- How to Start an E-Commerce Business with Next to No Capital - November 5, 2016
Many aspiring entrepreneurs are often faced with the daunting task of amassing capital in order to commence business endeavors. The idea that you have to be rich to start a business, or attain a large loan from your parents, has been embedded in the minds of many. While there are businesses that have high barriers to entry, many online or e-commerce business ventures are very accessible for the everyday working person.
Calculate risk versus reward
The key with online business is determining if arbitrage exists in that space. Arbitrage, the premise of buying low and selling high, is the fundamental building block for any e-commerce business and it exists wherever there are incongruences in the market. Whether you are a popular YouTuber capitalizing on ad revenue, or a Craigslist flipper moving items from one market to another, arbitrage for any online market must be assessed. Risks and saturation must be determined by the individual in order to properly gauge whether there is enough demand and room in the market for your product or service. To determine risk, look at the historical data of the product on multiple selling platforms. To determine whether a good is saturated, determine the number sellers or providers of this product and the ease of obtaining this product. For example, if there are already 50 YouTubers making videos on the latest video game, perhaps explore a new video game or angle in order enter a less crowded market.
Create a plan of action
After a risk/reward analysis is done, you must execute a plan of action in order to create a consistent flow of products or services that will allow for growth. For example, go to the grocery section of your local Wal-Mart and use the Amazon seller app, scan prices of certain foods and notice the differences of online pricing and retail pricing. Look at ratings and reviews and determine whether or not a customer would save themselves a trip to the store by purchasing it with their Amazon account. For example, if you run across a specific food item that may be regionally based, there are certain individuals in remote regions that may want to consume this product. However, while the product may be abundant in your area, it may be limited in another area.
Find your platform
One of the best ways to start a business with little capital is to leverage the success of another business. On two-sided marketplaces that have buyers and sellers, there is always an opportunity to create new business. Since the success of the seller is the driver of their revenue, the marketing of your business is already done. Airbnb finds people interested to rent your home, Etsy finds customers that are looking for creative crafts and Amazon finds consumers looking to buy your product. With these marketplaces, all you need is one item or service that you can sell. Once you make your profit from that item, you can turn around and invest into more.
The initial capital for selling products on Amazon FBA can be anything from a couple of dollars to a couple thousand dollars. However, an Amazon FBA business doesn’t need to take on a six-figure loan to purchase retail space and inventory. You can flip your way to success in an ever growing e-Commerce market. Sites such as Craigslist, Amazon, Wal-Mart, eBay, Jet, Newegg and many more give sellers an open platform to sell anything to anyone. Many of these e-Commerce giants have experienced a network effect, meaning that smaller third party platforms can’t take a large percentage of the market share even if they operate at better prices. Customers are curtailed to single large platforms, and sellers have access to large customer bases. Using these sites, you can potentially reach more customers than the largest brick and mortar stores.
True to our name, we are Savage Sellers who grew initial capital of less than $1 into a multimillion dollar revenue business. A lot of business owners claim great success, only to later reveal that they relied on loans and initial investments. We started this business out of a dorm room and have taken off running by finding the arbitrage in our market and capitalizing on it efficiently. We encourage you to visit and take our courses where we show you exactly how we achieved our success.