In the beginning, there was Amazon.
And Amazon arose and clinched the title of The Heavyweight championship belt in E-commerce.
Except in China. (If I remember correctly, Alibaba is King over there).
There have been many challengers, but none have thus far been able to destabilize Amazon from this privileged position.
From the success of Amazon, one thing was obvious to everyone watching- E-commerce can be very profitable.
So now you’ve decided you want to start an e-commerce business as well.
Before you do, there are a few important things you’ll need to know:
9 Things to Know When Starting An E Commerce Business
I already talked about things you need to do before launching an online business. In this post, we’re going to focus on the E-commerce side of things.
E commerce could be very profitable. It all depends on how you begin. And in the beginning, you need knowledge more than anything else.
#1. When starting an e-commerce business, thou shalt know thy Customer
This is where every e-commerce business needs to begin.
Who are your target customers? What do they need? What can they afford?
There’s no point selling products or items that nobody is interested in or would want to buy at prices beyond their means.
Now, you’re probably thinking “Can’t I just go sell everything like Jumia and Konga and Jiji?”
Well, you could but without an idea of who your customer is, you’ll pretty much be wandering in the wilderness of E commerce business with no idea of where you’re heading or who you’re trying to sell to.
And that is not good.
The customer is the life force of any business. You need to know the ages of your target customers, their genders (males or females or both), what they do for work, their average incomes, their desires and needs.
Using this information, you can construct buyer personas for each of your target customers and get a feel of what items they’d be interested in and what they can afford.
#2. Thou canst be starting an e-commerce business without knowing thy Product(s)
The very definition of e-commerce requires you sell products.
The question then is, what do you want to sell?
When you know your customers, you’ll have a pretty good idea of what they would be interested in.
And a big secret of running a successful e-commerce business is to sell what people want to buy.
For example, in the health niche, most people spend a lot on drugs to cure an ailment or get rid of a distressing condition, while only a select few spend on preventing the ailment.
Don’t get me wrong.
I’m not saying “Don’t sell prevention”. I’m saying most people are more likely to buy the solution to a problem than the prevention.
When you pick a product, you should also research your product and know every single aspect of your product.
From how much it costs to make or ship it to minute details about the weight, etcetera shmetcetera. This way when you start selling the product, you can use this knowledge to build trust with your customers and they’ll be more likely to buy from you.
People generally don’t buy from people they don’t trust. Remember that.
#3. In all thy doing, know thy Market
This part is all doing competitor research.
There are barely any monopolies left in the e-commerce niche, so if you decide to sell any product, there is a high chance that somebody is already selling a similar product online. But there is always an opportunity in every market.
All you have to do is find it.
To do that though, you need to know your competition. You need to know what they’re already doing, what the average prices of products are, and how the products are being delivered to the customers.
You need to understand the business models that already exist in your niche, and use that to find a way to differentiate your business.
#4. It’s basic economics, thou shalt know thy Supply Chain
One of the beautiful things about e-commerce is that you don’t have to create the products you sell.
Imagine Amazon having to create every single one of their one billion or more products they have on their site for sale. I doubt they’ll still be in business if they did that.
So it’s wonderful that you don’t have to create the products you sell. But how do you get the products?
Easy. You find suppliers.
This is almost a no-brainer but I had to bring it up because it was one of the things that held me back when I was trying to start an e-commerce business.
I and 2 other “partners” had an idea but unfortunately, we couldn’t figure out our supply chain quickly and then one thing led to another and we never got down to actually launching the company.
But enough about that.
Your supply chain is one of the most important parts of starting an e-commerce business.
You need to know who would supply you with the products, how you will get them, whether you’ll be storing them at home or whether you’ll use your garage or a warehouse or whether you’ll just go the dropshipping route and have a company handle it for you.
Some suppliers require you to buy wholesale, while others also offer retail options. Know your suppliers before you dive into the business.
#5. Know Thy Distribution Channels
Distribution channels here means how you will get the product to your customers.
Will you buy wholesale and then retail to small businesses or will you sell directly to customers?
Will you deliver the product to customers yourself? Will you use a product fulfillment company?
Will you send the product through “God Is Good” Motors?
It’s best to come up with an idea for how to distribute and deliver your product before you start your e-commerce business. This will save you from headache later on.
#6. Thy customers wilt not randomly find thee, therefore thou must know thy Marketing Strategy
The internet is a busy place, and customers are more easily distracted than ever.
A lot of startups basically die because they don’t make enough sales early enough to stay in business. And the reason they don’t make enough sales early enough is because in the beginning nobody knows they exist.
This is why you need a marketing strategy.
Marketing Strategy is simply how you’re going to attract and acquire customers. It’s how you’re going to put the word out about your business.
Are you going to use mainly offline methods like radio, TV, flyers, banners, word of mouth or are you going to focus your efforts on PPC Ads, Facebook Ads, SEO, Social media and word of mouse?
Come up with a strategy for how you’ll tell customers about your business and attract them early enough or you’ll be sorry later on when they don’t automatically come to you.
#7. Know Thy Costs
In the words of Patoranking: “How much I go pay?”
You need to know how much it will cost you to start your e-commerce business. You should know the costs of:
- Setting up your website and registering your company
- Product procurement
- Distributing and delivering the products
- Executing your marketing strategy/ customer acquisition
These costs will give you an idea of what it will take to run your business, and also inform your product pricing.
#8. Know Thy Resources
My question here is ” Do you have… 30 billion for the account o?“
If you’re reading this, you probably don’t. And even if you do, it’s still important for you to know your resources.
Resources fall into one of three categories:
(i) Time – How much time can you set apart in a week to work on your e-commerce business?
If you’re like me, you have a day job. Now with the day job, your hours are limited so you need to either find a way to run it while you’re not on your day job or find a way to make more time to run it.
If on the other hand, you already quit your day job, then you have more time to work on your e-commerce business.
(ii) Money– From #7, you already have an idea of how much it would cost in monetary terms to start your business. Now you just have to figure out if you have the money to do it all by yourself, or if you’ll need to get partners or investors or a loan, etcetera.
(iii)Human Resources– Forget the big English.
This basically means “Who do you need to start your e-commerce business?”
From marketers to suppliers, to people who do “run-arounds” for you, etcetera shmetcetera. You need to know who you need to start this business and what their roles and functions would be.
#9. Know Thy Unique Selling Proposition
What would be your winning difference?
What is that one thing that would set your e-commerce business apart from the rest in your niche?
What would you do for your target customers that your competitors are currently not doing?
After figuring out #1 to #8, you should have an idea of a way for your business to stand out in your niche.
The USP is very important because without it, your company would end up as just one of the many companies that don’t really turn a profit in their niche. E-commerce is very competitive, and as such, you need to find a strong competitive edge for your company.
These are all well and good, but it’s important not to do too much “senrenre”. Just make educated guesses on each of these 9 points and then go out and create a minimum viable business to test these guesses. Get feedback, and let your company evolve in line with customer feedback.
Now, get out there and build that e-commerce business you’ve always wanted to.
Keeping it 500,
Author: Tomi Joshua
Tomi is a case.
A bit brash, at first blush. But ultimately, he means well. There are very few things he won’t say or do in the presence of tolerant company (especially when it could make for a good story later).
Tomi is a Doctor, writer, certified inbound marketer (Shout Out to HubSpot), Digital Hustler, and online business addict.
He is most likely to be found dancing to the beat of his own drum, even in accapella.