What Is Ghost Commerce? A New Trend in Online Selling

In the evolving digital landscape where almost everything is going online, from work to learning, businesses have rightfully tapped into technology to leverage their sales. The digital age has transformed shopping styles by replacing offline visits with screen visits. Enterprises have to maintain a godown or a warehouse to stock the products, which can be stressful and loss-incurring. To overcome these challenges, a new type of commerce, which is hassle-free and less burdensome, has come into the picture. This strategic commerce method is known as “ghost commerce,” which we will look at in detail in this blog.

Understanding the Concept of Ghost Commerce

Entrepreneurs devised a way to digitally sell their products without maintaining an inventory. This is precisely what ghost commerce means. Ghost commerce is a growing trend where sellers operate without managing physical inventory or storefronts. It is a trending e-commerce model wherein the products are outsourced directly from suppliers and delivered to customers. This works by forming partnerships with suppliers and digital platforms. Basically, it acts as a bridge or a mediator between the seller and the buyer.

How Ghost Commerce Works?

Learn the step-by-step process of how ghost commerce is executed, from sourcing to selling products online.
Ghost commerce is a 10-step process:

1. Niche Selection: Businesses pick a particular product or an industry that they want to focus on and sell. 
2. Setting Up an Online Store: An online presence has to be established to list the products by creating consumer-friendly apps or websites.
3. Choosing the Suppliers: Since online stores do not stock the products in a warehouse, it is essential to form partnerships with the suppliers who deliver the products.
4. Advertisement: The listed products have to be promoted online with product descriptions and images. Develop marketing strategies to create a brand.
5. Orders: Customer orders are taken along with the billing address and payment information. 
6. Order Forwarded to Supplier: The order details are shared with the supplier, who has to ensure timely delivery of the order. The commerce website keeps track of the order.
7. Order Fulfillment: The suppliers have to pack and deliver the order directly to the customers within the scheduled time. 
8. Delivery: The shipped products are delivered to the customer, who assumes that the order is delivered by the online store. 
9. Payment: The online stores sell the product at its retail price while it is bought at wholesale price from the supplier. They keep the profit as commission.
10. Customer Support: The online stores handle customer queries, provide support and handle return or refund issues.

Benefits of Ghost Commerce for Entrepreneurs

The advantages of ghost commerce are:

• Minimal Overheads

Setting up and maintaining an inventory can be expensive. Enterprises incur huge losses when the products go unsold or if the products are perishable. Therefore, ghost commerce saves sellers from the high operational costs associated with storefronts.

• Flexibility and Scalability

The online stores are free to switch their niche products or display products that are trending in the market. The business can be scaled by supplying products that are in demand, fulfilling the customer’s needs.

Challenges of Ghost Commerce

The drawbacks entrepreneurs of ghost commerce face include:

• Excessive dependence on suppliers.
• Thin profit margins compared to running your own business.
• Restricted opportunities to offer discounts or upselling as the inventory is controlled by suppliers.
• Face criticism for quality issues.
• Over Competitive market.
• The need to maintain consistent product quality.
• Negative customer reviews or social media criticism can damage the brand reputation.
• High chances of delivering counterfeit products.
  
  Do you know: What is Quick Commerce? 

Tips to Start a Ghost Commerce Business

A simple guide to bootstarting your own ghost commerce venture is given below:

• Pick a profitable niche for ghost commerce success.
• Collaborate with trustworthy suppliers to deliver authentic products.
• Diversify the supplier base to reduce dependency.
• Expand your business by including products that are in high demand.
• Design consumer-friendly and appealing platforms for seamless operation.
• Resolve the customer issues on top priority.
• Do not compromise on the quality of the products to enjoy long-term success.

Platforms like Shopify and BigCommerce offer tools and features that give people the option to sell products across different channels and streamline the ghost commerce process.

Future of Ghost Commerce

The Indian market is vast and ghost commerce has great potential. Ghost commerce can be optimized with the integration of technological tools like AI into the business. For instance, use of tools to track the delivery, chatbots to resolve customer issues instantaneously or record the items available in the inventory. 

Conclusion 

The future of ghost commerce looks appealing. By adjusting the business model with the changing consumer needs, embracing technology and partnering with the right suppliers, the ghost commerce can see huge success. This is the wise choice for budding entrepreneurs to kickstart their entrepreneurial journey, as it is comparatively safe and easy to begin with.

Check: Top PU Commerce Colleges in Bangalore 

Frequently Asked Questions (FAQs)

1. What is Ghost Commerce and How Does It Work?
   Ghost commerce is a type of digital commerce in which products are sold by the online stores without having an inventory. The sellers maintain a partnership with suppliers who directly ship the products to the buyers based on the directives of online stores.

    

2. What are the Key Differences between Ghost Commerce and Traditional E-Commerce?
   Traditional e-commerce businesses cater to large audiences. They focus on marketing, maintain physical inventory and are responsible for the delivery of the order. On the other hand, ghost commerce stores do not have a warehouse. They cater to a small audience with a niche product. They are not directly involved in the delivery process.

    

3. How Can I Start a Ghost Commerce Business with Minimal Investment?
   Firstly, pick a niche product that is trending in the market. Look out for trustworthy suppliers and form a solid partnership. Create a website or an app to list and display the products. Build brand image through social media presence. Address customer issues promptly.

    

4. What Challenges Should I Expect When Operating a Ghost Commerce Store?Overdependence on third parties, counterfeit products, negative reviews, restricted flexibility in pricing and discounts, lower profits, less control on the supply chain, meeting customer expectations, and increased competition can be some of the hurdles that you may face when operating a ghost commerce store.