So, you are contemplating starting up your own e-commerce business, or have decided and are looking for a bit of guidance before you delve into it. You have probably heard that you can run an e-commerce business from home, make your own schedule, and avoid significant overhead costs. All of these things are true, but that does not mean that e-commerce ventures are inherently easier to run, or unnecessary to treat like other businesses. Here are a few things to keep in mind if you plan on launching in the near future.
Taking care of the logistics
The first item on your to-do list is to double check that no one else is using your business name. If someone is, or if theirs is too similar, you’ll need to find another option. Once you have selected a name you are proud of, register it and determine what kind of business structure you will have. You can be a sole proprietorship, an LLC, a partnership (if you have someone doing this with you), or a corporation. Each has their own entailments, so research which one is right for you.
Every e-commerce business needs a website, so set one up and secure your domain name. Avoid lengthy URLs with a series of letters, numbers, and symbols after it. You want something simple to read and easily shareable. Your enterprise hinges on your website, so put in the necessary effort to make it beautiful and navigable. There are pre-existing platforms you can utilize, or you can start from scratch if your operations will be more complicated.
Where will your products come from?
The biggest question of all is: where will you get your products? Will you make them yourself, or outsource to other companies? Shopify notes that the most common methods for obtaining products include making, manufacturing, wholesale, and dropshipping. If you run an Etsy store, for instance, you will probably produce your goods (such as handmade items) yourself and keep them in your home. This option is arguably the most time-consuming, but it may be necessary depending on your products, and you get to exercise complete creative freedom.
Much of this decision depends on how much time and effort you are willing to put into your merchandise and how much money you are capable of investing up front. If you purchase inventory without any guarantee that it will sell, you run the risk of losing funds. However, in cases like drop shipping, you never cross paths with products, so you can free up your time to focus on other things. Each method carries the potential for profits as well as risks.
Two local pizza joints, one in Washington and the other in Florida, are not in competition with each other despite sharing the same industry. However, when it comes to e-commerce, you can reach an entire world’s worth of people, so everyone selling similar products online competes with one another. The nature of your business model means that you have a significant amount of research to do if you want to stand out amongst the crowd.
Here are a few questions to ask about your competitors: who are they? Are you able to compete with them? What is the range of services or products that they sell? Who is their target audience? How profitable are they? How long have they been around? What is their marketing strategy? What do their customers think of them? Also pay attention to their size, if they are expanding, their revenues, pricing structures, and how you can distinguish yourself from them.
Keep yourself up-to-date with any rules that apply to e-commerce businesses. Make sure you are compliant with any dropshipper regulations if necessary and know what your taxes will look like throughout the year. There are proper ways to handle customers’ data, and different e-commerce platforms may have different guidelines, so familiarize yourself with all the laws you need to follow.
Marketing is essential
As an e-commerce business, you are more dependent on marketing than your brick-and-mortar counterparts. People will not find you while window shopping, so you need to have an extensive online presence. Leverage all the right social media platforms, devise an SEO strategy and provide consumers with incentives to buy from you. Many of these methods are free, but there are payable options if you decide to take advantage of them.
Running an e-commerce business enables you to reach a vast audience and avoid the costs associated with a physical space, but there are still aspects you need to take care of. What other things should people consider when starting an e-commerce venture?