How To Start An eCommerce Business In 5 Easy Steps
There is no shortage of messages telling you that the key to your financial freedom is to break into eCommerce. Everyone from software companies to magazines tells you to “be your own boss.” The allure is almost irresistible: no bosses, no commute, no deadlines, no time clocks. But you know what they say about things seeming too good to be true. While there are plenty of perks to a successful online venture, there are also some pitfalls. Whether you’re looking for a new career, adding online sales to your brick-and-mortar store, or just monetizing your weekend hobbies, we’ll show you some of the basics of starting an eCommerce business. You’ll know how to build an eCommerce website that works in no time!
Table of Contents
1. Do Your Homework
Yes, I said the H word. Turns out, successful people never graduate from doing their homework. If you’re still reading, that’s a good sign. Traditional nine-to-five jobs have structure and output expectations built in, but eCommerce requires you to be a consummate self-starter, especially if this is your first foray into the retail space. One of the best strategies for first-timers is the lean startup method. This is a very low-cost, low-risk way of testing out your idea for a product before you go all in with your savings account on the line. It breaks down the monumental task of starting a business into bite-sized tasks and refines your idea with a manageable, methodical approach. Think of it as a burning coal rather than a flash in the pan; a well-honed product can win market share by stealth better than a Latest And Greatest gizmo with a flashy ad campaign.
Even if you have an existing product that sells well in person, moving it to the online macrocosm can present new challenges. Whether you have a product ready to go or just an idea, the lean startup method can help you overcome the most common pitfalls.
To begin testing your idea for online feasibility, you can start an online search to see if your product has traction in the market. Is there already a similar product on the market (and if not, why not?) Is the market saturated, or can you edge into it? Spend an afternoon asking these kinds of questions, and take the time to find unbiased answers. Here are some diagnostics to get you started:
- Use Google, Bing, and Yahoo to scope out the competition. See if there is demand for what you’re selling. If there are few results, perhaps there’s little demand. If there are many results, perhaps the market is too saturated.
- Take notes on what makes your competition successful. Is it top-notch customer care? Quality? Value? Special features? Free add-on services? Determine if your product is viable against the competition. Find your niche. Be absolutely sure not to plagiarize or infringe on copyrights, but let your homework refine your ideas.
- Get a solid grip on why your product is the best. What sets you apart? Develop a perfect elevator pitch. Use that to guide your venture.
- Don’t fear change. While it’s essential that you believe in the value of your product, don’t zealously guard it from abrasion. Bending is better than breaking; let everything – positive feedback, criticism, competition, failures, successes – guide your product’s development.
2. Set The Stage
As you might imagine, there’s some legwork to do before your sales start rolling in. Remember- this is a business, and cutting corners will invariably lead to trouble. Your Business Plan (as recommended above) should have given you a much more precise overview of the costs and requirements associated with developing and selling your product. The next step is to get acquainted with your applicable local, state, and federal tax laws, followed by any international regulations if you plan to sell globally.
Since Internet Law is constantly evolving, and since our readers are global, it is impossible to list all of your pertinent requirements here. For detailed information, I recommend starting with a thorough read through the Small Business Association’s website. From there, you can search for the laws relevant to your business and your region.
For now, here’s a general idea of the steps you’ll need to take:
- Register a Trade Name, DBA, or trademark. There are a number of websites which can help you fill out this paperwork and file it with the correct state agency. A quick web search for “register trade name” will give you local results.
- Register a domain name. This is the custom web address to which you will direct most, if not all, of your customers. It’s usually the same as your trade name, but there is no rule to say that they must be identical. Again, another web search for “register domain name” will yield plenty of options to get you going. This custom URL can be used by any host (the specific service or website where your site will be stored.) To allay confusion, the following terms are usually interchangeable: domain name, web address, and URL.
- Find the right web host. A web host is where your site will be stored. A domain name is like a street address, and a web host is like the physical store itself. Hosts offer comparable services and fees, so while finding the best fit for your business is important, it probably isn’t a make-or-break issue. A web host may have a built-in structure for developing your website, which may include templates to get you started. Examples include WordPress, Wix, and those included with some eCommerce software packages (see below.) Other web hosts, like Rackspace and Amazon, are merely servers. You’ll need to develop your layout on your own. Typically, you get what you pay for; cheaper solutions may have ads, which are a nuisance. More expensive hosts will remove unsightly ads, and provide useful tools for developing your site further.
- Become well-versed in the software tools at your disposal. The next section, Tools of the Trade, will walk you through some of the software options available to you for managing the finer points of your online store.
I have little patience for cliches, but in this case, your personal mantra should be this: “An ounce of prevention is worth a pound of cure.” Do your research, make sure you comply with laws and regulations, be ready for tax time with impeccable records. In so doing you will set the stage for your success.
3. Use The Tools Of The Trade
You’ve heard it said that it takes money to make money. As it turns out, it takes software to make software. Nothing is a “one size fits all” software package. Your needs will most likely be met by a combination of software types listed below. Some software providers cover more than one service, but it will take a little digging to find the best fit for your unique business.
- Website builders. Don’t worry- you won’t need to go back to school to learn HTML before you get started selling online. Website builders have options for visual editing, and automatically create the code behind the scenes for your website. There are pre-made themes and templates, and some website builders offer one-on-one personal assistance. If you’d like more information about website builders or want to know how they stack up against professional web designers, click here.
- Shopping carts. Having a website is just the beginning; it will need a way to process orders and process payments. Shopping Carts bridge this gap, and can be installed on existing websites, and even on other sites like Facebook. Some Shopping Carts like Shopify have website builders available as an added feature, meeting both needs.
- Merchant accounts. Depending on how you want to accept payments, you may need a merchant account. This is a special bank account that allows you to process credit card transactions between your customers and your business identity.
- Marketing and customer relationship management. Attracting new customers and staying in touch with existing ones is a daunting task, but it is made easier by add-on software like MailChimp, Constant Contact, and other CRM providers.
- Accounting software. Just as “doing your homework” is an essential piece of preparation at the beginning, keeping bulletproof records is an essential piece at the end. Trust me, this is not an area where you want to fall short. Getting connected with the best accounting software, and maintaining accurate records, will help you to keep running smoothly. It is entirely too easy for a hiccup here to turn into a major obstacle, so make sure this is a part of your workflow.
4. Choose Your Marketplace
Once your idea has been refined by the process above, you’ll have an idea of how to take on the many venues for selling online. The term “selling online” can mean a variety of things, and your product will naturally fall into one (or several) of the options listed below.
- Your own website. As mentioned above, this is the foundation of any online store, though it is rarely sufficient by itself. Your website is where all of your marketing efforts will point. It is where your customers will go to get familiar with your brand and products and scope out your legitimacy; it is where they are most likely to make a purchase decision. The better your website, the better everything else will fall into place.
- Craft marketplaces. If your product is hand-made, this may be the best place to get started. Craft marketplaces like Etsy are an excellent place to get connected with your target audience since like-minded people commonly surf through the website searching for specific products like yours. These kinds of sites also have all the structure built right in, so all you have to do is upload photos of your product, write compelling descriptions, and set your prices. Using various software options, you can also monetize on sites like Pinterest.
- eBay, Amazon, Google Shopping. These kinds of find-everything marketplaces are supplied by thousands, if not millions, of vendors. If you have the capacity to mass-produce your product, fulfill a potentially high volume of orders, and ship globally, you may want to consider taking this leap.
- Mobile and pop-up shops. Sure, this takes us out of the realm of “online business” a bit. But the capacity to have tangible demonstrations of your product just might be the boost your online sales need. Don’t be afraid to hit up local markets, trade shows, and special events. A weekend of physical presence once or twice a year has the potential to drive your online sales into high gear.
- Multichannel selling. Got a solid Facebook following? Excellent. Or maybe you’ve successfully leveraged some sales on Etsy. Fantastic. But the best strategy is to sell everywhere you can. If your sales increase beyond the point that you can handle them all, that’s an excellent problem to have, with its own set of solutions. Many shopping carts out there (see the Tools of the Trade section for details) are designed to enable your sales wherever you have an online presence. And a select few also have physical Point of Sale systems, which can make it easier to streamline the aforementioned mobile shops.
5. Stay Tuned
As you develop your business, you will quickly get used to “wearing all the hats” for a while. This is an essential quality that every entrepreneur must come to terms with. However, getting stuck in that mode is a corollary danger. While you’re inventing your business, don’t reinvent the wheel. Rely on all the resources you can possibly dig up. It may seem like needless hard work while you’re already so busy, but it will absolutely pay dividends.
- Get in touch with your county’s Small Business Development Center (SBDC.) They provide a lot of resources, including introductory business counseling, seminars from industry professionals, and networking opportunities. Also get in touch with the SBDCs of your neighboring counties; they are lead by different people and may pertain more to your unique business.
- Read. Although we’re talking about eCommerce, nothing can beat a good old fashioned book. Be in the habit of educating yourself. Don’t expect that you can launch a website and sit back while the profits roll in effortlessly. Be a sponge. Read books on eCommerce, SEO, HTML coding, digital trends, internet laws, etc. Read relevant trade journals, which may contain success stories of other businesses in your niche.
- Maintain your business-to-business (B2B) network. If you sell physical products online, stay connected with a good product photographer in your area. Get a tech person who can aid you on short notice if your website breaks (don’t rely 100% on the support provided by your SaaS subscription.) etc.
- Get feedback. Friends, family, and even customers can show you what’s working and what isn’t. Tactfully inquire for feedback, watch your analytics, consult marketing firms. An outside perspective can illuminate your path like nothing else. Be humble enough to take advice and criticism.
The online retail market is full of potential. It is much easier to start an eCommerce business than to open a physical retail store, and these businesses have an amazing global reach. But that potential can go both ways. A wider market of customers also means a wider market full of fierce competition. Your idea might just be the Next Big Thing, but an “easy gold mine” mentality won’t get you there. If the processes outlined here have only served to solidify your determination, then you can expect success with your eCommerce website. As my buddy Yoda would say, “Try not. Do, or do not. There is no ‘try.’ ” Get out there and MAKE it happen!