Is ecommerce the right business move for you? It is if you’re looking for a lucrative opportunity to grow your income substantially. But it takes hard work, dedication, and the right knowledge to pull off.
As with any business decision, there are pros and cons to consider. So, it’s up to you to discern whether it’s right for you.
What Are the Pros and Cons of Starting an Ecommerce Business?
Here’s a look at the pros and cons of starting an e-commerce business:
Pros
- Make money from home
- No inventory to store
- Low startup cost
- Easy to set up
- Potential high profits
Cons
- High competition
- No control over stock
- Lack of brand recognition
- Risk of losing it all
Pros of Starting an Ecommerce Business
Make money from home: If you have a computer or smartphone with a decent internet connection, then you already own all the equipment needed to start and run an online store.
No inventory to store: If you choose dropshipping, the manufacturer produces and ships the products on your behalf). Meanwhile, with Fulfillment by Amazon (FBA), you can have your products shipped directly to an Amazon warehouse.
Low startup cost: Your initial costs are for a domain name like www.mystore.com and hosting service like Bluehost. Here’s a list of our top picks for hosting services.
Easy to set up: Setting up an online shop is easier thanks to platforms like Amazon, Etsy, and Shopify.
Flexible schedule: With e-commerce, there’s no set schedule or boss over you. As a business owner, you decide when, where, and how you work.
Potential high profits: Your income is no longer time-based. As you re-invest into your online business, you’ll sell more units, which means more revenue and profits.
Cons of Starting an Ecommerce Business
High competition: It’s easy to jump into online selling with all the user-friendly tools, low cost for inventory, and access to dropshipping providers. Now, there’s more competition than ever, but there are still opportunities to earn a decent living.
No control over stock: Keeping your store stocked is tricky when you rely on manufacturers. Sometimes, supplies run low or shipping demand increases, which can slow down your deliveries.
Lack of brand recognition: When you’re first starting out, you have to build your brand’s recognition. This can take time to achieve. With the right marketing and advertising strategies, you can speed up the pace.
Risk of losing it all: There is a possibility your product idea can tank. This is why careful market research and proper marketing are critical to your success.
How To Start Your E-Commerce Business
Are you thinking about jumpstarting your ecommerce business? Then follow these steps to get started.
Step 1: Research the Ecommerce Space and Find Your Niche
The first step in starting a successful online store is to research what’s already out there. Then, determine where there’s a demand you can meet. But where do you begin?
Start by choosing a niche — a great place to get ideas is Amazon’s product categories.
Scroll them to find three to five options. Some you may include are baby, clothes, or health and beauty. Then, within those niches, you can begin searching for trends to find a business idea.
Here’s where tools will become helpful. There are free ones like Google Trends that you can use to identify trends over time. It shows how often people search for specific keywords on Google over time. You’ll be able to see which terms are trending up or down. The goal is to find trends that have either been steady or increasing during the past 12 months.
For example, we searched “fidget spinners” in Google Trends from September 2020 to September 2021:
Step 2: Conduct Market Research to Learn About Your Customers and Competitors
You found one or more product ideas for your ecommerce business. Now, it’s time to see the competition. During this process, you’ll determine if it’s an industry you can break into and actually sell.
For instance, you don’t want to go head-to-head with a major brand. If there aren’t many smaller businesses with products in this space, then odds are it’s difficult to break into.
One way to find out is to type the keyword into Google and see who shows up on the first page. If there’s a variety of sellers, then this is good news. If it’s dominated by one or two major brands — not so good.
For example, a Google search for “printing paper” was dominated by leading brands like Amazon, Walmart, Staples, and Office Depot dominate the first page. It also features local search, which means you’d also have to compete with the local sellers from across the nation, not just in your area.
Validate that there’s demand and low competition. For example, look on Amazon to see the number of sellers and reviews, Alibaba to see sales. After determining it’s a viable product idea, it’s time to differentiate.
Step 3: Create Your Unique Value Proposition
If you’re serious about building a sustainable ecommerce business, then being generic won’t cut it. The key to driving sales is to offer something original. This is where your unique value proposition (UVP) will come into play.
A unique value proposition is essentially your answer to “Why would I buy from you?” Some are known for being cheaper (Walmart) or offering a large variety of options (Amazon). But racing to the bottom in price or overfilling your online store with too many products — most of which no one will buy — isn’t sustainable.
The best way to find your unique angle is to analyze the competition. See what they’re offering and, most importantly, what they aren’t offering. Maybe you can create a product with the missing pieces to make a better deal for buyers.
There are three key ways to make your product better than competitors:
- Bundles: Instead of selling just a baby bottle, turn it into a pack of three or include a wash brush and carrying case.
- Improve the quality: Search through the reviews on Amazon, Google, and social media sites to find out what buyers dislike about a product, then improve yours so it’s better.
- Add more/better features: Does a competitor have limited color options? Maybe they’re lacking the functionality people want? See if you can add it to yours to make yours better.
Step 4: Find a Supplier or Manufacturer for Your Product
Some say you shouldn’t try to reinvent the wheel, especially not with your first product. But if you find a way to improve an existing product, you’ll need to go through a similar process. This includes finding a designer to draw the dimensions and look, and then have a prototype created.
To do the latter, you’ll need a manufacturer that’s willing to create your unique design. Ideally, you want to find a supplier that already sells a similar option so that they don’t have to create a new mold or other expensive iterations.
Next, order a sample and test it out. Once you approve of the product, it’s time to order in bulk.
If you’re working with manufacturers on Alibaba, then make sure to find one with a gold star and remarkable reputation. This way, you can avoid ordering from a subpar supplier. There are horror stories of receiving a superior sample, then the actual products are horrendous. So, be sure to consider reputation above price.
Here are tips for working with manufacturers on Alibaba:
- Look for verified and gold suppliers
- Search for positive feedback (at least 90%)
- Look at the minimum order quantity (MOQ) and rate to ensure it’s within your price range
- Find affordable yet high-quality suppliers
- Ensure your instructions are clear as many manufacturers aren’t native English speakers
- Pay attention to response speed — less than 24 hours is good, but less than 8 hours even better
Step 5: Build Your Brand
A brand is more than a name and logo. It’s the first step to establishing yourself as a business. So, make sure you’re writing down ideas along the way. Once you have your name, see if it’s available as a domain on GoDaddy or a similar website.
From here, you can use a platform like Fiverr to find artists specializing in logo design. Embed your new logo onto your website, product, and packaging design. You can also find a package designer on Fiverr.
We saved this step for after you find a manufacturer to ensure that you don’t waste money on a brand for a product you can’t launch because no one can develop it.
Step 6: Set Up Shop
Now, it’s time to decide which ecommerce platform to use for your online store. Will you opt for Shopify? Maybe you want to sell on Amazon? What’s great about the former is that it comes with various templates to choose from — no designer or coding knowledge needed.
If you’re going with a single product, you won’t have to worry about creating a bunch of listings and product descriptions. Review competitor sites in your niche to get ideas on setting up your home and product pages.
Shopify also comes with necessary features that enable you to accept payments from credit cards and payment platforms like PayPal and Google Pay. Plus, you can sell on multiple marketplaces and even on social media.
Other ecommerce platforms to consider include:
The best to choose depends on your comfortability with web development. If you’re new, then opt for the platforms we listed since they’re beginner-friendly. If you want to work with a professional, then here’s our list of the best ecommerce website developers.
Step 7: Marketing Your Products
Now for the fun part — spreading the word about your new brand. Ideally, you want to start marketing your products before you launch. This way, on launch day, you have hundreds or even thousands of sales.
But don’t stress if it doesn’t turn out this way. Some see success build over time vs. in one day. So focus on generating buzz and traffic using:
- SEO: SEO is a strategy businesses use to get their web pages to the first page of Google and other search engines. It helps to increase traffic to your site.
- Search and social media ads: Using PPC ads is a paid method for getting more traffic to your website. This involves paying for keywords your target buyers use to search for your products.
- Influencer marketing: Find people in your niche with a semi-large following — 2,000 to 15,000 followers. Then, offer to collaborate — they promote your product in one or a series of posts for X amount of dollars.
Experiment, Reiterate, and Scale Your Ecommerce Business
Building an ecommerce business never ends — it requires constant experimentation to see what works. Reiterating to make improvements and see better results. By using this process, you can scale your online business to six or even seven figures.
But it all starts with following the above steps. Conduct thorough research, find your unique value proposition, and build your brand. The rest is up to effective digital marketing and advertising.