If you’ve decided to enter the world of e-commerce, you couldn’t have picked a better time. The last year has changed everything about the way people spend their money, and more than ever, people buy as much as they can online while avoiding unnecessary trips to brick-and-mortar stores as much as possible.
The level of opportunity in e-commerce, in other words, is enormous. Getting started, however, is much more difficult than you may realize.
Getting online traffic and generating sales are two of the hardest things that you’ll ever do with a computer, and if you’ve already begun to think about those things, chances are that you’ve gotten way too far ahead of yourself. Before you even consider starting an e-commerce site, you need to know the answers to these four questions.
What Is Your Niche?
Your niche – the types of products that you intend to sell, in other words – is the first thing that you need to decide upon before you launch an e-commerce site. The world already has an online store that sells virtually every type of product under the sun, and you’re not going to unseat Amazon from its position of power unless you have a bankroll of many billions of dollars. Even Amazon started out as something less ambitious – an online bookstore! – than what it ultimately became.
When you choose your website’s niche, keep in mind that the broader your niche is, the larger your potential customer base will be. However, it’s easier to build rankings and generate traffic when your site has a narrow niche. For example, consider these four e-commerce website niches, listed in order from broad to narrow.
- Pet supplies
- Dog supplies
- Doghouses
- Prefabricated doghouses for large breeds
Where Will You Get Your Products?
The next thing you need to know before you enter the e-commerce industry is where you’ll get your products. One of the best things to have in e-commerce is your own product – something that people can’t buy anywhere else. Building your own product, however, requires resources that you may not have yet. That’s true of most new online entrepreneurs, so they’ll often get their feet wet by operating as resellers.
When people want to get started as resellers, they often look to China. There, you’ll find no shortage of factories producing massive quantities of everything you can imagine and shipping those products around the world – boxed and ready for resale – at surprisingly low prices. Before you pick a product and order 100 units, though, you might want to check the popular online marketplaces like Amazon and find out how many other people are already selling that same product. You might find that the market is already so saturated that you’d have trouble earning a profit at all – and you don’t want to have a huge investment tied up in inventory that you can’t sell.
Sometimes, people get started in e-commerce by using drop shippers. A drop shipper is an order fulfillment center that already has products in stock and ready to ship. When you make a sale, your website will send the relevant information to the drop shipper, who will then pack the order and ship it out with your company’s address on the return label. Working with a drop shipper requires a much lower initial investment, but the drop shipping service will take a cut of your profits.
How Entrenched Are Your Competitors?
When you think that you’ve decided on the ideal niche and have found the perfect source for your products, you’re still not ready to sell until you study your competition closely. Even if you manufacture and sell your own product, you’re going to have competition unless you’ve managed to come up with something that’s never been done before – and even then, you’re probably building on existing product concepts.
As great as your idea of prefabricated doghouses for large breeds might be, you’re going to find it difficult to gain any traction with that venture if there are already dozens of other companies selling similar doghouses, and all of them have been in business for years. If you truly have a better product – and you have the funds for a serious marketing blitz – then maybe you can carve out a space for yourself in that industry. Otherwise, you should go back to the drawing board and come up with an idea that won’t involve tangling with such heavy competition.
How Will You Differentiate Your Business From Your Competitors?
Differentiation is one of the most important factors that causes people to choose one product or seller over another. As mentioned above, you’re going to have competition regardless of what type of product you decide to sell – so before you even consider buying inventory and launching a website, you need to have a definite answer to the question of why people should buy from you instead of going elsewhere.
Don’t forget that, with most types of products, “elsewhere” also includes Amazon, which sells just about everything. Millions of people make almost all of their online purchases from Amazon because it’s easy. In addition, Amazon’s prices are usually fair, and Amazon offers easy returns. Some companies like Vape Juice sidestep that problem entirely by selling products that aren’t available on Amazon, so that’s one option.
Another option is to offer your products on Amazon’s marketplace and give people a reason to go directly to your site if they want to buy again in the future. Some companies do that, for example, by including coupons when shipping Amazon Marketplace purchases.
Finally, remember that differentiation isn’t just a matter of giving people a reason to buy from you – it’s also a matter of giving people a reason to buy what you’re selling. If you’re just reselling products purchased in bulk from Chinese factories, for instance, there are already plenty of companies doing that exact same thing. A custom box with your logo on it can go a long way toward giving your product a higher perceived value than what’s already available.