There is a great deal to do when you’re first finding out how to start an e-commerce business. It can seem overwhelming to take that initial step, but it doesn’t have to be.
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The devices you need to start an online business are more accessible than ever, and so are the people who might buy your product. Data shows that e-commerce sales are expected to reach $740 billion by 2023 in the U.S. alone. That’s significant potential for your e-commerce business to carve out a niche in the market.
But that potential also comes with many difficulties. There is a lot to do when you’re first figuring out how to begin an e-commerce business. It can appear overwhelming to take that first step, but it doesn’t need to be.
Start by working out the fundamental of your e-commerce business plan, such as what you will sell online and how you will sell it. Get a picture of how you want to approach the world of e-commerce and determine what will help you succeed. With a solid action plan and some powerful tools, you can build your brand and launch your e-commerce business in no time.
1. Choose Your Niche
To start a successful online business, you need to find the right niche.
- What is your area of expertise?
- What marketable knowledge or skills do you possess?
- Where can these skills be found in the market?
- What kind of products do you want to sell?
You should have an idea of what type of business you will be running, so start with market research. Look at other companies in your sector to see what they are doing right or wrong. If you can think of an instance of a
the particularly successful e-commerce company in your industry, ask yourself:
- How are they reaching customers?
- What is their business model?
- Some logistical questions you need to answer when finding your niche are:
- Is your product physical or digital? Determine what type of product you want to sell.
- If it is a digital product, how will you source it?
- Can you handle the production yourself, or will you need help?
- Will you build your business on one-time orders, packages, or a subscription model?
Get as many company ideas as you can because the e-commerce market has snowballed, and you will face a lot of competition. Before you build your e-commerce business from the ground up, think carefully about what sets you and your business apart from others.
If you have in-demand expertise, you should take advantage of it. For instance, if you have years of experience as a freelance writer, you should start a blog site to write about that ability and develop yourself as a thought leader in the sector. You can use your e-commerce store to provide editing services, print-on-demand, or paid online courses in your area of expertise.
2. Do Your Research
Find critical competitors in your field, research their history and business model, and get ideas by looking for trending products. Ask yourself what they are doing that you can emulate. Find out what people in your industry or niche are looking for and think about how you can offer that in your specific way.
You also need to identify the barriers to entry in your field and figure out how to overcome them.
- Will you need to invest in ads?
- Will you need e-commerce software?
- Will you need to spend on expensive photography equipment or design software?
If the response is yes and you don’t necessarily have the money,
- what workarounds are there?
- What receptacle do you do with what you have?
It’s okay to start small and straightforward when starting an e-commerce business.
Determine gaps in the market that you can fill with your product or service. Even if you are offering something that already exists, don’t be discouraged. Just try to offer that thing in a way that no one else can.
Once you have found your place in the market and know your value to the customer, you should do a SWOT analysis, which stands for Strengths, Weaknesses, Opportunities, and Threats. It can help you identify potential obstacles and plan for the future of your e-commerce business.
Strengths and weaknesses are usually things you can control, such as:
- Business society
- Your track record
- Your client base
- Copy right
Opportunities and risk, on the other hand, are things you can’t fully control but can plan for, such as:
- What vendors exist in your market
- Your competitors
- The economy
- Market size
- Market trends
- Gaps in funding
3. Choose Your Product And Target Market
You can use several proven strategies to select your first profitable e-commerce product. You could solve a common problem in the market, target a small niche, such as hobbyists, or base it on your passion. Use these strategies to find the perfect product or service to sell.
Brainstorm for your products to sell.
Think about your personal experiences when developing your product. Have you worked in a particular industry that gives you insights that others don’t have?
Is there a gap in the market for something that people will soon need based on trends in your industry? If you have a good sense of trends, you should factor that into your decision. If you can identify a relevant trend, you can become an early leader in the market.
It’s important to know that trends and fads are two different things. A fad experiences a short-lived surge in popularity because of its novelty. If you develop your business on a fad, demand will almost certainly wane once the hype dies down.
On the other hand, a trend is something that satisfies an existing need in a new way. Because they satisfy an existing need, people are unlikely to get bored quickly. Fads can be a good marketing opportunity, but trends have more staying power.
You can identify trends by:
Social listening stays on social media, where others in your industry are posting or where your target customers are spending time, and watch what they say. Browsing hashtags or using social listening tools to collect data over time can also provide valuable insights.
Google Trends is an excellent place to find out what people are searching for right now. It can also offer you an understanding of what keywords are most commonly used in searches and problems people are often trying to solve.
Search e-commerce sites and aggregator sites. Sites like Trend Hunter or various subreddits for your niche can give you clues about emerging trends before they become big.
Client reviews also provide a wealth of data about what your potential buyers want from a product. Browse reviews of similar products you have your eye on and see what people lack. This is an excellent resource for getting ideas for new products. If you can, incorporate them into your product or service. Addressing an unmet need can help your product stand out in a crowded market.
When researching keywords, make sure you don’t just search on Google. Most people use Google may be the search engine, but online marketplaces like Amazon and eBay also have their search features.
If you want to sell a product, type in the product name on these sites and see what keywords appear. Let’s say you sell kitchen knives. If you type that into Amazon’s search bar, it will suggest keywords like “kitchen knife sets” and “kitchen knives with self-sharpening block.” These results will provide you with an idea of what people are looking for in that product.
4. Find your target market
While you’re gathering product information, research your target market. Who is your ideal customer? What characteristics does he have? At this point, creating customer personas is helpful.
Personalities are fictionalized versions of your ideal customers that you can use to predict their behavior. You can build a picture of the person you think would best benefit from your product or service and then figure out how to appeal to that person.
Ask questions like:
- How old is this person?
- Where does she live?
- How much money does she make?
- What concerns are important to them?
From this, you can deduce where they are likely to spend time online and what messages they are likely to respond to. This information will help you market your product effectively when it’s time to launch your e-commerce store. Now that you have developed an idea for your product and understand who you want to sell it to, you need to determine how to make your idea work. In other words, you need to figure out if your store will be profitable.
You can assess the viability of your product based on several criteria. The evaluation criteria fall into two main categories
These are market factors that will affect your product and business model. It would be best if you considered the following:
- Dimension and demand for your product/service.
- Who are your competitors?
- Is it a trend, a fad, a growth market, or a stagnant market?
- Whether customers can get the product/service locally.
- Who are your target customers
Once you know where the market is going and who you want to market to, you can proceed to the next set of criteria. Investigate:
- Your potential market price
- The possible markup for your product or service
- How many product types or styles you will have in stock
- Whether you will offer a subscription
- If you are selling something physical, the size, weight, and shelf life of your product.
- Whether you are likely to experience seasonal fluctuations in purchases
- Whether your product or service resolves a discomfort point or serves a passion
- Whether your item is consumable, disposable, or perishable
- What regulations or restrictions apply to your product
Analyze your results
Based on the market and product-related criteria, you can get an idea of how much it will cost you to get your online business up and running.
5. Decide How You Will Receive Your Item
If you’re offering a physical product, you’ll need to think about a model for sourcing and shipping orders to your customers. Below are a few models you can consider:
Do it yourself.
You make the item yourself by hand and bring it to the customer. This is a very affordable option if your product can get the ingredients for and make inexpensively, such as homemade soap or pottery. In the starting, you will have to buy the ingredients in smaller quantities, and your profit margin will be lower. But you can also manage the cost and risk and then scale up when you have more resources.
6. Write Your Business Plan
It would be best to have a roadmap to maintain your business on track. Once you’ve chosen all the basics, writing a business plan will help you set goals and get into the attributes of what you need to run your business and reach your customers.
If you are trying to obtain a company loan, lenders and financiers will require you to have a company plan. Make sure you make your strategy as thorough and professional as possible.
Your business plan should include the following:
- What your business is
- What you will sell
- How you will make money from your business
- A list of employees and officers
- Where you will get financing
- Your operating model
When developing your plan, keep your target audience in mind. If it’s investors, make sure they see that you know what you’re doing. If it’s employees you want to hire into your business, make sure they can see your values and how they will be treated.
The outline of your business plan looks something like this, from beginning to end:
- Executive Summary
- Overview of the company
- Market Analysis
- Products and Services Marketing Plan
- Logistics and operations plan
- Financial plan
If you want to start with a more detailed plan, you can easily find free business plan templates on the Internet.
The most important thing is that you know your goal when you write your plan. It will look different if you are writing it to get startup capital than just describing the business for yourself.
Be sure to keep your tone consistent throughout the document. It’s best to have one person write the whole thing or take the time to thoroughly revise the document before submitting it to someone outside your company.
Finally, keep your business plan short and sweet. It should be no longer than 15 to 20 pages. It should be long enough to convey the relevant information without wasting anyone else’s time.
7. Choose Your Business Name And Legal Form
Naming your business is one of the most challenging aspects of starting an e-commerce business. It would be best if you came up with something that catches the eye, describes your brand, and isn’t already being used by someone else.
You can usually check your local ministry’s website for available business names. It is also the best idea to search the U.S. Patent and Trademark Office. A good business name immediately adds a particular flavor to your business. Take Death Wish Coffee, for example. The name immediately tells you that this business is for people who want the most robust coffee you can buy. The name alludes to the company’s badass skull branding, and the product itself is geared toward the kind of customers attracted to that aesthetic.
When it approaches coming up with a name for your business, keep this in mind:
- Could you keep it simple?
- Stand out
- Be creative
- Be original
Use a name generator to brainstorm ideas for memorable names. Once you’ve found your name and made sure no one else is using it, you should register it as an online domain name. You’ll use your domain name to set up your online business and brand so you can be easily found on the Internet.
You will also use your business name when you register your business. The way you register has legal and financial implications for you. So it’s worth doing some homework to figure out which legal form is suitable for you.
You register your business as one of the following forms:
- Sole proprietorship
- General partnership
One and all of these types has its advantages and disadvantages. If you can, you should consult an attorney or other legal professional to help you decide which form you should choose.
Whether you are a sole trader, you will probably want to register as a sole proprietor. In this case, you are not legally required to register your business in your state. Your business will then be associated with your business name.
This also applies to general partnerships, but you will need to apply for a business name association (DBA) with your local authority.
8. Make An Application For Your EIN, Permits, And Licenses
While not all businesses require an Employee Identification Number (EIN), it can still be helpful to apply for one as it can help separate personal and business finances. Applying to the IRS is free, and the number is usually assigned immediately. You can also request an EIN by email or fax.
You’ll also need to apply for any permits or licenses your business needs in your state. If you operate your e-commerce business solely out of your home, you won’t need the same permits as you would for a brick-and-mortar business.
However, you should still make sure you have met all the requirements. Check your local government’s website to determine what permits or licenses you need to run in your state.
Kinds of permits or licenses you might need for your business include:
- Occupational and business licenses for specific industries
- Sales tax permits
- Health, safety, and environmental permits
- Permits for signage
If you need permits or licenses, be aware that you will likely have to pay a fee for them. Plan for these expenses in your business budget ahead of time, so you don’t have any financial surprises later.
9. Create Your Online Store
Since you are ready, it is time to choose a platform and create your online store. There is a lot of e-commerce plan of action to choose from, so you should find out which one suits your needs best.
Mailchimp stores give entrepreneurs who want to have complete control over their online business everything they need to market and sell products in one place effectively. Mailchimp has all the features you need to get your store off the ground, from unlimited items and order management to confirmation emails and sales reports.
Built-in marketing tools like the Creative Wizard and marketing automation powered by our Customer Journey Builder help you send personalized messages that drive sales.
Once your customers have made a purchase, you can engage them further with our email marketing tools. You can create a reflect campaign and target people who visit your website, send a friendly welcome email to new clients, or recommend other products that might be of interest to your customers.
10. Market Your New Business
Once everything is planned and set up, it’s finally time to tell the world about your new business and start selling your products. Your research on your target audience should give you an idea of where to place your ads and what content to create when you’re ready to start soliciting clients.
Don’t be afraid to use numerous channels to target your customer base. If you have a blog, promote it on multiple social media outlets. Post content relevant to your niche on Twitter, Instagram, or YouTube. Try different tactics in your marketing strategy, such as Instagram marketing, or work with affiliate marketers to create shoppable landing pages that make it easy for customers to buy your products.
You should also build your online store page to attract new customers. Please put some thought into your page text and product description and make sure they meet current SEO standards. Make sure your page is simple and easy to navigate.
If you have the option, invest in a CRM (customer relationship management) platform to manage your marketing efforts. With this marketing tool, you can gather detailed information about your customers‘ demographics, preferences, and behaviors to send the right messages to the right people at the right time and increase conversion rates. Build an email list to have a base of people you know are interested in your product. This gives you a direct line of imparting to send them future offers, discounts, and promotions. It’s also a way for them to give you feedback on your product or service after they’ve made a purchase.
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