So, you want to take the dive into e-commerce business? Great! What are you going to sell? What’s your website? Will customers buy directly from you? Can you answer questions about shipping? Have you even though these things through
If you’re not there yet, and if you haven’t, that’s OK. Every great business starts with a dream, and maybe you’re just at the beginning of turning your dream into reality. Maybe you’re feeling a little overwhelmed right now, unsure of what steps you’re going to have to make to refine your plan.
If so, you’ve come to the right place, and we’ve got just the guide for you.
Choosing a Product
What do you want to sell? It’s a basic question. Maybe you already know—maybe selling something you make is the whole point of starting the business. But let’s assume you plan to sell third-party merchandise. How do you decide what to sell?
You’re looking for a range of products that can earn you money, so you’re going to be looking at demand, market prices, availability, and other factors. Some of that will depend on how you structure your business—we’ll get to that in a bit. But you’ll make more money (and have more fun) if you are passionate and knowledgeable about your products.
Think about it. You’ll need to identify quality, answer questions about your products, and connect with potential customers, all of which is easier to do if you’re excited about your products. What’s going to engage people looking to buy these items? If you are a potential customer yourself, you’ll know.
Drop Shipping or Affiliate Marketing?
There are a couple of different ways you could structure your e-commerce business. You could maintain your own warehouse and ship products out, just like Amazon does. If you manufacture your own goods, or if you also have a brick-and-mortar store, shipping from a warehouse may be your best bet (in the very beginning, your warehouse might be your living room). But there are other options.
You can save a lot of money (and hassle) if you don’t handle your own merchandise at all. Let someone else take care of storage and shipping. There are two ways you can do just that.
Drop shipping means that you sell products through your site but the wholesaler takes care of shipping for you. Basically, when you place an order with your supplier, instead of having the goods shipped to you, you have them shipped to the customer directly. Everything else works just like what you’d find in any other retail business.
Affiliate marketing means that you’re maintaining a website that advertises products for other businesses. Customers who wish to buy click on a link and are automatically redirected to the electronic storefronts of the company selling the product. That company then sends you a cut of the proceeds.
With affiliate marketing, your business isn’t a store at all. Instead, it’s like the online equivalent of those booklets of ads and coupons you still see sometimes—your job is to increase business for someone else. Amazon is one of the most popular sites on the planet, and they too have an “affiliate” program you can participate in, and with Amazon Software and Amazon rank tracking services out there, you can easily find the most popular items to promote.
Which Is Better?
Which is better, drop shipping or affiliate marketing? Sorry, trick question! Either might be better, depending on your circumstances.
Affiliate marketing is much simpler. You don’t have to deal with customer complaints or problems with people’s credit cards, all of that is your affiliate’s problem, not yours. And if you have to take a break, your business can run itself until you get back. But to keep sales up, you do have to work constantly at marketing, as well as likely shell out for SEO and link building services to help get your site traction on Google. And you won’t develop a loyal customer base because satisfied buyers will go back to your affiliate, not to you. You won’t benefit from word-of-mouth either, for the same reason.
Drop shipping is a bit more labor-intensive, and you bear more responsibility, which means more can go wrong, but you’ll make a higher percentage on each sale. You’ll also have access to low-cost paid advertising and you get to collect customer data, which you can use to help drive future sales.
Depending on what you sell, what the demand is, and how much time and energy you have to devote to the business, you might find either affiliate marketing or drop shipping is a good fit for you.
Choosing the Right Platform
If you were opening a brick-and-mortar store, you’d need a location. You could build your own lemonade stand, but if you want to scale up, you’re probably going to need to find a building someone else built, possibly inside a shopping center that someone else manages.
In the same way, for your online business, you need a website, and that almost certainly means hiring an established e-commerce platform to help you build and manage your site. You’ll also need a server to host your site, though some platforms also act as servers. Which platform you choose has everything to do with your success or failure—but the right choice depends on the specifics of your situation. When considering a certain platform, ask yourself:
- Does the platform provide all the functionality you need? Do your research. Ask questions. Don’t take the platform’s own advertising at face value.
- Can you use the platform? If you find any aspect of the system counter-intuitive or hard to learn, it might not be a good fit for you.
- Is the price right? Remember to consider all costs, including any extra fees
There is no one right answer for everybody.
Once you’ve established the basics of your business plan, there’ll be plenty else to do—registering your business name, perhaps incorporating, and all the other steps involved with hanging out a shingle. But you can tackle all that later. First, just concentrate on figuring out what you’re going to sell, what type of business you want, and which e-commerce platform will work for you.