i will teach you to be rich review

Angie P.

Freedom Fighter

i will teach you to be rich review

Angie P.

Freedom Fighter

Why E-Commerce Is The Best Side Hustle / Business

by | Jul 21, 2021 | E-Commerce, Earning | 0 comments

Maybe you hate your job because your manager sucks and is a micromanager that can’t seem to give you the autonomy you need to do your work. Maybe you hate your job because you just hate the work…or the people at your work. Either way, you want to quit and do something else…but what, exactly? In this post, I’ll show you what I think is the single best side hustle out there, and how I came to that conclusion after tasting a ton of different businesses.

If you’re desperately wanting out of your W-2, you don’t really need to read “the 21 best side hustle ideas” or “69 side hustles you can do now”. Giving you 20 ideas will only distract you and pull you in a ton of different directions. If you are drowning and want out of your job ASAP, you need 1 side hustle, and only 1 side hustle can be the best, by definition.

Instead of throwing 20 different ideas at you, this article will show you why a ton of other side hustles didn’t work out for me, and why I think e-commerce is the best side hustle for most people.

Why E-Commerce Is The Best Side Hustle

I’ll just briefly touch on the obvious and say that one of the main reasons why e-commerce is great is because it isn’t going anywhere. People are buying stuff online more and more, year after year, and it’s hard to imagine that people will suddenly stop buying stuff online.

Now that’s out of the way: many business models are not going away…so why e-commerce?

Short answer: e-commerce has the best risk-to-reward ratio, is scalable, and will take the least amount of time to iterate.

Long answer: Let me list all of the businesses I’ve tried and talk about why each one didn’t work for me, and how I finally came to arrive to e-commerce.

First, My “Fails” / Side Hustles To Avoid

Investing in Single Family Rental Real Estate: I didn’t have much money to buy expensive real estate in big cities, so I bought rentals for cashflow in Memphis. This sounds nice, except for 2 things:

  1. The risk is very high. In any real estate investments there are numerous unknowns that can’t possibly be uncovered even with tons of due diligence. For example, 2 years into an investment, there was a gas leak that took $8000 to fix. The property itself was only worth $119K when I bought it. When I tried to sell it, people didn’t like trees in front of the house, so it took $4K to chop down a few trees. Renovating between vacancies also cost $10K, and the final renovation cost $40K! With the property only being worth $200K when I sold it, it doesn’t take many “unfortunate” situations to turn a good investment to something that’s losing you tens of thousands of dollars.
  2. With such volatility, you would expect these assets to stabilize over time. However, for you to get your money back after a $10K renovation probably will take years. And for you to become rich enough to quit your job…well, that’ll take decades. And I don’t have decades. In other words, Single Family Rentals (SFRs) are too slow to get rich with.

Driving For Lyft: I wanted to drive for lift to earn some extra money each year so I can speed on my schedule on buying real estate. This was also terrible for 3 reasons:

  1. It was miserable. The best time to drive was Thurs-Sat 2AM-5AM in San Jose.
  2. It’s not scalable: you are trading hours for dollars. You can at maximum drive 24 hours a day, so you can’t possibly reach a good ceiling for dollars earned.
  3. Income too low: Also, you’ll beat your car up driving people around all day long, so most of your revenue will just go towards maintenance, repairs, and gas. People also don’t tip where I live, so you might earn $200 in a day, but spend $100 just on gas.

Multilevel Marketing: When I was young and stupid, I tried MLM. It doesn’t work for the following reason:

  1. The products in MLM has no inherent value, generally speaking. That’s why they have to do a pyramid scheme to sell that shit in the first place.

Airbnb Arbitrage: This is the process of a “master lease”: where I pay landlord a fixed monthly rent and then Airbnb back out for a higher rent. For example, I’d pay a landlord $2000/mo for the right to Airbnb his apartment. And then I’d Airbnb it back out for $3000/mo and make a $1000/mo net profit, or so that was the thinking. This didn’t work for 2 big reasons:

  1. It’s called “Airbnb” Arbitrage because it is 90% of the short-term rental market. Craigslist, TravelHaven and a bunch other websites don’t really score short-term tenants effectively whatsoever. This may not be a problem but one of our guests installed a hidden camera in the bedroom, and either the same guest or the next guest complained, causing us to be banned from Airbnb. This killed all our revenue.
  2. Low reward, extremely high risk. The margin was about 15% when everything is going well. Translation: if anything goes wrong, we are done. And things did go wrong. A month of vacancy would mean we would need to take 6 months just to claw back to break even, for example. This makes the business extremely hard to operate, and it also makes it impossible to scale.

Social Media Marketing: This is the process of soliciting business owners to pay you $1000/mo in return for you to do social media marketing for them. This doesn’t work for 4 reasons:

  1. It is bullshit. I took Tai Lopez’s course and most of it is ‘fake it till you make it.’ It is very hard to sell yourself to businesses when you know for a fact the only credential you have is looking at a bunch of online videos you overpaid for and have no track record, experience, or skin in the game to show for it.
  2. It’s not scalable: You’re trading time to do social media marketing for clients. And you get paid $1000/mo. It’s not passive, and will never be passive. Ads get fatigued and even if you were to create ever-green content and keep charging a retainer for it, you might get some passivity, but the next point is really important as well.
  3. Clients are hard to get and is extremely time-consuming to get. If you spend an enormous amount of time getting a client, you lock in a revenue of $1000/mo. But with that $1000/mo you also need to work your ass off to earn it. This equates to a lot of time spent. You could have just as easily invested that time on a job and earned way more than $1000/mo. In other words, it takes too much time for what the reward is, and is fairly difficult to scale.
  4. Clients suck. They’re demanding and even when you get results, most clients will either ask you to produce more results or have you cost less. Dealing with clients is kind of a pain in the ass and it’s hard to just ‘drop’ a client because they’re hard to replace. It’s like, you have your own business, but you need to deal with the same bullshit as being in a corporate job. No thanks.

Flipping Houses: This mainly doesn’t work because it 1) costs too much time, and 2) has enormous risk for the reward you could possibly get (refer to the SFR section).

Etsy: I used to create digital downloads to sell on Etsy. This is quite passive and I still earn money from it to this day, passively. But there’s a big reason why this doesn’t work:

  1. It’s too time consuming to create new PDFs to test out new products. Not every product is a “hit” and maybe you’ll get 1 out of 20 PDFs you make actually making one sale, and 1 out of 100 PDFs making a decent amount of revenue. In other words, Etsy is too time-consuming.
  2. If you hire someone to create layouts and your ideas don’t really have a huge demand in the Etsy SEO mechanism, you could be wasting a lot of money (with no real data on why things aren’t working, and thus can’t learn nor iterate). In other words, you’re taking financial risk which is OK, but when you fail it’s hard to understand why as Etsy tools are severely limited. And if you can’t understand why something failed, you can’t improve. And if you can’t improve, you’re stuck forever.

Why E-commerce Works.

  • It’s fast. You can build a new website and test a new product in a day if you’d like.
  • It’s low-risk. You can test a product with only $100-$500 worth of ad money.
  • And your upside compared to that risk is huge: even if you run at a 15% margin for a $100K business, you’ll make $15K net income per year which would dwarf the amount of risk you’re taking. The 15% margin might sound scary here, but it’s really not. Your biggest expenses are 1) ads, and 2) inventory. But without sales, you just don’t buy any more ads and inventory and you cut your losses. In the Airbnb Arbitrage scenario above, we’re stuck paying rent even if there’s no customers. This isn’t true for e-commerce. Nobody is forcing you to buy ads or inventory if things aren’t working out.
  • You can iterate: you’ll fail a lot, just like Etsy. But using Shopify / your own website lets you use tools like surveys, Google Analytics, Facebook/Google Ads Analytics for you to understand exactly why the product has failed. Failing a ton isn’t an issue—and it isn’t why Etsy is bad—failing a ton without being able to get a clear hypothesis of why you failed is bad. Etsy doesn’t provide enough intel for you to form a clear hypothesis, but Shopify+Google+Facebook does, so each new product / website you try out will get just a little bit better.
  • It’s scalable (to a point): Once your business is humming along and all your supply chain is set up properly, taking 1 order a day vs. 100 orders a day takes almost the same amount of work. At that point, you’d have plenty of margin to hire a team to take care of customer service so it’s not going to be 100 times more work to do 100 orders a day vs. 1 order a day. It’s scalable “up to a point” because obviously there’s physical things involved: factories producing the product and employees in warehouses trying to fulfill your orders. Going from 1 to 100 orders a day may be somewhat trivial. But going from 100 orders a day to 100,000 orders a day is extremely difficult.

It’s The Best Side Hustle, But It’s A Very Hard Side Hustle

Unlike gurus trying to sell you a dream, I’m not going to tell you that anything you choose to pursue to replace your terrible job will be remotely easy at all. Anything you pursue will be extraordinarily difficult. That’s the game of business.

And unlike gurus that are trying to steal your money, I’m telling you all the different things I’ve tasted and why they don’t work and why I am confident e-commerce will work for me the best. You don’t have to agree with my conclusion based on my own experiences above, but if you’re going to look to start a new venture, you should consider the following factors:

  • Can it scale? If you go from 1 customer to 1000 customers, will your work 1000X? Or will it only increase by 10%? If it’s the latter, that seems like a much better choice.
  • Can you easily learn from your mistakes and thus improve and iterate rapidly?
  • Can you test out an idea very quickly? Or do you need to make something from scratch?
  • Is it low-risk, high-reward? Or is it high-risk, low-reward?

If you despise working at your current gig and want out: I feel you 100%. I highly recommend diving into e-commerce as a “first taste” to entrepreneurship, but if reviewing the 4 factors above you decide to choose something else, that’s good too (less competition for me)!

P.S.: This is a new blog and if you’ve found this helpful at all, it would mean the world to me if you were to share this post to someone that you think this post might benefit. It would also be immensely helpful to me if you could give me any feedback on the content at hello@goodmoneygoodlife.com




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