According to research by McKinsey, three-quarters of Americans said they shopped differently during COVID, and most intend to continue that behaviour. To succeed in e-commerce and pull a profit, you will need to work hard and build a strong foundation. You will need to do market research; understand your target audience; create a business plan; and take all the necessary steps to set up your business in compliance with federal, state, and local laws. Beyond that, here are some essential tips to help you start a successful online business.
1. Choose an e-commerce model
When most people think of e-commerce, they think of an online store that is the digital equivalent of a brick-and-mortar store. However, there are a wide variety of e-commerce business models. Some require you to build your own e-commerce site, while others let you set up shop on an existing marketplace.
Some require you to handle the process of manufacturing, marketing, selling, and shipping yourself. Others allow you to make a profit without handling the product at all. Which model you choose will depend on the type of product or service you want to sell, how much money you can afford to invest in the business, your existing skills and competencies, and your time horizon for getting to profitability.
Here are some e-commerce models to consider:
Business to Consumer (B2C) Using a B2C model, businesses sell directly to customers. This model works for both products and services and is what people commonly think of when they think of e-commerce. There are some variations on this model. For example, a direct-to-consumer (D2C) business model means the manufacturer is also responsible for distributing the product. You won’t find a D2C business’s products at a brick-and-mortar store or a third-party e-commerce website. Such companies only sell through their own physical or online store. A vital benefit of a D2C business model is that the customers can always trust the product to be original.
Examples of D2C businesses include BOS, RunwaySale, MGM and MAXHOSA AFRICA Casper, Allbirds, Manscaped, and Dollar Shave Club. But you don’t necessarily need to be the creator of the product or service you are selling to operate a B2C e-commerce business. You can be a curator who brings together various products from other manufacturers—an online version of a variety store or department store.
You could also sell via a subscription model. No matter which model you choose, you need to think about how you will fulfill orders. You could take delivery of inventory and ship the products yourself, but you’ll likely need a workspace for that and an online inventory tracking software. Read about the benefits here.
Or, you could sell the product, collect the money, and have the product dropshipped by the manufacturer or a third-party service. The downside of dropshipping is that you don’t have complete control over the customer experience, but you are the one who will be held accountable and receive negative reviews if customers are unhappy.
Business to Business (B2B)
Using a B2B business model, one company buys goods or services from another company. They typically do not sell directly to individuals. B2B commerce is one of the fastest-growing e-commerce segments, and opportunities abound. However, this kind of business can cost more to start and take longer to get off the ground.
The business buying process is more complex, typically involving more decision-makers and purchasing order processes. This model also requires you to consider how you will fulfill orders.
Consumer to Consumer (C2C)
The C2C business model connects customers with other customers to trade goods or services using your platform. It’s the online version of a go-between, with the platform taking a cut of each transaction. eBay is an early example of this type of business. In the past few years, specialized C2C companies have sprung up, such as ThredUp and Poshmark for clothing; Chairish for furniture and home decorating; Airbnb and Vrbo for short-term rentals; GOAT for sneakerheads; and TaskRabbit and Thumbtack for errands and household chores.
C2C can offer higher profit margins and less hassle with products and fulfillment, but it can also take a long time to get off the ground. Sometimes also called two-sided marketplaces, you have to focus equally on attracting buyers and sellers. Customer satisfaction can also be a challenge since not all sellers will deliver the same quality of goods and services, but the buyer will still associate the experience with your brand. Fraud is also a challenge, as these types of businesses are heavily targeted by criminals who set up fake listings to take the money and run.
Consumer to Business (C2B)
A C2B approach is an emerging category in which a brand’s customers create value for the brand. An example is a blogger becoming a paid influencer for certain brands; becoming an affiliate seller of the brand’s products; co-creating a product, service, or experience with the brand and marketing it to the audiences of both; or providing ad inventory for digital advertising companies. With this type of business, you don’t have to worry about products or fulfillment. The main challenge is building a large enough audience to have the kind of influence that would attract a brand or drive enough traffic to your site to generate significant revenue from affiliate sales or ads.
2. Determine your product(s)
Once you’ve determined what business model best suits your aims, you need to find the right product. An ideal choice will be a product or service with high demand and low competition. Of course, that’s easier said than done, especially when it seems like everything under the sun can already be found and purchased online.
The key is to carve out a niche for yourself. Start by thinking about the things you are passionate about or have unique knowledge of, products that come out of your skills and intellectual property, products that are brand new to the market, bespoke versions of existing products tailored to a specific audience, or a novel solution to a big unsolved problem.
How do you find these products?
To get started, you can simply search for products to sell online.
– Keyword research can help you determine how many people might be looking for a particular product or service, and what it might cost to advertise for it.
– Google trends can alert you to emerging problems and hot products.
– If you’re thinking of selling on an existing platform, do some research there to see what is on offer, what the prices are, and how much competition there is.
– Read reviews to see if customers are generally satisfied, or there are unmet needs you can fulfill.
– Search for related products to see if there are ancillary products such that you could put together a value-added package or come up with a better iteration of an existing product.
3. Develop your brand
Developing a brand image and a brand voice that attracts your customers is crucial to customer acquisition for your new business in the first place. Customers will be loyal to your brand because of the high-quality products or services you offer, but they are attracted to your brand by what they think you represent.
Choose a business name.
Once you have decided on your offering, you’ll want to choose a solid brand name. Aim for something catchy that also speaks to your offering rather than obscures it. It should stand out from the competition. Consider how your business name can be incorporated into the logo and other visual representations of the brand. Be sure to research domain name availability. There are plenty of tools that can help you determine whether the domain for your potential brand name is available.
Popular domain research tools include:
– Google Domains
– Instant Domain Search
Hire a designer
Since visual branding is a key element of a successful e-commerce site, you might consider hiring a professional to bring your brand to life. After all, your site is your storefront, and it needs to be as attractive. You’ll want a total package that includes logo design, website design, and a visual branding stylebook to ensure consistent branding across all social and advertising platforms.
Here are some popular services you can use to hire designers:
4. Setup your website
Building your website is the online equivalent of building your store. There are two parts to that—the storefront and then the back of the shop where operations are carried out. If you are looking to create your website from scratch, you can hire website developers to do it for you.