Here’s the good news – eCommerce is for everybody and can be a vehicle for drastically improving your life. Here’s the bad news – if you’re looking for something easy, you’ve come to the wrong place, writes Paul Waddy, eCommerce expert and strategic advisor at Wayflyer.
eCommerce is full of false prophets who fish on YouTube and LinkedIn for those looking for a guarantee to ‘grow your online store to seven figures’. As a rule, if the word ‘guarantee’ finds itself in my inbox, it’s guaranteed to then find itself in my trash.
There are only two guarantees in life, and eCommerce success – while frequent – is not one of them.
The four ingredients that make a successful eCommerce business
There are, however, certain ingredients that I would call essential for starting and scaling your online business.
1. Getting your eCommerce store started
The actual process of setting up your online store has been made easier with platforms like Shopify, which takes away the financial burden and complexity of needing to hire a web developer. I’d direct aspirational online retailers to Shopify – I’ve seen plenty of retailers that I’ve worked with go from startup to turning over millions, if not tens of millions of dollars, using that platform.
Shopify works with themes, with both free and paid options available. These themes are customisable by anyone who cares to take the time to learn the platform. You can add bells and whistles in the form of apps, from the Shopify app store.
The days of an eCommerce startup needing to drop $15-20K on a new website are gone. The key to designing a great store is to keep the user experience (or UX) front of mind. UX makes up one important factor in the overall customer experience (you guessed it, CX).
The majority of visitors to your website are likely to click once (or not at all) when they reach your online store, so the goal is to get the customer to their preferred products in as few clicks as possible. Keep it simple, and make sure it’s easy to use on mobile devices.
2. Finding products
My rule for finding a product to sell is you should be able to answer the question, ‘What problem does my product solve?’ in one sentence.
If you’re a small business owner or starting an online store as a side hustle, then I’d suggest steering clear of ultra-competitive industries, like fashion. Now, I’m not saying there can never be another eCommerce fashion brand that starts in the garage and makes it big. However, it’s harder than your typical product, and here’s why.
Fashion is an incredibly competitive space, and online advertising works on an auction system, so the best ads go to the highest bidder – and right now, there are some big players with some big budgets, so my advice is to avoid a digital bidding war.
Try and find your niche. Tools like Google Trends are a good way to check what products people are searching for, which is a good indication of what people are wanting to buy.
3. Acquiring customers online
There’s a misconception that throwing a few dollars at Facebook ads is all that’s required to attract customers to your online store. Ten years ago, advertising – or ‘paid media’ as it’s known – was significantly cheaper than it is now.
To build a profitable online store, you’re probably going to need more than half of the traffic coming to your website from free or ‘organic’ sources. In other words, use paid media as a channel, not a strategy.
Too many online businesses fail because their strategy is to depend on Facebook ads, which should be just one channel you can use as part of your overall strategy. My advice is to hustle – use your friends and family as advocates, shout your brand name from the rooftops ,and treat every website visitor as gold (you’re probably going to pay $1 – $2 a click on paid media platforms, so they are gold!).
Remember, any new business needs to gain the trust of their prospective customers and asking someone to buy online involves more trust than most. So, to build trust, think about using product and customer reviews. And when you’ve got a customer, do everything in your power to keep them because retaining a customer is cheaper than acquiring a customer.
One of the main reasons I see online retailers fail is the lack of funding and general financial planning. There are several courses an online retailer can take when approaching growth:
- Slow and steady – cash positive, profitable growth, reinvesting the earnings of the business as sales come in
- Hard and fast – growth over profits, generate as much revenue as possible without worrying about your net profit
- Somewhere in between – want to scale the business aggressively while maintaining a break-even point
Spoiler alert – I prefer option 1.
Now, it’s horses for courses, different strokes for different folks. Options 1, 2 and 3 can all work, depending on what your end goal is. The key is to go into any strategy with your eyes wide open. In other words, think, ‘How much money do I need to execute my plan, and if I do expect a cash burn, at what point will that cash burn stop, and profitability commence?’.
How you fund your eCommerce business is crucial. Most online retailers hold inventory, and inventory has never been more expensive than it is now due to the rising costs across all parts of the supply chain. In addition, if your business does start to take off, you’ll need money to fund your growth – higher inventory levels for higher anticipated sales.
Many eCommerce businesses can struggle to access finance, which can limit their growth as they start to gain traction, or stop them getting through the initial startup phase. I’d always think twice before giving up equity in your business, unless it’s to seize an opportunity you otherwise couldn’t take advantage of. This has led to alternative finance providers like Wayflyer, which cater specifically to the needs of growing eCommerce businesses.
eCommerce done well is a game-changer, and in Australia online retail only accounts for around 20 per cent of total retail sales, so it’s not too late to start.
Just remember to pay attention to the plan, and hopefully, these four points will help you go into eCommerce with your eyes wide open.
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