be tricky, but the best place to start is from your network. You can ask if anyone has recently purchased handmade products online. Next, you can request an interview with people that responded. Ensure the questions you ask during the customer interviews are objective and open-ended. For instance, instead of asking, “Will you buy from my store?” you can say something like: “What do you look out for in your ideal seller?”

    Phrasing your questions objectively will enable you to make good inferences without being pushy.

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  4. Perform keyword research

    Keyword research involves searching for the top keywords your customers search for before buying an item. For instance, two customers may search for the same item using different keywords. One can search for “Cotton baby changing basket foldable,” while another may look for “foldable cotton baby changing basket.”

    To identify the best keyword of the two, you can use SEO tools such as Ahrefs, SEMrush, and MOZ to compare the two keywords. Pay attention to the search volume, keyword difficulty, traffic potential, and other metrics. Also, ensure to set the location to that of your target audience. For instance, if you’re based in Vietnam but your target customers are in the US, your location must be set to the United States and not Vietnam.

  5. Test and validate the outcome

    Market research can never be complete without testing and validating your result. The best way to do this is by performing A/B testing. You can list some of the items you want to sell, choose the best keywords and write the best product description.

    To run a proper A/B test, you can create two versions of your product descriptions while changing the keyword only. That is, use the same words all through but only change one variable; the keywords. Also, ensure all other variables are the same and leave the item listed long enough to see which version of the keywords performs better.

    However, this can be tricky as many factors, such as customer feedback, trust, and reviews, can influence buying decisions.

Mapping Customer Segments

Customer segmentation mapping, on the other hand, is when you tag and group customers with similar attributes such as gender, age, preferences, and others. Mapping customer segments allows you to tailor your marketing, sales, and services to each group's specific needs.

Resist the urge to be a generalist when it comes to online selling. A business that targets everyone will end up with no one. As mentioned earlier, you can target nursing mothers with children between 0 - 6 months of age. That way, whatever product you sell will be focused on them rather than targeting all moms.

Selecting Product Niches

After customer segmentation, the next thing is to find niche products. These are items that are specific to your target audience only. Due to the competitive niche of Alibaba and other eCommerce platforms, you must find untapped areas or less competitive markets to explore.

Back to the handcrafted baby product again, assuming that by conducting market research through customer interviews, you notice that most of your interviewees mention a certain item with a few sellers, you can decide to add this item to your product list.

Also, sometimes customers want certain features not existing in the current products. Let’s say many of your prospective buyers complain about the lack of removable handles on the foldable basket; you can add this to your product. If you’re not the original maker, you can inform the craftsperson to make the handle removable.

Tips to Grow and Scale Your eCommerce Business

Building an eCommerce business requires intense work and commitment to turn your business idea into a profitable online venture.

Here are some tips for growing and scaling your eCommerce brand:

Build Brand Loyalty

Have you ever decided to wait until your customer restocks rather than buy from another seller or brand? Brand loyalty is when customers develop a strong connection with your brand instead of only choosing your products based on prices or values. To build brand loyalty that drives growth, your customers must trust your brand’s quality, perceived values, and price competitiveness.

You must consistently deliver quality, prioritize customer services, and integrate a loyalty program that rewards good customers.

Leverage Analytics for Business Growth

A ‘spray and pray’ cannot sustain your business growth in the long run. Things change fast in this highly competitive digital landscape. You must know how to use data analytics to uncover marketing opportunities that guarantee reliable outcomes and desired impacts. These include market trends, customer behavior, and competitor assessments.

Expand your Product Range

Every business envisages growing in the long run, and you must begin with the end in mind. While you can start with a single product, scaling in the future will require broadening your product range. As mentioned earlier, you must identify your niche and research collections of products that fall under the same category. However, while we advise having a niche, allow room for flexibility. Sometimes, demand in certain niches will shift; you must know how and when to pivot to meet your business goals.

Do you want more resources to grow your business? You can access hundreds of useful resources free of charge when you visit the Alibaba B2B resource page.

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Sell on Alibaba.com

Now that we have covered the seven low-investment business ideas you can start in 2023, how to conduct market research, map customer journey, and choose a profitable niche, it’s time to implement these lessons!

As one of the largest and most reputable B2B eCommerce platforms, Alibaba.com has helped many entrepreneurs like you to create financial freedom and fulfill their dreams by providing all the support you need to thrive.

You can access all resources you need to start your online business. The first step is to become a seller, followed by implementing all the tips you have learned.

Additionally, check our resource center for assistance regarding your seller account, self-services, and after-sale support.

Are you ready to implement your low investment business idea? Open a seller account now to launch your next big online business ideas.

References
1. https://www.grandviewresearch.com/industry-analysis/e-commerce-market
2. https://www.forbes.com/advisor/business/ecommerce-statistics/#sources_section
3. https://www.raydiant.com/blog/state-of-consumer-behavior-2022
4. https://www.statista.com/statistics/1394870/gen-z-online-shopping-frequency-us/#:~:text=In%20the%20first%20quarter%20of,once%20a%20day%20or%20more.
5. http://journal.jis-institute.org/index.php/ijbmer/article/view/440
6. https://www.fundera.com/resources/dropshipping-industry-statistics
7. https://www.luisazhou.com/blog/affiliate-marketing-statistics/
8. https://influencermarketinghub.com/how-much-money-do-affiliates-make/
9. https://builtin.com/salaries/marketing/social-media-manager
10.https://www.statista.com/outlook/dmo/eservices/online-education/worldwide
11. https://www.fundera.com/blog/what-percentage-of-small-businesses-fail
12. https://www.cbinsights.com/research/report/startup-failure-reasons-top/

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