The Hello Bar is a simple notification bar that engages users and communicates a call to action.

Side Hustle Series: I Run an Online e-Commerce Store

by J. Money on Thursday, June 21, 2012

minted republic

(Guest post by Jun Loayza, as part of our Side Hustle Series. I met Jun two Summers ago and he’s always creating something new! Great great guy to learn from – I hope you all really enjoy this :))

I’m a huge proponent of multiple sources of income.  Ever since I read the 4 Hour Work Week, I felt the need to increase my passive income slowly but surely, with the goal of never having to work a full-time job again.  I have multiple sources of income, but today I will focus on my newest venture: the online e-commerce store.

My side hustle: MintedRepublic.com – an online e-commerce store that sells day dresses and other luxury women’s clothing. Sites like Gilt and Modcloth make a ton of money online. I thought, “Why shouldn’t I be able to get in on the action?”  It seemed so simple really – just get a distributor, take some pictures, and start selling clothing.  What could be easier?

We ran into many obstacles along the way, but once we finally launched, we were able to enjoy a steady stream of dependable income.

Step 1: Get the distributor

A business partner of mine has a close family friend that is a clothing manufacturer in Los Angeles, CA.  We approached the manufacturer and pitched the idea of selling her current inventory. It took some negotiation, but we finally arrived on the following partnership:

  • Dropship model: we sell the clothing – the distributor is responsible for the rest: fulfilling and shipping the order
  • We pay wholesale pricing on the clothing

Step 2: Build the site

There are many e-commerce platforms to choose from.  We chose Shopify because it came highly recommended by Tim Ferriss.

Benefits of using Shopify:

  • Simple and easy to use CMS
  • Pricing isn’t too expensive: we pay $59/month
  • They have a theme store with many free and premium themes to choose from
  • They have an app store with many useful add-ons for your site

Our site uses a premium theme that was customized by our developer and designer.

Step 3: Get the catalog photos + lookbook photos

model - minted republic
We’re very particular with our brand.  Because we sell luxury women’s clothing, the site needs to convey a high-quality feel that exemplifies luxury.  We therefore went all out for the model and photography on the site.

Model: We found our model through Model Mayhem.  She just moved to Los Angeles from Seattle, so we got her as fast as possible before other retailers could get her.  Expect to pay your model $400 – $800 for a day of shooting.

Photographer: I previously worked with Kevin from Hotography on another project.  I reached out to him for his photography services and we worked out a deal for a 2-day shoot for the catalog and the lookbook (a lookbook is a collection of photos put together to show off a model or a photographer, clothing line, etc).  Expect to pay $3,000 – $5,000 for a day of shooting + final editing of photos.

Step 4: Marketing for launch and post launch

The women’s apparel world is highly influenced by fashion bloggers.  We therefore reached out to popular and up-and-coming fashion bloggers to post up advertisements and for clothing reviews.  Here is an example of a review.

It’s quite easy to find and get in touch with fashion bloggers.  Most of them are looking to make money, so they’ll respond immediately to your inquiry.  Expect to pay $100 – $250/month for advertising on a good fashion blogger’s site.  The big ones will charge up to $2,000/month, but we’re not ready to advertise with them yet.

How to find fashion bloggers: we’ve compiled a list of fashion bloggers that are looking to partner with online retailers.  For a full list, email me.

Total Costs

Here is a quick breakdown of costs so that you know how much you’ll need to get started:

  • Shopify: $59/month
  • Model: $400 – $800/day
  • Photographer: $4,000 – $6,000/day
    • This total includes all final edited photos (we had about 300 final photos)
    • Advertising: $100 – $250/month to advertise on a blog with 100K hits per month

What kinds of people make ideal e-commerce professionals?

Startup costs are quite high, so you’ll need to have a good amount saved up to invest in the venture.  However, if you’re ok with having low-quality photos or if you’re a photographer, you can save A LOT of money by doing the photography yourself.

You’ll spend the bulk of your time-investment in the beginning to set up the site, do the first catalog shoot, and approach fashion bloggers to put up advertisements.  Once you launch and have a system in place to fulfill orders, you can sit back and manage the site at nights or weekends.

Do note that each new season should come with a new catalog and lookbook shoot. If you have the capital and love fashion, then this could be a very promising venture for you.

How much money you’ll make

We just launched the site a few months ago so our true potential is yet to be determined.  In the last week, we’re averaging 18 items sold per day.  Here is a breakdown of the numbers projected numbers:

  • 18 items sold per day
  • $45 average item value
  • Revenue: $810 per day

In a month, we can expect $24,300 in revenue.  In your total calculations, you must of course take into account COGS (costs of goods sold), costs for advertising, and costs for photography.  We hope to increase sales steadily in the coming months.

——–
Jun Loayza is the Co-Founder of RewardMe.com, a digital rewards program for restaurants and retailers. In his entrepreneurial experience, Jun has sold 2 internet companies and lead social media technology campaigns for Sephora, Whole Foods Market, Levi’s, LG, and Activision.

**Have a side hustle of your own that’s interesting? Let  us know about it!


We recommend:

{ 29 comments… read them below or add one }

1 Call Me What You Want Even Cheap June 21, 2012 at 7:55 am

Awesome breakdown of your side hustle and great income potential if you love fashion.

I just read the 4 hour work week as well. Great book and I have gotten a few ideas for my side business as well.

Reply

2 Michelle June 21, 2012 at 8:20 am

Wow very interesting! I love reading about others side hustles.

Reply

3 SavvyFinancialLatina June 21, 2012 at 9:03 am

Super interesting :) I love the breakdown. My only side hustle only consists of baby sitting right now. Hoping to expand :)

Reply

4 ImpulseSave June 21, 2012 at 9:06 am

It looks like an expensive side hustle, but if done well, it could even turn into your sole income! Very interesting. Thanks!

Reply

5 Bridget June 21, 2012 at 9:22 am

oh my god I wonder if I could do this.. not sure if I’d sell clothes though. Great breakdown, very cool to see.

Reply

6 Lance@MoneyLife&More June 21, 2012 at 9:33 am

I’ve always wondered about drop shipping. I thought it would be neat but don’t know what product to sell. Nice to see a little behind the scenes.

Reply

7 Kate June 21, 2012 at 9:45 am

I love this idea, although clothes would not be the right item for me. What else could this be done with?

Reply

8 PB @ EconomicallyHumble.com June 21, 2012 at 11:16 am

wow, thats really fascinating. What would you say is your time commitment?

Reply

9 From Shopping to Saving June 21, 2012 at 11:29 am

This is awesome! I’ve always thought about opening up my own store, and finding a distributor, but I never went into it seriously. I thought about it 3 years ago when I first started a fashion blog. Many stores were popping up online and I got a ton of emails from advertisers. Should have done it when the time was right but I was in college and it obviously requires a lot of work and money and time I didn’t have.

Awesome job though, so interesting to hear about the logistics of opening up an online store!

Reply

10 Andrew June 21, 2012 at 11:45 am

Was your drop shipper open to placing single item orders at wholesale prices? Meaning, if you sold just one of a particular dress, they fulfill the order? Or, do you have to buy each item in a lot, at wholesale pricing?

Just curious how you manage inventory.

Reply

11 J. Money June 21, 2012 at 12:31 pm

Glad y’all find this as interesting as I do! I consider stuff like this all the time but haven’t had the balls to pull the trigger yet ;) This is perfect for someone who has a great biz partner or shares a fellow passion with someone though – you can help motivate each other and split up the tasks! Def. cool stuff if you’re willing to take on the risk. Worst case you lose some money but gain valuable experience, right?

I’ll check in with Jun and see if he can help answer some of y’all’s questions…

Reply

12 Jun Loayza June 21, 2012 at 12:32 pm

Hi PB @ EconomicallyHumble.com,

My time commitment at the moment is 5 hours per week. I have my team run the majority of the business.

Reply

13 Christine Wilson June 21, 2012 at 12:34 pm

Don’t know how much someone would pay for dropship clothing. If the price is high the profit is decent, if it is low the profit is amazing. Here’s what I worked out from these numbers:

$72,900/quarter – Revenue

Expenses per quarter
———————-
$36,450 Assuming drop ship items are half of sale price
$15,000 for 3 days of photographer
$1,800 for model (3 days)
$2,625 to advertise on 5 sites with 100K hits per month
$177 for Shopify
——————
$16,848/quarter – Net profit

$67,392/year – Net Profit

Reply

14 Christine Wilson June 21, 2012 at 12:36 pm

Oh and beautiful website with beautiful clothes! You’ve done an excellent job. I’m sure you’ll only grow more and more :)

Reply

15 Jun Loayza June 21, 2012 at 12:47 pm

Hey From Shopping to Saving,

There’s no better time than the present! It’s never too late to start

Reply

16 Jun Loayza June 21, 2012 at 12:50 pm

Hey Andrew,

The majority of manufacturers are not interested in selling single-items. It took some time to find the right partner.

I flew out to LA to meet with them personally. I centered the pitch around how much more money they’ll make and that it won’t really cost then much extra in time or operations.

We got the deal because of the pitch. They trusted me and we’ve been great partners ever since.

Reply

17 Christine Wilson June 21, 2012 at 1:09 pm

You have a team too? That’s great! I’m guessing right now it’s not bringing in much of an income right now? Using most of the profits to put back into the business and grow it? Very impressive. I would love to do something like this.

Reply

18 Jenna, Adaptu Community Manager June 21, 2012 at 1:27 pm

What a great side hustle. Thanks for sharing.

Reply

19 Financial Samurai June 21, 2012 at 2:16 pm

Good stuff and very random Jun! Can you talk a little bit more about your start-up and operating costs? I’m alway fascinated to know what goes beyond revenue. How many ways do you have to split the proceeds?

Let me know when you’re back up in SF to get a drink.

Cheers!

Reply

20 Jun Loayza June 21, 2012 at 5:12 pm

@Christine Wilson – Yup, my team consists of 1 developer, 1 advertiser/designer, and 2 social media interns.

Yup, the majority of our money is spent on advertising at the moment.

Reply

21 Jun Loayza June 21, 2012 at 5:15 pm

@Financial Samurai – most of the startup costs were detailed in the post. Shopify is $59/month, the photographer cost about $8,000 for the initial 3 shoots, and we spent a good $7,000 in the first 2 months on advertising alone.

That’s about it though. Photography was the main cost the we incurred (assigned from advertising of course)

Reply

22 Mikayla June 22, 2012 at 12:51 am

Super awesome fun time… best of luck Jun….
BUT is anyone looking at these number$ thinking maybe photography needs to be their side hustle hahaha!

Reply

23 J. Money June 22, 2012 at 2:20 pm

Oh man, THAT is hard. Everyone and their mother wants to do photography for $$$ and only like 1% actually kill it from what I see. I’d still give it a shot if I were super passionate about it all, but def. a trickier one in my opinion. More power to everyone doing it though!

Reply

24 Sam June 23, 2012 at 7:56 pm

Hi Jun,

What about the operating and net profit margin though?

What actually is left a month from the $10,000?

Tx

Reply

25 Sun June 26, 2012 at 9:51 pm

The mistake most people make with drop ship is to buy a list that anyone else can buy. The OP did something very smart here by taking a distributor that is not online and offering a unique product online. This somewhat insulates the OP from competition on those particular SKUs. The OP has some front-loaded cost with getting the images online, but should be able to recoup and milk those photos for a long time.

I’m curious what the actual expenses are though. Cost of goods, merchant account fees including fraud and chargebacks, freight, advertising, shipping supplies, processing returns. With drop ship, the distributor may not realize their costs and could raise prices later.

I already have drop ship set up for almost ten years, but I like this angle of bringing new people aboard. I have a photographer I can use already, so that part of the equation is set to. I just have to find products that are not online that can easily be sold and shipped. I’ve dreamed of finding products that can fit in a USPS Flat Rate Envelope! ;)

Reply

26 Barbara Friedberg June 30, 2012 at 8:59 pm

I’m fascinated by your side hustle. A real inside look into setting up and ecommerce site. How are your revenues coming? Gook luck.

Reply

27 Lisa December 15, 2012 at 3:58 pm

Hi There fellow entrepreneur :) I would love to chat a bit about this type of venture. I am looking to create one of my own, and I’d love some tid bits and advice.

Thank you and please email above!

Lisa

Reply

28 Janelle Davis October 16, 2013 at 4:18 pm

Hello,
I’m interested in seeing if you could help me find a distributor. I would like to also start an e-commerce store. Please help. Thank you!!! If you could offer any other advise in addition to your blog, i would greatly appreciate it. Thank you

Reply

29 michelle January 4, 2014 at 12:04 am

Great realistic and detailed article. I am in the process of starting an online clothing store myself and of course my biggest obstacle is finding a good distributor that of course not every store in my area is doing business with! If you can help guide me in the right direction… I would appreciate it ! As a single mom I am beyond tired of living check to check.
thanks in advance mrosado8503@yahoo.com

Reply

Leave a Comment

Previous post:

Next post: