Five Things to Consider Before Starting an E-commerce Business
It’s not hard to see why e-commerce has become such a popular choice for many small business owners and entrepreneurs. Setting up an online store provides access to a global marketplace, one without opening and closing hours, and doesn’t demand anywhere near as much overhead as running a traditional bricks-and-mortar operation.
Still, while the upside is enticing, it’s important to remember that e-commerce isn’t as simple as just making sales and shipping out orders. Hard work, attention to detail and a little bit of ingenuity will be required to turn your online store into a success. If you’re serious about starting an e-commerce business, make sure to consider these five things first.
Pick your product and sort out your sourcing
Obviously, one of the first things to determine before launching any kind of e-commerce operation is precisely what you plan to sell. Ideally, it will be something you’re interested in and passionate about. As you get started, it’s wise to focus your efforts on one product, or a very small range of items. It’s also best, if possible, to refine your offerings so they target as specific a market niche as possible. Remember that competition in the online world is even more fierce than in the regular retail environment, and that you’ll be competing against an entire planet of salespeople, from other small businesses to large, well-funded brands. The more targeted your store is, the fewer direct competitors you’ll have, and the more of a specialist you’ll be in the eyes of your buyers. If things go well, you can broaden your range of products down the line.
Limiting your scope will also keep things simple when it comes to sourcing your product, which is arguably the most important part of any e-commerce venture. One thing you’ll want to avoid at the outset is having to keep a large inventory on hand, because storage costs money and unsold merchandise is a major aggravation. It’s also vital to make sure you get the best price on your product right from the beginning, because that’s where most of your margin will come from. Still, while price is important, reliability and consistency are also major concerns. If your supplier costs less but can’t deliver a product that meets your standards every single time, it might be worth paying a bit more to find one who can.
Who’s going to host?
Even if you’re not especially computer savvy, you don’t need to spend a lot of money on a designer to build your e-commerce website. That’s not to say, however, that you don’t need to worry about appearances: your online store, its payment system, and the photos that show off your products should all be of a high enough quality that buyers aren’t turned off, and consider you suitably secure and trustworthy. The good news is that these days, there’s a myriad of relatively easy options to get an attractive, low-cost e-commerce website up and running. Sites such as Magento, Shopify and Volusion will help you design and build a store, and host your shopping cart software. Even WordPress offers a shopping cart plugin you can add to a website and start selling. Or, if you’d prefer, you can offer your wares through a bigger site with an established reputation, such as Amazon, ebay or Etsy. Bear in mind, however, that these sites will charge you a fee for every item you list, and take a percentage of each sale. There’s also a good chance that you’ll be sharing the marketplace with rival sellers who may have more aggressive prices.
You need to get noticed
Even if you’re offering wonderful products on a slick-looking website, sales will be few and far between if no one can find you. Take some time to think about marketing by considering online advertising and, even more importantly, the power of search engine optimization. It’s a good bet that almost three quarters of your traffic, if not more, will come via internet searches, so make sure you don’t run afoul of Google’s algorithm and do what you can to keep your site near the top of the all-important search rankings. This involves more than just jamming a bunch of keywords onto each page. A better strategy is to improve the overall content experience of your online store by including blogs, expert advice and other relevant content, as well as taking advantage of social media to help drive traffic and create an online community of fans and followers.
Keep it legal
Make sure to sort out all the legal details of your e-commerce venture before you launch. There are plenty of questions that will need answering. What do you plan to call your store? What’s your company name going to be? What domain name will you use? Are you planning to incorporate? Who’s going to handle your finances? Do you need trademark protection for your products? How are you keeping transaction information secure? What will your return policy be, and who’s going to handle your shipping? It’s important to find time for the fine print in order to properly protect yourself against any potential legal difficulties down the road. The UPS Store offers a handy online tool that can help simplify the process.
Beware of bogus buyers
Unfortunately, fraud costs the e-commerce community many billions of dollars per year, and doesn’t discriminate between big and small businesses. Don’t think you’re immune to such problems because you’re not a large, well-known operation; fraudsters will take advantage of anyone they think they can. In fact, they may consider a smaller online store to be an easier target, assuming it’s not as sophisticated and less well protected than a bigger business. If a sale looks suspicious it’s worth investigating first, before you get burned.