Incredibly, 90% of people who are trying to start an e-commerce business fail within the first three months. There are hundreds of things that can go wrong when opening any business: underestimating the competition, poor business ideas, lack of technical knowledge, marketing, and spreading a lot of resources.
However, the other 10% manage to succeed. What do they do differently and what should you do?
Step 1: Finding an Ecommerce Business Idea
The first step in starting an ecommerce business is to decide what products or services you will sell. Pretty obvious, isn`t it? However, in this step, it is important to choose an idea that is both profitable and scalable. It should meet the following criteria.
Solve Customer Problems
To solve customer problems, your product or service must meet people’s needs. It could be something very specific, like a pillow for side sleepers, or something very common, like PCs, clothes, etc.
To understand people’s problems and needs, start with the people surrounding you. Ask friends and family or take an online survey. Perhaps you see some imperfection in the products you are using, and you know how to add extra value to them.
Occupy a Specific Niche
This point goes hand in hand with the first one. Narrowing a niche means targeting a specific audience and their interests.
When consumers are passionate about something, they are more willing to pay for it because:
- They have both emotional connections to the product
- It helps them solve their pain points
Take gaming, for instance. There`s an avalanche of devices that the gaming market has to offer. However, some gaming disciplines require something very specific. This is how mini keyboards for Fortnite went viral.
Other examples could be baking retailer Wilton or Active Hound that develops durable toys for dogs.
Therefore you should know how to read your customer’s wants because this is what brings demand for your products.
Focus on Trends
Promote your brand by recognizing a trend in time. If done right, you can gain a foothold in the market and win over your competitors.
Stay on top of what’s hot right now by following social media. We all remember a booming trend of spinners. Who would have thought it could pan out that way? So start by looking at popular topics on Twitter and Facebook.
Additionally, you can use social monitoring tools such as Google Trends, Trend Hunter, and others to get more detailed information.
Step 2: Find a Product Source
Unless you are going to sell digital products or services, you need to decide where you’ll get physical goods. You need to find a supplier or set up your own production.
Here are three of the most common options.
Outsourcing to Manufacturers
Unlike small and medium-sized businesses, manufacturers can produce goods on a large scale. They are much more efficient and have the lowest price per unit.
As an option, you can launch an online store of your own brand while outsourcing orders to manufacturers. This will greatly reduce production costs and allow you to bring your ideas to life.
All you have to do is contact the right manufacturer and describe your product.
Examples of this ecommerce business model are Indie Source in the clothing industry and Ever Shiny, which makes jewelry.
The disadvantage of this option is that there is a minimum order. You will need good start-up capital to order the first batch of your product.
In addition, it is quite a lengthy process, as manufacturers execute the order in several stages: prototyping, sampling, finishing touches, and production.
Buying From Wholesale Suppliers
The well-known and most common method. You buy items in bulk from a supplier and resell them at a higher price. Fortunately, wholesale suppliers have discounts for resellers.
This option will work for those who want to sell different products from different brands. If you know where to look for reliable suppliers, you will succeed.
If you want to become a reseller, try looking for suppliers on such websites as AliExpress or Oberlo.
Keep in mind, however, that the profit margin will be much lower than if you produce your own products.
In addition, you have to be attentive to the details. Even if several suppliers offer the same product at once, the quality can vary greatly.
Dropshipping
If you don’t want to deal with stocking goods, you should consider dropshipping.
Essentially, this method allows you to be an intermediary between suppliers and buyers. This is a great option for those who are more into the process of promoting and selling products.
There are many places where you can find suppliers for dropshipping. The most well-known are AliDropship, Salehoo, and Alibaba.
However, as in the case of reselling, you cannot control the quality of goods. Be careful when choosing a partner.
Step 3: Starting to Build a Business
This step covers different aspects of your company such as branding, the unique selling proposition (USP), and the business structure.
Come Up With a Name for Your Brand
The brand name is one of a company’s most valuable assets. It encapsulates the image of an entire company in a word or two. What’s more, a name tells your brand’s story, thus telling your audience what to expect from your ecommerce business.
For your brand name to make a strong impression, play with rhythm and try to put the stress on the first syllable of the word.
Keep it as simple as possible and remember to check the meaning in other languages to avoid confusion.
It is also very important to make sure the name you have come up with is not registered with another company.
Decide on the Structure of the Business
The business structure takes care of the legal aspects of your ecommerce business, such as tax issues and asset protection in case of crises such as lawsuits or bankruptcy.
There are several organizational forms of business. However, the most common ones for online stores are a limited liability company (LLC) and a sole proprietorship.
An LLC is a more formal business structure in which the company is legally separate from the owner.
On the other hand, a sole proprietorship is an informal business structure. The owner is less legally protected because the business is owned directly as an individual. Thus, individuals are responsible for paying taxes.
If you run a small, low-risk, low-income business, a sole proprietorship is more appropriate for you.
But if you have a large customer base and want to take advantage of different taxation options, protect your business with an LLC.
Buy a Domain Name
A domain name is your Internet address. It’s where users go when they want to visit your store.
Your domain name should be memorable and easy to pronounce. It’s just as important as your brand name.
You can choose any extension for your name. The most popular is .com. Also note that it’s best to avoid numbers, hyphens, and double letters in the domain.
Keep in mind that there are many options on the market. Let’s take a look at the best ones.
If you’re looking for a solution that comes with hosting by default and allows you to publish your site automatically (you don’t have to buy and set up hosting separately), here are the right platforms:
- Shopify – By far the most popular e-commerce platform on the market because of its intuitive system and multi-channel sales feature.
- BigCommerce – This platform offers its users a lower commission for PayPal transactions, depending on which plan they use.
If you prefer to host your own site, the following tools may work for you:
- WooCommerce, a WordPress plugin that allows you to turn your site into an online store.
- Magento – the best platform if you want to grow and expand your business.
Bottom Line
This is just the beginning of a long journey. Remember that your ecommerce business requires just as much attention as its traditional brick-and-mortar counterpart.
There is still a lot to do: try out hundreds of methods to attract and retain customers, find the best online marketing tools for yourself, boost brand awareness, and engage loyal customers in communication. The main thing is not to stop experimenting.
About the author:
Louis Sawyer is a professional writer, editor and a web design expert. She loves writing about technology trends, web development, mobile games and business issues. Also, Louis works as a proofreader at Computools. Follow her on Twitter.
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