How Much Money Can You Make in Your First Year Running an E-Commerce Website?

Starting an e-commerce website is an exciting venture but not every site is a success. Many new entrepreneurs wonder: how much can you really make in your first year? A realistic expectation is important. Under-estimate and you could be sabotaging your site’s true potential but over-estimate and discover how wrong your projections were the hard way. The answer isn’t one-size-fits-all. For someone about to embark on their first year running an e-commerce website, here is what you need to know.

What Can Influence Your E-Commerce Website Income First Year?

1. Business Model Selection Matters

Your choice of model – dropshipping, private labeling, wholesaling, or print-on-demand – affects margins, startup costs, and scaling potential.

2. Niche Selection Is Critical

Choosing a profitable, demand-driven niche with manageable competition dramatically impacts an e-commerce website’s early success. Be sure to research your chosen niche to determine its demand and profitability strategy.

3. Initial Investment Level

Your upfront capital (for inventory, web development, marketing, etc.) determines how fast you can grow. A company with strong funding is more likely to grow than an organization pinching pennies and struggling to spend on marketing or upfront expenses.

4. Marketing Strategy Strength

Effective e-commerce digital marketing – such as SEO, paid ads, and influencer collaborations – heavily influence your traffic and sales volume. This reinforces the importance of securing the services of a strong digital marketing or e-commerce digital marketer.

5. Pricing Strategy And Profit Margins

Understanding your cost of goods sold (COGS) and setting competitive yet profitable prices is crucial.

6. Customer Acquisition Cost (CAC)

The lower your CAC relative to your average order value (AOV), the more profitable your first year. This entails conducting in-depth research to determine your most affordable pathway to customer acquisition.

7. Website Quality And UX

A professionally designed, fast-loading, mobile-friendly website builds trust and drives conversions. The majority of your online sales will come from mobile platforms. Keep this in mind when designing the user experience, or UX.

8. Product Quality And Customer Satisfaction

High-quality products boost reviews, word-of-mouth referrals, and repeat sales. Low-quality products are going to harm your e-commerce business. Ensure you are careful with how you choose to manufacture or select products to sell.

9. Operational Efficiency

Effective order fulfillment, inventory management, and customer service impact profitability. These are expenses to carefully monitor.

10. Seasonality and Market Trends

Sales can fluctuate due to seasonal demand, industry trends, and economic shifts. Be sure to plan and execute marketing plans at select times during the year to capitalize on seasonal changes in e-commerce.

Average Revenue Projections for First-Year E-Commerce Stores

While results vary, here are typical first-year revenue expectations based on different commitment levels.

Hobbyist E-Commerce Store Earnings

Revenue: $0–$5,000

An e-commerce store with minimal time investment and that is mostly a learning opportunity or a chance to flirt with a hobby is likely to net very minimal return in its first year.

Part-Time E-Commerce Store Earnings

Revenue: $5,000–$50,000

A part-time e-commerce website is your average side hustle effort supported with moderate marketing.

Full-Time E-Commerce Store Earnings

Revenue: $50,000–$200,000+

A full-time Shopify-style e-commerce website with significant resources and significant effort, capitalizing on professional marketing strategies, and that is involved with consistent scaling has the potential to net six figures.

High-Performing E-Commerce Store Earnings

Revenue: $250,000+

Please note that this is rare but possible with strong brand positioning and viral marketing. That said, no e-commerce entrepreneur should project these sorts of earnings without a strongly defined business plan.

Understanding Profit vs. Revenue

Revenue is total sales. Profit is what’s left after expenses. Many first-year stores operate on slim margins. Expect 5-20% net profit margins after expenses, depending on your model and efficiency.

Budget carefully for all of the common first-year e-commerce expenses, including website design and hosting, social media paid ads, influencer marketing partnerships, email marketing, inventory purchases and costs, shipping and fulfillment, and relevant business licenses and taxes.

When should you project to break even with an e-commerce store? Many aim to break even within 6-12 months, depending on overhead and scaling strategy. Do not expect to walk away with a profit prior to the six-month mark.

Furthermore, true profitability often starts after 12-18 months, once customer acquisition becomes more cost-effective. Keep your expectations grounded and ensure progress is measurable. All milestones you set for your e-commerce brand should come with a path to achieve them.

Here is a small example of what your first year in e-commerce might look like if you’re strictly pursuing profitability.

• 1-3 months: Build and launch your e-commerce website. Focus on the initial website launch and aftermath, product sourcing, and initial marketing efforts.
• 4-6 months: A shift in business approach should take place in your second quarter. Expand on digital marketing efforts to launch paid ads, build SEO, and engage with influencer collaborations to ideally begin generating a consistent baseline of sales.
• 7-9 months: This is an optimization phase where it’s important to look at your analytics and consider how you can improve website UX, fine-tune ads, further build an email list, and start retargeting.
• 10-12 months: Now it’s time to kick things into high gear and scale a successful marketing campaign. Double-down on what’s working and pivot from what isn’t. Deliver a strong finish to your first year running an e-commerce business.

How To Increase First-Year Profits In E-Commerce

There are several strategies you can use to effectively accelerate growth, sales, and profits for your e-commerce website.

Nailing Product-Market Fit

Products that solve urgent problems or meet strong desires sell faster. Focus on your products’ ability to problem-solve for your target market.

Investing Heavily in Marketing Early

More visibility equals more customers. Focus on expanding your exposure in measured steps. It’s that simple in e-commerce.

Building an Email List from Day One

Email marketing consistently delivers one of the highest ROIs in e-commerce. Do not wait to set up an email capture feature on your website and encourage anyone who interacts with your e-commerce brand to provide an email.

Offering Upsells and Bundles

Increasing average order value, or AOV, can dramatically improve profitability even at the same traffic levels. When you upsell, cross-sell, and bundle, you can increase the money you make from each customer.

Prioritizing Customer Experience

Fast shipping, excellent support, and quality packaging boost loyalty and reviews. There is a lot of competition in e-commerce. A bad customer experience with your brand can damage your reputation and hinder sales in a long-term way.

E-Commerce Mistakes That Shrink First-Year Earnings

In the same manner that there are things you can do to set yourself up for the highest revenues, there are mistakes you can make that can interfere with your e-commerce website achieving its potential. Here is what not to do.

Underestimating Marketing Costs

Many new sellers fail to allocate enough for paid acquisition. The result is stunted growth and a failure to reach the audience your e-commerce website is capable of reaching. Make calculated spending decisions to ensure you are supporting maximum growth.

Poor Niche Selection

Selling low-demand or highly commoditized products leads to slow growth. Unless your e-commerce site is a passion project, if you’re focused on maximizing first-year earnings, avoid product categories that might be hard to capitalize on.

Ignoring SEO

Organic traffic is one of the highest-converting and most profitable sources, whether this is through search engines or social media. Optimize your web presence so that it’s easier than ever for a potential customer to locate you.

Focusing Only on New Customers

At some point, your customer acquisition is going to stall, temporarily or permanently. Retention strategies are often more cost-effective than constant acquisition. Ensure you are spending your marketing budget accordingly.

E-Commerce Website Income First-Year Is Yours To Discover And Earn

Even with the best of intentions and having done all things right, there is no guarantee you will successfully earn the income indicated in your first-year.

There are many variables at play and many brands struggle to find their audience, are underfunded, and aren’t able to differentiate themselves enough to stand out against the competition.

As e-commerce web designers and digital marketers, we believe it’s important to not only launch by leveraging every opportunity to speed up sales but to continually optimize. What may seem like small improvements in design and strategy can have a massive measurable impact on revenue.

While we’re discussing revenues and income, it’s important to be mindful of profitability. Too much spending can cut down on where your revenues go to and ultimately penalize your profitability. While your first year’s profitability is unlikely to be significant, this will become more of a priority during its second year and third year.

Lets Nurture specializes in launching and developing high-quality e-commerce brands. We use data-driven strategies, such as retargeting messaging, loyalty programs to compound growth, featuring proven best-selling products, and metrics monitoring. It’s not unreasonable that, with the right foundation, a site can generate $50,000-$200,000 in revenue. Let us help you scale your e-commerce site. While not every e-commerce business is profitable in year one, a strategic and persistent approach can generate significant income. With Lets Nurture, we can help set the foundation for bigger success in year two and three.