Very recently, there has been a boom in e-commerce. Due to the pandemic, more people are shopping online and this means that more people are trying to get a piece of the e-commerce cake. Additionally, many businesses that only have physical stores are going out of business. Whether you’re trying to get into e-commerce or trying to move your business online, the time to do so is now. That’s why we’ve put together this article that will teach you how you can start your own e-commerce business.
Starting an E-commerce Business: Step-By-Step Guide
1. Product Research
If you’re going to start up an online business, then your merchandise needs to be both in high demand and also of high quality. Without either of these, your business will practically fail before it even starts. This is where the importance of proper research on the different types of products comes into play.
A big part of your research into what you should sell should belong to looking at niche products. For those of you who don’t know, a niche product is a piece of merchandise that is tailored for a very specific consumer base. An example would be school supplies for left-handed students.
The reason you should look at niche products is for two reasons. First of all, the prices of niche products tend to stay the same and don’t fluctuate that often. Additionally, niche products will usually be very profitable. Some companies even start e-commerce businesses based on single products that fit a very specific niche.
The next type of product you should look into when gearing up to start your e-commerce business is commoditized products. These types of products are high-demand or even essential products for lots of people and have a huge consumer base. These products can come in digital or physical forms. Because of the high demand for these products, there tends to be a lot of competition as well.
If you’re wondering as to what specific products are commoditized, there’s a huge range of them. Anything from phone chargers, to pots and pans, and even toys! A lot of commodified products may have started out as some sort of popular innovation that eventually spawned knock-off products.
You don’t have to only choose a niche or commodified products for your small business. In fact, many e-commerce merchants like to sell a mix of these products. This is a common strategy as the niche products in your inventory will make you stick out from competitors, while the commodified products add extra options for your consumers.
2. Choosing Products
Now that you know about the two big types of products you should be researching, you’re probably worried that you’ll need to wait for the next big innovative product to really get into e-commerce. This really couldn’t be further from the truth, you don’t have to be some genius inventory to get into the e-commerce world, though it certainly wouldn’t hurt.
When it comes to choosing products to sell, there are definitely a few things that you should consider. These next few tips mostly focus on choosing niche products. Choosing commodified products doesn’t really require a lot of close thought anyways.
Firstly, you should be sure that whatever niche product you’re looking at is something that really interests you or it’s something that you’re passionate about. Think about it, if you’re going to be starting a business and plan on doing it full-time, why invest your precious time in a product or field you don’t care about? If you aren’t passionate about it, you’ll lose the drive to keep selling or manage your business and ultimately cause it to fail.
Next, try to choose a product that has a lot of branding potential. Advertising and building the brand of your product and company is a huge part of creating an e-commerce platform. Therefore, you need to make sure you know what the target audience for your product will be and figure out how to reel them in.
Always be on the lookout for trending products as they could present an excellent opportunity. If there’s some sort of change in how society works, you’ll no doubt see a new product emerge in online marketplaces. When this happens, you should absolutely hop on this trend early. It can prove to be an excellent investment, just be sure that to hop off the trend when it becomes unprofitable.
Your next step is to start brainstorming and then create a list of products that really catch your eye. You’ll want to identify products and niches that don’t have too much competition. After that, it’ll be time for you to start looking at business models.
3. Choosing the Right Business Model
After doing the appropriate amount of researching and deciding what products you want to sell, now it’s time to decide who you actually want to sell it to. This is where choosing the right business model comes in. There are four main e-commerce business models that we’ll go over briefly.
Business to Business (B2B) – Simply put this type of business model is when businesses buy products from other businesses. Generally, these types of transactions involve things like components or materials. So imagine a computer company buying motherboards or other things from another company so they can build their computers. This business model can have high returns but it can take a lot of time to see them due to how complex trade agreements and contracts with businesses can be.
Business to Consumer (B2C) – This type of e-commerce is the most common type that you’ll encounter in day-to-day life. It is simply e-commerce at its most simple, a consumer buys a product or service from a business at an affordable price. This type of business model involves selling all sorts of things whether they’re physical products or virtual. B2C generally has a higher profit margin and is also a safer option, compared to B2B. An example of this would be Amazon or other online retailers like Walmart.
Consumer to Business (C2B) – The C2B business model might seem strange at first, but it is a genuine and viable strategy for e-commerce. Here, a consumer will sell goods and services to businesses. A prime example of this strategy is freelance workers that companies hire to complete projects for them.
Consumer to Consumer (C2C) – These are e-commerce businesses where consumers are connected to other consumers in one way or another. Whether it’s to sell products to each other or through other things like subscriptions. Examples would be something like eBay. Essentially, this business model allows you to be the middle man between two consumers.
4. Ensure Your Product Idea Is Sound
After picking out your business model comes a very crucial step. This is where you’ll find out if you’re product is worth pursuing as a business venture. You’ll need to find out more about the target market of your product via market research.
It’s very likely you may have done this already when researching your product in the first place. That being said, we still have some extra ways for you to be extra thorough. The reason you should be doing this is two-fold. For one, you’ll figure out if a product is in high demand, pricing options, and you’ll also be able to develop marketing strategies around the data and information you gather.
So how does one conduct this type of research? Well, there are multiple ways to conduct market research. For instance, you could always create a survey and ask potential customers to go through it or you could use different marketing tools, email marketing, or you could even contact a blogger or influencer to promote your product.
There’s lots of different data and information that you can glean from these surveys and other forms of digital marketing or content marketing. Demographics like age, gender, interests, lifestyle, and the list goes on. All of these things are very important when it comes to making an informed decision about your customer base and ultimately will decide whether your product will sell well enough.
Once you are without a doubt confident in your choice of product, it’s time to move on and actually establish your business!
5. Creating Your Business
Now you’re finally ready to really start kicking things off! Your next step in creating your own e-commerce business is to pick a structure for it and then register it. There are a few ways that you can go about this:
First is something called sole proprietorship. This is the type of structure you should pick if you’re freelancing or if you’re doing the selling under your own name. It is the perfect structure for self-employed retailers because of how straightforward the process for registering is. That being said, there are some downsides such as taxes and if your business goes under, you won’t be able to keep personal assets tied to the business.
If those downsides seem too unappealing to you, then you can always register your business as a Limited Liability Company (LLC). Registering your company as this ensures that your personal assets will be protected, unlike a sole proprietorship. The real downside to putting an LLC together is that the process is more complicated.
You’ll need things like an agent to represent your LLC, file something known as Articles of Organization, and pay a fee. Additionally, if you plan on hiring other employees, you’ll need something called an Employer Identification Number (EID).
If you want, you can also choose to turn your business into a corporation. Contrary to popular belief, your business does not have to rake in millions upon millions of dollars to be considered a corporation. Regardless of what you decide on, you’ll also need to obtain the appropriate license associated with your particular structure.
After you’ve decided on a structure, you’ll need to start branding for your company. In a nutshell, you’ll need to think of ways to make your company memorable through things like a business name, logos, advertising, social media presence, and so on. Branding in and of itself deserves a lot of time and consideration, so make sure the way you brand your company is at the top of your list when it comes to your business plan. Without proper branding, it will be hard to attract new customers
6. Sourcing and Making Your Store’s Products
This is where things get kind of tricky. Obviously, you’ll need a way to acquire stock for whatever product you intend to sell online. This can be done in a few ways.
First of all, there’s always the possibility that the product you’re selling online is something that you’ve made yourself. This is a very viable way of doing things and there are plenty of people who do that as a business venture. Take a look at Etsy, for example. It’s a platform that is totally dedicated to people who sell their own products.
The only real downside to selling homemade products is the amount of time you have to put into making them. It can be very time-consuming and if you’re not on top of things, you could fall behind on orders. This is doubly true if the products you sell become very popular!
Beyond that, you can also look at getting your goods from wholesalers or straight from manufacturers. Wholesalers are really more for if you’d like to sell different brand-name goods as they will sell those in books. Meanwhile, a manufacturer can help you mass-produce something that you’ve made.
If none of those options interest you, there’s always the possibility of getting involved with dropshipping. This is where you essentially become a distributor for a wholesaler. You sell the goods on your e-commerce website, meanwhile, your chosen vendor will create and ship orders so you don’t have to. It’s an appealing option as when you dropship, the upfront costs are lower.
7. Where To Sell Products
This is a fairly straightforward step. For starters, you can always use your own website or platform to sell your products. However, many big online retailers such as Amazon and Walmart allow you to partner with them in order to sell your products. In fact, Amazon and Walmart both offer services so you don’t have to worry about shipping and distributing.
8. Building a Website
With all of this said and done, the final step is to build a website for your e-commerce store. The nice thing about the world today is that you don’t have to be some sort of coding savant to create a fully functional and aesthetically pleasing website.
There are a lot of internet services out there that will help you or will have templates for websites with high functionality and domain names such as BigCommerce, Shopify, WordPress, and Squarespace. After you’ve built your e-commerce site, all you need to do now is get the word out about your new business and start selling!
Automation: An Excellent Alternative
Another option for budding online sellers is to automate your entire e-commerce business. This is done by using AI and other automation software to take care of a lot of the more tedious aspects of owning an online store like re-stocks, cyber-security, search engine optimization (SEO), and customer fulfillment. Many e-commerce business owners go this route and there’s a lot of services out there that will handle the whole process for you, such as ours.
Automation services use big retailers, such as Walmart, to sell their goods and services. It’s an excellent way to make some side-income or if you’re too busy to worry about managing the business for a while. It’s a great business idea and is an almost guaranteed way to create a successful e-commerce business.
Overall, putting together an e-commerce business is one of the smartest things that someone can do in today’s market. There’s plenty of potential to make a lot of money, or just make some cash on the side. Additionally, you can always automate as it is one of the best e-commerce options out there right now