Let’s face it. The future of e-commerce looks indisputably bright. Online shopping is no longer just a matter of convenience but a necessity.
Global retail e-commerce numbers reflect this sentiment as well. Online retail sales are expected to touch $6.8 trillion by 2023—a 386% jump from a mere $1.4 trillion in 2014.
If you’ve been toying with the idea of building your own e-commerce business, I believe the time is right for you to take the plunge. Here is a guide to help you build an e-commerce business from scratch.
6 steps to build an e-commerce business
1. Pick your e-commerce niche
Having the dream to build an e-commerce business is one thing; knowing what you want to sell is quite another. When it comes to selling online, the possibilities are virtually endless. For some people, that could make decisions harder. If you’re having trouble deciding on your niche, it helps to break things down.
For instance, all the ‘‘products’’ sold by e-commerce businesses fall into one of these four categories: physical goods, digital goods, services, and subscriptions. You can pick one of these, a mix, or even choose all, depending on your business goals. Regardless of what you pick, it’s important to keep a clear focus.
I also find it helps to identify a need before you pick or create your niche. Find out what’s in demand among your target customer base and choose accordingly. For example, let’s say you want to first operate within your city. Look at local surveys, check social media commentary, and talk to people to understand what is in demand. This will help you narrow down your niche greatly. Once you identify the broad market niche, you can always narrow down your business model and choose one or more specific products/services.
2. Choose the right e-commerce business model
When beginners think of e-commerce models, it’s often the B2C model they first envision. That’s quite understandable because it is the deepest market and also the most relatable model for the average individual. But if you’re really interested in making a mark in the e-commerce space, you’ll need to broaden your horizons.
There are as many as 10 different types of online business models that are in vogue right now, and many more that you could explore as backups. Potential options include B2B models that involve sales from one business to another, C2C e-commerce which allows customers to trade with each other in exchange for commissions, and even C2B models where consumers sell to businesses.
ou also need to choose the right revenue model for your business. Think drop shipping, subscriptions, wholesaling, and warehousing, among others. It’s important to make these decisions early on because they make business planning far easier for you down the line.
3. Focus on your business plan and your brand identity
We’ve agreed that e-commerce is booming. So, if you’re planning to build an e-commerce business during this sweet spot in time, chances are, so are a lot of other people. The competition is thick, and like everybody else, you’ll no doubt want your business to stand out. But I find that many fledgling businesses, in a bid to be extraordinary, tend to overlook the ordinary, important things—like planning and branding.
To work out your e-commerce business plan, make sure you take care of the following aspects:
- Product sourcing
- Inventory management
- Budgeting and financial management
- Product lines
- Sales channels
- Marketing and operations
4. Develop your online store
Your online store is an extension of your brand. In fact, when you build an e-commerce business, your online store may be the only part of your brand that your consumers get to interact with regularly. It’s a no-brainer that you need to put in a great deal of thought to set up this experience.
