We recently asked a group of e-commerce sellers one simple question: What are the most important things to know about running an e-commerce business in today's business climate?
Their advice spanned such a broad range that we decided to share it in two parts. This article will focus on advice for newcomers. Part 2 will contain advice for people who have the basics under their belts, but want to take their operations to the next level.
Without businesses addressing proper accounting, newcomers can easily mistake their sales for profits
"The more I think about it, the more I feel that sellers need to understand 'business,'" says Donna MacMurray Klein. "I think a lot of them come at it looking for the nitty-gritty of selling stuff on a site, like where to point and click. They miss out on success factors like marketing, accounting analysis, business communication and more. A business attitude, I think, is the real key to success."
Without businesses addressing proper accounting, newcomers can easily mistake their sales for profits and miss out on knowing their true bottom lines. Likewise, without keeping an eye on business communications, those starting out are far more likely to engage in a flaming incident when customer service issues inevitably arise.
Know your competition
Sellers also remind us that no matter what platform you use, you'll find competitors already doing exactly what you want to do. You'll need to bring your best business sense into play as you learn about your competition. Study their products, policies, advertising, marketing, customer service responses and shipping features.
"I use WebMeUp to review 10-plus main competitors," notes Daniel Brady of Heavenly Hammock. "Check your competitors' top-selling products and up-sell strategy. Check SEMrush to see your competitors' top Google organic keyword rankings and ads. Consider if you have forgotten to target any of these."
How will you build your business in the marketplace if you have no idea how the merchants already selling your item are doing it?
Don't aim for the lowest price
Going for the lowest price is a common strategy among newcomers, but it's one that is doomed to fail
As you plan to go up against competitors, you will be best served by finding a way to grab market share without engaging in price wars. Going for the lowest price is a common strategy among newcomers, but it's one that is doomed to fail.
"When I first started, I was always checking to ensure I was the lowest," recalls online seller Jimmy Freeman. That proved tough.
"Someone would then lower [their price]," he says. "I would follow by going 50 cents below them and so on. Before long I was losing money on the product."
Instead of fighting it out on price alone, look for other ways to distinguish yourself, such as through customer service or convenience.
"One way to stand out from your competition is to offer added value, like a service or additional products," says Julie Austin, an inventor and manufacturer selling her products online. You already know a lot about the products you sell, so you're in a great position to offer customers advice about care and maintenance details, useful accessories, or alternate ways your product can be useful.
"I ordered a hot tub, and the company helped me with valuable information on how to keep it clean and how to make it last longer," she remembers. You can clearly see where she will shop the next time she needs anything for the hot tub the company has already sold her. Sure, they made a sale, but even better, they made a loyal customer.
You can do the same by building your business from the very beginning based on what you know about your potential customer. "Up-sells are great for profit margins," Brady adds.
If the merchandise you sell requires cases, covers, replacement parts or even batteries, make yourself the one-stop shop your customers will think of whenever their purchase needs maintenance, repair or accessories. Now you've got an additional revenue stream that allows you to reach out to your customers based on the things you already know they're going to need and want.
I ordered a hot tub, and the company helped me with valuable information on how to keep it clean and how to make it last longer
Remember to reassess
As you start building your business, don't forget about scalability. If your efforts bring the rewards you're hoping for, you're going to need efficient and effective ways to fulfill orders, take stock of inventory and reorder supplies, and keep your accounting in order. Here's where many newcomers begin to falter.
Make sure your bookkeeping strategy can keep up, that you have adequate storage for your inventory, and that your processes for pulling, packing, and shipping are solid. Don't put any new system into place until you can see how you will expand it as your business grows.
"Don't forget to renegotiate your payment processing fees if your sales volume is high enough," Brady notes. "PayPal gives volume discounts such as this."
Staying on top of your growth will also help you see when it's time to expand your marketplace. Cross-market selling may not be right for you when you first launch your business, but looking at other marketplaces should be part of your strategy as you take your business forward.
"By using sites like Amazon, Etsy or OpenSky, business owners really are creating an umbrella effect," says Nicole Bandklayer of bijouxxjewels.com. "You will expand your reach, your visibility and customer base this way because these platforms have customers already."
This is all great advice. Next time, we'll look at the businesses of people who are not just starting out on this adventure and explore advanced strategies for keeping your already thriving e-commerce business growing strong!