Thinking about starting an online business? It’s a good idea: e-commerce sales are expected to reach $3.45 trillion globally this year. Here are eight steps to take when launching your business, according to successful e-commerce entrepreneurs and Advisors in The Oracles.
Play to your strengths and outsource the rest
“I don’t even have a laptop or iPad, and I have no idea how to launch an e-commerce business — so I hired people who do. I live by one simple rule: If you don’t know what something means, ask immediately. Don’t pretend. My strengths are marketing, branding, identifying your target audience, and designing a narrative about the product, which are all crucial in e-commerce. Play to your strengths, and then outsource or learn whatever you don’t know.”
—Bethenny Frankel, entrepreneur and philanthropist; founder of the Skinnygirl lifestyle brand and the charity BStrong, New York Times bestselling author, and Shark on “Shark Tank;” follow Bethenny on Twitter and Instagram
Plan for future buying behavior
“From a practical perspective, you need the right infrastructure, such as Magento or Shopify. But more importantly, you need to think about how we will buy in the future. Too many people focus on our current behavior versus the reality three years from now, which is where you want to play. For example, when I launched my e-commerce business, everyone told me they’d never buy something online. Now look at sites like Woot.com, which changed online retail with its flash sales and daily deals.
I believe mobile will become increasingly important for e-commerce businesses. The winners will be the ones who create the easiest, most native and natural way to buy something on a mobile device. But that’s just me. Ask yourself where the market will be in 36 months; then trust your intuition, plan accordingly and be patient.”
Calculate this simple equation
“E-commerce is a simple equation: your profit on each order should exceed the cost to acquire a new customer. Whenever I start or consult with an e-commerce business, this is where we focus. First, break down your revenue and costs for an average order. Include the cost of the product, importing and shipping, packaging and fees for the merchant and warehouse. To identify your customer acquisition cost, run a presale trial before committing to ordering your product in bulk. This will give you an idea of the cost to ‘buy’ a customer from advertising platforms like Facebook and Google.
Don’t give up if your cost to buy a customer is more than your profit per order. The last e-commerce business I co-founded, alphabetlegends.com, was in this situation. We pushed down costs by negotiating a bigger order with the supplier and increased our profit by improving our landing pages and upselling our customers. Start with confidence in your numbers and clarity on where to focus.”
Set up your corporate structure correctly
“Access to capital is everything if you want to go from your garage to greatness; so make it easy for investors to invest in your company. Investors will not value your company as a mom-and-pop if your housekeeping is in disarray. But with the right corporate formation and record keeping, they will see a well-run company poised to give them a great ROI.
You need well-written legal documents, including a certificate of incorporation, action of incorporator, founder stock purchase agreement, initial board action, and bylaws. Investors want to know that you legally own everything that your team creates; so your employees need to sign offer letters, employee proprietary information and inventions agreements, nondisclosure agreements, and consulting services agreements. Fortunately, law firms have partnered with app creators to help you manage everything while collaborating with your employees, attorneys, investors, and board members. Start right so you don’t have to start over.”
—James Daily, founding partner of Daily Law Group, which helps high-profile clients with fiduciary abuse litigation, including fraud, crisis management, and business and family disputes; connect with James on LinkedIn
Do your research
“First, decide what platform to sell on. I recommend starting with Amazon unless you already have a following, in which case you could create your own store using a platform like Shopify. Begin with just one product, researching similar ones that are selling well to ensure people will buy it.
You can find manufacturers on Alibaba.com or by Googling your product along with the word ‘manufacturer.’ Order samples from a few suppliers and choose the highest-quality product at a reasonable price. You should make a profit of 30 percent to 40 percent after inventory, shipping, packaging, and credit card, fulfillment, and platform fees.
Use professional photos and well-written sales copy, selling the benefits through vivid descriptions of the product features. Make it easy to try your product with a no-risk guarantee. Offer an initial discount and launch a marketing campaign using Facebook advertising, social media and email. Then follow up with your buyers to find out what they liked and didn’t, and ask happy customers to post reviews.”
Focus on marketing
“My agency has scaled dozens of e-commerce brands, many to $1 million and some to over $10 million. Those that grow fastest have several traits in common. First, they have a unique selling proposition that marketers can craft a story around. They aren’t just another supplement or T-shirt company.
Once they have a well-crafted product, the next step is marketing — specifically, getting eyes on the product, cash flow and sales. We build high-converting sales pages and a website, then send them traffic using Facebook, Instagram and Google. While you probably can’t afford a high-level agency at first, teach yourself or hire a part-time marketer who understands strategy, copywriting, sales funnels and advertising.
Remember: You can have the best product in the world, but if no one sees it, you’ll never make money.”
Create content for your customers
“With widespread access to the internet, anyone can compete in e-commerce. The barriers to entry have collapsed. So the question is, how will you bring value to your potential customers? That’s how you close the sale. Everyone is doing the same thing with their marketing. How will you stand out? By creating content that adds value.
For example, I have a YouTube series where I answer questions about day trading. For three years, I uploaded a video every day, and sales immediately increased. I also host free events around the world to educate people — not to sell. My goal is to teach traders and then give them my money to trade. So I have to teach them to be profitable if I’m going to make money. Build trust by giving your customer value and tying their success to yours. Instead of forcing sales, customers will come to you.”
Find a great mentor to guide you
“’You have invented nothing new,’ my English teacher used to remind us daily. That has never been truer in the world of e-commerce. Thousands of online entrepreneurs have had great ideas, launched businesses, failed, and succeeded before you. Tap into that vast wealth of knowledge by finding a mentor who can offer advice through the hard times and see your challenges from a different perspective. A good mentor will identify where you are and offer advice on where you’re going. You can find e-commerce mentors on sites like Clarity.fm and eCommerceFuel.”
Originally published on Entrepreneur.com. Copyright © 2019 Entrepreneur Media, Inc. All rights reserved.
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