Ghost Commerce: A Comprehensive Guide

TL;DR: Ghost commerce

Ghost commerce is an innovative online business model that enables entrepreneurs to sell products without holding physical inventory or managing traditional storefronts.

• No inventory management: Entrepreneurs don’t need to stock products, reducing financial risk and simplifying operations.
• Third-party fulfillment: Suppliers handle product storage, packaging, and shipping directly to customers, freeing up entrepreneurs to focus on marketing.
• Digital marketing focus: Success relies on effective digital marketing strategies such as content creation, social media engagement, and influencer partnerships.
• Low startup costs: Minimal upfront investment compared to traditional e-commerce businesses, which typically require significant capital for inventory and warehousing.
• Scalability: Businesses can easily scale without worrying about managing physical inventory or logistics, allowing for rapid expansion.
• Flexibility: Operate the business from anywhere with an internet connection, offering significant flexibility for entrepreneurs.
• Types of business models: Includes dropshipping, affiliate marketing, white labeling, and print on demand, providing various paths to success within ghost commerce.
• Native advertising with Outbrain: Use platforms like Outbrain to drive more qualified leads through native ads that blend seamlessly with editorial content, boosting engagement and conversions.
• Dependence on suppliers: Success depends on reliable suppliers for product fulfillment, with potential risks from delays, poor product quality, or stock shortages.
• Marketing is key: Building a strong online presence through SEO, content marketing, and native ads (like Outbrain) is essential for driving traffic and growing sales.

What is Ghost Commerce?

At its core, ghost commerce involves promoting and selling products through online channels without directly handling the inventory. This approach relies on partnerships with suppliers who manage inventory, packaging, and shipping. Entrepreneurs focus on marketing and sales, directing customers to purchase from these suppliers.

Is ghost commerce the same as dropshipping? 

Ghost commerce and dropshipping share similarities but are not exactly the same.

Similarities:

• Both models involve selling products online without holding inventory.
• In both models, third-party suppliers handle the product storage, packaging, and shipping directly to customers.
• Both rely heavily on digital marketing and sales strategies rather than traditional brick-and-mortar retail.

Differences:

• Ghost commerce: This is a broader term that includes various business models like dropshipping, affiliate marketing, white labeling, and print-on-demand. It’s essentially an umbrella term for business models that allow entrepreneurs to operate without directly managing the products.
• Dropshipping: This is a specific type of ghost commerce where an entrepreneur sells products through their own online store but doesn’t hold inventory. The supplier ships the product directly to the customer. Dropshipping is one subset of ghost commerce.

In essence, dropshipping is a type of ghost commerce, but not all ghost commerce businesses are dropshipping businesses. Ghost commerce can also include affiliate marketing, where you promote someone else’s products and earn a commission, which doesn’t involve directly selling or managing products.

Key Components of Ghost Commerce

Ghost commerce allows entrepreneurs to focus on the aspects of e-commerce that require minimal capital investment – marketing, customer engagement, and sales generation – while third-party suppliers handle the logistics. 

Below, we will explore in detail the three key components of ghost commerce: 

1. No inventory management
2. Third-party fulfillment
3. Digital marketing focus

1. No inventory management

One of the primary features of ghost commerce is that entrepreneurs do not need to stock or manage products. This component is essential because it removes one of the largest financial barriers to entry for e-commerce businesses: the need for upfront capital to purchase inventory

A study by Statista showed that 47% of e-commerce businesses (particularly dropshipping) can scale without maintaining inventory, relying entirely on third-party suppliers for stock management.

According to Oberlo, dropshipping businesses typically require only $500 to $1,000 to get started, much less than traditional retail models that involve warehouse rentals, inventory purchases, and logistics management.

“The no-inventory model in ghost commerce is transformative for people who want to start a business without a huge financial risk. You simply don’t need to deal with warehouses or stock, and that is one of the key reasons why ghost commerce is gaining so much traction.” 

Chris Davis, E-commerce Expert, Greenwich Technology

2. Third-party fulfillment

Third-party fulfillment is another cornerstone of the ghost commerce model. In this setup, entrepreneurs work with suppliers, manufacturers, or fulfillment centers that store, package, and ship products directly to customers. This removes the logistical burden from the business owner, allowing them to focus on marketing and scaling their online presence.

According to a 2021 survey by eCommerce Platforms, 33% of e-commerce store owners listed third-party fulfillment as one of the key factors contributing to business success, noting its ability to improve efficiency and reduce human error. Samir Patel, founder of Fulfillment by Amazon (FBA), suggests that entrepreneurs can save up to 30% of their operational costs by using third-party fulfillment services that handle everything from warehousing to returns.

“Third-party fulfillment gives entrepreneurs the freedom to scale without worrying about the complexities of logistics. You simply partner with established fulfillment centers that already have systems in place to ensure fast and reliable deliveries.” 

Neil Patel, Marketing Expert

3. Digital marketing focus

Digital marketing is the lifeblood of a ghost commerce business. Since entrepreneurs do not handle the physical aspects of operations, the majority of their time and resources go into marketing strategies to attract, convert, and retain customers. The success of a ghost commerce business largely depends on how well the entrepreneur can execute online marketing strategies such as content creation, social media engagement, and influencer partnerships.

The Content Marketing Institute reports that 93% of businesses using content marketing generate higher levels of engagement, and companies that actively create high-quality content tend to see a 6x increase in website traffic. Additionally, research by HubSpot found that businesses that use social media for marketing grow 4x faster than those that don’t.

“Content is king. If you can consistently produce valuable, relevant, and optimized content, you will see organic traffic and sales climb exponentially. In ghost commerce, where marketing is the key differentiator, content marketing isn’t just an option; it’s a necessity.”

Rand Fishkin, founder and former CEO of Moz, CEO of SparkToro

For ghost commerce entrepreneurs, marketing strategies are crucial to driving traffic and converting sales. The focus on digital advertising (e.g. Outbrain ads), search engine optimization (SEO), and influencer partnerships can create the necessary exposure and customer loyalty that leads to sustained business growth.

Types of Ghost Commerce Models

Ghost commerce is an umbrella term that covers a range of similar business models with a key aspect in common: entrepreneurs can sell products without maintaining physical inventory or managing traditional retail operations. The four key models of ghost commerce are: 

• Dropshipping
• Affiliate marketing
• White labeling
• Print on demand

Each model offers unique opportunities and challenges. Understanding these distinctions is crucial for choosing the right one for your business.

Dropshipping

Dropshipping is perhaps the most well-known ghost commerce model. In the dropshipping model, entrepreneurs sell products through their own online store but do not hold any physical inventory. Instead, when a customer places an order, the entrepreneur forwards the order details to a supplier or manufacturer, who then fulfills and ships the product directly to the customer.

According to Statista, the dropshipping market in the U.S. was valued at $196.7 billion in 2022, and it is expected to grow at a compound annual growth rate (CAGR) of 28.8% from 2023 to 2030.

Oberlo reports that 33% of the most successful dropshipping stores use Shopify as their platform, with a large majority of entrepreneurs running their businesses from home with minimal upfront investment.

“Dropshipping provides an unparalleled entry point for new e-commerce entrepreneurs due to its minimal financial barrier. However, it’s essential to focus on building a strong brand and a unique selling proposition (USP) to stand out in a crowded marketplace.”

Chris Davis, E-commerce Expert, Greenwich Technology

SaleHoo, a marketplace that connects suppliers with dropshipping businesses, recommends that newcomers carefully vet suppliers and prioritize customer service, as the success of a dropshipping store relies on the reliability of third-party vendors.

In summary, dropshipping offers a low-risk path to enter the e-commerce world, but it requires a strong understanding of marketing, customer acquisition, and supplier management.

Affiliate marketing

Affiliate marketing is another popular ghost commerce model. Instead of selling products directly, affiliate marketers promote products or services from other companies and earn a commission for each sale made through their unique referral links. 

Affiliates can market through blogs, websites, social media, native ads, and email marketing, driving traffic to merchants’ sites.

Rakuten Marketing found that 81% of brands and 84% of publishers use affiliate marketing to boost their revenue, making it one of the most lucrative digital marketing strategies. The global affiliate marketing industry is expected to reach $12 billion by 2026. According to a 2021 study by Awin, affiliate marketing generated $12 billion in the U.S. alone, contributing to 16% of all online sales.

Digital marketing guru Neil Patel emphasizes that affiliate marketing works well for those with an established online presence. He suggests focusing on creating high-quality content and finding affiliate programs that align well with your audience’s interests.

Affiliate marketing can be highly profitable for those with the right skills in content creation and audience engagement. Success is often dependent on traffic generation and the credibility of the affiliate products.

White labeling

White labeling involves selling generic products under your own brand name. In this model, entrepreneurs work with manufacturers who produce the product and allow them to label the goods with their own branding. White labeling typically involves more control over the branding and customer experience than dropshipping but still avoids the need for inventory management.

A survey by Shopify found that over 45% of Shopify store owners have successfully used white labeling to sell health, beauty, and lifestyle products. Rand Fishkin, co-founder of Moz and founder of SparkToro, highlights that white labeling provides an opportunity to scale without creating a product from scratch. However, he warns that success in white labeling requires significant differentiation in terms of customer experience and brand positioning.

White labeling offers a unique combination of brand control and reduced operational complexity. However, successful white labeling requires careful attention to product quality, branding, and customer loyalty. 

Print on demand

Print on demand (POD) is a business model in which entrepreneurs sell custom-designed products such as apparel, mugs, posters, and more. In this model, products are only printed and shipped when a customer places an order. Print-on-demand commerce allows sellers to offer a wide variety of custom designs without the need to hold inventory.

The print-on-demand industry is growing rapidly, with due to the increased demand for customized products and personalized merchandise.

Statista reports that 38% of online shoppers prefer customized products, contributing to the growth of the POD model as businesses tap into the demand for unique and personalized goods. According to Printful, global revenue projections for POD will surpass $10 billion by 2026.

“POD allows entrepreneurs to create unique products that stand out in the marketplace, but it’s important to focus on marketing, as the product itself often won’t sell without a strong brand.” Ellen Williams, Design Expert.

POD allows for creativity and scalability, offering a way to generate revenue from customized products without the burden of holding inventory. Creative innovation and strong branding are critical to success.

Which global commerce model should you choose?

While dropshipping is ideal for those with limited investment, affiliate marketing focuses on content and audience-building, white labeling allows for brand control with minimal product creation, and print-on-demand caters to creative entrepreneurs who want to sell custom goods. 

Benefits of Ghost Commerce

Ghost commerce is a low-risk and flexible way to enter the world of e-commerce, and that’s just one of the reasons why it is growing in popularity. Here are the top three key benefits of the ghost commerce business model that entrepreneurs can enjoy:

Low startup costs

Traditional e-commerce businesses often require substantial upfront capital to purchase inventory, rent warehouse space, and cover other operational expenses. Ghost commerce eliminates many of these costs by allowing entrepreneurs to sell products without holding stock or investing in inventory.

According to a report from Shopify, the typical startup costs for a traditional e-commerce business can range from $5,000 to $10,000, factoring in inventory, storage, and logistics. In contrast, ghost commerce businesses, particularly those using dropshipping or affiliate marketing, can be launched with as little as $500 to $1,000. 

By removing inventory costs and logistical management, ghost commerce dramatically reduces the financial risk for new business owners.

Scalability

Ghost commerce entrepreneurs can expand their product offerings and reach a broader audience with minimal additional costs, making it easy to grow the business once it gains traction. Since suppliers handle the fulfillment of orders, businesses can scale quickly without worrying about managing an increased inventory or expanding warehousing.

SaleHoo estimates that many dropshipping entrepreneurs scale their businesses to six figures within the first three years, largely due to the ease of adding new products without having to handle the complexities of inventory management.

The ability to scale easily is one of the most attractive aspects of ghost commerce, especially for entrepreneurs with limited resources who want to grow their business rapidly.

Flexibility

As long as you have a stable internet connection, you can operate a ghost commerce business from virtually anywhere. This makes it an ideal choice for digital nomads, stay-at-home parents, or anyone looking to run a business remotely without a physical storefront or office.

According to Forbes, 77% of entrepreneurs cited flexible working hours as one of the primary motivations for starting their own businesses. Ghost commerce, in particular, allows for this flexibility because all operations, from marketing to customer service, can be managed online.

Statista also highlights that nearly 60% of global internet users make purchases online, giving entrepreneurs the freedom to tap into a global market without being tied to a physical location.

Flexibility is a core benefit for ghost commerce entrepreneurs, providing them with the freedom to work remotely and manage their businesses on their own terms.

Ghost Commerce Challenges to Consider

While ghost commerce offers many benefits, it is not without its challenges. Entrepreneurs must be aware of these potential pitfalls and plan accordingly.

Lower profit margins

One of the main challenges of ghost commerce is the potential for lower profit margins compared to traditional e-commerce businesses. Since entrepreneurs do not purchase products in bulk or hold inventory, they often face higher per-unit costs when sourcing from third-party suppliers. These costs can erode profitability, especially if the business relies on low-priced products or has high transaction fees.

Shopify estimates that dropshipping businesses have a profit margin of 10% to 30%, which is generally lower than traditional retail models that can achieve profit margins as high as 50% to 60% for some product categories.

To overcome this challenge, ghost commerce entrepreneurs must carefully select suppliers and optimize their pricing strategies to maintain healthy profit margins.

Dependence on suppliers

Since ghost commerce businesses rely on third-party suppliers for fulfillment, the reliability of these suppliers is critical to the success of the business. Any issues on the supplier’s end, such as delayed shipments, low-quality products, or stock shortages, can directly impact the customer experience and damage the business’s reputation.

In fact, Statista reports that 60% of online shoppers abandon a purchase due to long delivery times. According to Oberlo, 21% of dropshipping businesses cite supplier issues, such as shipping delays or poor product quality, as the most common reason for customer dissatisfaction.

Ghost commerce entrepreneurs must maintain strong relationships with reliable suppliers and have contingency plans in place for potential issues.

Intense competition

The low barrier to entry in ghost commerce means that many entrepreneurs are entering the market, which can increase competition. With more businesses vying for attention in the same space, it can be difficult for a new business to stand out and achieve sustainable growth without strong branding and marketing strategies.

Shopify finds that 45% of new dropshipping businesses fail within the first year due to intense competition and poor market differentiation.

To overcome the challenge of competition, entrepreneurs must focus on creating a unique brand identity, offering exceptional customer service, and developing effective marketing strategies.

Getting Started with Ghost Commerce

Launching a successful ghost commerce business requires strategic planning and execution. To help you get started, here’s a step-by-step approach, plus how to integrate native advertising to boost your success.

1. Choose a profitable niche: Choosing the right niche is crucial for the success of any ghost commerce business. Look for a market segment that has demand but also manageable competition. You want to find products that are popular yet not oversaturated, which allows your business to stand out and attract customers. To identify profitable niches, use tools like Google Trends and Outbrain to analyze trending topics and discover untapped markets.

2. Partner with reliable suppliers: A dependable supplier can make or break your ghost commerce business, as delays, poor product quality, or inaccurate stock information can lead to frustrated customers and lost revenue. Choose suppliers who are known for their reliability, speed, and product quality. Before finalizing your suppliers, verify their reputation through reviews and sample orders. Tools like SaleHoo and Oberlo provide vetted supplier lists that are ideal for ghost commerce models.

3. Develop a strong online presence: A strong online presence is crucial to attract and engage potential customers. Social media marketing and content marketing are your best bet. Beyond paid and organic social media campaign, start a blog and create YouTube videos around your products to boost organic traffic. This will also help with SEO, which enhances visibility on search engines like Google. 

4. Leverage native advertising: Use native advertising to further expand your reach. Native advertising platforms like Outbrain help distribute your content on high-traffic websites, expanding your reach and driving more qualified leads to your site. Native ads blend seamlessly with editorial content, increasing the likelihood of user engagement and conversions. According to Outbrain, native ads generate 53% higher engagement compared to traditional display ads. 5. Implement email marketing to nurture leads: Email marketing is a powerful tool to connect with potential customers and build interest over time. Send personalized offers and recommendations based on customer behavior, encouraging the audience to interact with your ghost commerce business. Tools like Mailchimp or Klaviyo can automate email campaigns, ensuring your customers stay engaged.

6. Collaborate with influencers: Choose influencers in your niche whose followers align with your target audience. A successful influencer partnership can amplify your marketing efforts and drive traffic to your website.

Ghost Commerce and Outbrain Native Ads: How to Drive Real Results

The key to success in ghost commerce lies in how well you can market your products and differentiate your brand. While traditional digital ads (like display or social media ads) remain important, the future of driving real business results lies in leveraging native ads with platforms like Outbrain.

Explore why native advertising is a unique tool to help you achieve sustainable growth and high performance in ghost commerce, and strategies to take advantage of native ads:

Seamlessly integrating content and ads to build trust

Unlike intrusive display ads, native advertising blends seamlessly with the content surrounding it. For ghost commerce entrepreneurs, this offers an opportunity to connect with potential customers in a non-disruptive way. By using Outbrain, you can place your products or services in a context that feels organic to the user’s experience. This helps foster trust and increases the likelihood that a user will engage with your brand.

Key advantage: Native ads feel like valuable content, not just ads. This results in higher engagement rates and better customer retention as users interact with content that genuinely resonates with their interests.

Strategy: Create compelling and informative content that provides value to your target audience (e.g., guides, how-tos, product reviews) and pair it with a native ad that leads to your product offerings. For example, if you’re in the print-on-demand business, a blog post about design trends can naturally incorporate a CTA for your customized products.

Scaling customer acquisition with performance-driven ads

Performance advertising, particularly native ads on platforms like Outbrain, allows ghost commerce businesses to drive targeted traffic at scale. The ability to track each campaign’s performance – such as click-through rates (CTR), conversion rates (CVR), and cost-per-acquisition (CPA) – gives entrepreneurs the flexibility to optimize their strategies in real time.

Key advantage: With performance advertising, every dollar spent is measured against real business outcomes. Unlike traditional advertising, which may be harder to quantify, native ads on Outbrain provide detailed analytics that helps ghost commerce owners make data-driven decisions.

Strategy: Continuously optimize ad creatives and landing pages based on performance metrics. If an ad is driving clicks but not conversions, experiment with different offers, headlines, or content formats to see what resonates best with your audience. You can even use A/B testing to see how different headlines or images perform and to optimize campaigns for better results.

Targeting the right audience at scale

Native advertising platforms like Outbrain excel at audience targeting. You can leverage interest-based targeting, demographics, and even lookalike audiences to place your ads in front of users who are most likely to convert.

Key advantage: By targeting users who have already shown interest in topics related to your niche (like fashion, health & wellness, or home decor), you’re ensuring that your ads are reaching the right people at the right time.

Strategy: Use Outbrain’s interest-based targeting to promote your ghost commerce products to users already engaged with content relevant to your niche. For instance, if you’re selling print-on-demand T-shirts, you can target people who are browsing content on fashion blogs or trending designs.

Leveraging content partnerships for organic reach

Native advertising gives you the opportunity to partner with trusted publishers and showcase your products to a highly engaged audience. Outbrain’s large network of premium publishers offers an excellent platform for ghost commerce businesses to increase brand visibility via ads and content that looks and feels ‘organic’.

Key advantage: By aligning with reputable publishers, you gain access to high quality and highly engaged audiences who trust the content they consume. This association elevates your brand’s credibility and increases the chances of conversion.

Strategy: Collaborate with influencers or publishers in your industry to co-create content that subtly integrates your product offerings. For example, a well-known fitness influencer could create a blog post about workout gear and include a native ad linking to your white-labeled fitness products.

Building long-term brand awareness

For ghost commerce businesses that are just starting out, building brand awareness is crucial. While paid ads can drive immediate results, native advertising helps establish a foundation for long-term brand presence. Various native ad formats allow you to tell your brand’s story in a compelling way while educating potential customers about the benefits of your products.

Key advantage: Native ads work well not only for direct conversions but also for long-term brand awareness. Over time, customers will start recognizing your brand, leading to higher customer loyalty and repeat purchases.

Strategy: Combine native ads with a content marketing strategy that focuses on educating and nurturing your audience. Use informative blog posts, customer testimonials, and expert reviews to create a comprehensive narrative around your product, all while driving traffic to your website.

The Power of Outbrain Native Ads for Ghost Commerce Success

If you’re looking to elevate your ghost commerce business and compete effectively in today’s crowded digital marketplace, native ads can provide the edge you need. Native advertising with Outbrain provides ghost commerce businesses with a scalable, cost-effective way to acquire customers and grow brand visibility. By leveraging the seamless integration of ads with content, performance-driven metrics, and the ability to target highly specific audiences, you can drive real, measurable business results.

FAQ

What is ghost commerce?

Ghost commerce is a business model where entrepreneurs sell products online without holding physical inventory. Instead, they partner with third-party suppliers who handle storage, packaging, and shipping directly to customers. This approach allows businesses to operate with minimal upfront investment and reduced operational complexities.

How does ghost commerce differ from dropshipping?

While both models involve selling products without holding inventory, ghost commerce is an umbrella term that includes various business models like dropshipping, affiliate marketing, white labeling, and print-on-demand. Dropshipping is a specific type of ghost commerce where an entrepreneur sells products through their own online store but doesn’t hold inventory; the supplier ships the product directly to the customer.

What are the key components of ghost commerce?

The key components include:

• No inventory management: Entrepreneurs do not stock products, eliminating the need for warehousing and inventory control. 
• Third-party fulfillment: Suppliers handle product storage, packaging, and shipping directly to customers. 
• Digital marketing focus: Success hinges on effective online marketing strategies, including content creation, native advertising social media engagement, and influencer partnerships.

What are the benefits of ghost commerce?

The benefits of ghost commerce include low startup costs, ease of scalability, enabling you to reach a broader audience without significant additional costs, and flexibility to operate the business from anywhere with an internet connection.

What challenges should I consider when starting a ghost commerce business?

The challenges of ghost commerce include lower profit margins, high dependence on suppliers, and intense competition, which is due to the low barrier to entry in the ghost commerce arena.

Is ghost commerce a legal business model?

Yes, ghost commerce is a legal business model. However, it’s essential to ensure that you partner with reputable suppliers, avoid selling prohibited products, and maintain transparency with customers regarding shipping times and return policies.

What are the different types of ghost commerce models?

The main types of ghost commerce include:

• Dropshipping: Selling products without holding inventory; suppliers ship directly to customers.
• Affiliate marketing: Promoting products from other companies and earning commissions on sales generated through referral links.
• White labeling: Selling generic products under your own brand name.
• Print on demand (POD): Selling custom-designed products that are printed and shipped per order. 

How can I get started with ghost commerce?

To start, choose a profitable niche. Then, partner with reliable suppliers, develop a strong online presence through digital marketing, and implement effective marketing strategies to drive sales.

What platforms are best for starting a ghost commerce business?

Platforms like Shopify, WooCommerce, Facebook Marketplace, and BigCommerce are popular choices for starting a ghost commerce business due to their user-friendly interfaces and extensive features tailored for such models.

What are the startup costs associated with ghost commerce?

Ghost commerce typically requires minimal upfront investment, especially compared to traditional retail models. Costs mainly involve setting up an online store, marketing, and possibly using automation tools.

How do I find reliable suppliers for my ghost commerce business?

Research and vet suppliers thoroughly by checking reviews, requesting samples, and ensuring they can meet your quality and shipping standards. Platforms like SaleHoo and Oberlo provide vetted supplier lists ideal for ghost commerce models.

What marketing strategies are effective for ghost commerce?

Effective strategies include content marketing, social media engagement, search engine optimization (SEO), and influencer partnerships. Native advertising platforms like Outbrain can also help distribute your content on high-traffic websites, driving more qualified leads to your ghost commerce site.

Can I operate a ghost commerce business from anywhere?

Yes, one of the advantages of ghost commerce is the flexibility to operate the business from anywhere with an internet connection.

What are the profit margins in ghost commerce?

Profit margins can vary depending on the product category, supplier, and marketing effectiveness. On average, ghost commerce businesses may experience profit margins ranging from 10% to 30%.