How to Succeed as a New Ecommerce Entrepreneur
During the last ten years, I have been fortunate enough to play a part in the development of hundreds of websites. Many established ecommerce businesses, but also the “shoestring startup”, trying to make their mark (and dollars) with a new product, idea, or service.
Within this time period, I’ve worked with clients from both ends of the spectrum: the extremely intelligent and savvy, to the technically challenged. I documented a few initial trends that have helped set the foundation for my clients to succeed and prosper year over year.
Listed below are a few of these trends that precede choosing a development platform or firm (which is in itself its own process). As this list isn’t exhaustive, I welcome the feedback and experiences from other ecommerce specialists/entrepreneurs-leave a comment below to chime in!
1 - Depth of Knowledge – have an understanding on how an ecommerce website works. For example, you should know what a web host is, how payments are processed, and the difference between website design, programming, and marketing (which are all separate initiatives). Don’t depend on your web development firm to fill you in; take the initiative to understand and learn as much as you can about your new online business!
Your knowledge and skills should complement the development process, not complicate it. Start by reading through the Practical Ecommerce website, industry blogs, forums and whitepapers.
2 - Financial Planning – due to the relatively low cost of starting up and maintaining an ecommerce business, many entrepreneurs fail to set realistic goals and expectations. Competition is fierce, marketing costs money, and ideas are a dime a dozen.
Develop your business plan with an emphasis on the following:
- P&L Summary; revenue sources, fixed expenses, variable expenses (marketing), cost of goods expenses, net profit and overall cash flow
- In-depth Revenue Forecast; top product sales, expected sales volume, average revenue per order, average customer order cycle, and sales conversion rate
- Detailed Visitor Analysis; expected traffic to website (daily, monthly, yearly), traffic growth, rate-of-return on marketing investments, customer cost of acquisition
Please, don’t use arbitrary numbers! Focus on how you will meet your sales goals; what marketing initiatives will be used, how much traffic will they generate, etc…Break down the revenue sources, and track them back to their marketing sources. Be conservative-taking over the world will take some time!
3 - Competitor Analysis - take a detailed look at your competition. One of the great benefits of ecommerce business is that you can quickly analyze your competition and learn the structure of their operation. Use the barebones list below to get started. Since each business is different, some of these items may or may not be applicable.
Using Google search and Adwords search; locate top online advertisers, then define:
- Review each site with; Compete.com, Alexa.com, Domaintools.com, and Quantcast.com
- Check customer reviews (epinions.com, google.com, yelp.com, ripoffreport.com, etc…)
- Create an order on the site, sign up to newsletter, email/call customer service
- Discover what marketing initiatives are used (contests, giveaways, pay per click, comparison shopping, affiliate marketing, and SEO)
- For more advanced users check; backlinks, article content, microsites, and keyword optimization practices
4 - Software Glitches – understand and be prepared for bugs, glitches, and software malfunctions. Software development is an evolving model, and it is never 100% perfect. Your development team should do everything they can to thoroughly test and resolve most issues, however, there is a reason why the big software firms (Microsoft, Apple, etc…) release patches and updates.
Don’t settle for buggy software, but understand that with an online business, your customers aren’t all looking through the same lens like they are in a brick-and-mortar. Your customers will be accessing your website through different devices, operating systems, monitor sizes, browsers, and modems.
5 - Be Prepared – not only is it the Boy Scout motto, it is a top mistake made by many budding entrepreneurs. Be prepared with your product description, features benefits, photos (at least 500 x 500 pixels), videos, and other such attributes. Have your site content; About, Contact, Terms, Privacy, FAQ, Customer Service, Shipping, Returns, and Resource sections defined and ready to be published.
The more complete and prepared your business is prior to working with a development firm, the smoother and more efficiently the whole process will proceed. Make an outline of all your pages, categories, and special features/needs. Discuss this with your development firm, and ensure all areas are understood.
6 - Budget – remember the old adage: “you get what you pay for”. When you develop your financial plan, include the following expenses in your analysis:
- Website setup fee’s
- Additional add-on’s during development (undiscovered features or customizations you must have)
- Ongoing support and hosting
- Ongoing add-on’s after launch (new features and technology)
Also take into consideration the following fees: payment processing, merchant account, SSL, and domain names. Don’t skimp on your marketing budget; because once you build it, unless you market it, they won’t come!
If you follow the 6 steps above, you will be rewarded with a much smoother development process with significantly less stress and frustration.
Please feel free to leave a comment below on what has helped you in the initial stage of starting your ecommerce business.
Great advice Louis. I read a lot of blogs from AllTop's ecommerce section (http://ecommerce.alltop.com/) especially The Shop.org blog (http://blog.shop.org/) and the BigCommerce blog (http://www.bigcommerce.com/ecommerce-blog/) - lots of good tips and strategies on both blogs.