The ecommerce business model utilizes online resources to allow customers to purchase items online with ease. This type of business model has seen massive growth in the past decade.
Over the last 15 years, major global brands are actively selling their services and products online. In mature ecommerce markets like the United States, eCommerce is an ever-dominant presence in the retail space. According to the Department of Commerce, in the second quarter of 2022, the share of e-commerce in total U.S. retail sales stood at 14.5 percent. The eCommerce market can easily increase from $3.3 trillion today to $5.4 trillion by 2026.
Just like many other types of online businesses, the ecommerce business offers a lot of opportunities. However, to succeed, an entrepreneur must understand how to launch an ecommerce store the correct way. This article will let you know what needs to be done to launch your ecommerce store.
Why Ecommerce Works
The best part about an online business is its practicality and flexible nature. Many online businesses can be started from home. This flexibility makes it easier for a business owner to grow their business without taking on the sizable financial risks involved with building offline businesses. Although with most ecommerce businesses, inventory is required, there is no need to fill an entire store with merchandise like you would with a traditional retail store. This means that most eCommerce stores can be launched for a fraction of the cost of other types of businesses
Ecommerce stores can also be operated at a lower cost. The cost of operating an ecommerce store can be as low as free. Although the average cost is anywhere between $80-$250. Lower operating costs often mean lower prices. And with lower prices come customers looking for a good deal. 75% of Americans say they shop online at least once per month.
This trend towards online shopping continues to push the ecommerce world forward.
How to Start an Ecommerce Store
Carve Out Your Niche
At the beginning of the whole process, let’s assume you already know what you are going to be selling online. The real focus needs to be on how you’re going to sell it, and how you are going to reach your potential target audience. The way you operate needs to be unique, otherwise, without the big budgets of the high street brands, you will get lost in the sea of consumer brands.
Choosing a niche is an important part of the process of starting any online business. Many times, online businesses don’t succeed simply because the entrepreneur chose the wrong niche. If you’re not sure how to find the right niche for your online business, check out an article that we’re written about how to do just that here.
Set Your Price Points
Arguably one of the main things that will determine if your product sells online is its price. Without stating the obvious; if it is too pricey you may price yourself out of the market. If you’re too cheap then you probably won’t function as a business for long. The best way to find that midpoint is to do market research across your competition.
This way you will gain a good understanding of the market you’re about to enter. In an ideal world, you need to have a margin of 30-35% profit so that you can post healthy revenues as well as allow you to scale the business over time. This margin will also be determined by what industry you’re operating in, so it’s imperative to do your research.
Find Your Manufacturers
Not everyone manufactures their products in-house, even more so if you’re working from home. Therefore, it’s an absolute must to sort out your manufacturers, availability, and shipping costs before even building your site. These can make or break your dream before you’ve even started as they all need to be factored into your overall cost per product and will affect your top line.
Finding online manufacturers is a tricky game so you need to be ready to do your research. Sites like IndiaMart, Alibaba, ThomasNet, and Bambify are good places to start. Take your time in making your decision and don’t be afraid to try our different manufacturers to find the right one for you.
Build Your Platform
Once you understand your market and services/products that will help you grow your business, the next step is building your ecommerce platform and getting the hosting package that suits you, along with everything else that comes along with your newfangled business venture. Here is a run-down of what you’ll need:
–Choosing an ecommerce platform – There are an endless number of platforms where you can build an eCommerce store. A few of these are Shopify, Wix, WordPress, Woocommerce, and Squarespace. Research each one to see which will work with your ecommerce vision.
–Domain Name – Make sure it stands out; it’s easy to read and is a great representation of your product/s and brand.
–Logo and Website– Again, this needs to represent your brand to your target market so make sure it’s something you’re proud of and can work with for years to come.
Begin to Market Your Business
Just like any other business, an ecommerce business doesn’t succeed unless you get the word out.
- Put a blog on your site-Putting a blog on your ecommerce platform is a way to get information out about your product by offering informative content. For example, if you want to build an ecommerce site that sells herbal tea, you can use a blog to offer information about herbal tea. Use the blog to educate your visitors as well as answer any questions they may have. You can also use the blog content on your website’s social media platforms.
- Pay-Per-Click(PPC)-This is a type of advertising where you pay for every visitor that you receive. The easiest and most popular PPC platform is Google’s Adwords
- Social Media Ads-Social media ads are advertisements on social media platforms that are shown to the users of that platform. Unlike PPC ads, most ads are based on impressions and not clicks. The most popular ad platform is Facebook Ads. However, Instagram is also another effective platform. Platforms that behave as search engines such as Pinterest and YouTube are also a great way to get the word out.
- Influencer Marketing-Influencers are people who can promote your product to their fans and followers. The influencer market is driven by those who know how to present your products to their audience in a way that will turn into sales.
With a little research, hard work, and enthusiasm, a small ecommerce business can turn into a big one. Although there are over $9 million ecommerce sites in the U.S. alone, there is still plenty of space for newcomers. Take these first few steps to see if an ecommerce business is right for you.
This article was first published in October 2017 but has been updated and expanded.