Tips on Starting an Ecommerce Business

Are you planning a business on the web? I started my first web based business in 1997. I’ve learned a lot since then, and even given webinars on how it’s done, so you’ll find this hub useful.

Like many women who decide to start a web based business, I’d just had a baby and had had enough of working for other people. It wasn’t just that I wanted to be with my new daughter, becoming a mom gave me a completely different set of priorities. I went back to work when she was around six months old, but every time I went to a meeting to be told how x, y or z was vital, crucial or essential, I couldn’t take it seriously. Life and death are important issues, but software deadlines? My job seemed trivial and superficial, so I decided to work for myself, something the world wide web made possible.

Since then I’ve run several online businesses, some were successful, others, not. I learned a lot from both, if you’d like to learn from my mistakes, here are my tips on starting your own E-Commerce business.

Many women start web based businesses as a way to make money while staying at home with their children. I did the same thing, but don’t be fooled. Life can be harder as a result. If your aim is to make extra money for the household then you are working at a money making hobby, not a business. If you aim to start small and grow to the point where you can afford to hire others, then you are a business. Decide which at the start and prioritise accordingly.

This doesn’t have to be complicated, or filled with financial tables, but you do need a plan. Some say it shouldn’t go beyond one page, and that’s a great place to start, but you need to research your product and your competition. Put the results on paper and make that the start of your plan. I use Busines Plan Pro form Palo Alto Software. It’s a great tool and has a number of templates specific to certain types of business. If you don’t want to go that far, then try the One Page Business Plan, a book available on Amazon.

Don't forget to add to your plan and change it as you go. If you are successful, you may need finance in the future, and good updated plan will help you get it.

A business plan is designed to help you act. Use it as such. Many people use the creation of a business plan as a excuse. They’ll get started as soon as the plan is done. Don’t let this happen to you. The plan is worthless without action.

Every business is a team. There will be come parts of the business you know little about or can't do. Consider getting help. To begin with you can hire contractors. It's amazing what you can get done on Fiverr.com, or elance.com, it may not cost as much as you think.

My fashion business seemed about to fail at the start when we tried to photograph our product, but the results were far from professional. We asked around and found a recently qualified photographer who wanted to expand his portfolio. Models can also be hired for relatively small sums if you allow them to use the pictures. You can see one of the results below.

Don’t get carried away with the need for logos and color schemes. They can be expensive. Conserve your money and your energy and concentrate on bringing in some revenue before you go mad on branding. If you need business cards, get some simple but effective cards from vistaprint.

I'm often surprised by the number of people who sort out every aspect of their business except packaging and shipping.

If you supply physical products this is crucial. Will you charge your customers full price or a flat fee? Will you provide free shipping? If so, will that be for all your products or just sales over a certain amount? In either case, your shipping policy needs to be spelled out clearly on your website and you need to be able to change it. Shipping can make a big difference, be prepared to experiment to find what your customers like.

What sort of boxes will you use? Will you need packaging, like tissue, for example. Will you provide gift wrapping?

These are all details you need to consider. If you'd prefer to start with the simplest possible web based business type and still sell physical products, consider drop shipping. The upside is that you don't have to worry about shipping, your supplier does that for you. The downside is that you will make less profit and you can't compete with large stores, so try to sell something people will want to buy from a specialist.

No! Original Ideas are not good business. The web is wonderful. You can look for others who sell your product and see how they do it, but what if you can’t find anyone selling the same thing you sell? Have you spotted a gap in the market? Remember the old saying. The real question is, is there a market in the gap? The chances are that if noone else is doing what you plan to do, no-one wants what you plan to sell. The web is worldwide and there are very few new ideas. Be very very careful if you think your product is original.

Its true that it can cost far less to start a web based business than a brick and mortar store, but If you are down to your last dime, don’t try to start a web based business.

I don’t want to sound negative, but starting an internet business costs money, the least expensive option is running a blog, and that stills requires a domain name and monthly hosting fees. Then you’ll almost certainly need some form of newsletter software and then some social media tools, a good template for a wordpress blog can cost 70-100 and you will need pictures and graphics (easy to buy from places like istockphoto) but still they are an expense.

Ecommerce stores typically cost $50 t0 $150 per month plus a fee for credit card processing each month. Some also charge a fee for each transaction and for additional services. Custom templates for a store can cost $1000-$2000, but these are a nice to have, not a necessity. You will, however, need some custom graphics, for example a header for your website. If you can use a graphics package you make these yourself, otherwise try a site like fiverr and have someone do it for you.

If you are planning to sell on the web you will find that it is reasonably simple to set up an ecommerce store, however there are many companies who will offer to deal with the technicalities for you for a fee. This is usually a bad idea. You not only spend money, you lose control of your store. There are many ecommerce packages which do not require you to learn a computer language, you simply learn how to use the package, as you would learn to use a word processor. If you are not happy with that level of technical involvement, then consider a different type of business, ecommerce is probably not for you.

If your friend offers to build you a webstore you may be grateful for the help, but beware. This is something you need to understand yourself. Time and time again I've seen good, promising ecommerce businesses go under for this reason. You can’t wait until you friend gets round to it before you announce a sale or add a product. Your friend will lose interest unless he is paid well and regularly, in which case he or she is your employee. Better to do it yourself, but if for some reason you can’t, make sure the store is built around a standard ecommerce package, custom built stores are typically a waste of money and far more trouble than they are worth.

To begin with you are just proving that there is a business, that you can sell on the internet. You need a functional way for people to buy from you, but it doesn’t need to be fancy, don’t spend thousands on a custom made template for your internet store, many people find they make the most money from products or service they didn’t intent to sell in the first place, so that custom built store front may be a complete waste of money, while a more general purpose template (which could well be free) will allow you to change your products and service to meet demand.

Overnight success Is a Myth.
Selling is seasonal. You might find, like I did, that your product is wildly popular at certain times of year. You will need to operate for at least a year to find out.

Put in the hours.
An ecommerce business means you can work from home, it doesn’t mean you can work part time. Once you have your store set up you will need to promote it and that is a full time job as you blog, tweet, pin and update facebook on a regular basis. You also need to keep up to date on the tools you can use to do all these things. Your number one task is to build a following on twitter. The best product and store in the world is useless if noone knows it is there.

The great thing about the web is that you can sell products, but you can also sell services and information. You can package information as products (ebooks, pdf file reports, webinars) and you can provide the services in the form of webinars or simple telephone calls. Information sites are funded by sales of ebooks, webinars and reports and also by advertising income.

Gurus will sell you courses on this at vast expense, and of course they are successful, but before you sign up for a course, find out what they are successful doing. If it’s simply selling courses on how to be successful on the internet, they might not actually know very much about selling a real product or service.

Don't be afraid to change. Very very few people get it right first time.

Use Google adwords to test your market. Google publish some great videos which show you how to use adwords. Create an adword ad for your product and target people who are searching for a specific word or phrase. The url you supply in the ad can be for a store that actually sells that product. Run the ad for 24 hours and see what happens. If you are selling luxury nightgowns you might want to target that precise search phrase “luxury nightgowns”. You’ll see just how many people will click on an ad for that product and that will tell you whether you can make money by targeting that word or phrase.

Typically, 1% of site visitors will buy which means if you need to make one sale a day to break even on your business, you need 100 visitors a day to your site. By running an adwords ad you’ll see how much interest there is, and how much it would cost to pay to get those visitors. Then you can see if your idea is viable. You can get visitors through organic search, (just trying to rank well for your product) but it isn’t easy and Google changes the rules on a regular basis. My advice would be not to rely on it.

Let’s say your store costs $100 a month to run, and you sell a product for $50, of which $25 is profit. Let's also suppose that you need to sell four products each month to break even, but that’s not the point of business, the point is to make a profit. If you want to pay a $1000 mortgage with the store, you’ll need to sell 44 products (four to beak even, 40 to earn $1000). If buyers usually buy one product at a time, you’ll need to attract 4400 visitors a month to your store. Can you convert more than 1 visitor in every hundred into a customer? Sometimes, yes, but sometimes, no. 1% is an average.

You need facts and figures in order to make decisions. I hate it when people tell me they’ve had their store running for a couple of months and are disappointed they’ve made no sales. My first question is always the same, ‘How many visitors have you had?’ and their answer sadly, is usually ‘I don’t know.’

The tools to monitor visitors are freely available in google analytics and google webmaster tools. If you have a store there will probably also be ways of tracking visitors through that. There are tutorials on how to use these tools. You have to learn. If you don’t want to do this, don’t start an internet business.

Remember that the web allows you to sell, but people still prefer to buy from people. Make sure your customers can contact you by telephone - get an 800 number (try ringcentral) and redirect to your cell or home phone. Your store should make it very clear that there is a person behind it. If you get messages, reply to them! Selling on the web is a dialogue, get information from your customers about what they want and how they want it. You can do this through a blog, a newsletter and even through tweets.

I'd love to say 'riches beyond your wildest dreams' but I'm still working on that, and frankly, if I had tons of money, I don't think I'd be writing this, just as I often wonder why the 'gurus' keep running webinars instead of having fun on their yachts.

Owning a web based business has many benefits, but the biggest plus is that you get to work form home. Not because you can spend more time with your family, or because you can cut out the commute to work, or because it’s more fun being your own boss (sometimes that’s not fun at all) . For me, the huge advantage of owning your own web based business is that even if it is ‘just you’ you can live wherever you like, and that can make a huge difference to your quality of life.

It has taken my family from a suburban street full of identical, cramped homes, to a large home on the side of a mountain, with a glorious view.

If we can do it, so can you.