If you’re thinking of starting your own online business, there is a lot to consider. An e-commerce business involves providing goods or services via an internet site or portal, but there are a number of different e-commerce platforms to choose from and a lot of factors to consider if you want to be successful.
What will you sell?
The first step when starting an e-commerce business is knowing exactly what you’ll sell. You may want to sell a specific product or a group of related products, such as women’s clothes and accessories, make-up and beauty products or baby clothes and equipment.
You will need to test your product ideas by looking at the competition and assessing not only what the need for your products is but how likely people are to buy them online and how likely they are to buy them from you.
At this point then, you’re not only thinking about your products but also how you’ll market them. In fact, you’re slowly starting to put together your entire business plan. One thing you need to focus on is what will make you stand out from the crowd. Is your product better than others? Or will it be your marketing and messaging that makes you unique? Why will people buy from you rather than your competitors?
How will you source your products?
Depending on the type of products you sell, you may want to source your products through drop shipping, manufacturers, wholesalers or resellers. You may also, of course, be creating your own products or providing your own services.
There is no one ‘best’ way to source products, and they all have their pros and cons. Drop shipping is often thought of as the easiest form of e-commerce, as you won’t have to keep any stock or be directly responsible for shipping, but obviously this means you have less control over the process.
Who are your customers?
There are various business models to consider. Are you going to be a business-to-business (B2B) seller or a business-to-consumer (B2C) seller? You might even be a consumer-to-consumer (C2C) seller, also known as a peer-to-peer (P2P) seller. This is when consumers interact directly with each other to sell something they already own. This form of selling is now hugely popular due to apps such as Poshmark and Depop, as well as sites like eBay.
You’ll also have to know who your target audience is in terms of demographics, such as age, gender and location, as well as life stage and interests. This will help you target paid advertising and other marketing activities. Sometimes, your customer profile will be dictated by the products you are selling, such as “new parents with a baby under 6 months” (if selling products for newborn babies). With other products, it might be harder to pinpoint exactly who you are selling to, but you will need to have an idea of who your ideal customer is in order to guide your marketing activities.
Which platform will you use?
Picking the right platform is essential, and you will need to assess which will work best for you, given the product you are selling, the audience you are trying to reach and the way you are sourcing and shipping your products. Top e-commerce platforms are set up to integrate a wide variety of tools and technologies to make running your store as easy, and in many cases as hands-off, as possible.
Some platforms have a bigger ‘built-in’ audience than others, whereas with others, you will be much more responsible for driving traffic to your storefront or website. You will also need to look at the costs involved in using each of the platforms you are considering to see which best fits with your objectives regarding pricing and profits. Some of the major e-commerce platforms to consider are Shopify, Wix eCommerce, Magento, BigCommerce and SquareSpace. Bear in mind that the majority of these will have fees to create your website and some even take fees for selling stock.
What skills do you need to develop?
There is quite a varied skill set you’ll need to develop to be successful at e-commerce, from product and market research, through to marketing, SEO and business analytics, and while it is possible to learn these skills, it will require some dedication and effort and can be quite time consuming.
There is plenty of online education that will be useful to you as you set up your business, from short courses in SEO content writing to full programs such as the masters in business analytics from Aston University. It is, of course, possible to outsource some things that are outside of your skill set, but again, this should be balanced against the loss of control that comes with being less hands-on.
What type of shipping will you use?
The process and strategies you will use for shipping your products will depend on how you source them, who (and where) your customers are and what type of products you are selling. Things to consider here are the reliability of your shipping partners, costs, speed of shipping and options for expedited shipping, whether to offer international shipping and how to deal with returns and exchanges. Shipping can be a significant part of your business costs and can impact purchasing decisions, so it’s important to get your strategy here right.
How will you process payments?
Choosing a payment processor is another important thing to consider. Your payment processor will handle the actual transactions within your e-commerce store, taking the customer’s money and transferring it you. A payment processor effectively acts as an intermediary between your store and your merchant account.
Some e-commerce platforms have payment processing built-in, and some simply have a payment gateway, which is slightly different. A payment gateway is an interface between your website or online storefront and a payment processor. They are the payment methods customers see on your website’s checkout page, such as PayPal and Stripe. When deciding on how to handle payment processing, you’ll need to think about what is important to your customers, such as data security, a choice of payment methods and fast refund processing.
Running an e-commerce store can be highly rewarding. Just ensure you have everything you need in place to maximize your chance of success.