eCommerce Merchants: A Formula For Success $$$$
With job security and financial independence on their minds, many people are looking at starting an eCommerce business in 2021. This is not surprising given that eCommerce is a trillion-dollar market that is growing exponentially with no end in sight.
However, many who are considering starting up their own online business operate under the mistaken impression that they need a large investment to get going. While having plenty of money at the start helps, many million dollar-plus eCommerce businesses started with next to nothing in terms of funds.
What follows is a four-step plan that will help you get started, find your path, and maximize your potential for running a successful eCommerce business by next year.
Choose the Right Niche
There is an old saying in sales, do not sell a product, find a product that sells. For you, this means doing the research to find a product or niche that is in demand. Identifying the demand is 90% of the work involved in creating a successful eCommerce business. So, here are a few tips that will help you focus your research.
- Look around and see what people want
- Find a problem that needs to be solved
- Track trends on search engines and social media
- Examine popular products on eBay or Amazon
Just by doing those four things, you should be able to find plenty of products to get you started. To help narrow the list, here are a few tips.
- Product Price: Is it a price attractive to consumers?
- Margin of Profit: Will you make enough money to be worth the effort?
- Ease of Shipping: How much expense is involved in shipping?
- Long Term or Short-Term Trend?
The final point is most important as you do not want to be stuck with a product that is out of fashion after a short time. Once you have narrowed the selection to a product or niche that meets all the requirements, you are ready to set up your eCommerce business.
Create the Right Model for Your Business
It’s all about how you acquire the product and its availability. In general, it is better if you are on a tight budget to meet an existing demand rather that attempting to create a new one. Once that is in place, you can choose from four basic eCommerce business models
- Online Store
Each model has both benefits and challenges that you will need to address to be successful.
Concerns For eCommerce Merchants:
The Inventory model is best suited for entrepreneurs who have unique products and can house a large inventory of items. This maximizes the profit potential, but you will need plenty of money up front to invest in stock, supply chain management, and hire people to oversee the process.
For the Marketplace model, you set up a website that allows third parties to sell their products. You make money by charging commissions for all sales on your site. The profit potential is considerable since you can recruit as many third parties as you want. Plus, you do not have to sell, manage, or stock any products on your own.
However, you will need to purchase expensive marketing software. Plus, hire a team to manage the site and work with the third parties to ensure a smooth process. If you have significant money to invest, but do not have any product ideas of your own, then the Marketplace model may work best for you.
Drop-shipping lets you obtain products directly from the manufacturers. You make the sale, earn a commission, and the manufacturer handles the inventory and shipping. This allows you to create significant profits without the expense of handling or shipping the products.
The downside is that the profit margin is considerably less compared to the Inventory or Marketplace models. Plus, you have no control over the quality of the items you sell. The competition is also greater which makes it more difficult to stand out from the crowd.
Running an Online Store is one of the most popular options if only because it requires little in the way of upfront investment. You can join sites such as eBay, Alibaba, Etsy, or Amazon and have a storefront provided for you. They do all the work in terms of handling and shipping the products while you earn a commission.
But this is not really an eCommerce business as you are limited by what the parent site allows you to do. Instead, you are just another seller on their platform.
Creating an eCommerce Business Platform
The eCommerce solution offers three basic platforms for you to start an online business.
- Open-Source Platform
- Turnkey Solution
A popular alternative to the Online Store option is creating an independent platform on sits such as on BigCommerce, Shopify, or Squarespace. You can sign up for their plan, but unlike Amazon your ready-made storefront has its own domain name. Plus, you do not have to follow strict marketplace rules. You have a large degree of independence while not having to invest much at the beginning. Called the Software as a Service model, you have considerable flexibility. However, to get the more desirable features, you will have to upgrade as your store grows. This may become expensive as the higher-grade plans run into the hundreds of dollars each month.
If you want a more budget-friendly solution, then an open-source eCommerce platform may be the answer. PrestaShop, WooCommerce, and Open Cart have free store builders you can create with just the source code. They are limited in terms of functionality and running the site will be a complex affair. You may want to hire a technical expert to ensure security and function of your site.
Remember that you will need to be approved to accept payments, you may consider High Risk Merchant Account LLC for an eCommerce Merchant Account to configure your website shopping cart to your payment gateway to conduct transactions for payments.
The Turnkey Solution offers a compromise between the Online Store and SaaS models, with the biggest advantage being the customization that this solution provides. You can have the software shape the store to your needs without having extensive knowledge of software, but it will cost you more money to get started.
For 2021, starting your eCommerce business will depend on choosing the right model that fits your budget while allowing for maximum growth potential in your niche.