Need something? Check online! We all know this to be true because almost all of us do it in our everyday lives. Online shopping has become widely popular. The popularity of the brick and mortar stores is decreasing. E-commerce businesses are seeing huge growth.
1. About E-Commerce Business
Online business is not just convenient but highly profitable as well. In this article today, we will discuss, what I mean by an e-commerce business. We would also talk about the pros of a startup e-commerce business and how one can go about setting it up.
2. What Is an E-commerce Business?
E-commerce business refers to a company that sells products and services online to generate revenue. It essentially acts as a channel that helps in connecting sellers and buyers around the world.
The business model can be of various types as follows:
- B2C: This is when a business, that is a manufacturer, wholesaler, or retailer, sells a product to the end user.
- B2B: This is when one business sells to some other businesses. It is likely that the new purchaser will resell the product to a consumer.
- C2C: This is when one consumer sells to another consumer. Applications like E-bay are an example of this e-commerce business model.
There are a few other combinations of business models that exist. Here we need to discuss how you apply these business models to an online business. Before we do that let us look at some benefits of a startup e-commerce business.
2.1. The Example of Amazon
When we talk of the e-commerce business, it is essential that we discuss the case of Amazon. It is one of the most successful e-commerce businesses in the world today.
The biggest reason for the growth of Amazon is that it provides everything in a single place. From clothes to shoes, to books or electronic appliances. This makes shopping very convenient.
For an e-commerce business to be successful, it’s important that a strong network is set up. A network of both buyers as well as sellers. If a platform is providing various options, it is likely that a consumer will prefer to buy from it as their choices are increased.
The price factor also comes into play. We can say that Amazon has got the customer value proposition right. They are providing you with quality products at lower prices and managing to earn good revenue. We can thus say there are various advantages to starting an e-commerce business. Let us discuss some benefits in detail.
3. Advantages of Starting an E-commerce Business
3.1. Growth Potential
As mentioned before, this is a field that has very high growth potential. A lot of consumers are shifting to online stores and online shopping. The ease of buying is a factor promoting the same.
After the covid19 pandemic hit, people could not easily go to places physically. Even after the lockdown restrictions were eased, the need to go to crowded places was avoided. Most of the shopping shifted online. Even groceries and items of daily use were purchased through e-commerce applications.
All this led to a preference among various consumers to buy through an online store. This propensity to buy online will only increase with time.
3.2. Reach
Another advantage of pursuing a start-up e-commerce business is getting access to a wider target market. Just like a consumer will get more choices to buy from, a seller will have more people to sell to.
It would be possible to reach consumers all around the world.
3.3. Reduction in Costs
A start-up e-commerce business will lead to a reduction in operating costs for the seller. We know that setting up a business requires the maintenance of a good physical store. It can prove to be costly.
An e-commerce business model, on the other hand, does not require an actual store. Thus costs will be reduced considerably. It’s good for people who are low on finances or do not have a proper location to set up their business.
Thus we can see that there is an appeal to start an e-commerce business. Yes, there is an issue that people sometimes don’t want to buy a product, without actually seeing it. But it is an issue that is somewhat avoidable and not so pervasive.
In fact with the development of augmented reality technologies, it is also possible to try on a product to see the fit. Thus overall starting an e-commerce business is a good idea.
4. How to Start an E-commerce Business?
Once you establish the scope and opportunities of starting an e-commerce business, the next step is to understand how does one go about it? We are here to guide you through this journey of starting your own e-commerce business.
4.1. Step 1: Model & Idea
The first and most important step while starting a business is coming up with a good business idea. The competition in the market is fierce these days. To be a successful e-commerce business, a startup would need to have a unique selling proposition that sets them apart.
To decide on an idea, you would first need to select what kind of business model you want. B2B, B2C, C2C, or something else. Once you have selected what model you want to operate in, you can move on to the actual idea.
You can use your personal experiences to think of an idea. There are numerous e-commerce business platforms that exist. What did you think was lacking in them? what more could you want? How can the existing models be improved? Start by answering these questions in order to build your own e-commerce business.
4.2. Step 2: Idea Evaluation
Now that you have come up with the idea, you need to see if it actually holds up. This means, that you need to evaluate if other people see it as a good idea or not.
To do this, you will need to conduct research. Primary as well as secondary. Surveys can be conducted to check if the target audience will use such an e-commerce website. This will make you understand if your idea has a scope of being a profitable business.
Primary research involves connecting with the target market in order to gauge interest in your idea. It is essential for reinforcing that your e-commerce business is actually solving issues or is attractive to other people.
Secondary research can be done by seeing if a similar business idea was taken up before and if it was successful.
4.3. Step 3: Giving a Name to Your Ecommerce Business
Now that you have a green light on your idea, it is important that you select a good business name for your e-commerce platform. This is because this business name is going to be the identity of your business going forward. It’s essentially the brand that you will create. It is thus important to select something that feels authentic to you and at the same time will connect with people. It should also be easy to recall.
You also need to come up with an interesting logo that relates to your business name to generate interest.
4.4. Step 4: Create a Business Plan
You will then need to come up with a proper e-commerce business plan to run your business. A business plan is important to understand the scope of your business. It would give a detail about the objectives your business aims to achieve. You also need to understand how to reach the target audience.
The e-commerce business plan would act as a roadmap to all your future actions while looking at the functioning of the business.
4.5. Step 5: Financing
The next and one of the most important steps is getting financed. You need to pitch your idea to investors, who can provide you with the business finances necessary to fund your operations.
A successful business requires a strong base. This would mean the incurring of start-up costs. You need to make the potential investor believe in your idea. You need to give them the security that their money will not go to waste.
These people can further back you up and help make your business a leader in the e-commerce market. You can also look at business loans as an option. Most governments are now taking steps to make it easier for start-ups to take loans. Thus it can be a huge help.
4.6. Step 6: Registering the Business
So you have the name, and you have the finances. What else do we need? It’s now time to get your start-up registered. It is important so that the functioning of your e-commerce company can start as soon as possible.
This is important so that you can get the important business licenses. After this, the business can be commenced.
4.7. Step 7: Connections
Now that all this is established, you need to create contacts with sellers and manufacturers who would sell products online through your platform. You need to give them incentives and convince them that it would benefit their business if they collaborate with you.
It is also important to do a background check on the people who will sell on your site. It is necessary to have a reliable supplier base.
4.8. Step 8: Marketing
So you started the business, the most essential thing now is to increase the reach of your platform. This means that you need to create a strong customer base. To do this use of accurate marketing tools in the best way possible is necessary.
The following can be some steps you can take:
4.8.1. Search Engine Optimization:
This is a process of using keywords and such on your website, in order to ensure that it ranks high up on the search results shown. This is an effective way to drive traffic to your ecommerce site. It would help in making people more aware of your business.
4.8.2. Social Media Marketing
We are living in a world where almost every person is using some form of social media. It is a great way to make people aware of new ideas. Social media channels can thus be a very good source of marketing.
Instagram marketing is also getting very popular. You can see people having business pages on Instagram these days. It helps promote start-ups in a really effective way.
4.8.3. Online Advertising
Online advertising combines the above two headings, digital marketing, and more. It refers to sending ads through emails or websites. It targets the customer base more directly. You try to create a brand identity by bringing the brand into as much focus as you can.
You try to condition the consumer towards your online e-commerce business. This brings the brand into the consideration set of the target audience.
Thus through the effective use of search engines and online tools, you should market your startup properly.
5. Some Successful E-commerce Business Models
Let us now look at some start-ups that have become highly successful in the US when it comes to e-commerce businesses in the past few years
5.1. Brandless
This start-up, as the name suggests, sells products without a brand name. This helps in cutting costs that popular brands charge. It offers various products that are pocket friendly.
5.2. Boxed
This is an essential delivery app, which allows consumers to buy the required goods in bulk. These are the products that are usually available at higher prices in the retail market.
5.3. Rent the runway
This is an ecommerce business that allows consumers to get fashionable and designer clothes on rent. It is more affordable than buying new clothes and also helps in brand promotion.
6. Collective Benefits
There are numerous other e-commerce businesses in the US as well as the world. We would like to bring your attention though, to a common factor in the above examples. Most e-commerce businesses focus on the cost factor to attract consumers.
They appeal to the price-sensitive side of a buyer by providing them with discounts and offers. This will induce them to purchase more from the e-commerce website.
The seller will also benefit as their product ideas will be promoted. The target audience they are reaching will be maximized in this way.
7. What Makes an E-commerce Business Tick?
We spoke about the benefits and the method to start an e-commerce business. Now, What exactly makes it a success?
So obviously you need to have a strong idea that can sustain over a long period of time but the next most important thing is building:
7.1. Strong Customer Relationships
You need to be able to acquire new customers while maintaining the existing customers. To do this your brand must be delivering what is promised.
It is easy to attract consumers with good offers, what is difficult is retaining them. The only way to do that is by building trust and loyalty. The marketing too needs to appeal to the emotional side of the consumers so that a brand connection can be generated.
You need to make your e-commerce platform dependable. This can be done by providing quality products. Keep a check on your ecommerce store owners. Make them understand the importance of timely delivery and good products.
When you sell products, ensure that you are taking proper reviews from the customer base. You can also float surveys to potential customers to understand what they expect from your site. All this should help in maintaining your business.
8. Conclusion
The e-commerce industry and e-commerce stores have the potential for rapid growth. Starting these online marketplaces and selling online is something, that if taken up, can have a good success rate.
All you need to start your own e-commerce store is a strong idea and you can start selling. Obviously, it’s not as easy as it sounds. There are many roadblocks that you can face, but that is imminent in almost everything that you take up.
Targeting potential customers and converting them into new customers will always be a task. There are various e-commerce platforms available too and you would need to take steps to set your new business apart from others.
This would require a good marketing budget and a strong marketing plan. This should help in maximising customer purchases and in the end you need to make sure that you retain the online customers as well.
Establishing strong relationships with store owners is also highly important. At the end of the day owning a start-up requires a lot of work and dedication. You will not see success from the first day you start the business. You will have to persevere and work hard to build good customer relationships, a strong brand and ensure that you are a dependable platform to generate sales.
It is also important to remember that a business is started with the aim of earning money. Even if you face losses at the start because you are starting a new business, the end goal should also always be to work in order to gain profits or the business would not be able to continue. We hope that this article gives you something to think about, maybe a good start-up idea of your own.
