In 2023, understanding the landscape of E-commerce is crucial for anyone looking to venture into online business. Whether you are setting up a small enterprise or expanding an existing one, you must start with a plan. As the saying goes, ‘if you fail to plan, you plan to fail’. This accurately applies to starting your own business.
Starting an online business? Lucky for you, the internet has all the info you need, and most of it is free.
Assessing the Viability of Your Business Idea
When planning a business, it’s crucial to be critical and objective. While it’s great to pursue a passion, it’s important to acknowledge if that passion has a limited market. It would be highly unlikely for you to create a profitable business solely focused on a narrowly defined topic.
These are therefore the questions that you must ask as a way of establishing the initial viability of your idea.
Does this business idea work as an online business?
Consider profitability when choosing an e-commerce business idea. If the business is not suitable for e-commerce, it’s best to drop the idea.
Certain businesses such as sports clubs, bowling alleys, and amusement parks are not suited for online operations. While e-commerce websites can be utilized to sell equipment and merchandise, the essence of running these businesses cannot be replicated online.
Think about your local electricity company. Online bill payments are an option, but their existing home delivery systems are sufficient for now, leaving no room for internet expansion.
You need to adopt a practical approach to your ideas from the beginning. If unlikely to succeed, drop it before wasting time and effort.
Are there artificial limitations to consider?
Think about any artificial limitations that might apply to your business as well. If you launch a business supplying heavy plants and machinery, its geographical appeal will be limited. This is because it is not economically feasible to deliver such equipment to far-off places. Thus, this business model doesn’t take full advantage of e-commerce’s ability to attract customers nationally or internationally in a cost-effective way.
Who is my target audience?
Define your target audience as it will define how you operate.
For example, if your business is selling school supplies, then your target market is school administrators and boards. Your website would be created to appeal to people like these.
If you know who you are selling to, it becomes far easier to do so effectively. Defining your target market is therefore essential.
How will you deal with customers?
Limit your business’s geographical reach to your country of origin. If you are based in the US, it may be best to only deal with US citizens to ensure payment in dollars.
However, limiting your e-commerce site to US citizens defeats the purpose of having access to a global marketplace. It’s narrow-minded to assume your best customers are only US citizens when they could be people in the UK, Africa, or mainland Europe.
Selling to overseas customers raises payment and shipping questions.
However, these are not major considerations, because there are plenty of solutions available already, and more solutions are coming to the net every day.
For example, most banks will accept credit card charges from overseas, and online payment processing companies like Paypal, Paystack, and Flutterwave, operate on a pan-global scale without restrictions.
Furthermore, most e-commerce sites use online shopping carts integrated with merchant accounts for convenience. Logistics integration is no longer a primary concern.
Understanding the Competition
Most people who are planning to launch an e-commerce-based business probably think that they have come up with a completely original idea, but in truth, it is highly likely that other people have got there before them no matter what your idea is.
However, you should not necessarily view competition as a bad thing, because without competition, you would not be able to establish what works and what doesn’t. The problem with being the first into a particular market, a pioneer, is that you are the person who is going to make all the mistakes. On the other hand, if there are other people already on the market, they have made mistakes for you, so you should be grateful for the competition.
The presence of competition in a business indicates that money is being made, which is a crucial factor to consider. While a market with too many competitors may pose difficulties in entering, having others already working in the same area as you is a positive sign. It means that there is demand and potential for profit in the market.
Identify your unique selling point (USP)
When starting an online business, it’s important to research global competition and its advantages and disadvantages, unlike opening a business in a local shopping mall where you only need to look at local competitors.
Research and analysis of what other people in your business are doing online is essential. While it might be a time-consuming process, it is necessary and time that is very well spent.
If you’re planning to start a weight-loss industry business and want to learn about other companies in the same sector, you can conduct research by searching the name of a popular weight-loss product, such as ‘hoodia’, on Google. This will give you an idea of how many web pages exist that mention the specific product.
There are 2 million web pages featuring ‘hoodia’. Many belong to companies offering hoodia products, making them direct competitors. Analyze the most common companies’ websites.
- Check the product range, prices, delivery terms, and promotions available on their site.
- Research top-rated companies in your market using their domain name URL to learn more about their operations, target audience, and customer satisfaction.
The internet is a democratic place where people can comment and review your competitors, highlighting both the good and the bad.
From this research, you should be able to establish one very important thing.
Competitors in the market mean money is being made, but your research should focus on their weaknesses.
This is crucial because what you should be looking for is a point of advantage or a unique selling point that you can use to differentiate your business from the competition.
Offer something your competitors don’t
Newcomers must prove to potential customers why dealing with them is better than with established competitors. It’s important to keep in mind that existing e-commerce sites already have customers.
Your job is to convince as many of those customers as possible to switch their business to your site, but you have to give them a concrete reason for doing so. Human nature dictates that people do not change unless for a very good reason, so you have to supply that very good reason, which is why you need a unique selling point that no one else in the market is currently offering.
Consider offering free delivery, even if your competitors already do. You could even extend your delivery boundary to attract more customers.
Offer bonuses for loyalty or larger purchases.
Although having competition is a good thing, you have to differentiate your business in some way to be successful.
The Practicalities of Running an E-commerce Site
24/7 Operations
Online businesses operate 24/7, 365 days a year. You have an immediate advantage over real-world businesses that are only capable of operating their businesses during normal business hours.
However, running a business 24 hours a day every day makes significant demands on your time, and depending upon those demands, you might need to seek assistance to make sure that the ‘always available’ nature of your enterprise doesn’t swamp you.
For example, because your e-commerce site is always available, you may have new customers from the far side of the world who place orders while you are asleep. How are you going to dispatch goods, and how soon after payment is confirmed will those goods go out?
Most importantly, who is going to handle all of this?
The natural reaction when you are first starting out is to imagine that you can do everything, but in reality, it is impossible for one person to do everything.
For this reason, you should consider the requirements of your business, and then look at the practicalities of either finding people who can handle the day-to-day running of the business for you locally or looking at outsourcing through a site like Upwork or Fiverr.
The advantage of using outsourced workers is that you only pay them for the work they do and you only need them when there is work to be done. Consequently, using outsourced workers tends to be cheaper and far more flexible than employing your own people.
It is important to establish a long-term relationship with good outsourced workers. This ensures that they understand your business and can meet your requirements whenever needed.
Shipping charges
Most e-commerce businesses that have a major problem do so because they do not fully appreciate how much of an effect shipping charges can have on their bottom line.
Far too commonly, a customer will find a suitable e-commerce site offering exactly the product they are looking for at a fantastic price, only to discover that the shipping charges quoted are so high that they remove any cost advantage of buying from that particular business.
Consequently, they cancel the whole transaction seconds before they are due to make payment and turn to the Yellow Pages to look for a local dealer instead.
All too often, this happens because online merchants get greedy. They offer attractive discounts on products they list in their online catalog, only to try to get back some of the money that they are ‘losing’ by offering a discount with an artificially inflated shipping charge.
This is not going to work, because most national delivery services (US Post, The Royal Mail etc.) and international courier companies show delivery charges on their websites, and if you can see those charges, so can your customer. It is very easy for them to see whether you are ‘cheating’ on delivery costs, and if you are, that is your business relationship with the customer concerned at an end.
It is in the interests of the long-term future of your business to find the most economical and reliable way of delivering your goods to your customers, and you should never try to grab an extra few cents here and there by inflating delivery charges. Do so and you will lose far more than you could ever gain.
You need a customer service policy
Before you start, you need to know what level of service you are going to provide to your customers, because providing customer service is resource-heavy and labor-intensive.
For instance, many online businesses provide 24-hour customer service ‘chat lines’, and because this is becoming the norm rather than the exception, it is something that your customers might expect. Looking on the bright side, providing on-call 24-hour customer support could be the unique selling point you are looking for, so this may be a silver lining in what might appear to be a cloud on the horizon!
Nevertheless, if you want to provide this level of customer service, you are going to need other people to help you. Although this work can be outsourced, you need to know what you are going to offer and how you are going to handle it before you start.
Do not fall into the trap of underestimating the importance of customer service, because when you make a commitment to a certain level of service, this is exactly what your site visitors, prospects, and customers expect.
If you state on your site that you have a 24-hour chatline, then people must be able to get through on that chatline 24 hours a day. If you state that every e-mail will be answered within six hours, then that has to be what happens.
Making a commitment to a certain level of customer service, and then sticking to what you have promised, is crucial. There is nothing more likely to turn potential customers off than a company that does not supply the level of service that they promise.
Ensure that all promises are fulfilled by factoring in necessary resources into your initial plans.
Conclusion
Launching an e-commerce business requires meticulous planning, research, and dedication. By understanding your market, assessing the competition, and committing to excellent customer service, you’ll be well on your way to e-commerce success.
