Beginners Guide to Starting an Ecommerce Business that Lasts

Kizzy D. Blount

These last few years, the eCommerce industry has been growing rapidly. In 2021, the number of online shoppers grew to 2.14 billion, registering a 4.4% jump from the previous year. These figures reveal that online transactions have become an essential part of the retail industry. 

The rising trend in the number of digital buyers shows considerable potential in the eCommerce business. Startups, small businesses, medium-sized ventures, and established brands, have been reaping the benefits of having an online retail presence. It has become a crucial component in their business strategies.

Taking the digital route has helped businesses:

  • Reduce their operating costs.
  • Reach a global market.
  • Promote and expand their brand quickly to boost sales. 
  • Implement a more personalized and effective marketing strategy.
  • Provide a more convenient way for shoppers to search for and buy their products.
  • Receive immediate feedback.
  • Operate 24/7, all year round.

You can also enjoy these benefits with your eCommerce venture. However, it doesn’t end with putting up an online store. You need to apply planning and marketing strategies to ensure its profitability. 

To help you get started with your transition to online retail, we’ve created a complete guide to help you build a profitable eCommerce business.

5 Approaches to Building a Profitable Online Business

1. Start with a good business plan

A business plan is a map that can guide you toward your goals. This vital management tool allows you to make strategic and data-driven decisions to help your business grow. If you’re starting a business, pitching to investors, or planning to transform your existing venture, writing a good business plan can help ensure you’re on the right track to reach your goals and succeed.  

How to do it:

A good business plan contains the following vital parts:

  • Executive Summary
  • Company Description
  • Description and Prices of Products or Services 
  • Market Analysis
  • Organizational Structure and Management
  • Customer Segmentation
  • Marketing Plan
  • Financial Projections
  • Operations and Logistics Plan

 Get inspiration from:

There are available online templates that you can use to write your business plan. However, it would be best to put your own spin on it. The following entrepreneurs shared their insights on how to create an effective business plan with Forbes Magazine.

  • “Substance is the heart of the business plan” 

– Shu Saito, founder of All Filters, Fact Retriever, and Godai Soaps

The founder of three dynamic businesses explained that your plan must have substance, a systematic plan to increase revenue, a marketable product, and a knowledge of the competition. 

Too many pages and a deluge of market analysis can distract from the essence of the business plan. Take note of how you can create cash flow before your money runs out. 

  • “A comprehensive plan will help you make sure that you are clear on the selling points and the go-to-market strategy for your company.” 

– Cooper Harris, CEO of the tech company, Klickly

There is no guarantee that your eCommerce business will be free from problems. However, knowing what makes your products and services great can help you sharpen your focus and solve potential issues.

2. Practice strategic capital allocation

When you start an online business, you can avoid costs related to brick-and-mortar stores such as property insurance, rent, and furniture. It may be easy to fund an online shop with a tight budget, but you still need to allocate them strategically to ensure maximum profits.

How to do it:

Here are the following expenses you need to prepare for when your business goes digital.

You may start your business on a free, open-source platform, but you still need to pay for hosting, developer fees, and add-ons to make your site more user-friendly. There are all-inclusive solutions, from basic ones at $16 per month to advanced options at $300 per month. 

If your eCommerce platform does not include a domain name, expect to pay between $1 to $15 for one year. As for the hosting, prepare at least $30 every month.

If your platform does not include a payment processing feature, you will need to work with a third-party processor. Fees usually go at 2.9% and $0.30 per transaction at your shop.

  • Business permits and licenses

The cost of permits and licenses depends on the products you will be selling, your entity type, and the location of your business. It would be a wise move to allocate $50-$100 from your capital to fulfill this requirement.

As a rule of thumb, it would be best to allocate around 6-7% of your gross revenue for marketing. You may want to try free marketing solutions such as social media marketing to promote your product when you’re just starting. Once you get an idea of what is best for your business, you could spend on Facebook ads and other paid advertising options. 

  • Inventory and shipping expenses

One of the significant allocations in your initial investment is your product inventory. You have to be careful in purchasing the items you want to sell. Make sure you have an understanding of what the market wants. 

Determine if your budget can cover the shipping cost to your customers. If it cannot, remember to factor this in the cost of goods and warehousing and packaging expenses. 

Get inspiration from:

“If you don’t keep track of your finances, you’re likely to struggle and make rash decisions.” – Blair Williams, creator of MemberPress

Williams encourages business owners to have a concrete plan to track how and where they spend their money. This should help identify if these expenses are bringing in revenue. Businesses have a lot of transactions, but knowing where the money goes can help you cut down on unnecessary expenses. 

3. Practice Ecommerce Personalization

Ecommerce personalization refers to creating tailored experiences for your online shoppers. These personalized interactions are based on browsing behavior, your customer’s purchase history, language, personal information, and geographic location. 

How to do it:

  • Create campaigns based on location

This strategy is the most helpful if you have a brick-and-mortar store and want to drive foot traffic. You can include relatable messaging that revolves around the location. You can also use 

familiar regional celebrations to boost attendance at your events. 

  • Upsell, Downsell, and Cross-sell

You may use your customer’s unique purchasing behavior to apply the following strategies before, during, or immediately after check-out.

Upsell: Try to suggest products that cost more than what your customers have purchased before or those they currently have in their cart.

Downsell: This is the opposite of upselling, wherein you offer products that cost less than the ones they purchased or those that they have in their carts.

Cross-sell: Offer products related to what your customer has clicked or those that they have purchased before: 

  • Use your customer’s purchasing behavior when designing offers

 Understand how your customers shop on your eCommerce site by checking on the following:

  • High-converting and popular pages and posts
  • Customer purchase and browsing history
  • The time of the day when most of your customers shop
  • The medium they use to interact with your site (mobile or desktop)

You may use the data you have gathered to create offers that encourage them to engage and purchase.

Get inspiration from: 

Shoeline, an online shoe store for men, women, and kids

When customers sign into their Shoeline account, they can easily access the products they have viewed and bought in the past. While this feature is available on other eCommerce sites, Shoeline differentiated itself by placing the tabs strategically on the purchase page. 

4. Develop a niche-focused audience

A micro-focused audience refers to a more extensive market segment defined by its unique preferences, needs, and identity. For example, the market for pastries can still be categorized into various niches, such as vegan, sugar-free, gluten-free, and many others.  

How to do it:

  • Define your niche based on the following:
  • Price (discount, moderate, luxury)
  • Level of quality (handmade, economical, premium)
  • Demographics ( income level, age, gender)
  • Geographics ( residents of a specific community or country)
  • Psychographics (interests, attitudes, values)
  • Analyze your products by asking the following questions:
  • Who are the products for?
  • Why is it for them?
  • What qualities about the product will make them happy?
  • Find out where you can access your customers on the internet.

Now that you have defined your niche audience, you can find out where they usually hang out on the web. For example, Millennials’ go-to resource for researching products they want to buy is Google, so focus your marketing efforts on Google ads and SEO. 

Get inspiration from:

Only Natural Pet, an online shop for organic pet products

The pet industry is a multimillion-dollar business that can still be divided into several niches. A great example is Only Natural Pet since it focuses on selling only organic pet hygiene products, food, toys, and outdoor gear. 

5. Outsource time-consuming tasks

Let’s face it, multitasking can do more harm than good, especially in managing an online store. You can outsource some tasks to effectively and quickly scale your eCommerce business. 

Outsourcing is when you employ the services of a third party to produce goods or perform business processes. 

How to do it?

Analyze which of the following tasks are beyond your skills but within your budget and start outsourcing them:

  • Design (product, packaging, graphics)
  • Administrative tasks (data entry, email support, calendar management, customer service)
  • Accounting (bookkeeping, tax filing, and payroll)
  • Digital Marketing (social media management, SEO, content creation)
  • Writing (blogs, press releases, copies)
  • Research (market research, competitor analysis, consumer behavior)

Get inspiration from: 

Tamara Schumer, owner of Budget Blinds of Arlington and Alexandria

Tamara runs a home-based window treatment business. In an interview, she revealed she got so stressed doing everything on her own – scheduling, following up on orders and sales, and customer service. She decided to hire virtual assistants to help her manage some administrative tasks. This decision proved to be a relief for her and allowed her to focus on revenue generation. 

Gear Up for Ecommerce Success

Ecommerce may be a massive industry, but there’s always space for a new creative venture like yours. There are billions of people worldwide ready to purchase a product or service that answers their needs. To summarize the tips above: 

  • A good business plan serves as the roadmap to guide you in your marketing, sales, and product development efforts. 
  • Your capital allocation plays a pivotal role in ensuring your business’s profitability. Any entrepreneur can attest that raising funds to start a business is not easy. So, allocating your money to activities that generate revenue is the right move.
  • Going digital to focus on your niche market and provide them with a personalized experience is worth checking out. When you zero in on a smaller market segment, it would be easier to offer your customers interactions suited to their needs and preferences.
  • Do not be afraid to loosen the reigns on some tasks. It is a great idea to outsource business processes, especially those not within your scope of expertise. It will leave more room for you to focus on bringing your business to the next level. 

The future of the eCommerce industry is bright given all the solutions within an entrepreneur’s reach. More and more people are turning to the internet for their daily transactions. Now is the time to head on to the drawing board and start creating that online shop you’ve always wanted. 

___

Outsource Access is the brainchild of Brad and Jaycel with the ultimate goal to help entrepreneurial businesses realize their potential. Jaycel now leads 300 employees as the Chief Operating Officer for Outsource Access. She is responsible for achieving the company goals.

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