We often see success stories of people without any experience making good money from opening e-commerce stores. Whether you just want to start a side hustle or want to do it full-time, there are things key things to consider before diving in.
Why Choose E-Commerce?
More and more people are getting involved in e-commerce businesses nowadays. It certainly seems like we are surrounded by gurus and success stories. People talk about making their first pot of gold and this seemingly “easiness” of making money is luring more people into the industry.
At the same time, there seem to be so many decisions that you need to make, such as choosing over a dozen different e-commerce platforms to start with, including Shopify, WooCommerce, or BigCommerce. Without at least some strategy in mind, it’s easy to waste time and money and fail in the end.
Decide On The Products And Market
Picking the right products is half of the battle. You want products that can sell and more importantly, they are attractive and unique enough to make you stand out.
Usually, it’s best to choose a niche or field you are interested in or experienced in. Being in a niche means you will face less competition, while still having a solid group of customers to target. And most importantly, if you are selling something you are personally passionate about, not only would it show through your branding and messaging, it will help you overcome the long journey before reaching profitability. For example, if you love beauty, then a beauty business may be the path to go down.
After picking a niche to focus on, think about the business implications of what you sell. You want to find products that have:
- a relatively high-profit margin
- relatively low price to sell to customers
- smaller in physical size so shipping
- returns are affordable, probability of repeat purchases
You’ll also want to think about whether there are complementary effects (purchased in bundles).
It is important to evaluate the potential profitability and advantages, look for a dependable supplier, and research your competitors to see what price points are acceptable for the market.
When researching competitors, it’s good to evaluate their social media and see how they market the products, how big their audience is (potential niche size), their product reviews, typical pricing, etc. All of this information can be useful signals for you to learn from.
Drop Shipping vs Sourcing The Inventory?
After you have decided what to sell, you need to consider how you want to sell them. Drop shipping has become a popular option in recent years due to cheap shipping and low up-front cost. With drop shipping, you do not need to keep any inventory with you, and when you receive an order, you pass it on to the vendor and they will take care of shipments on your behalf.
There are many benefits to starting with drop shipping. Handling the logistics of packaging and shipping is a non-trivial amount of work and having that taken care of you would free you up on more important business matters like branding and marketing. This is beneficial in the early stages of the business.
The downside is cost and lack of control. With drop shipping, you won’t have any negotiating power to cut down on the price of the products. This means that your margin will be slim. You also cannot control how long your package would take to ship, especially if your vendors are based in a different country. In the case of using platforms like Aliexpress for dropshipping, shipping time can take anywhere from 14 to 28 days, which is not a great customer experience.
Create a Business Plan
A solid business plan is the foundation of any successful business. List your business activities, set your long-term goals, and accordingly your short-term goals. Assign a timeline to each.
Your goals must be ‘SMART’, i.e. specific, measurable, achievable, realistic, and time-bound. Create a realistic plan for your business that will not affect your performance in your full-time job.
Make Your Own Return Policy
A sound return policy is necessary for every e-commerce store. Customers are accustomed to a generous return policy these days so it’s become less of an advantage but a requirement.
A good return policy is an important way to earn customers’ trust. It also offers incentives for the business to come up with solutions that reduce customer returns. In turn, this improves customer satisfaction.
When crafting a return policy, consider when cases are non-refundable due to the nature of the product and when you want to make an exception. For example, whether you accept returns with the tags ripped off, or the packaging needs to be untouched.
If you are selling personal or health-related products (such as underwear, swimming suits, cosmetics), do you still accept returns? If a customer can provide an unboxing video that shows the product is defective, then would you make an exception?
While we generally believe brands that optimise for customer satisfaction will ultimately succeed in the long run. It is important to evaluate the immediate cost of having a generous return policy and decide how much return cost are you comfortable absorbing.
If you are suffering from a high rate of return, the issue is probably not with the return policy itself but with other issues with the business. Find out why customers are returning, and focus on the root of the issue. For example, if you are selling clothing, a high return rate might be because of fit issues. So look at your size chart information.
Online Payment Gateway Integration
The most convenient point of online shopping is that customers can place orders and pay easily. Therefore, a safe and fast online payment method is necessary. Fortunately, online payment gateways have become more and more common in the past few decades.
PayPal, Stripe, Apple Pay, Amazon Pay, Google Pay, Square, and many other online payment service providers can all be integrated with your store to guide to make checkouts dead simple. However, every online payment service provider’s commission and service charge are different. Some will only charge setup fees and monthly fees, and some will draw transaction fees around 3% to 5% per order.
Having a wide range of payment options will reduce the possibility of purchase drop-offs, but be mindful of the cut these processors are taking. These costs will eat into your margins. Fortunately, the bigger the size of your business, the easier you can negotiate the cost down.
Start To Set Up And Integrate With E-Commerce Tooling
All of these platforms support some form of plugins integrations, allowing you to enhance your store. You could add more third-party services, such as Yotpo for helping you collect customers’ reviews. All of these are indispensable tools when running a successful e-commerce business.
Besides using one of those e-commerce platforms to create your shop, another alternative is selling on marketplaces like Amazon, Etsy, or eBay, which already has high customer traffic you can leverage. The downside is that it is harder to build a brand on those marketplaces and you would be subjected to price comparison and be forced to cut down your price to stay competitive. There is also significantly less customization available which may or may not be a plus for your business goals.
Schedule Everything – Even The Smallest Task
Schedule any task, chore, or errand you may have. Jot everything down in your diary or digital calendar so that you don’t forget things and fall behind on your timeline. Or, even better, use some digital marketing tools.
Even if the task is as small, everything should be scheduled.