In the pre-digital era, launching a business required considerable resources and often connections to secure outside funding. However, the game has changed with the explosive growth of e-commerce and online businesses. In the last few years alone, e-commerce sales have surged by over 50%, accounting for 13.2% of all retail sales in the U.S.
The shift towards e-commerce and online businesses has democratized entrepreneurship, enabling anyone to start and grow their venture, regardless of background or experience. However, while the barrier to entry has been lowered, it still exists. Aspiring business owners need to develop a solid product concept, establish a strategy for sourcing or manufacturing, and implement an effective sales plan to succeed in the competitive online marketplace.
Why Starting an Online Business Can Be Beneficial: Top Reasons
Are you pondering why launching an online business is better than going for a brick-and-mortar one? The answer lies in the numerous benefits an online business offers, such as:
Low Startup Costs: Starting an Online Business on a Budget
Starting a business can be daunting for many due to the substantial investment required to kickstart it. Expenses such as leasing a location, procuring inventory, and managing employee salaries can increase quickly. Furthermore, the financial repercussions can be devastating in the event of a business failure.
To start an online business, you only require the following items:
- Domain name
- Website Builder
To put it differently, commencing an online business with a starting capital of $100 is achievable. There is no need to risk your entire life savings to establish yourself as a prosperous online entrepreneur.
Potential for Significant Growth
If you have a brick-and-mortar business, you must navigate the physical world's limitations, including real estate expenses and regional demand. However, running an online business eliminates these constraints. You can reach customers worldwide, and each year your potential customer base expands as more people become comfortable with online shopping.
It is estimated that e-commerce will account for nearly 25% of global retail sales by 2025. The worldwide internet population is also expected to reach 5.6 billion by the same year. This growth in online users provides a substantial opportunity for your brand to gain more exposure – especially if you're open to expanding your business internationally.
Online businesses have another edge over brick-and-mortar ones in that they can operate 24/7, irrespective of lock downs or other disturbances.
Once your website is up and running, you're always open for business, and customers can place orders anytime.
You don't need to be physically present to close a sale, so your business can generate revenue with less daily involvement.
Identifying Your Niche and Business Concept
A business niche is your business's focus area – a market segment and target audience that you cater to primarily. This could be anyone ranging from sports enthusiasts and hobbyists to professionals.
To identify the right target audience for your business, make sure that they:
- Have a problem that no one else is solving
- Are willing to pay for a solution to that problem
- Have enough discretionary income to afford the solution
After identifying your niche, contemplate the subsequent steps to develop your business concept:
Initiate an E-commerce Store
E-commerce has existed for nearly four decades, but there has never been a better time to launch an online store. As per “The Future of Retail 2019” report, 32% of U.S. consumers now receive one or more Amazon packages weekly, while 10% receive three or more Amazon packages weekly.
Once you've decided on your niche, you can select an e-commerce platform, set up your online store, and drive traffic. If you choose to self-host, you can choose a dedicated service. Alternatively, you can start selling on online marketplaces like Amazon, eBay, and Etsy.
Venture into Dropshipping
Dropshipping is an e-commerce fulfillment technique that enables you to market tangible products without needing to maintain inventory.
This is the process of how affiliate marketing operates:
- Register for an affiliate program.
- Choose a product owned by someone else to advertise to your followers. This can be either digital or physical goods.
- Receive a commission for each sale completed through your referral link.
To market affiliate products on your blog, develop SEO or social media content that centers on relevant keywords, then optimize it to generate organic traffic from Google. Alternatively, you can promote affiliate products to your email list subscribers by allowing your affiliate partners to host webinars for your audience.
Affiliate marketing has a minimal upfront cost, requiring only payment for a domain name, web hosting, and email marketing software.
Providing Web Design Solutions
To begin attracting clients, build a portfolio website. You can acquire fundamental web development and design knowledge through e-learning platforms and personal experimentation.
Alternatively, you can join a freelance marketplace such as Upwork or 99Designs. Freelancing may present certain obstacles. While it offers location independence and flexibility, it also initially entails less predictable income and financial stability.
Regardless of your choice, once you possess web design expertise, you can branch out into developing and selling your products, mitigating financial instability and gaining greater autonomy.
Craft an exceptional blog
If you possess a writing talent, blogging is a potential online business concept to explore. Although keeping a blog does not constitute a business model on its own, it enables you to cultivate an audience. Once you have an audience, you can market your goods or services, endorse affiliate products, execute sponsored campaigns with brands, and more. This allows you to acquire passive income while working on additional business initiatives.
Perform Product Research
During the process of product research, you should assess the following main product categories:
Physical goods refer to tangible items requiring production, warehousing, and customer delivery.
While vending physical goods can be profitable, the profit margins may be slim if operational expenses are not effectively managed.
Electronic products encompass any products a customer can download to their device, such as eBooks, audio courses, podcasts, online courses, and more.
Digital products generally possess more significant profit margins than physical goods. Nevertheless, determining their price can be challenging since they are frequently deemed less valuable than physical products.
Nearly all remote services can be sold online. Vending services are one of the quickest methods to launch an online business and generate income.
However, it is essential to remember that selling services entail selling your time.
This suggests that your earning capacity is restricted because you have a fixed number of hours available each day.
Conducting Market Research
Market research is a crucial step in starting an online business as it helps to assess the depth, competition, and profitability of the chosen business vertical.
Launching a product or service that no one is interested in purchasing is not ideal. You can gain valuable insights into your target audience's wants, needs, and pain points by conducting thorough online market research.
Analyze the Search Engine Results Pages (SERPs)
To gain insights into your competition and plan a preliminary SEO and digital marketing strategy, search for variations of your product or service keywords and analyze the search engine result pages (SERPs).
Examine the type of content currently ranking on the first page and identify the businesses paying to advertise on top of organic search results. This research will provide valuable information about your target audience's preferences and the competitive landscape in your industry.
Conduct Competitor Research
To gain an edge in the market, it's essential to thoroughly research your main competitors beyond just examining SERPs. It would help if you also investigated your niche's most prominent business ventures, their revenue, and their strengths and weaknesses.
By doing so, you can identify areas where you can differentiate your business and gain a competitive advantage.
Monitor Top-Performing Keywords
Monitoring niche-relevant keywords is a great way to analyze how the demand for different products changes in your niche and what content ranks best. There are several quality tools available to help you with this, including:
Identifying Your Target Audience
Understanding your target audience and their desires is crucial in building a successful business. With this knowledge, you can tailor your sales approach and grow your brand. By combining different insights, you can better understand your ideal buyer's needs, preferences, and purchasing behaviors.
To gain insight into the needs and preferences of your target audience, be sure to conduct research on the following:
Essential socioeconomic characteristics and templates such as are included in demographic data:
- Job title.
Psychographic data encompasses a range of psychological characteristics, including:
Finding Products to Sell Online
When looking for products to sell online, ensuring they meet high-quality standards is crucial. Selling low-quality products might lead to a spike in sales in the short term, but it will ultimately harm the business in the long run.
To source products effectively, consider the following strategies:
Creating Your Own Products
Making your own products can be relatively easy if you plan to sell digital products. However, if you want to manufacture physical products, it involves hard work in design, material selection, and interactions. Additionally, the financial costs are higher.
Nevertheless, manufacturing your products can give you an advantage over the competition in terms of quality, product range, and branding capability.
Finding a Dropshipping Partner
Discovering a manufacturer that provides dropshipping services can be profitable. This is accurate since numerous small business owners negotiate dropshipping contracts with overseas manufacturers to reduce business expenses.
Partnering with a Wholesaler for Your Online Business
By working with a wholesaler, you can access various products to feature in your online store. Some wholesalers also offer a distribution plan to help get your products to your customers.
Assessing the Feasibility of a Product
Before investing in a large product order, it's important to evaluate its viability comprehensively. Here are some questions to consider:
- Is there a successful online business already selling products like that?
- Is the demand for this product sustainable? Or is it temporary?
- Does the math behind this product make sense? Can you sell it at a profit?
Remember that a product's success is not solely based on how innovative or exciting it appears. The crucial aspect is that it must be feasible from a business standpoint.
Creating Your Brand Identity
Your brand represents the fundamental character of your business. It is crucial that every aspect of your business, ranging from your company name, website design, and content, conveys a uniform visual and conceptual image.
This principle should also apply to your external presence, including social media, email newsletters, and packaging.
As you develop your brand identity, it is essential to focus on the following aspects:
- Color scheme.
- Landing pages.
- Page layouts.
- Graphics and photos.
The culmination of these elements should result in a cohesive brand image for your business.
Discover the Essentials of Laws Governing Online Businesses
Small business owners who run online businesses may mistakenly believe that conventional business laws do not pertain to them. However, this assumption needs to be revised.
Although an online business may require fewer licenses and permits than a physical establishment, various crucial legal considerations must be addressed. These include:
- What kind of business license do you need to start operations?
- What legal structure makes the most sense — a sole proprietorship, limited liability company, or corporation?
- Are there any permits that you need to obtain?
- Are there any inspections that you need to pass?
- Do you need a sales tax license?
- Are there any specific regulations applicable to online businesses only?
- What are the laws regarding hiring contractors and hiring employees?
Verifying information with local authorities is essential as each state and country has its laws.
Additionally, consider expanding your knowledge of laws and regulations that pertain to e-commerce companies.
Start Your E-commerce Website
Once you have completed a substantial amount of preparation, it's time to gear up for the launch of your website. To pave the way for your website's success and sustainability, take into account the subsequent steps:
Select Your E-commerce Platform
The e-commerce platform serves as the technical infrastructure for conducting online sales. This software offers comprehensive features, including product catalog and payment processing.
Listed below are some of the most widely used alternatives:
- Adobe Commerce (Magento).
- Salesforce Commerce Cloud (Demandware).
Ensure to choose a platform that offers all the required functionalities at a cost that fits your budget.
Add your products
After finalizing the platform and store theme, add products to your catalog. While doing so, be mindful of the following:
- Product images: Include high-quality photos that showcase the product from various perspectives. Refer to this e-commerce photography guide for further guidance.
- Product descriptions: Emphasize the benefits that the customer will receive rather than just listing the features. Follow this guide for a quick formula to write compelling product descriptions.
Decide on Your Shipping Method
The provision of prompt and complimentary shipping is a topmost motivator for online purchases and can considerably impact your sales' magnitude and quality.
Make certain that your customers receive their products without any delay. It's advisable to have multiple shipping methods at your disposal, such as:
- In-store pickup.
- LTL freight carriers.
- Same-day or next-day delivery.
- Free shipping.
Ensure Proper Functionality
Ultimately, after launching your e-commerce store, thoroughly test all the components. Confirm that:
- All pages are visually appealing and adequately displayed on desktops, tablets, and mobile devices.
- The website performs seamlessly on different browsers, including Chrome, Firefox, Safari, and Microsoft Edge.
- All buttons are functional and linked to the correct applications.
If you have the means, it can be advantageous to engage the services of a QA specialist to perform site tests and provide feedback on the results.
Expand Your Business
After completing the setup, the next step is to direct traffic toward your e-commerce store. Give priority to the following channels:
- Paid ads: Set aside a budget for pay-per-click (PPC) ads on social media platforms and search results, as it is one of the quickest ways to improve brand recognition for a new store.
- Influencer marketing: Establish partnerships with social media influencers to generate product testimonials and promote your products.
- Social media marketing: Build your audience on social media platforms like LinkedIn, Instagram, and Facebook to drive organic traffic and complement paid campaigns.
- Search engine optimization (SEO): Ensure all website pages are optimized for SEO and create a content marketing strategy for written content.
- Email marketing: Build an email list by collecting the email addresses of visitors to your e-commerce site. This way, you can promote your products to your email subscribers.
Embarking on an online business journey does not have to be daunting.
To simplify the process, break it down into steps. Although the research, development, and website launch process may be intricate, it does not have to be complicated.
By following this guide and utilizing useful analytics, you can establish a thriving online business and get it up and running quickly.
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