Yaro Blog

How I Have Made Money Online – Part 2 – Online Stores and Advertising

Continuing the three part series on how I have made money online today I look at operating an online shop and using advertising on a hobby website to generate an income. If you missed the first part of this series you can read it here – How I Have Made Money Online – Part 1 – eBay, Garage Sales and Card Trading

Online Store

My first online store was also focused on Magic: The Gathering and run through my Magic site. I had a captive targeted audience so it made sense to start a Magic store. I stocked my shop with product from my own collection but also started to buy cards from other sources such as players quitting the game and by buying in bulk from trading forums. I contacted wholesalers and started to sell new product which is called “sealed” product, which has not been opened yet and contains a random assortment of cards.

I never had a proper online shopping cart and instead maintained text lists on webpages. It was a hard slog maintaining the store and shipping products which had me making near-daily trips to the post office. Running the card store was my first taste of real online business — taking regular orders online including processing credit cards, buying at wholesale and selling at retail, customer support — and all the other functions that an owner-operator of a small Internet business must go through.

You can read more about my time running MTGParadise Mail Order and the events that eventually lead to its shut down in my business timeline – Part 2.

Earnings: My card store earnings were pretty good however I did not keep proper records. I considered it a hobby and the reality was that I never did take the business seriously. Unfortunately the margins for Magic product were pathetic and the labour certainly did not justify the rewards. I knew I would never make substantial income and I was already working a lot of hours to make marginal profit. The truth was I only made as much as I did because I was slowly selling my personal collection and I was “paid” in new product for my work as a reporter for Magic tournaments. If I did not have this “free” inventory my profit margins from wholesale product would not have justified running a store. Regardless of this I probably managed to sell about $200-$1000 per month in card sales, although my memory is hazy and I was also earning advertising revenue at the time.

Advertising on Websites

One of the most popular articles I have written is How to Make Money from Your Website Using Advertising. It’s popular because it’s practical and I talk about the exact steps I went through to generate a steady income from advertisements placed on one of my websites.

Advertising income is a great way to make money on the web. Finding advertisers and generating income is not the hard part of this strategy, it’s establishing a website with enough traffic to justify advertisers paying you that is difficult. I go into more detailed numbers in the above article but basically once you have a site that has a consistent 500+ unique visitors coming everyday you have the groundwork for a steady income from advertising. The best thing is that if your site is popular because it has a great community it is hard for you to lose that value. I was lucky enough to establish a geographically niched community focused on trading a commodity, Magic cards, which is a perfect recipe for a lively community and consequently an income from advertisers willing to pay to attract that audience.

If you build a popular site that doesn’t require much maintenance then advertising income can be quite passive. If you take this blog as an example I have to create new content on a regular basis to retain a readership and if I stopped updating for a long enough period of time this site would lose its popularity and consequently any income I might be making from advertising. Of course there are many ways around this which I won’t go into now but any smart business person will be thinking passive income as a long term strategy because one day they will tire of writing new content or performing whatever function they currently do to create value in their site.

My old Magic site is a good example of a formula to create almost passive income. The heart of the site was a community forum and in fact the forum received more direct hits than the actual index of the website. The forum was managed by a collection of volunteer moderators who chose to perform their function for free because they received some sort of intrinsic value – an increase in community status (moderators are “staff” and therefore in a leadership/power role within the community). New content was generated by the audience for free because they enjoyed writing about the game they played and talking about their achievements publicly. Free content and free forum maintenance left only site updates as my job, which was significant enough but took about an hour a day to maintain the status quo.

Earnings: When I first started off I brought in $30 per month from my first advertiser. I slowly added more and over about a 2 year period I generated a consistent $300 – $1000 per month through banner and email newsletter sponsorship.

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You can read the other parts of this series here –

Yaro
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