There are lots of reasons why starting an Ecommerce business from scratch is a brilliant idea.
You might be a natural entrepreneur who has always been fascinated by starting businesses.
There might be a skill or passion that you’re keen to indulge.
Having spent your whole career working for other people you might want to work for yourself. Even if you’re not ready to go full-time, launching an Ecommerce business offers the possibility of quitting your day job in the future.
For many people starting an Ecommerce business from scratch is an incredibly exciting proposition.
In 2015 it’s probably easier to start your own business than at any other point in history. At least, that’s the popular conception. The prevailing view is that the affordability and quality of Ecommerce platforms make business success achievable for anybody and everybody.
However, in reality it’s not that straightforward.
Starting an Ecommerce business from scratch is a complex, time consuming process. It requires time, energy, creativity, business acumen and capital.
There is always the possibility that your store will generate sales and build momentum quickly; the normal trend is for business to be slow, capital to disappear and initial enthusiasm to be replaced by a powerful dose of reality.
With that in mind, we wanted to put together a definitive guide to starting an Ecommerce business from scratch. There are certainly no guarantees when it comes to starting an Ecommerce business, but developing a thorough and comprehensive plan will do your fledgling business the world of good.
In this article we’ll be considering the most important steps in launching your Ecommerce business. We’ll also think about what not to do when starting an Ecommerce business from scratch.
Starting an Ecommerce Business From Scratch in 5 Easy Steps
1. Perfect Your Product: Do Your Research
The beauty of ecommerce is that you can sell absolutely anything online. This is great news for budding entrepreneurs; if you’ve got a great product then there’s every chance your business will succeed.
There are two key factors to consider when you’re working on your product. It needs to stand out from the crowd and it needs to be strong enough to drive your business forward in a saturated market.
This is a really important step that you cannot shortcut or avoid. There are so many ecommerce stores out there that you need to find a product which will outperform the competition. This doesn’t mean that you have to find a completely original market; it’s much easier to sell to people who are already persuaded that they want a product (ie other businesses already sell them) than it is to try and create a whole new market. You need to find a product that lots of people are going to want to buy.
You’re also going to need a product that will be strong enough to drive your business in a crowded market. What do we mean by this? Quite simply, you need a product which will be the heart and soul of your business. If you were only going to sell one product in the first year of your business, would you be able to sell in high enough quantities – at a high enough margin – to sustain and grow your business? A nice product that will only sell in small volumes is fine for somebody who’s interested in starting an ecommerce store as a sideline project but it won’t generate full-time salaries any time soon.
Your product needs to be distinctive, high quality and help your business to compete in an incredibly competitive marketplace. It doesn’t actually matter how you stand out from the crowd – price, delivery, design, functionality – as long as you’re not irrelevant.
How do you go about perfecting your product? You need to research, research, research until you’ve found a product that you’re prepared to put your body on the line for. You’re going to be putting in a serious amount of work to sell this product; it would be ridiculous to cut corners at this stage.
You want to conduct your research in such a way that you get both qualitative and quantitative data. You’ll probably need to work through some or all of the following processes:
- The first step is to talk to family and friends. Experienced entrepreneurs often warn you not to base all of your decisions on the feedback of your loved ones, and we’ll come to this in a moment. However, starting an Ecommerce business from scratch is an incredibly personal process. Family and friends are likely to be supportive and provide a safe context for you to air your ideas and dreams without being totally crushed.
Problems start to arise when budding entrepreneurs only speak to family and friends before launching their business. Your friends and relatives might not want to hurt your feelings – even if the product is terrible and you’re ill-suited to running your own business. They’re also likely to be a fairly homogenous group, representing a very small cross-section of society. They have the same background as you and are likely to live in the same geographical areas.
Listen to and apply the advice and feedback that you get from family and friends, but do remember to take it all with a pinch of salt. Further research will be required before you launch your ecommerce business.
The next step is to try and widen your research pool. This is very easy to achieve and will usually take the form of surveys and questionnaires.
You should be aiming to get as much data as you possibly can. Asking 100 people for their honest, detailed feedback is much better than asking 10, and asking 1,000 is better than asking 100.
Tools such as Survey Monkey are great – you can get 100 responses for free, and there are a range of paid programs to suit your needs. Leverage your Facebook account to run surveys and ask for feedback. If you’re not planning to leave work then it might be appropriate to ask your colleagues for their input.
However, this kind of research is still likely to be fairly homogenous and limited in terms of geography, ethnicity etc. If you’re only going to be selling to a small pool of consumers then this is fine, but you need to make sure that you’re not going into business with an unrealistic view of who is actually going to be buying your products.
Your research should include taking a seriously close look at your competition.
This is key because knowing your opposition inside-out is going to give you an advantage going forwards. It’s also important because as things stand, your competitors already have the edge over you, simply because they’ve been in business for longer.
Carefully researching and evaluating your competitors’ products should help you to understand your target market more carefully. They’ve almost certainly learned lessons themselves that you can apply to your business.
We’ll talk more about marketing later on, but it’s worth getting hold of some data on your competitors at this early stage. It would be really helpful, for example, to see what kind of search volumes your competitors’ products are generating. Low search volume certainly doesn’t mean that the product isn’t viable – it could be a high value product or an emerging, growing market – but you do need to know that your product is going to be launched into a receptive market.
The final stage of your research will be the ongoing process of actually taking your product to market.
Getting early prototypes of your product into the hands of customers and distributors is a great way to gauge whether you’re on the right track. You can do this by attending trade shows, industry events and even local markets. If your family and friends like it, online surveys confirm this and the end users are keen then you should feel very confident that you’re onto a winner.
There is a sense in which your research will never really stop. Future products will be birthed out of the data that you collect once you’re up and running. In fact, the best businesses listen to their customers and find creative ways to feed customer feedback into the design process. However, it’s much harder to make significant changes to your products once you’re up and running, so do make sure that you do everything you can in the early stages of setting up your business.
There is one more thing that’s worth saying about researching and perfecting your product.
One of the most successful ways to build an Ecommerce empire is by selling consumable products. It’s always worth considering whether your product would work better as a consumable that requires customers to sign up for a monthly subscription.
Businesses like Graze and the Dollar Shave Club have realised the power of this model; customer engagement is much higher, and the long-term returns are that much higher. It’s easier to plan because you have returning revenues which are more akin to a software-as-a-service business than a traditional retailer.
It won’t work for everyone, but it’s something to think about in the early stages of starting your Ecommerce business.
2. Create an Engaging Brand
The success of your Ecommerce business will rise and fall on the quality of your branding. Create an engaging brand at the outset and you’ll put yourself into a much stronger position going forwards.
Why is it so important to create an engaging brand?
Engaging brands are much easier to market. A cheeky, distinctive or unique brand will give you a real head start when you’re getting started because it will make your product a real talking point. Remember that you’re fighting for every click and every sale – particularly when starting out – and the last thing you want to do is lumber yourself with a boring, ineffective brand.
A high quality, engaging brand will reassure customers that you are a trustworthy business. In the early days of ecommerce there was a lot of fear about fraudsters stealing our credit card details; in many ways this natural suspicion hasn’t really subsided. We still want to find businesses that we can trust.
You’re going to spend a whole lot of time talking about your brand, so you need to choose something that you like – or at the very least are completely persuaded by. When you’re going to trade shows, distributors, retailers and bank managers you want a brand that communicates the quality of your product. It shouldn’t look out of place alongside the very best of your competition. If you’re asking for money – from the bank or venture capitalists – you need a brand that does the hard work for you. The last thing you want in the early days is an unnecessarily hard sell.
Ecommerce is a fiercely competitive world which pits newcomers against seasoned pros, market leaders and household names. Creating an engaging brand won’t guarantee success, but what it will do is make your life easier every step of the way.
You might like to check out these case studies on the Shopify blog which show how you can research and perfect your product without spending any money.
How to Go About Creating an Engaging Brand
You might have been wondering what we actually mean when we talk about branding. It’s essentially the identity of your business. In real terms it’s your name, logo, website and visuals.
There are loads of things to think about, but at the very least you should be considering the following:
What’s your business/product going to be called? It should be easy to read, memorable and catchy. Ideally it should help to communicate what the product is or does. You should take care to avoid future legal disputes by choosing a name that nobody else in your field is using.
What’s your logo going to look like? The general rule is that a logo should be simple enough that a child can draw it. You’ll be using your logo in a myriad of locations; your website, social media channels, packaging, invoices, emails, clothing and more. A successful logo needs to communicate the quality and essence of your business.
What colour scheme do you need? Colours are very powerful and have a big impact on the way that businesses are perceived. Blue, for example, is known to inspire trust and confidence. That’s why so many banks choose to use blue in their branding; it communicates transparency and integrity, values that they’re desparate to affirm.
Who are you trying to connect with? This is one of the first questions that you need to answer. It will have a big impact on the way that you develop your branding. Yes, your branding is about you and your business, and you should be proud of it. However, successful branding is also focussed around the customers that it’s targeting. The very best Ecommerce stores make this distinction early on.
3. Develop a High Quality Ecommerce Store
Now that you’ve nailed your market and your product it’s time to develop a high quality ecommerce store that will enable you to start selling.
We recommend that you work through these processes in this order because your product and market research should inform the decisions you make when developing your website. Your website needs to make it incredibly clear what your product is and who it’s for.
There are several reasons for this.
When we apply the principle that retail is all about the customer to the design process we’re far more likely to develop an ecommerce store that customers enjoy using. Remember, it’s not necessarily about what you personally want.
If you’re selling trainers to teenagers then you’re going to need a very different store to one which will sell gardening tools to the over-50s.
You’ll find that different customers need different levels of explanation. Let’s use the example above to illustrate this.
The store selling trainers to teenagers will rely very heavily on photography and graphic design. It’s likely to have Instagram integration and less text than the average store.
The store selling gardening tools to the over-50s will also need excellent photography, but it’s going to have a completely different feel. The site will need much more detailed product descriptions, delivery/payment information and review system.
Both products need high quality ecommerce stores, but the two sites will be almost complete opposites of one another. They’re both trying to build trust and credibility with their users in order to sell the product, but the way that they go about this is completely different.
This is why you need to understand your product and your market before you develop your store. You could very easily develop a generic, clean store that could be used for either product, but it’s not going to be anything like as effective as a store which is developed with this data in mind.
Another critical reason why you need to develop a high quality ecommerce store is that you’re going to be competing with established competitors. This isn’t necessarily a problem, but it does mean that your ecommerce store will need to be comparable in terms of quality and user experience.
How do you go about developing the high quality ecommerce store that you need?
There are several options.
If you’re starting your Ecommerce business from scratch with no capital whatsoever then you’ll probably be looking for a cheap interim solution. This might involve buying a theme or template for a user-friendly Ecommerce platform. You might have a friend or family member who’s able to put a site together for you.
Many successful Ecommerce businesses started this way, but it’s worth saying that it won’t work for everybody. If you’re completely dependent upon your online store then saving money in the short term might well cost you money in the long term. Equally, if you’re doing a lot of local networking and offline marketing then you might decide that a simple, low-cost site will help you get the business up and running so that you can afford to invest in a better site in 6-12 months time.
If you’ve got some funding in place then you’ve got much better options available to you.
The first is to find a web design agency who can design and build your store for you. They’ll be able to help you with your branding, marketing, SEO and website maintenance. Finding and cultivating the right partnership in the early stages of your business will allow you to outsource this key area without compromising on quality or loyalty. Your agency will know exactly what you’re trying to do and be able to deliver work quickly and efficiently.
The second option is to hire somebody who has design and development experience. If you’re setting out in the Ecommerce world then you’re always going to need somebody who can maintain and improve your store. A team member who can fix bugs, add content, optimise images and run your marketing, social media and SEO campaigns is a huge asset to any fledling online store. The flip side of this is that you’re going to be very vulnerable if and when they leave, particularly if it’s not on good terms.
4. Develop a Detailed Marketing Strategy
Once you’ve nailed your product, market and ecommerce store it’s time to think about developing a detailed marketing strategy. This is arguably the most important thing you’ll do when starting an ecommerce business from scratch because it’s the process that will enable you to connect with potential customers.
The slightly strange thing about marketing an ecommerce store is that there’s not really a right or wrong way to go about it. In fact, there are probably hundreds of ways to go about it. However, the key thing that every successful ecommerce business has in common is that they have developed and implemented a detailed marketing strategy that has helped them to achieve their goals.
Having gone through the three steps we’ve listed above you’re actually in a very strong position to start writing your marketing strategy. At this point you should know what you’re selling and who you’re targeting, and hopefully you’ll have an ecommere store that features the right branding and design to generate sales for your business.
Now you need to think about the ongoing processes that will help you find customers.
This will need to include some or all of the following:
offline marketing including networking, business events and retail opportunities (markets, festivals and pop-up stores)
social media – Instagram, Facebook, Twitter, Snapchat
targeted social media advertising and sponsored posts
print media – newspapers and magazines
search engine optimisation (SEO) – on-site and off-site optimisation, link building and content creation
pay-per-click (PPC) – paid advertising through search engine results pages
blogger outreach to connect with influencers in your sector
distributor and retailer outreach to sell your products in multiple locations
partnerships with complementary businesses to encourage cross-referrals
This might seem overwhelming, but it really doesn’t have to be. The key thing is making sure that your marketing is done well and carefully planned. It’s not enough to “do Facebook” or “do blogger outreach” – you need to find the marketing channels that work for you and do them better than your competitors.
We can’t overstate how important it is that you get hold of statistics and data from all of your marketing efforts. You need to know how much you’re spending, how much time it’s taken and what the ROI is. The ideal outcome is that you find the most successful, efficient and cost-effective channels as quickly as possible. This will keep your marketing costs down and help you to build momentum quickly and effectively.
5. Get Your Customer Service Systems In Place
By this stage you should have nailed your product, figured out your market, built an awesome ecommerce store and implemented a detailed marketing plan that is bringing customers to your business.
Now we need to think about the kind of experience that customers are going to have when they use your business. This includes the transaction itself, but it doesn’t stop there.
Good customer service has always been a hallmark of good retailers, and ecommerce certainly hasn’t changed anything in this regard. A positive customer service experience will have a positive impact for your business (think word of mouth, referrals etc) but a bad one has the potential to seriously derail you.
78% of customers have bailed on a transaction because of a poor customer service experience
customers are 2 x more likely to talk about a bad experience than a good one
it’s 7 x more expensive acquiring a new customer than selling to an existing one
only 4% of dissatisfied customers will share their feedback with you – this doesn’t mean that they’ll be silent (quite the opposite!) but that you’ll probably be the last to hear about it
the average American will tell 9 people about a positive experience and 16 about a bad experience
In the same way that you need a detailed marketing strategy, you need to think about your customer service strategy before you start getting negative feedback from customers.
You need systems in place to make your life easier and keep hard-earned customers happy. The fact that they’ve experienced a problem with your business doesn’t mean that you’ve lost their business; it simply means that you need to work hard and take the opportunity to turn a bad experience into a positive one.
What do you need in place to keep customers happy? Well, it all rests on your ability to respond quickly, politely and effectively when you receive complaints or queries.
By thinking about this before launching your business you’ll be able to set expectations before a customer completes the transaction. They should know how long it will take to deliver the product and what they can do if they have a problem.
You should be prepared to respond to customer feedback in the following ways:
You’ll need to work out who is going to be responding to customers, how quickly they’re going to be doing this and what they are able to offer to keep customers happy. Whether it’s a free gift, shipping a replacement the same day or offering a discount on their next transaction, you need to work out what’s going to keep your dissatisfied customers happy and persuade them to use your business again.
Remember, it’s 7 x more expensive to win a new customer than to keep an existing one – even if things haven’t gone to plan during the transaction!
Starting an Ecommerce Business From Scratch: Your Experiences
Working through these 5 steps should give you the tools to get your Ecommerce business up and running. Starting an Ecommerce business from scratch is incredibly hard work but incredibly rewarding.
Have you succeeded in getting an Ecommerce business up and running? Are you thinking about launching a new product and want some advice from other Ecommerce entrepreneurs? Why not leave a comment and share your experiences below.