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If you’ve set a resolution to increase your wealth in 2020, you may be one of many who are considering launching an e-commerce business. Whether you’ve been wanting to find a way to monetize a talent or hobby or you’re eager to take on more in order to reap the rewards, this kind of hustle — or full-blown career — might be right or you. It’s never been a better time to think about launching an online enterprise, either. Statistics show that retail e-commerce sales are predicted to reach $4.5 trillion by 2021, which isn’t surprising when you consider that 40% of U.S. internet users purchased items online several times each month during 2017. The majority of millennials and Gen Xers prefer shopping online to buying items in brick-and-mortar stores, with 57% of all shoppers being willing to purchase from companies based outside their home country.
In other words, the conditions are ripe for success. But that doesn’t mean you’ll automatically thrive just by opening an online shop. You’ll need to develop a real strategy if you want to do well. Those who are considering starting their own e-commerce business this year should keep these tips in mind.
Choose Your Business Model Wisely
Most people wisely choose to sell what they’re passionate about. But the exact way in which you should sell those items might not be as obvious a choice. You’ll first need to determine whether your online business will sell items to other businesses or whether you’ll market your products directly to the customer. From there, you can choose among several different business models:
- Drop Shipping — The most straightforward and most cost-effective option. This won’t require you to keep inventory or handle shipping, as that’s all handled by a third party. However, you’ll have to choose your vendors wisely, as slow shipping speeds or poor quality products can result in major customer dissatisfaction.
- Wholesaling — With this option, you’ll have to purchase, house, and ship inventory yourself. However, you can have the option of selling to both direct customers and to other retailers, which can expand your revenue stream. There’s more pressure to make this work, however, since you’ll be required to make a bigger investment up front.
- Private or White Labeling — Private labeling refers to a model wherein your product idea would be manufactured by someone else. In some cases, those products would be shipped out by the manufacturer or by a third party (like Amazon). White labeling refers to the process of selling an item created by another manufacturer and selling it under your own brand. This is a practice that’s common in the beauty, wellness, and even apparel sectors. Private labeling can be a good place to start for many businesses, but white labeling can have some limitations in terms of product supply.
- Subscription — Subscription boxes have really taken off in recent years. They’re appealing to customers and to businesses, as e-commerce retailers don’t always have to create any actual products. Instead, they can source these items from different businesses. While subscription services do offer a steadier revenue stream, zeroing in on a niche while making the service both profitable and “worth it” to consumers can be a struggle.
Once you know what kind of business you want to run, you can continue on in the process. Without knowing what your startup costs will be or the basics you’ll have to check off on your list, you won’t have a clear idea of how your business will really function.
Conduct Competitor Research
With this information in mind, you can perform research on the competitors within your same operational realm. It’s essential to know what other businesses are doing well and where they’re struggling so that you can differentiate yourself and make yourself indisposable. In addition to learning more about the products offered by these other companies, make sure to take a close look at their websites, figure out their main marketing tools, and see what you might do differently to stand out. Conducting an in-depth analysis can tell you exactly how much you’ll need to spend in order to compete and the areas you’ll need to improve in your own strategy.
Select a Worthy Platform
Many online businesses do create their own independent platforms for shopping, but starting from scratch can be daunting. Even if you’ve invested in fiber optic internet — which is so fast that a single optical fiber can carry over 90,000 TV channels of 3 million full-duplex voice calls — and secure servers, web design, and overall development is a huge undertaking. As a result, many small online businesses will start out on a platform like Amazon, Etsy, or eBay. These sites have marketplaces specifically or sellers, which can help you to reach a wider audience and simplify the entire process without investing a lot in your own web hub.
At a certain point, however, you may find that you’ll need to move operations over to a website of your own. Shopify is a popular choice for online retailers; the company is even granting initial starter loans to people who want to start their own small businesses through their content management system! Of course, you can use another CMS for your store (like BigCommerce, WooCommerce, Squarespace, BigCartel, and others), but designing a site completely from scratch can be expensive and fraught with problems. Make sure, above all else, that the platform you choose will provide an attractive end result, provide easy navigation and check-out, and compatibility on all devices.
Put Your Customers First
Along those same lines, your e-commerce business needs to consider the needs of the customer. Roughly 72% of businesses say that improving the customer experience is their top priority — and the necessity of having a responsive and helpful customer service setup doesn’t go away just because your shop exists only online. In addition to providing different options for customers to get in touch (including live chat, email, and phone correspondence), you’ll want to connect with consumers on social media and encourage them to leave reviews. Be sure to respond to those reviews (even negative ones!) with a positive attitude and with grace. You should also eliminate the need for account creation, make the cheapest shipping option the default selection, offer to save payment and billing information, and provide several different ways for customers to pay. The more convenient and pain-free you can make the transaction (and any subsequent communications), the more likely it’ll be for first-time customers to turn into repeat ones.
Starting any kind of business is a big deal. There’s a lot that goes into the success of an e-commerce retailer, but these tips will certainly get you on your way. By considering these factors first, you’ll be able to make well-informed decisions that can set you up for success online.