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So You Want to Start an Online Business?It’s easier than ever before to get an e-commerce business started. It’s also more complicated than ever to manage a successful e-commerce business. The following article explains how you can get started selling online, and keep generating sales month after month. Paul Lundy
Things Have Changed The good news is the costs associated
with starting an online business today are a fraction of what they were
several years ago. Even with technology improving exponentially,
overall technology costs have decreased considerably. No longer do you
need to have IT experts on staff and invest in expensive servers and
software licenses. The rise of software as a service (SaaS) companies
means you can access all the ecommerce software
you need over the Internet, without investing in a single piece of
hardware. This is certainly the most cost effective way to start and
grow an online business and the approach I would recommend to anyone
just starting out in online sales. Online shopping behavior has
changed as well and it is important you understand this behavior before
you create your plan and determine what type of technology is best for
you. Today’s online buyer begins the shopping process one of four ways.
They go to a marketplace like eBay, Amazon or Overstock; they begin
shopping at a search engine like Google or Yahoo!, they may go to
shopping comparison sites like Shopping.com or Shopzilla or they go
directly to a Web store if they know the URL address. The bottom line
is if you are not sending your product listings to each of these
channels you are missing valuable eyeballs and potential sales.
Recognizing this behavior and providing an e-commerce engine that
automatically places product listings in each of these channels is the
primary value proposition of Marketworks. Plan for Success Likeany business venture, before you invest a dime, invest a little time
and craft a business plan. Business plans come in all shapes and sizes.
I’ve worked in Fortune 500 companies where the business planning
process was a four-month ordeal, consumed hundreds of people-hours and
a small forest worth of paper. With the exception of a few key pages,
the plan generally sat on the bookshelf in a great looking three-ring
binder and was never opened after the initial presentation.
The
budget will drive most of your initial decisions, and this is a good
thing. Think like a true entrepreneur and determine how you can launch
your business in the most cost effective way. Be sure to keep in mind
that most business ventures take longer to get started than originally
planned and require twice the money. Understand the levers you have to
increase/decrease spending based on key milestones and market
conditions you are tracking. A good plan is only as good as your
capabilities to execute. You need to take an honest inventory of your
capabilities and knowledge of the market you will serve and the
requirements your business will demand from you and your team. Product Sourcing Assuming
you will be selling a product rather than a service, sourcing becomes
one of the most important factors in determining success. You’ve heard
it a thousand times before and it is true, your margins, your profit
and ultimately your success will be greatly influenced by product costs. I
have worked with hundreds of small businesses over the years and those
that have a number of product sources and a number of product lines are
in a much better position to weather the ups and downs of constantly
changing market conditions. Unfortunately, I have seen a number of
businesses fail as a result of their sole supplier changing pricing or
eliminating a vendor relationship. Strongly consider working with
several producers for your product and establishing off-shore supplier
relations. There are literally thousands of Asian manufacturers looking
for Building a Web Store When you are building your online business, one component of it will most likely be an ecommerce storefront.
When shoppers come to your Web store they will want to see a superior
selection of merchandise that is displayed attractively and priced
competitively. Many times shoppers may not find exactly what they are
searching for but will buy a similar item, which means it is important
to have a wide selection of merchandise available in your Web store. The Guts of Your Store – Evaluating Technology Solutions Too
many people make the mistake of thinking that selling online simply
means developing a Web store. Whatever you do, don’t get sucked into
the trap of having an in-law, a neighbor or a friend of a friend build
your Web store. It seldom works and in most cases you end up
over-spending for an inferior product. Consequently, the e-commerce
landscape is littered with failed Web stores that buyers never found. Helping Customers Beat a Path to Your Store Marketing
your products can become very complex so my advice is to start simple
and build from there. Depending on your product, I generally recommend
starting your online business on eBay. Despite the eBay price increases
over the last several years it remains a highly cost-effective sales
channel. You pay a fee to list products on the site and a fee when your
product sells. Depending on your average sales price and
conversion rate, you can generally expect to pay eight to 15 percent of
your total sales to eBay services.
Best of all, eBay does all the marketing for you. In fact, eBay spends
millions of dollars each month to drive buyers searching for products
of all types to the site. Just go to any major search engine, type in a
product and I’ll bet you’ll find some links to eBay product listings. Next,
I would experiment with search engines and shopping comparison
channels. This can get expensive and needs to be closely monitored to
see exactly what key words are driving traffic and ultimately
conversion in your Web store. Today, approximately 34 percent of all
online shoppers begin their product search on a major search engine. To
take advantage of this trend you will need to develop a list of key
words well suited to your products. The trick here is to get very
specific so purchasing these keywords doesn’t get too costly. For
example, if you sell golf clubs, purchasing the word “driver” or
“putter” can get very expensive as these are extremely general terms
and you’ll quickly find thousands of sellers are competing for them.
Instead, look at the various skews in your inventory and get as
specific as possible like “left-handed Never Compromise blade putter”
or “Taylor Made, left-handed, graphite shaft, 10 degree R7 driver.”
Also, make sure the URL from these keywords links directly to the
corresponding product page on your Web site. Don’t make the buyer
search your site for the product they came to buy; send them directly
to that product. However, don’t start investing in an expensive
AdWords program unless you have the tools in place to track
performance. It is imperative that you understand what terms are
driving the most traffic, what the click through rate is by keyword and
ultimately how your keywords are converting to a sale. Google offers
Google Analytics for free to track your Google AdWords effectiveness
and I strongly recommend this tool. An effective pay-per-click campaign
requires constant monitoring and tweaking to drive click thru costs
down and conversion rates up. As if this weren’t enough
information to consider in developing your marketing strategy, you also
need to have an effective search engine marketing strategy that
includes pay-per-click advertising, online advertising (such as banner
ads), organic search engine optimization, and the use of shopping
comparison sites. Unless you already have experience working in these
areas, I would suggest that you enlist the help of an independent
search engine marketing resource like Atlanta-based NeboWeb or a multi-channel e-commerce expert like Marketworks.
You can also learn a lot about search engine marketing from resources
like Google and Yahoo!. A simple search for “SEO” in most search
engines can get you started in the right direction. Customer Care and Logistics Often
overlooked, these are very important aspects of the consumer buying
experience and thus must be prioritized in your business. Failure to
execute on these has the potential to damage your business and alienate
a prospective buyer. Customers are too difficult and expensive to
acquire to lose for some stupid reason. Be sure to clearly state in
your eBay or Amazon listings and on your Web store your business
policies so the customer knows exactly what to expect. This can also
protect you down the road in case you are faced with a dispute. State
precisely how to contact you, your policy on returned items or customer
satisfaction guarantees and your payment and shipping policies. Also
make sure you ship orders promptly and accurately. Failure to ship in a
timely fashion will result in increased customer inquiries and will
drive-up operational costs. Same day shipping on orders received before
a certain time of day is very compelling for buyers and is a great way
to establish your organization as a reputable seller. It’s
really up to you how sophisticated you’d like your e-commerce operation
to be on day one. For many, simply selling products through the
e-commerce channels provided through eBay, Yahoo! and Amazon.com is a
good proving ground. You can always evolve out of individual
marketplaces as you begin to increase sales and the size of your
customer base. For more aggressive entrepreneurs, a multi-channel
e-commerce partner like Marketworks can help you develop your strategy
and provide you with comprehensive do-it-yourself offerings or
full-service (outsourced) e-commerce services.
In other words, we can do all the work for you, or show you how it is
done and empower you with all the technology and resources you need to
be successful. Either way, there are endless opportunities for entrepreneurs in today’s digital world. I hope you decide to pursue your dreams of doing your own thing by starting an online business. Please contact one of our e-commerce experts if you’d like additional information on starting your online business. We’ve helped thousands of people like you find success selling online. |
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