What Is Ghost Commerce: How Ghost Commerce Works

Ghost commerce is a business model where you do not have a storefront. It covers a wide gamut of online businesses, including affiliate marketing and dropshipping. 

I have been doing online business for so many years, and it seems like ghost commerce is gaining traction. To help you out, I will provide clarity about it. 

We will discuss: 

• Pros and cons of ghost commerce
• What ghost commerce is
• How to start a ghost commerce business

Key Takeaways

• Ghost commerce is one of the most competitive business models 
• Ghost commerce works best if you are an influencer
• Ghost commerce gives you little to no control

In the end, the information I provide you will help you decide. Is ghost commerce for you? Or is there a better business model that works?

Ghost Commerce Explained

Ghost commerce is a business model where you sell someone else’s goods or services. Most people think that it is the same as dropshipping, but it is more than that. 

Ghost commerce has several main characteristics: 

• You have no storefront or physical store
• You have no digital store
• You do not sell your products or services
• You do not keep inventory 

Ghost commerce is not a new phenomenon in business. However, its characteristics can overlap other known models to make money online. 

An example of ghost commerce is affiliate marketing. Let us say that you are a kitchen product reviewer. In your YouTube videos, you tell your viewers to visit a link in your video description. 

This is an affiliate link. If people click on it, they will find themselves on a website. If they buy something, you get a commission.  

Another example of ghost commerce is Uber. It is a ride-hailing application. Although it has physical offices, Uber owns no cars that people rent. 

The word ghost means it is “not real.” It can also mean that it is an “illusion.” Affiliate marketers have no products of their own. Yet, they make money by selling products. So, if you take that into account, it seems like an affiliate marketer’s business is “not a real business.”

Uber does not have a fleet of taxis. DoorDash does not have a kitchen. They do not produce food. They do not employ riders or delivery personnel. Yet, they make money from food delivery.  

Dropshipping can be a form of ghost commerce. What is dropshipping? It is a process where you sell someone else’s products and make it seem like they are yours.

The big difference between ghost commerce and dropshipping is that in the latter, you operate an online store. In dropshipping, you ask people to come to your store. 

On the other hand, you can also do dropshipping without an online store. You can do this by posting products on your social media accounts. If anyone is interested, you charge them money, either by Western Union, cryptocurrency, or other means. 

Once a customer places an order, you contact your suppliers, pay them, and they will ship the order to your customer.

Pros of Ghost Commerce

Should you even bother with ghost commerce? There are benefits to it, and it is only you who can make this decision. Below are the pros of ghost commerce. 

1. Ghost commerce needs no inventory 

Unlike traditional retail businesses, ghost commerce can operate without inventory. Just look at Uber. They manage thousands of cars, but they do not own one.

In affiliate marketing, you can promote as many products as you want. You do not need to buy them. You do not need to store the items in your house. 

Since you do not need inventory, you do not need physical space. You do not even need to ship these times. Finally, there is no need to worry about potential losses if the products do not sell.

2. Ghost commerce needs no storefront to manage

You do not need to build a website to manage a ghost commerce business. However, there may come a time when you must build an app.

Again, Uber is a good example. It has no storefront to manage, but it has an app. The thing is that for small businesses, it is not necessary. 

You can post your products in the following: 

• Facebook
• Twitter
• YouTube
• Twitch

While you do not need a store, you need a social presence. It means that you must be an influencer to be able to attract buyers.   

3. Ghost commerce has low start-up costs

You do not need to spend a lot of money to start a ghost commerce business. The exception, of course, is an app-based business like DoorDash. 

Just think about these things:

• Affiliate marketing is free; no need to pay to register
• Dropshipping is free; no need to buy inventory

The money you need is likely in building your blog or producing your content on YouTube or Twitch. You also need a lot of time for editing, shooting videos, etc. 

You may also need money if you intend to advertise. For example, if you advertise an affiliate product, you certainly have to spend cash on Facebook or Google ads. 

4. Ghost commerce can be a passive income 

Ghost commerce is an attractive business because you can leave it alone. Here is an example situation: 

• You sign up for affiliate links
• You create videos and post them online (YouTube or Instagram)
• These videos carry your affiliate links

You can also publish blog posts if you do not want to produce videos. Once these posts are out, just let them be. Any time a person clicks on your affiliate link, you do not have to do anything. If they buy an item, you get your commission and wait for the payout in your bank account. 

Cons of Ghost Commerce

1. No control over products

One of the biggest challenges you will face in ghost commerce is control. This speaks for both the quality of the product and its handling.

Here are a few examples: 

• Product photos may not truly represent the real deal
• Shipping can take too long
• Product quality may be poor

The thing is that you have to deal with customer complaints as if you were the product manufacturer. After all, the customers learned about this product from you. 

2. High competition 

Prepare to compete with thousands of people. Since there is little to no capitalization required, ghost commerce is easy to penetrate.

Just like dropshipping and affiliate marketing, anyone can start a ghost commerce business today. Because of this, there certainly are a lot of people who would try their luck at it.

Ghost commerce is a battle of attrition. You must stay in the game until your competitors get tired, and only a few of you remain.

3. You need to be popular

Selling something that is yours is tough enough, but selling something that is not your product? Oh, it is harder. 

You need to have social clout to be able to succeed in ghost commerce. Since it is highly similar to affiliate marketing, it can only work if you have a following. 

Here are some things you can do about it: 

• Make a YouTube channel
• Educate or inform people about a niche
• Provide value

Once you have amassed subscribers, you can now make offers. For example, on YouTube, you can paste links in your video description and tell the viewers to visit these links. 

To give you a perspective, OptiMonk says that the typical conversion rate of affiliate links is 0.5% and 1% [1]. It means that for every 1,000 clicks, you can expect about 10 sales.  

4. Small profit margin

Ghost commerce offers a small profit margin. Why? This is because ghost commerce is a cut-throat competition. 

Besides, most ghost commerce models lean on affiliate marketing. You get a commission for every sale. The challenge is that these commissions are too small. 

Let us say that you found a product you can sell, and the commission is 5%. If the product costs $100, you get $5 for every sale. Does this commission even justify your efforts in marketing? 

A better option than this is to just do plain and simple dropshipping. In this business model, you are in control of your products and profit margins. 

5. No branding 

Finally, you cannot brand your ghost commerce products. There is a way for a buyer to remember what you buy. It also means there is little likelihood of repeat business.

On the other hand, you can do dropshipping and select white-label or private-label as a business model. You can also do print-on-demand, where you get to design your products. 

There are better options than ghost commerce. While ghost commerce is free and easy to set up, the amount of work it takes to make a sale is not paramount to your potential profits.

How to Start a Ghost Commerce Business

1. Pick or choose a niche

The niche is the most critical aspect of ghost commerce success. There is no right or wrong niche. What you have to worry about is the competition and demand. 

Here are some pointers for niche selection:

• You must be interested in it
• There has to be a market for it
• The products and suppliers must be abundant
• Must have low competition

Even if you do ghost commerce, the principles of niche selection are the same as any other business. For more guidance, I suggest you read our article on the best niches to penetrate. 

2. Decide how you will market your product

There are many ways to market your products, but you must list down a few where your focus would be. Since you are not creating a physical or online store, your marketing strategy will lean heavily on content creation. 

Here are some options:  

• YouTube –is great for instructional and educational content; will work for any product.
• TikTok – best for audience type that has low retention; they want easy gratification. This platform is best for selling trinkets and spur-of-the-moment purchases.
• Twitter (X) – best for political content and products

Instagram and Facebook are also great options. The former is excellent for beauty products, while the latter is an all-around social media platform.

3. Create your content

Content creation is the bloodline of ghost commerce. Without it, you will not get views. Without views, no sale. Your content must be varied but should not gear too far away from your niche.

Here are some tips when creating content: 

• Make the content about the audience, not you
• Add or provide value
• You must entertain, educate, and inform
• Encourage your audience to engage 

In addition to this, you need to be consistent. What you are operating here is a business, not a hobby. Like any business, you must show up. 

4. Build your reputation

Next, you have to build your reputation. If, at first, you make interesting and entertaining content, your next goal is to become an authority for it. 

Let us say that your ghost commerce niche is beauty and cosmetics. Your content must revolve around this niche. Not only will you create videos on how to apply cosmetics, but also what kind of cosmetics are safe for consumption. 

You need to position yourself as an expert. As you become one, it will be easier to convince your audience to buy the products that you recommend. 

5. Use ads as the situation necessitates

Finally, run ads. While organic traffic is the best, it is slow. Truth be told, it can take you years to achieve heights of organic growth. 

You can run ads on:

• Facebook
• Google (games, apps, YouTube, blogs)
• Twitter
• Instagram

It is completely up to you which one to run ads on. However, make sure you choose the platform where your target buyers are. For example, it does not make sense to run ads on Instagram if your content/niche is children’s toys. 

How to Market Ghost Commerce

There are many ways to market products online. The best ones, in my experience, are:

• Social media content
• Ads 
• Niche communities
• Freebies

Let us go through each one.

1. Social media content

Social media is your best ally to succeed in ghost commerce. At this point, the video is king. Even Facebook and Instagram influencers now use videos to gain followers. 

It is not advisable to use several social media platforms concurrently. Not that it does not work, but it is tedious to do so. My recommendation is to concentrate on one to two social media platforms only.

YouTube, by far, is the best one that I recommend. TikTok works too, but followers on TikTok are a bit flimsy—they have poor retention, so long-form content will not work on that platform.

2. Ads 

Organic traffic is hard to come by, especially when you are in the beginning phase of your ghost commerce business. While a lot of content creators frown on ads, I say that you must do it. 

Most ads fail because the people who launched the ads have no clue what they are doing. If ads did not work, then no one is advertising by now. 

Here are some tips to succeed in running ads:  

• Focus on a demographic – create one ad for each demographic; try not to target all types of audiences all at once 
• Do A/B tests – you have to launch several variations of your ads; check which one gets the highest conversion rate, and double down on it.
• Start small – it is always a bad idea to go all in when running ads; start your campaign with a low budget and see how it goes from there. 

It is also a good idea to do geo-targeting. It means running an ad on a specific geographical location only. The challenge here is that you may not get as many impressions as you would if you targeted more countries. 

3. Build communities

Ghost commerce leans heavily on building a community. What does this mean? If you have a YouTube channel, it is your subscribers and loyal fans who will buy your products. 

Building a community, especially one that is engaged, is hard. You need to have a knack for touching people’s emotions. 

One thing you will realize is that many viewers of your content may seem not to care. They lurk, watch, and do nothing. They do not click the like button, and they certainly do not comment. 

So, how do you make them engaged? Here are a few tips: 

• Ask questions
• Challenge them
• If there is one comment, respond to it
• Ask them for input 

Building a community means making the viewers part of the process. You do not only educate and inform, but you also want their take on matters. What you want is to make them feel that they are part of something bigger. 

4. Freebies

The last recommendation I have is to give something for free, like an eBook. This is an old method of marketing, but it works. 

In exchange for this freebie, you get the email address of the user. Then, you can send them promotional emails later. 

An important note here: there are laws about data privacy and marketing. Make sure you are compliant with these laws. 

FAQ: What Is Ghost Commerce

What is an example of ghost commerce?

The best example of ghost commerce is affiliate marketing. It is a process where you promote the products of the companies and get a commission if someone buys.

How do I start ghost commerce?

You can start a ghost commerce by looking into products that you want to sell. Next, check if that merchant offers affiliate marketing. 

Can you make money with Ghost Commerce?

Yes, but it is hard. Perhaps the biggest challenge in operating a ghost commerce enterprise is that you have no control over what you sell. In addition, you are not in control of your commission rates. 

Is ghost commerce the same as dropshipping?

No, but it can be. One fundamental aspect of ghost commerce is the absence of a storefront. Dropshippers have stores, either on marketplaces or on their website. Dropshipping can only become ghost commerce if you have no store (sell via social media posts only).

Summary

The next step from here is to look for a niche or product. Like all businesses, you have a product that has a strong demand. I recommend that you sign up for a free trial account with Dropship.IO. Experience the power of analytical research. Once you find winning products in our system, you can now move on to the next phase of ghost commerce!