Starting your first e-commerce business requires hard work and long hours, and the decisions you make at the beginning will shape your journey. For many consumers, e-commerce websites such as Amazon and eBay have replaced traditional stores as their favorite way to shop. While huge companies like Amazon dominate the e-commerce space, millions of micro-businesses sell online. Some of them may have a physical store, while others are virtual traders who build websites to export their goods or services. Are you looking to start your first e-commerce business? If so, we’ve come up with the essential things you’ll face when researching, launching and growing your enterprise.
E-commerce vs. Traditional Stores
There are advantages to selling via e-commerce than traditional stores. You can reach customers anywhere in the world, so geography is no longer a physical barrier to trade. It can increase revenue and even complement a traditional store’s income by generating extra sales.
Identifying Products to Sell Online
Understanding whether you can sell your products online is a vital first step. Firstly, you need to ensure there’s a viable market for your goods and services, and that you can make money from selling them. Take the time to evaluate the sales potential of similar products and their pricing and how they correspond with your costs. To achieve these goals, you can use ITC’s Market Analysis Tool and Marmalead, which uses machine learning to analyse online marketplaces such as Etsy.
Check Out the Competition
After working out the product you will be selling online, you’ll need to check out the competition. E-commerce businesses are not unique propositions, so you need to be smarter than your competitors to succeed. So before you write your business plan, work out who you are up against, what they do well, what are their weaknesses, and whether you can make your business stand out.
Can You Ship Your Product Range?
Your product has to be easy to ship as modern customers expect their goods to be delivered almost instantaneously. Think about the size, weight, and dimensions of your product and factor in these costs before choosing. Profitable e-commerce products usually have a high “value density,” which means they are relatively small and cost more than their shipping rates. If your products are voluminous, fragile, or relatively low value, then you’re going to have to investigate different ways to ship them. ITC likes to refer to this as “e-commerce engineering,” which means selling your product at the right price with the appropriate shipping arrangements.
Find out How to Get Paid
Your ability to sell and make payments online is a crucial part of any e-commerce business. Unfortunately, not everyone can use a payment service provider such as Paypal. If you have any doubts, then check what payments are available in your country and what you customers prefer using. Payment is a complex topic for any new business, and an easy first step is to ask other sellers from your home country how they get paid. As a word of caution, it’s best to contact a non-competitor when it comes to payment methods as it’s a sensitive subject.
Working Out Your Margins
The bottom line is how much money can you make online. On top of your marketing and shipping costs, you also need to consider marketplace and payment solution commissions, banking charges, and currency fees, not to mention transportation costs, chargebacks, and returns. Marketplaces can charge anywhere from 5% to 40% in commission, while payment solutions providers often charge around 5%. Most customers have the right to return products they do not like so decide upon your returns policy. Returns and chargebacks can lead to higher costs for a business. It’s a topic we will explore in detail in the future.
Writing a Business Plan
With your competitor analysis complete, you can now write your business plan. A business plan will be your guiding star. There’s no standard approach to writing one, but most documents include profit goals, sourcing, and funding commitments. It’s a vital document when identifying what you want to prioritize and how to reach new customers.
Launching Your Business
If you want to be successful, your e-commerce venture needs to match your talents. All entrepreneurs need to know their skills before starting a new business. A profitable enterprise is one where your personality and abilities can shine. By following these tips and suggestions, you’ll now be ready to turn your business vision into a reality. If you want more information on e-commerce, then check out the other articles and learning resources in this section.