(10 min reading)
So, you are thinking about building your own business, or maybe you and your partner are having a great idea and would like to find how to build a business from it?
How to launch your online business?
Data shows that, by 2023, e-commerce revenue is expected to reach $800 billion in the U.S. alone. Now is the best time to start your e-commerce business and build your own tribe.
There are many things to consider like the business plan, what is the product or service you like to sell, how would you deliver it, what technologies are there, what is the brand differentiator, when would you like to start selling?
Read all 10 bullets to find many answers.
1. Choose your Tribe
To start a successful online business, you have to find the right tribe. What’s your area of expertise? What marketable knowledge or skill do you have? Where do those skills or products fit in the market? What type of products or services do you want to sell?
You must have an idea of what kind of business you want to build, start by researching the market. Look at other businesses in your area and see them as joint opportunities. When looking at an example of a successful e-commerce business in an industry, ask yourself:
- How are they reaching customers?
- What appeals to you about their website?
- What’s their business model?
Some logistical questions you’ll need to answer when finding your tribe includes:
- Is your product or service?
- Is physical or digital?
- Do you deliver local or international?
Will you base your business around one-time orders, bundles, or a subscription model?
Get as many business ideas as you can, the online business is super competitive. You’ll want to do some serious thinking about what sets you and your business apart before starting your own e-commerce business.
If you have expertise that’s in high demand, capitalize on that. If you have years of experience in music or baking, for example, start a blog to write about that skill and establish yourself as a knowledgeable person in the market. You can use your e-commerce store to offer your products or services, on-demand online courses, or local deliveries of experiences in your area.
2. Do your research
Find the top competitors in your space and do some research on their history and business model, and get products ideas by researching trending products. Ask yourself what they’re doing that you can follow. Find out what people are looking for in your business and figure out how you can provide it in your unique way.
You’ll also need to identify the barriers to entry in your field and how you can overcome them. Will you need to invest in paid ads? What is the cost of an e-commerce platform? Need for expensive equipment? Where do you manufacture your products? What other challenges will you face when going to market? How much do you need to invest? Can you start small and then scale your e-commerce business?
Identify any opportunities in the market your product or service can fill. Even if it is something not new, try to deliver it in a way that is unique so you can add value.
Once you’ve identified your opportunity in the market and know what value you’ll bring to the customer, consider doing a SWOT analysis — which stands for Strengths, Weaknesses,
Opportunities, and Threats. This modeling technique can help to identify potential challenges so you can plan ahead your strategy for your e-commerce business.
Strengths and weaknesses are typically things you can control, like:
- Company culture
- Your reputation
- Your customer base
- Intellectual property
Opportunities and threats, are things not in your control, but you can plan ahead, like:
- What suppliers are in your market
- Your competitors
- The economy
- Market size
- Market trends
- Gaps in financing
3. Choose your product and target market
There are several ways you can use to choose your e-commerce product or service. You can provide a solution for a problem in any marketplace, local or worldwide. Lean on your passion. Try these options for finding a product or service you can sell online.
Think about your personal experience. Have you worked in a certain industry that gives you insight others don’t have?
Is there an opening in the market for something that people will need soon based on trends in your industry? Recognizing a relevant trend can make you a leader in the market. Something that fulfills an existing need in a new way.
You can spot trends in many ways:
- Social listening. Hang out on social media where others in your industry post or where your target customers spend time and see what they say. Browsing trending hashtags or using social listening tools to gather data over time can also provide valuable insights.
- Following search trends. Google Trends is a great place to see what trending products people are searching for. It can also tell you the keywords used most commonly in search, and what problems people are commonly trying to solve.
- Browsing e-commerce websites and aggregator sites. Pages like Trend Hunter or assorted subreddits for your niche can help you sight into developing trends before they get big.
Customer reviews also provide a wealth of data on what your prospective buyers expect from a product. Browse reviews of products similar to the one you have in mind and see what people say. They are a great resource to get new products ideas. Addressing an unsolved need is one way to differentiate your product in a market.
When researching keywords, make sure you look outside of Google. While Google is the search engine most people use, online marketplaces like Amazon, Wish, eBay, or Alibaba have their search functions.
If you’re thinking about selling a product, type in the product name on these sites and see what keywords come up. Say you’re selling guitars. Typing that into Amazon’s search bar turns up suggested search terms like “guitar lessons” and “guitar experiences”. Those results can give you more ideas of what you can do to differentiate.
Finding a market
As you’re gathering product information, study your target market. Who is your ideal customer? What characteristics do they have? This is where creating customer personas is useful.
Personas are fictionalized versions of your ideal customers that allow you to try and predict how they’ll behave. You can create a picture of the person you consider would be best served by your product or service, and figure out how to attract that person.
Answer questions like:
- How old is this person?
- Where do they live?
- What is his/her job?
- What do they care for?
- What problems do they face?
- What is most important for them?
With all of this, you can find ways to reach them online and what messages they’re more likely to respond to. The information will help you market your product or services more effectively.
4. Validate your product
Now you have an idea for your product or service, and you know who you might sell it to, now you need to validate whether you are right and how to execute the business idea. You need to see whether your business idea is viable in real life.
You can use several criteria to evaluate your product’s viability. Evaluation criteria can be split into two main categories: market-based and product-based criteria.
These are market factors that will influence your product and business model. You’ll want to look at:
- Market size and demand for your product/service
- Who your competitors are and where are they
- Is this a trend, fad, growing market, or flat market
- Whether customers will be able to get this product/service from other sources
- Who your target customers are
Once you have an idea of where the market is going and who you’re marketing to, you can move on to the next set of criteria:
- Your selling price
- The potential markup for your product or service
- How many products you’ll stock
- Will you offer a subscription
- The size, weight, and durability of your product, if you’re selling something physical
- Whether you’re likely to experience seasonal buying variations
- Whether your product or service solves a pain point or is more of a passion
- Whether your product is consumable, disposable, or perishable
- Whether your services are re-purchasable or 1 time only
- Regulations or restrictions around your business
Looking at the market and product-based criteria can give you an idea of how much it’ll cost you, how you can sell it, to whom and how many times.
These criteria can give you a good idea of your product or service’s potential, and help you avoid common mistakes. If you’ve determined that there’s enough market for your product and services, you can move on to other aspects of your business model.
5. How you will source your product or service
If you’re selling a physical product, you’ll need to figure out a model for obtaining it and shipping orders to your customers. There are a few models you can explore here:
You make the product yourself, by hand, and get it to the customer. This is a highly favorable option if your product is something you can get the ingredients for and make cheaply, like home-baked foods or hand-crafted gifts. You’d need to purchase ingredients in smaller batches to start, you can control the cost and the risk, then scale up when you have more sales.
If your product is something you cannot make yourself, you could partner with a manufacturer. This alternative makes sense if you have a product you plan to sell in large numbers, as manufacturers normally require you to order in large batches. You’ll need to be able to cover the cost of those initial purchase orders.
Wholesale and resell
Buying your desired product and selling them through your store with a markup. You don’t have complete control over pricing, as the manufacturer sets the price of purchase. Margins for selling wholesale products are around 35%.
A good option if you don’t want to deal with inventory, dropshipping involves partnering with another company that would ship the product for you after purchase. There are no startup costs to make the product on your end, your margin is only about 15%.
Guides, eBooks, Blog posts, templates, online video classes, selling your expertise. Anything people can download has the potential to be a product. Digital products can also be a service like consulting, coding, writing, therapy, social media management, or graphic design.
Digital downloads or services are suitable for customers and, depending on what you’re selling, they usually have a low overhead cost too. Experiment with different things until you hit on the product or service that’s right for your business and passion.
6. Do your business plan
You’ll need a road map to follow to keep your business on the right track. Once you’ve defined all the basics, writing a business plan will help you establish goals and get into the details of what you’ll need to run your business and sell to your customers.
If you’re going to get a business loan, lenders and investors will require you to have a business plan. Make sure you make your plan as detailed and professional as possible.
Your business plan should include:
- What your business is
- What you’re selling
- What is the market
- How your business model works
- SWOT analysis
- Company structure and roles
- Financing and capital
- Other resources
Keep your target market and buyer persona in mind as you develop your plan.
The outline for your business plan will look something like this, from beginning to end:
- Executive summary
- Company overview
- Market analysis
- Products and services
- Marketing plan
- Logistics and operations plan
- Financial plan
If you’d like something more detailed to start with, it’s easy to find free business plan templates online.
The most important thing is to know what your goal is when you write your business plan. It’ll look different if you’re writing one to obtain startup funds than if you’re outlining the business plan for yourself.
Make sure you keep your tone consistent throughout the document. The best way to ensure this is to have one person write and edit the whole document, completely edit the document before presenting it to anyone.
Finally, keep your business plan short and to the point. It should be 15 to 20 pages max. Make sure it’s long enough to communicate the relevant information.
7. Business name and legal structure
Naming your store is one of the creative aspects of starting an e-commerce business. You’ll need to come up with something that catches the eye, describes your brand, and hasn’t already been taken by somebody else.
You can typically search for domain name availability on Godaddy or CheapDomains. It’s also good to run a search with the U.S. Patent and Trademark Office to avoid future problems.
A good business name will set the tone for your online store. The name plays into the company’s branding, and the product itself.
When it comes to making your business name, remember to:
- Keep it simple
- Differentiate yourself
- Get creative
- Be original
You’ll also use your business name when you register your business. How you choose to register will affect you legally and financially down the road, so it’s worth doing a little homework to determine which type of legal structure is right for you.
You’ll register your business as one of the following:
- Sole proprietorship
- General partnership
- Limited Liability Corp
Each one will have benefits and drawbacks. You should consult an attorney or other legal expert to determine which one you should choose.
8. Permits and licenses
Some business types need an employee identification number (EIN), it can help keep personal and business finances separate. It’s free to apply through the IRS, and the number is usually assigned right away. You can also apply for an EIN by mail or fax.
You’ll also want to apply for any permits or licenses your business will need to operate in your state. If you’re operating your e-commerce business entirely from home, you won’t need the same kind of permits as a traditional store.
You’ll want to make sure you’ve got it covered. Check your local government’s website or get professional advice for permits or licenses you might need to operate in your state.
Types of permits or licenses you might need for your business include:
- Sales tax permits
- Professional and trade licenses for certain industries
- Health, safety, and environmental permits
- Signage permits
If you need permits or licenses, be aware you’ll have to pay a fee for them. Add those expenses into your business budget upfront so you don’t have to deal with any financial surprises.
9. Create your eCommerce
Now that you’re finally ready to launch, it’s time to choose technologies and build your online store. There are many e-commerce platforms out there to choose from like Arcadier, BigCommerce, VTex, Shopify, Wix, and many more, so you’ll want to research which fits your needs better.
Depending on your need for a custom unique experience, a headless API eCommerce SAAS is best suited for entrepreneurs and large companies who want to have full control over their online business and but also have everything to effectively market and sell products online.
Remember once your customer makes a purchase, keep them engaged with post-purchase follow-up. You can configure a campaign to users who visit your site, send them offers, specials, best deals, or recommend other products your customers might be interested in.
10. Marketing your new business
Now that your shop is planned out and set up, it’s time to tell your potential customers about the new business and start selling. The research of your target audience will suggest where you’ll run your ads and what content you’ll create to bring in customers.
Don’t be afraid to use multiple channels to market to your customers. If you’ve got a blog, promote it on multiple social media outlets. Put out content relevant to your niche on Facebook, Twitter, Instagram, and YouTube. Try out different tactics in your marketing strategy, like Facebook ads or partner up with affiliate marketers. Use landing pages that make it easy for customers to buy your products.
Be careful about your page copy, product description, and make sure it adheres to current SEO best practices. Make sure your site is simplistic and easy to navigate.
You should consider investing in CRM (Customer Relationship Management) tools for following up with customers, building email campaigns, and keeping them up-to-date with your business offerings, keep your tribe alive is a continuous delivery process.
Get started with Towa e-Business Services
Many things will happen when starting an online business. With the right team, proven process, agile practices, best technology you can make it a success!
Towa integrates as part of your team to build awesome eCommerce Experiences.
We can build great ecommerce plataforms together
Towa Software has over 20 years of experience to guarantee the quality of every line of code, we are proud of our products and services delivered.
We have expert Project Managers and Innovation Consultants along with top talented teams who have delivered awesome products to customers in U.S.A, Canada, Mexico, London, and Australia.
As a leading software development outsourcing company in the USA and Mexico, we have extensive experience in many fields including fintech, banking, payments gateways, e-commerce, retail, marketplaces, health care, omnichannel, and many more.
You can contact us at firstname.lastname@example.org or give us a call via (+1) 210-787-4525 for more information.