One great way to create a stream of income is by starting an ecommerce store. An ecommerce store also known as electronic commerce is a business model that involves selling items which typically are physical or digital but technically includes the selling of anything online. Products are sold in ecommerce stores and then shipped to the customer. We see them all over the internet and businesses with retail locations can have an online or ecommerce store as well. They can sell to other businesses and/or consumers in the same manner that a retail store would. For our purposes an ecommerce store is a great business idea for those looking to create a steady stream of income that does not limit where they live. We are going to cover some of the high level points to consider and then future posts will drill into the details. This article will help the newbie understand what all is involved and decide if they would like to move forward with starting their own ecommerce store.
What To Sell
One of the first considerations you are going to want to research is what to sell. Choosing what to sell is a decision only you can make but my recommendation is to focus on the ultimate objective. If your ultimate objective is to sell whatever item is in demand then reverse engineer the process and research using some of the tools listed next. Starting an ecommerce store is super popular now and is something I have a love hate relationship with. Let me explain. 2020 knocked us all upside the head. And more people are now looking for other ways to create an additional stream of income. Shopify saw an 86% increase in business in 2020. For those who don’t know Shopify is one of many platforms that allows you to easily create a ecommerce store. I am ecstatic that more people are choosing to become entrepreneurs even if it is just as a side business. Multiple stream of income are how you find financial freedom. On the flip side (the part I hate) now that there are soooo many more stores there are some terrible terrible looking stores that are creating bad customer experiences. And here’s the thing. When one of us creates a bed customer experience all of us small business owners suffer in the long run. Don’t get me wrong I am not trying to discourage but make clear the need for you to make sure you contribute to good experiences. Part of that will be taking your time when designing your store and the other part will be setting realistic customer expectations from the start. The great news is you can create a phenomenal store that works on auto-pilot with all the supports in place but it will take time, money, and sacrifices. Y’all know I don’t like to sugar coat anything. This is not hard meaning it’s not difficult to understand but it will test your resolve and endurance to run the entire course.
Step 1 – Choosing what to sell
There are quite literally millions of products being made worldwide. So to narrow the field here are a few tips. Decide first if you want to sell a digital or physical product. Digital products are typically courses or tutorials based on your skillsets. Don’t short yourself. There are things that come easily to you that to someone else can’t figure it out. You have probably gotten compliments on this skill or trait since you were young. That is a market-able skill. If you decide to go into physical products. Start with what is drawing your attention. Something you like. A hobby you have. Then start creating parameters. Use Google Trends to research what people are looking for. Be prepared to jump down some rabbit holes. Also research who currently is selling an item and would be your competition. Start making notes about what they are doing well and any gaps or things they aren’t as efficient with.
Step 2 – Where To Get Your Products
Next, you will want to look at where you will be getting your products. Typically this falls into 4 categories. Make Manufacture Wholesale Dropshipping
Make – this is where you create the product. Maybe you own a Cricut and want to do some fun crafts at home then you will fall under this category. You will be looking at start up costs for equipment, materials, plus labor. And don’t discount labor because you are doing it. Factor in that one day you will outsource this task and by including that cost from the beginning you will make for a much smoother transition. And yes, I am speaking from experience. Quick story. I made candy bar labels at one time. And it was all fun until an order for 2000 that needed to be done in less than 5 days. I still worked a full time job and I knew how long it took my to print and apply the labels and it was obvious I was going to need help to make this deadline. I didn’t have anyone that would just pitch in I had to pay someone. And it was then I learned my prices were way to low. The cost for help ate into my already tiny profits and while I did not lose money I did learn a very valuable lesson and the importance of factoring labor into your productions from the start. If the item you make can’t handle the normal cost of labor then your prices are not correct and as someone who made this mistake I beg you to skip that hurdle by starting on the right foot. Making your own products also has a high level of satisfaction on a personal level. Each item you make you will feel a sense of accomplishment. The drawback is the amount of time you have to invest in making your products. It can quickly become overwhelming if you are still working or have other obligations to attend to when things get busy. The last point is you will find your profits are typically higher on products you make. Makers typically place their wears on websites like Ebay and Etsy in addition to having their own store.
Manufacture – this is when you find a company to make your product for you. People typically source overseas especially in China. Websites like Alibaba you will find being a great resource. A manufacturer is great if you have invented a product or have figured out a to make an existing product better. You can find someone to create it and then you can focus on marketing. Things to bear in mind is you will need to buy a certain number of units. So you want to ensure there is a market demand for your product. Having a manufacturer make your product takes a considerable amount of time to get started. Just on locating the company to work with and then negotiations and actual production can take 6 months or longer. You also will want to look into a good customs broker if things have to be shipped from overseas in large quantities as there are many reasons the government may tax or not release your items. They can help you navigate those finicky waters.
Wholesale – this is when you buy a product in large quantities and then re-sell in your store. Typically there is a mark up of which the difference between your expenses and what the customer paid is your profit. There are typically minimum order amounts but this will vary based on who you are getting them from. This route can take less time to get started as the manufacturer is already producing and you can research how well an item is selling before jumping all in. Things to consider include market saturation especially for extremely popular products. Pricing needs to be competitive for the market and if your market is saturated then you may find your margins (or the amount you can profit per order) are thin because so many are competitors. Most shoot for a 50% margin. This you will find is sometimes attainable and sometimes not attainable. Good research will uncover all this and whether it’s worth it to you to go this route.
Dropshipping – this is when all of the fulfillment is handled for you. And I will break this down. Dropshippers will ship the product direct to your customer for you after you have made a sell. You are then able to create an online store and test what products are sellers and what are duds with the least upfront investment. And you don’t have to find somewhere to store inventory. I am a huge fan of dropshipping but with a few disclaimers. The biggest issue I have seen is fulfillment times. In a time where Amazon gets you your package in 2 days understand that consumers do not like to wait. And the news is full of horror stories about people waiting months to get their product which is not good. Because they handle fulfillment you will typically find the cost for these items are more per order than if you bought a bunch upfront. This is a judgement call. I have seen small business owners sitting on inventory for months and months because they bought a ton inventory to hit their minimum and get the best price but now they are not seeing the sales in their store. On the flip side I have also seen dropshippers that had delay after delay on a customers item and it can feel pretty helpless if your customer is calling you and you can’t just drop their item in the mail. AliExpress is a great resource for finding dropshippers. Click here to visit AliExpress Another resource is Spocket. Click here to visit Spocket
Which option you choose will be based off of your goals and the route you have found to be most effective to achieve your ultimate goal.
How To Sell
You will want to choose a platform for your ecommerce store. There are a ton of options that are specifically geared toward ecommerce and you can always have a WordPress website created. I’ll list options here. I do plan to do reviews on each of these platforms so join my email list if you want to be kept in the loop.
- Bigcommerce – My personal fave check out my review by clicking here!
Choose your merchant
Your merchant is how you will process payments. Each one charges a fee which is typically a percentage of the sale. Some platforms have the merchant fees included and others you can use whoever you want. Everyone pays with a debit or credit card now-a-days so whether you should have one is not a question. You need one. The easiest process (in all this) is making it easy for your customer to pay you. If you have a bunch of limitations then expect those frictions to decrease your sales.
- Stripe – also my personal fave.
- Paypal – Braintree is a division of Paypal that I have had no issues with
Create A Business Plan
A business plan helps you navigate the business set up and planning process. Don’t think because your business is online that is does not need the same due diligence and strategy that a brick and mortar does. Business plans are not only for getting investors. They help you as the founder put all your ducks in a row. Microsoft Word has a phenomenal free business plan template that goes into detail on what you should be considering for each part of the business plan and I have found as a great resource to flesh out topics that I may have originally glossed over. So take the time and create a business plan. Also as a serial entrepreneur I want to mention something I had to learn. You see I thought when I missed a bench mark in my business plan that I had messed up or somehow failed and then my mentor explained to me that your business plan is a living breathing document. Even if you miss a benchmark you have learned a ton in the process. The more you learn about your business the better your business plan will become as you update it and create better objectives.
- Name your business
- Choose your brand image/colors/logo
- Choose your legal structure
- Decide on which platforms you want to use to create your store
- Research your competition
- Create a marketing strategy
- Create benchmarks
As someone who has created more than one ecommerce store I can tell you the actual store creation is the easy part. It seems overwhelming at first because all of this information is new to you. And each new thing you learn is opening new questions that seem endless. I get it completely. But believe me the effort is to focus on choosing the right product. Create parameters that measure demand and margin and find the item that is not over saturated. Remember people are lazy by nature. Yeah I said it. Which means that doing the extra effort or going the extra mile can be the difference in you getting a winning product on your store. Another option to consider is buying an existing store. People sell their ecommerce stores all the time and my next article will dive into the benefits of buying an existing store over starting from scratch. Stay tuned.
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