The Best Ecommerce Business Model

In this year’s “Ecommerce Conversations,” I’ve occasionally shared my experiences owning and operating Beardbrand, the direct-to-consumer brand I launched a decade ago. To date, I’ve addressed hiring, branding, profit-building, priority-setting, exiting, and overcoming a million-dollar loss.

In this installment, I share what I believe is the best bootstrapped ecommerce model and why others should consider it.

My entire audio dialog is embedded below. The transcript is condensed and edited for clarity.

Building a D2C brand is hard. Developing and selling products is a grind. A better path is a bootstrapped, sustainable business where you spend less than you make and enjoy the journey.

The purpose is not chasing giant exits or reinventing the world. It’s about building a lifestyle business — likely under a few million in annual revenue — that trades rapid top-line growth for lower stress, profitability, and freedom. It may never go mass market, but it can deliver a great life.

Agile Structure

When building an ecommerce business, aim to keep fixed, internal costs to a minimum. Take inspiration from Will Nitze of IQ Bar, who runs a lean team and outsources marketing, design, video, packaging, operations, and manufacturing. Outsourcing creates flexibility. Vendors that underperform are easily replaced.

In-house manufacturing ties you to equipment, facilities, and local employees. All reduce mobility. With an outsourced model, you can work from anywhere — even Denmark, where I am now — and still receive prototypes and manage operations. A remote setup opens the talent pool worldwide.

There are trade-offs. In-person collaboration can be valuable, but physical offices create obligations. I learned this the hard way with a five-year lease in Austin, Texas, that became unnecessary during Covid, costing us over $100,000 annually.

Local teams and on-site operations may suit folks who prefer a traditional setup. But if freedom matters — to travel, hire globally, pivot quickly — consider outsourcing from the start. I prefer flexibility, partnering with both in-house staff and external providers to keep my business agile.

Smart Niches

An ideal ecommerce product is small, lightweight, and consumable, serving a large audience with an average order value of $75–$125. This price range makes customer acquisition easier and ad testing faster. The challenge: It’s highly competitive, especially in the supplements, beauty, and premium beverage sectors, such as specialty coffee or tea.

Other strong options are non-consumables that share those traits, such as a Ridge pocket knife — easy to ship, high perceived value. Consider untapped luxury niches. Affluent customers value convenience, presentation, and uniqueness far more than price.

For inspiration, visit luxury department stores such as Neiman Marcus and Saks Fifth Avenue. Observe what sells and why someone might pay 10 times more than a viable alternative. Avoid trend-driven categories, such as fashion, which require constant reinvention. Instead, focus on evergreen household goods with a unique twist for a small but willing-to-pay market.

While these niches won’t create billion-dollar companies, they can deliver low-stress, highly profitable businesses — think $750,000 in annual revenue with $250,000 in profit — without the complexity of endless SKUs, large teams, or operational headaches.

Margin Power

It’s possible to build a $750,000 ecommerce business that nets $250,000, but only if you manage gross margins — aim for 90%. For example, sell an item costing $6 for $60. You’ll still retain around 80% after shipping, taxes, and delivery costs. High margins are non-negotiable for a low-stress operation.

Conversely, products with tighter margins attract price-sensitive customers, which leads to increased returns, complaints, and support tickets. Serving customers with disposable income reduces friction because they’re less likely to demand refunds.

At a $115 average sale, $750,000 in annual revenue equates to roughly 6,520 orders — just 18 per day. One person can fulfill this volume, or with minimal help, generating perhaps only a few support tickets per week.

If margins leave $650,000 after cost of goods, and you spend $400,000 on marketing, you’ll retain $250,000 profit. The model works, but launching it — higher-priced products in a niche — requires time and testing. It won’t be easy to stand out, but with the right offer, it’s a manageable, profitable, and less stressful way to run a business.

Trusted Voice

Every high-end ecommerce brand needs a trusted public advocate — someone who can vouch for the quality, experience, and value of the product. It doesn’t have to be a celebrity. It can be the owner, provided she’s willing to be the face of the brand.

The advocate’s role is to build trust, communicate the product’s value, and demonstrate how it improves customers’ lives. Titles alone aren’t enough. An advocate must have influence and sales ability. Without this trust, it’s nearly impossible to command premium prices.

You may need to sell to an audience you’re not part of. That requires shedding your own “value shopper” mindset to learn how target customers buy. Experience their lifestyle, understand why they pay more, and embrace their perspective. This shift in thinking can be the key to unlocking growth.

Creative Edge

Innovation is essential. If you can’t create something unique, this model may not work. Competitors will copy your ideas and undercut your prices. Success requires loyalty and brand affinity, and thus customers who won’t switch to save $30 — or $100.

Luxury beauty brands such as La Mer skincare succeed not only from functional superiority, but also because of their storytelling, perceived exclusivity, and trust. The challenge for like-minded entrepreneurs is to create an experience and narrative so compelling that customers believe no substitute can match it.

In premium markets, even a few thousand loyal customers can sustain a profitable, low-stress business — if your innovation keeps them hooked.