How to Start an Ecommerce Business (Ultimate Guide for 2020)
In 2018 alone, ecommerce sales around the world reached $653 billion. The likes of Amazon, eBay, BestBuy, and other large ecommerce companies have 69.6% of the total market share. However, there's still room for small businesses to get into ecommerce either as a side hustle or a full-time business.
Don’t believe me? Just take a look:
Starting and running a successful ecommerce store isn't as straightforward as it seems. You need to find the right product to sell and have an effective marketing plan to make sales. And there's more...
You'll need to choose the right revenue model and figure out how you will provide fast and affordable order fulfillment. Besides, you'll need to keep an eye on your inventory and solve any problems that come up every day, such as defects on items or issues with your checkout process.
So how do you know where you need to start and move on from there while avoiding challenges that might knock you off the ecommerce space for good?
Stick with me and let's find out.
1. Find the right product to sell
An ecommerce business has many moving parts. Each of them relies on the product you choose to sell and the market you will serve.
And if you don't come up with a product that people want to buy, you can't plan anything else for your business.
Choosing the right product, however, isn't easy. You're spoilt for choices given the number of products available for you to sell. You also want to make sure that your target market will buy your products and you'll make a profit.
No matter the type of ecommerce store you build, you're going to have two types of products: Niche products and commoditized products.
Commoditized products are those things that people use every other day - Clothes, food, toys, and makeup, among others. You'll often find big brands such as Walmart and Amazon selling them.
On the other hand, niche products serve a particular market segment, and people will do just fine without them. These products are mostly handmade, e.g., custom made bangles, pieces of art, and premium phone cases, among others.
To come up with the best product ideas, you'll need to look inward to identify what kind of entrepreneur you are, because that's what should guide you to choose the type of product to sell.
In his book, Choose: The Single Most Important Decision Before Starting Your Business, Ryan Levesque talks about four types of entrepreneurs:
He goes on to explain that since you'll be the one running the business, you need to look at your strengths and talents to guide the business model you choose, the product you sell, and the market you want to enter. This way, you'll be hitting two birds with a single stone.
Let's look at different ecommerce businesses with these types of entrepreneurs:
Mission-based: Warby Parker
Reading through their story, one thing is clear: they believe eyeglasses should be good looking and affordable. And they're on a mission to achieve that.
Besides, they're also partnering with non-profit organizations to help other people who can't afford glasses by donating a pair of glasses to them every time they make a sale.
So, what social problems do you feel compelled to solve? What products can you sell to help solve this problem?
Passion based: Kodiak Cakes
When you're passionate about something, you always rally other people to join you and experience the joy of what you're passionate about and even urge them to spread the message to others. And that's how Kodiak Cakes, a family-owned business started. You can watch the full story here.
Think of one thing that you're passionate about. It could be knitting. Photography. Or even fishing.
Now, what outcome that is related to what you're passionate about would you love to share with the world? What product would help people achieve this outcome?
For instance, if you love knitting, you can decide to sell knitting tools to help other people learn how to knit. You get the idea, right?
Opportunity based: Bonobos
Ever ordered some nice clothes online only to realize that they didn't fit when you tried them on? Worst feeling ever.
And that's how Bonobos started. The founders couldn't find pants that fit them and saw an opportunity where the others, too, had a similar problem.
And they fixed it - selling having pants with waistbands that naturally align with your waist.
Have you solved a problem that you faced while using a product you bought, but you still know that other people are struggling with the same issues?
What products can you sell to solve this problem?
Undecided
If you're getting started in ecommerce, there's always uncertainty that comes with starting something new, and there's a likelihood that none of the above entrepreneur types resonated with you. That's fine.
If you feel stuck, that shouldn't stop you from moving ahead to know where you stand. So, here are six places you'll want to check out to help you get product ideas. If you're considering dropshipping Aliexpress products, download the Aliscraper chrome extension and import products to your store instantly, and filter by shipping origin.
Are you still stuck? Take a look at this list of sustainable products to sell, as they might give you the light bulb moment you've been waiting for.
2. Validate your product idea
Having identified your product or a number of products you want to sell, the next step is to evaluate it and determine whether:
- There is a demand for your product, and the market isn't crowded
- You can have a consistent supply of the product at a reasonable price
- It will be profitable
It's a crucial step that most business owners skip and end up spending time and money on products no one wants to buy. Here are possible reasons why you might be tempted to do this:
- You might think that the first product idea you come up with is what the market wants and is willing to pay for it
- You might be too excited to get started, so you rush through the validation process
- You don't know how to validate a product idea, so you avoid it
- A combination of any of the above reasons
And here are several ways to get this done:
Verify that there is a market for your product
This step helps you get into the shoes of your target market and think the way they do. Enter your product idea into the Google search bar and see the results you get. You might have the right idea, but if you use the wrong words on Google, people will never find it.
If, for instance, you want to find the best VPN provider, what you search for is what you should get. Take a look:
If you don't see the results you are looking for, you have two options:
Do away with the idea or play around with the words to get the results you want.
Next, head over to Amazon.com and search if you'll find similar products listed. This works like the Google search test. If your idea doesn't come to give you the results you're looking for, you either need to tweak it or do away with it.
Determine your market size
Google trends results give you a clear picture of the number of people searching for a particular product over time. Besides, you can even compare two products to decide which is the most popular and start selling them.
Take a look at best VPN provider searches over the past five years, to give you an idea of what I mean:
Remember, a sustainable business is possible only if you choose a niche that is consistently doing well.
Moral of the story? Google trends and search traffic don’t lie.
Competitive analysis
Are there other people selling the products you have in mind? If there's no competition, give that product a pass… at least for now.
If you do have other players in the market, study how they are doing. And the first place is through checking their websites.
How much are they selling these products? How do they deliver these products? How long have they been selling their products? Are they innovating and introducing new products? Have they expanded to the global market yet? What do their customers say about them?
Go ahead and buy a product from them to get a feel of their check out process, their customer service, and product delivery. These first-hand experiences will help you know how to differentiate yourself from them.
As a side tip, you should probably skip common products that people can easily buy on Amazon or Ebay, according to Style Factory Productions. Don’t give them a chance to bury you in the sand.
Surveys with potential buyers
While studying your potential competitors helps you know what's going on in the market, reaching out to your potential buyers gives you an idea of what's going to happen in the future.
For instance, someone who loves fishing equipment might be looking for new equipment with better features, and if you can supply that, you're going to win.
Besides, your potential buyers might be looking to buy more products in addition to what they are already buying. If you want to sell men's shoes, for instance, your buyers might be looking for shoe cream, or suede to help them maintain their shoes.
Armed with this information, you will open a store that has both men's shoes and sell what they need to maintain their shoes.
Run Google ads
These will give you an idea of how well your product will do and the profit margins you're likely to make with each sale.
3. What business and revenue model will you choose?
Having come up with a couple of product ideas, you've got a few more decisions to make, and then you will be out of the woods - ready to launch and start driving customers to your store.
Who's your ideal buyer? Your customer will help define this so you might end up using one of these popular models:
a. B2B: Dealing with other business owners, e.g., selling task management software to other businesses, similar to a SaaS company like Monday.com as seen below.
b. B2C: Dealing with consumers directly, e.g., selling physical products directly to consumers from Amazon or your choice of ecommerce platforms.
c. C2C: Think of eBay and Etsy where consumers sell products to each other
What type of product will you be selling, is it a digital or physical product?
What's your revenue model? Here, you have a couple of options: dropshipping, white-labeling, manufacturing, subscription model, and private labeling.
If you're just getting started with ecommerce, the best way to climb the steep learning curve is by reducing your risk while giving yourself room to learn as much as you can.
And that makes dropshipping the best place to start. First of all, dropshipping is pretty straightforward…
Your customer places an order, you forward the order to your supplier then the supplier fulfills it for you.
Now, you won't have huge profit margins at first, but the lessons you learn while running such a business will guarantee more success if you ever decide to go for any other model to run an ecommerce business.
Besides, you don't need a warehouse to store your inventory and can work from your favorite holiday destination so long as you have a laptop and wifi.
Dropshipping has its cons too, and, as I see it, these are issues you can always get around.
With this model, you don't have control over the quality of the product your customer gets, the packaging might be crappy, or your supplier might take ages before delivering the product.
But aren't these things you can work around by doing due diligence before deciding to work with a supplier?
For instance, you might decide to create a checklist that you will use to vet your suppliers, making sure that you both agree on product quality, packaging, delivery timelines, and any other relevant issue.
The only thing you have to compromise on for a while is your profit margins. And you won't have to make huge compromises. You'll still make more than a decent income from drop shipping just like Marc Chapon did- $178,492 in 90 days and Erin Rafferty did - $442,991 in just 6 months .That's $ 1,983.24 per day. Not too shabby, right?
%201.svg)
.svg)
