What is Ghost Commerce? A Beginners Guide & How To For 2024

There’s no shortage of approaches to selling products and services online, from traditional e-commerce platforms to dropshipping services.

Ghost commerce businesses are the next big thing for online retail, removing the need for stocking inventory with an emphasis on digital marketing.

In this guide, we’ve broken down the ghost commerce business model and how you can implement a successful strategy to earn money.

What is Ghost Commerce? A Beginners Guide & How To For 2024

Setting up an effective ghost commerce operation can pay huge dividends, with a reliable stream of income and great growth potential.

To help you get started, we’ve outlined the best practices for a ghost commerce strategy to maximize your chances of success.

So, let’s get the ball rolling and explore everything you need to know about setting up a ghost commerce business in 2024:

What is Ghost Commerce?

The landscape for online retail is continually adapting, and ghost commerce represents the latest trend, reshaping how retailers sell goods.

While traditional ecommerce platforms stock an inventory, ghost commerce businesses promote and sell products without holding any goods.

Instead, ghost commerce businesses use their online presence to drive consumers to products through content marketing strategies.

They also use social media accounts and influencer marketing strategies to drive traffic to their products directly to consumers.

This makes ghost commerce one of the best scalable business ideas because it offers low overheads and a steady stream of passive income.

Ghost Commerce Vs. eCommerce

It can be easy to confuse ghost commerce with traditional e-commerce at a glance since the two business models share several similarities.

However, while both models involve selling products online to customers, there are important distinctions you need to be aware of.

Unlike standard e-commerce, ghost commerce features elements of dropshipping and doesn’t require the storage or shipping of goods.

It also places more focus on effective marketing strategies, primarily using an online presence that fosters relationships with the target audience.

This includes utilizing the latest social media and e-commerce strategies to maximize online reach and analyze customer behavior and trends.

How To Set Up A Ghost Commerce Business (Step-By-Step)

Now that we’ve defined ghost commerce let’s examine everything you need to know to set up a ghost commerce business.

Step 1: Choose A Niche

As with any other new venture in the business world, ghost commerce businesses begin with carefully selecting a niche product and target market.

This means focusing on a specific industry that delivers enough customer demand while avoiding oversaturated markets.

A good strategy for choosing a niche is to research products you’re passionate about and have a knowledge base from which to draw.

You can then identify trends and refine your marketing strategies, researching relevant e-commerce business names in your chosen field.

Step 2: Online Store Setup

With your niche industry and product range selected, it’s time to set up an online store to add your product listings for potential customers.

A successful online store should be user-friendly and visually appealing, designed to capture the spirit of your products.

A website design timeline will help you set up your store efficiently while ensuring all pertinent information is included.

You should also pay attention to search engine optimization, particularly if you’re including a blog to drive traffic through keywords.

Step 3: Supplier Selection

A ghost commerce company is only as good as its products, so finding reliable suppliers in your niche is vital for your venture to succeed.

Start by researching the latest e-commerce trends. Use this knowledge to make an informed decision about which supplies to use.

When selecting suppliers, pay attention to product reviews assessing their quality, as well as pricing, shipping times, and minimum orders.

Look for a supplier’s system that includes generating shipping labels, stocking products, and general inventory management.

Step 4: Product Listing

With your supplier ready to go, it’s time to begin listing your products on the online store and promoting them to your target audience.

This process might sound complicated, but an e-commerce website builder will help you add and manage inventory without hassle.

Product listings should be complemented by high-quality images showing their appeal and resonating with the core consumers.

You should also pay close attention to your pricing strategy and factor in potential profit margins to remain competitive in a crowded marketplace.

Step 5: Promoting Products

Once your online store has been populated with a range of products, it’s time to begin implementing your marketing strategy to reach customers.

You can try many effective strategies, from writing articles on your website to working with influencers across social media platforms.

If you’re considering using SEO through content marketing, you can use a blog website builder to set up easy-to-use templates for your content.

You can also complement a content marketing strategy with traditional marketing approaches, such as bulk emailing product information.

Step 6: Order Forwarding

The next step in running a ghost commerce business is order forwarding, which involves taking customer orders and linking them to your supplier.

This involves passing on the customer’s shipping address and order details so the supplier can provide timely delivery of the items.

Using an e-commerce platform simplifies this process, and there is an option to automate order forwarding to the supplier fully.

Indeed, the system used to manage inventory can be fully integrated with the supplier’s system for a fully streamlined workflow.

Step 7: Supplier Fulfillment

With the customer’s order forwarded to the supplier, it’s their obligation to pick, pack, and ship the products directly to your customers.

This alleviates the ghost commerce business owner of all the hard work and is why it’s a popular home-based business idea for aspiring entrepreneurs.

You’ll need to establish a clear line of communication with the supplier in the event of mishaps so you can manage any customer issues.

This means being clear beforehand on order fulfillment times and how to handle tracking information so everyone is on the same page.

Step 8: Customer Delivery

Setting up a streamlined process for tracking and verifying delivery is a vital element of the ghost commerce model and supplier fulfillment.

Most customers will work on the assumption that the online store is responsible for shipping, so you need to be able to help with their queries.

This means gaining access to the progress of the order shipping and tracking in the event the item gets lost in the post or delayed.

It also means being able to provide customer support in the event of damaged goods and liaise with the supplier to ship a replacement.

Step 9: Payment Handling

The process of payment handling for ghost commerce businesses works differently than other e-commerce models of physical store sales.

Customers make the purchase directly through the online store, typically using the website builder’s point-of-sale system tied to card payments.

Once payment has been processed, the ghost commerce operator is then responsible for paying the supplier for the wholesale cost of the product.

Additional pre-determined profit is then retained by the ghost commerce company owner as part of the commission for their services.

Step 10: Customer Support

We’ve touched briefly on the importance of providing customer support as part of your ghost commerce strategy to ensure customer satisfaction.

This includes following up on issues with order shipments and damages and taking a broader approach to customer engagement.

General inquiries about the products you’re selling and overall reputation management are also elements of customer support to consider.

While you aren’t directly handling the products, you need to be aware of what they are and how they’re intended to work for consumers.

It’s a good idea to pick up product samples and check them in person so you’re clear on any issues that potential customers might raise.

There are also lots of great tools for freelancers you can access to help streamline the support process to increase your satisfaction rate.

Pros & Cons of Ghost Commerce

Setting up a ghost commerce business is a great side hustle to pay off debt, but as with any business model, there are pros and cons to consider.

Let’s examine some of the main advantages and then some of the potential pitfalls you should be aware of.

Pros

Becoming a ghost commerce retailer is an attractive alternative to setting up a physical store, with the following advantages for entrepreneurs:

1. Passive Income

The best small businesses that run themselves are characterized by their ability to generate passive income; ghost commerce is no exception.

While it takes time to get the platform established, once your online presence and products are listed, you can sit back and take in revenue.

You are not required to manage your inventory or fulfill orders actively, and you can handle customer support in your spare time.

It’s also easy to scale your ghost commerce business over time without the need for warehouse management to facilitate sales.

2. Low Overhead

Ghost commerce doesn’t require a brick-and-mortar store or other overheads associated with product storage and maintenance.

This makes it an attractive business model for those looking to launch a company with low startup costs that might otherwise be off-putting.

Ghost commerce, which does not involve a physical store, is a great way to deliver a seamless shopping experience for customers.

It allows entrepreneurs to establish a loyal customer base and achieve sustained success by using online tools from the comfort of their homes.

Likewise, creating social media engagement can be achieved through affiliate programs that can boost sales with minimal time and effort.

3. Flexibility & Scalability

Since ghost commerce doesn’t require any physical space, it offers great potential for scaling over time through new products in your chosen niche.

Ghost commerce is completely independent of location, allowing you to run your business from anywhere and reach a global audience.

If you want to switch things up and explore a different product niche, it’s easy to do so without worrying about unnecessary risks.

If you have a supplier who caters to emerging market demands, your ghost commerce company can adopt a flexible approach.

Whether you’re approaching ghost commerce as a stay-at-home mom or tackling it full-time, it’s a business model with impressive potential.

Cons

Ghost commerce presents a great opportunity for consistent revenue, but before you get started, consider these potential negatives:

1. Thin Profit Margin

One of the principal trade-offs to consider before setting up a ghost commerce business is the limited opportunities for high profit margins.

Since you’re outsourcing storage, shipping, and other processes to third parties, your share of the profits will undoubtedly be lower.

While different suppliers work on their own commission structures, ghost commerce platforms generally take a small share of the pie.

With that said, there are strategies you can employ to maximize your profits and mitigate the potential losses inherent in the ghost commerce model.

One way to achieve this is to focus primarily on high-value products that cater to niche audience preferences and exclusive tastes.

You can also test your marketing strategy to deliver the highest return on investment, offering exclusive discount codes and other promotions.

2. Third-Party Dependent

Another inevitable pitfall of the ghost commerce model is the reliance on third-party organizations such as suppliers and shipping companies.

This process naturally limits your control over your inventory and the range of products you can offer your customers.

If your supplier goes under or experiences problems around sourcing or distribution, there’s little ghost commerce business owners can do.

Inevitably, since the customer is using your online presence as the first port of call, these issues can damage your brand’s reputation.

With that said, you’re free to switch suppliers, and many third-party retailers use multiple suppliers should they become unreliable.

3. Highly Competitive

With its relatively hands-free approach, it’s no surprise that ghost commerce is a highly sought-after method for generating new revenue streams.

Thousands of startups are bringing social shopping into the mainstream, and successful ghost commerce businesses need to stand out from the crowd.

It can be especially challenging for new ghost commerce companies attempting to break into oversaturated markets with high demand.

Fortunately, focusing on more obscure niche markets with a small but dedicated customer base can keep this competition to a minimum.

Fine-tuning your marketing strategies and increasing search engine ranking can also help ghost commerce businesses stand out.

Tips For Ghost Commerce Strategies

Launching a successful ghost commerce company that stands out from your competitors requires a comprehensive business strategy.

This includes understanding the relationship between consumers and influencer marketing, mastering inventory management, and much more.

Here are some essential tips for ghost commerce strategies you can incorporate into your plan of action to help you get off on the right foot.

Develop A Strong Online Presence

Ghost commerce companies live or die based on their online presence, and developing a unique brand is vital for capturing customers’ attention.

This means setting up a visually appealing, professional website through which to promote your products that understands audience preferences.

It also means marshaling your social media platforms to the full extent, using them for marketing campaigns, and connecting with customers.

These platforms are powerful tools for feedback and can be used to understand better which products are popular and how to improve your inventory,

Focus On Customer Satisfaction

The old adage “the customer is always right” is as true for ghost commerce as any other type of retailing, whether online or offline.

In order to be successful, you need to have a clear grasp of customer behavior and what drives their interest in the products you’re selling.

It also means fully engaging with their queries and concerns, relating to them on a personal level that creates long-lasting relationships.

You can achieve this by integrating feedback and product rating tools into your online store to gain insights into why specific products are popular.

Leverage Data Analytics

Just as feedback mechanisms can be powerful tools for understanding your customers, so too are data analytics tools vital for ghost commerce growth.

These tools deliver granular insights into web traffic and customer preferences, which are powerful resources for boosting sales.

The more data points you can gather and assess, the greater your options for refining marketing campaigns where it counts the most.

It’s also relatively easy to accomplish, with most e-commerce platforms featuring data gathering and analytics as part of their services.

Utilize Influencer Marketing

If you’re a ghost commerce entrepreneur with a limited online presence, you can utilize influencer marketing to fill in the gap.

Many of the best solopreneur business ideas get their big break through influencers, capitalizing on their online presence to expand their reach.

When researching your product niche, make a list of influencers on Instagram, TikTok, and other social media platforms who share your interest.

You can offer them free products in exchange for reviews and coverage, reaching their global audience with minimal effort.

Alternatively, if you have a budget at your disposal, consider investing some cash in paid promotions through your affiliate relationships.

Summary

With its impressive potential for generating a consistent passive income, ghost commerce represents the next frontier in online retail.

By following the advice in this guide and supplementing it with additional research, you can launch a viable ghost commerce company.

As your business expands, the potential for growth and expansion can transform your side gig into a full-time and highly profitable venture.