Starting an eCommerce business is an excellent way to hone your entrepreneurship skills, create your own schedule, and learn about this incredibly fast-paced and high-growth industry. More people are turning to the Internet for all of their basic (and extra) needs, and that’s good news for enterprising, Internet-savvy sellers.
Running an eCommerce business means you get to set your own hours and scale your business at your own pace. However, that doesn’t mean it’s easy!
There are a few key considerations you’ll need to make when starting your own eCommerce business, from your sales strategy to buyer communications.
1) Choosing your platform
Did you know there are more than 200 eCommerce platforms? With so many platforms to choose from, it can be hard knowing how and where to host your online shop.
Should you create your own website on Shopify or WordPress? Should you join a marketplace like Amazon or Walmart? These are going to be the key decisions that set the course for your success.
Tip: Eventually, you should be selling multi-channel. That means being present and operating in multiple places, such as Amazon, Walmart, and your own Shopify store. The more you diversify, the more resilient your business will be when it comes to sudden surprises like an unexpected Amazon suspension.
When it comes to eCommerce, buyers judge you based on your website, marketing, delivery, and support. Before shoppers become buyers, they only see your website and marketing. There is no brick-and-mortar store they can go to.
That means you need to be on top of how you reach your customers, from integrating live chat into the website to making your “View Cart” button easy to find, your website must be build strategically to drive as many conversions as possible.
Benefits of D2C
Having your own website means you have full-control over the entire shopping experience, from content to UX.
When you own your website, you can capture emails for a direct line to your buyer base, showcase a promotion on the homepage or header, add abandoned cart pop-ups, and install heatmaps to see what products shoppers are most interested in.
From a marketing perspective, your website is a powerful, conversion-generating tool.
Your website will also be free from competitors and fully dedicated to your products, eliminating any risk of shoppers getting distracted by the prices or products of other brands.
Disadvantages of D2C
However, building a website entirely from scratch is a hefty undertaking. You will need the basics, such as product photography and listing descriptions. On top of that, you’ll also need a web designer, UX tester, developer, and likely a copywriter to get your pages set up and ranking on search.
If you’re a newer brand, you also risk a slow start. Whereas marketplaces bring their own shopper base, your brand or website might not. When you eliminate marketplaces completely, you tend to lose out on local and international visibility for you products.
Tip: If you have a fast-growing or large, engaged email list, it’s a good sign that you have a dedicated user base who will enjoy purchasing from your own branded website.
Some of the most popular eCommerce marketplaces include Amazon, Walmart, eBay, and Wish. These are platforms where various merchants list their items, creating a huge variety that in turn attracts shoppers.
Benefits of marketplaces
Selling on a marketplace is fairly simple compared to having to build your own website from the ground up. Marketplace requirements for sellers vary, but once you are set up and approved, all you need to do is create your listings and invest in marketplace ads to begin seeing some conversions.
With ready-to-use templates, support teams, and an active buyer base, an existing marketplace makes it easy for you to hit the ground running in just a few minutes.
Tip: Be sure to use their reports and analysis tools to find the best keywords to bid on, and follow listing optimization best practices for each marketplace for best results.
Marketplaces also extend your reach considerably, and in turn increases your potential sales. In September 2020, Amazon amassed over 2.4 billion visitors across both desktop and mobile.
Disadvantages of marketplaces
The biggest disadvantage of selling on a marketplace is the lack of control. Marketplaces can be notorious for strict rules and restrictions.
For example, many marketplaces disallow sellers from contacting buyers with marketing or promotional emails. They may also have restrictions on whether or not you can send free samples and asking for reviews and feedback.
Navigating the many rules as a new seller can be a tricky landmine, and sellers of all experience levels risk loss of income subject to whatever the marketplace decides. For example, if you get suspended from selling on a marketplace that made up all of your sales volume, and that marketplace deems their suspension valid and final, you lose income suddenly and with no recourse.
2) Organizing your supply chain
Taking a step back from the customer-facing website or marketplace listing, you need to determine where your products will come from. Do you make your SKUs yourself? Do you import them from another country? Do you whitelabel another brand? Do you have your own factory?
Having a reliable supply chain means having an organized supply chain with multiple safety nets. You should have more than one source for your items and updated communication with your suppliers to be able to forecast any shortages months out.
Having a reliable supply chain can make the difference between having a successful and failed eCommerce business. If your products are always out of stock, or your delivery times are always delayed, your store will get a bad reputation and will lose customers.
On the flip side, when your items are always reliably available, you introduce new SKUs for growth, your items arrive at their doors quickly and in good condition, and you don’t face any stocking issues, your one-time buyers are more likely to become loyal customers.
3) Set up payments and documents
Now lets talk about the legalities of setting up an eCommerce business.
Setting up any business in general comes with some hoops to jump through, so please consult a lawyer and accountant to ensure you get your documents in order.
Be sure to register your eCommerce business at the start of your business journey. Registering your eCommerce business as a legal entity will ensure that both your personal assets, and those of your business, are legally secure. Registering can also help protect you in the event any of your customers or competitors file legal action against you.
Other finances to take into consideration include product prices, shipping rates, and the cost of any platforms, tools, or services used to manage your business. How will you accept payments? What will your refund process look like? Make sure you can follow the money all the way from your customer to your bank account, and where it goes after.
You will also need to keep track of your business earnings and expenses. You can do this manually through the use of spreadsheets or by using accounting software. This will make it easier to track your sales performance, prepare your taxes, and claim eCommerce deductions.
4) Choosing the right fulfillment method
Order fulfillment is the process of storing inventory, picking and packing products, and shipping orders to customers. The order fulfillment process can be managed in-house or can be outsourced to a third party logistics provider.
When it comes to online shopping, consumer demands are high. When they want something, they want it now. 53% of online consumers said that speed of delivery is an important factor when shopping online. So whatever fulfillment method you choose, you should be able to offer fast delivery.
When sellers first start out, it can be common to store, pack, and send all orders out from home. This can be a cost-saving solution while your eCommerce business is still small.
However, manually packing orders and keeping stock levels updated can be a time-consuming task. As your sales and stock levels grow, you may want to consider moving to a larger warehouse or outsourcing inventory and fulfillment management.
Outsourcing your fulfillment means you partner with a fulfillment provide who can take care of getting your orders delivered for you. This can help ensure your eCommerce business is a well-oiled machine and stress-free operation.
For example, Deliverr is an end-to-end fulfillment solution that handles everything from order to door on a flat rate per SKU price. They help to ensure nationwide 2-day delivery, which you can use across your website and marketing materials to boost conversions.
Marketplace-specific and marketplace-owned fulfillment
Then there are your marketplace-specific and marketplace-owned fulfillment options, such as Fulfillment by Amazon and Walmart Fulfillment Solutions.
When you’re selling on a single marketplace, these can be attractive because you simply send all your inventory into the marketplace you’re selling on, then they handle the rest. This usually includes customer service, returns, and meeting certain fast shipping criteria.
However, don’t forget to build redundancy (the good kind) into your fulfillment processes. What happens when you want to sell on more than one channel, but the pricing and service level agreements are different? Or if you want to expand but your new channel doesn’t allow fulfillment by the other party?
If you send inventory into separate services, your entire process becomes fragmented and a ticking time bomb. For example, if you sell out on one marketplace and have too much stock in another you’ll have to pull out inventory and shift it around. I recommend getting a multi-channel fulfillment partner as a back up even if you use marketplace-specific fulfillment services.
Finally, you can dropship your items. When dropshipping, you handle the marketing of a product and generate orders, then have your supplier fulfill them. This eliminates the need to store inventory or handle fulfillment completely, as you’ll only need to worry about getting orders.
Dropshipping can be a great way to dip your toes into eCommerce and start generating a lucrative business with minimal effort and investment (no warehouses or fulfillment network needed), but be sure to find reliable suppliers or it’ll be your reputation that suffers.
5) Automating your post-purchase communications
Another thing to consider when starting your own eCommerce business is how to manage post-purchase communications. It is important that your customers receive automated transactional emails when they place an order with your online store.
The four key types of transactional emails are cart abandonment, order confirmation, shipping confirmation, and customer feedback emails.
Most email marketing providers, such as Mailchimp, can be connected with your eCommerce platform to allow you to send customers automatic transactional emails. eCommerce marketplaces like Amazon and Shopify, also offer transactional emails that are triggered by consumer activity. Sending customers post-purchase emails can improve your customer service and increase the customer lifetime value.
6) Planning your marketing strategy
If you really want your eCommerce business to succeed, you need to consider your marketing strategy. Where should you invest? A blog and SEO? Facebook ads? Google ads? An affiliate program?
When thinking about your marketing, look at your pre-purchase strategy (to get new customers) and customer retention strategy (to upsell or bring back returning customers).
If you’re selling on a marketplace, marketplace ads are usually the way to go to generate new business. When you have your own website, you can run ads on search engines and social, and boost your search rankings with SEO. You can partner with similarly aligned (non-competing) brands to share your audiences. You can sponsor an influencer or go onto forums to find people whose problems your items solve. There are hundreds of ways you can market your eCommerce store.
For returning customers, you’ve likely got a direct line of communication to them, like an email address or social media follow. So, you need to strike a balance between being present (reminding them to purchase from you) while being useful (providing value instead of annoying them).
Tip: Your marketing strategy should incorporate customer reviews to increase social proofing.