Online shopping booms as the COVID-19 pandemic has changed the way consumers buy things.
95% of purchases are expected to be made through eCommerce by 2040. The future of this industry is exceptionally bright. However, running an eCommerce company could be overwhelming for you at first. Thus, we have drawn up a blueprint as a step-by-step guide to launch an online business with Boost’s best articles.
Step 1. Identify What Products to Sell
This is the most challenging part, with many people giving up here. Here are some strategies for you to find your perfect product quickly.
Pinpoint A Problem and Solve It
Now you should think about an issue that customers usually face, make a problem statement, and then list several products or services that serve as a solution. For example, many people want to wear luxury clothes and accessories from top fashion houses, but they can not afford brand new ones. In this case, why don't you consider selling second-hand items that are still in good condition at reasonable prices?
Hop on Trends If You Need Inspiration
Future business owners can check out recent in-demand products on the marketplace by following new trends before they peak their popularity. We have gathered several tools for you here.
You can gather inspiration by checking out what is popular on the marketplaces, for example, Etsy. (Source: etsy.com)
- Amazon, Etsy, or eBay. Look at the curated lists or categories to know customers' demands.
- Reddit is home to thousands of communities that showcase every topic. Diving into subreddits like Reddit eCommerce could help you discover some exciting business ideas.
- Social listening is another helpful tactic. You can join Twitter, Facebook groups, and other online forums to see what people need help with. Once you have become a merchant with a running store, you might use advanced tools like Google Ads, BuzzSumo, and Google Trends to uncover what people are searching for.
After getting a list of potential items, it's time to narrow it down. You should remove any products if they are:
- Too bulky, which leads to high shipping rates.
- Fragile, as you will take the risk of losing money on refunds if the item is broken while being delivered.
- Highly perishable goods that are difficult to preserve.
Now you have shortlisted what’s in hand, and it’s time to take further action. Before devoting more effort and money, you must have a proper understanding of the market, your competitors, ideal customers, and market demands.
Step 2. Identify Competitors
The second step is to see how your business compares to others in the space as every market has more than one company offering similar products or services to the same target group. Therefore, the more you know about the competitive landscape, the less surprised you will be later. You can run a Google search (on top-ranking sites) and Semrush research to identify your competitors.
A competitor analysis aims to provide entrepreneurs with deep insights that help them make better decisions on marketing and product development.
Before entering the game, every business owner should, at least, know how to do competitor analysis. If you want to see why it matters, here are the reasons:
- Make your market positioning clear in terms of differentiation and value proposition.
- Evaluate the entry barrier into the market.
- Classify customer expectations.
- Identify a gap in the market as well as development opportunities.
- Unveil potential weaknesses and risks in the marketing plan.
When conducting competitor analysis, it’s worth taking note of these critical aspects:
- Who their target customers are
- What market share they currently own
- What is their unique value proposition for their business and products
- Key features highlighted in their sales material
- Price points for products across different marketplaces
- How they approach shipping
- Marketing strategy including the social media channels they are using
- Customer reviews/feedback
To make the process easier and to stay updated about your rivals, you could use the following methods:
- Analysis frameworks like SWOT analysis, perceptual mapping template, the resource-based view framework, or Porter’s Five Forces model.
- SimilarWeb is a tool that tracks traffic volume and the primary referrals.
- Google alerts will notify you when their brand name gets mentioned by the influencers or media and in what context.
- Semrush and Ahrefs are great tools to analyze competitors’ keywords and their backlink profiles.
- Add the competitors’ brand names into your social media analytics tools to keep track of their online activities that enhance audience engagement.
Step 3. Validate Your Idea and Obtain Your Product
By now, you should have narrowed down your product idea to a winning product. Here are two options that help you validate your idea or test the demand.
- Build a landing page to promote your product. Then, run a few paid ads driving traffic to your site and collect the email addresses of interested customers.
- Run a crowdfunding campaign.
Once you have validated your idea, your next step is to obtain your products. There are four common ways to do so.
- Making your product will give you complete control over the quality while keeping your startup costs low. Hence, this is appropriate for do-it-yourself businesses.
- Hire a manufacturing company. eCommerce merchants have two options: choose a domestic manufacturer, or find a cheaper manufacturer overseas. These approaches are a good idea for businesses that have a unique concept.
- Buying wholesale is a less risky business model for several reasons. Firstly, you will deal with validated brands. Secondly, you do not have to purchase a high quantity of products compared to manufacturing your products. Although products are not exclusive, you can sell a variety of products and brands.
- Many eCommerce merchants choose dropshipping/print-on-demand because it is the cheapest option to kick off. By nature, this choice is for those who like to keep startup costs as low as possible.
Step 4. Craft A Business Plan
With the competitive analysis and the knowledge of how you will obtain your items, it’s time to draw a roadmap aligning your effort and giving you focus. In short, a business plan clarifies your strategy and specifies what resources you need as well as potential obstacles. However, if you find it daunting to formulate a traditional business strategy, a one-page plan might be a less rough start.
Now, let’s see how entrepreneurs form a successful business plan. Here are the vital components of a complete plan.
Beyond a document, your business plan will guide you through each phase of running your online commerce to success.
We highly recommend you to write this section last as it is a high-level overview of your plan, summarizing the essential points.
This section needs to answer two questions: Who are you and what you plan to do, including your mission statement, value proposition, company structure, objectives, key members, and what you sell.
A big picture shows how big you estimate your market, including analyzing your business position in the market and an overview of competitors. Doing searches online will help you gather insights about the industry, your competition, and your market segment. Here are some resources that make your research more focused and valuable:
- Quantcast offers users reliable and accurate information about target audience insights for free. Data are collected from about 100 million web and mobile addresses.
- Alexa is a beneficial tool as it transforms data into meaningful knowledge so business owners can find a competitive advantage with ease.
Marketers are familiar with Ahrefs as it can check the backlink profiles of any competitors they want. Hence, this is one of the best marketing tools to uncover SEO and online chances.
Although your products or services would attract many beneficial people, it does not make sense to market to everyone. Thus, you need to identify shared traits of ideal consumers (where they live, expected behaviors, beliefs, how much they earn, and where they spend their leisure time). Conducting surveys, interviews, or gathering data are methods that business entrepreneurs often use.
Every business is different so try to craft a specific customer profile. Based on the target audience persona, you can arrive at wise decisions to conduct compelling campaigns, and this will set you up for long-term goals. Thus, bear in mind that the more you know about consumers, the better you will sell to them.
Products & Services
Business owners dig up detailed information on products they want to sell and their sources in this stage. Here, you should point out how your winning product is different (in terms of price, design, and functions). Some key questions that every entrepreneur must answer are:
- What are the central features of their business, products, or services?
- What benefits would those features provide?
- How the mentioned benefits help customers solve their problems?
A Marketing Plan
The first and foremost purpose of a marketing strategy is to drive shoppers to your online store. According to Impact, nearly 33% of clicks from the organic results belong to the first listing on Google. Thus, Google Ads is the top choice for attracting visitors to both new and old websites. However, the budget might be a significant concern to SMBs, so we will show a marketing mix of SEO and social media (Step 9) to generate leads without spending much money. Overall, your marketing strategy should include:
- How much your product costs
- What problem it solves
- How your brand is different
- What marketing channels you will use to reach your target audience
- Where you will sell your product
Logistics and Operations
This part refers to the whole process of moving products from the manufacturer to the end customers. To be more specific, it deals with the following factors:
- Who are your suppliers?
- How much inventory do you plan to keep?
- How will you ship and fulfill orders?
- What tools do you need to keep up and run?
Large enterprises often work with multiple parties to keep up with the high demands. Small businesses, on the contrary, do not necessarily partner with different companies due to small operations. Once consumers place orders, the transaction will trigger your inventory software, and then it’s time to deliver products to customers. Depending on your operation size, the next phase could be:
- Office/home operation - this fantastic option is for small businesses that run their online commerce and store inventory at home or office. If you are following this way, you do not have to worry about outsourcing warehouse management to a third party.
- Brick-and-mortar retailer - if you are running both an eCommerce site and a storefront location, you can apply the process as mentioned above.
- Outsourced logistics - if your operation is large enough to outsource online logistics, you need to sync your platform with a third party. Their operation will get a notification when your customers place an order, and then they will send the package to awaiting customers.
It would be remiss to lack a financial plan in your strategy. In short, it is a document that contains your money situation as well as long-term goals. It would help determine how to cover all costs, whom to fund your company, or borrow money. Also, think about whether you have the finances to run your business until it makes a profit. But first, you must carry out a break-even analysis - a formula that shows you the minimum performance to achieve and where to earn profits.
According to The blance small business, whether you start a large enterprise or a medium-sized business, the break-even point formula is a crucial tool to assessing your finances.
Looking at the picture, you might have some concerns about reducing the fixed costs, variable costs per unit, and increasing sales. To deal with them, here are some practical tips:
- Avoid unnecessary expenses like fancy office equipment that will not lead you to your business goals.
- Look for financial assistance. As startup capital comes from different means, you could consider choosing some options, for instance, business loans through a bank, business grants, attracting investors, or running a crowdfunding campaign.
Before moving to the next step, here is one thing to note down. Startup founders seem to be over-excited about their idea. Consequently, they often forget to set out an exit strategy to avoid confusion in the worst-case scenario, even the closure of your business.
Step 5. Build Your Brand
Once you have your business strategy in place, start building your brand right away.
In eCommerce, choosing a memorable brand name might make you feel uneasy as it seems like all the great ones are already used. Hence, the solution here is to try name generator tools such as Shopify name generator or Nameforce.com.
After you secure your domain name, the following action is to get your logo designed. A good logo is simple, memorable, versatile, enduring, and business-appropriate. Besides finding a pro designer, you could go to online logo makers as a time-saving and cost-effective solution, such as Canva.
And these are the first five steps to start an online business. Come back to our blog soon to find out what else you need to take your eCommerce company to success.