The ecommerce field is one with a very low barrier of entry which can be both a good and a bad thing. The good part is that anyone can try their hand at the business model, but too many people assume that it’s easy to make it when it actually isn’t.
Most successful business owners in this space have had to work for years until they found something that worked, so you can’t expect success to come overnight. You can also expect to struggle more if you don’t have an actual understanding of how businesses work. Let’s take a look at what it takes to build a successful ecommerce business.
Be Ready to Fail
One of the first things you have to know about running an ecommerce business is that very few people succeed on their first try. You will have to be ready to fail – and learn – at first if you want to eventually be successful.
This also means that you shouldn’t spend too much on your first ventures. Try to start with a small store or a model that requires less involvement. If you want to start a full-on online store with your own product, for instance, then it could be a good idea to start with an affiliate site or try to sell through Amazon FBA first. This will at least allow you to know if you can handle running a store in the first place.
Many people start in the ecommerce business through dropshipping. At first glance, the business model seems extremely simple. But you should know that there is a lot more work that goes into operating that kind of store than many people imagine.
First of all, if you’re working with overseas suppliers like many of these dropshipping courses advocate, you have to think about the possible logistical headache that comes with managing returns. Very few dropshipping gurus will talk about that part when it’s one of the biggest and most problematic parts of running this kind of business.
Another thing you will have to learn is how to manage relationships with clients. If you end up getting a lot of orders and enquiries, you can’t expect to be efficient by handling everything yourself. This is where call centres, VAs, and CRMs come in. This may sound a bit overwhelming but know that this is all part of the process when you run a major dropshipping operation, so this is something you’ll have to prepare for.
Having a formal business education is not essential to starting an eCommerce business and many people who get into the field come from tech fields like computer science, web design, or marketing, among others. But it would be a good idea to get a business administration or management formation if you want to get an edge and increase your chances of succeeding.
Having an actual business formation will give you skills that many people in this field lack. Very few people in eCommerce know how to manage employees, for instance. A lot of entrepreneurs in the field also lack accounting skills and don’t know how to manage or diversify their supply chains.
This is why we would suggest that you look at something like this master’s in business management from Aston University. Getting a formal education will give you the foundation needed to run a real business while avoiding some of the major but avoidable pitfalls many starting ecommerce entrepreneurs fall into.
Most of the success of an ecommerce business is predicated on its niche, and the most important skill in this field is arguably knowing how to differentiate a good niche from a bad one. There are some niches in ecommerce that are much tougher than others. While they may seem profitable at first glance, they will be much more of a nightmare to run. This can be because the margins are too small or because they’re prone to returns.
One example is personal products like clothing and lingerie. These products are very popular with people getting into ecommerce, but there is a high rate of return on these. Especially when it comes to lingerie. And even if the client made a mistake and didn’t check the size chart, the blame could eventually fall on your hands.
Another product category that is very popular with newcomers is electronics, but these products usually have tiny margins and are extremely competitive.
If you want to know what a good niche looks like, it should have a low return rate and pretty good margins, and the products have to be easy to ship. Or you could go for a niche that doesn’t require shipping at all, like SaaS or informational products. When it comes to demand, you can either go with a product that has high demand and moderate to high competition or moderate demand with little to no competition.
Some examples of great niches include educational toys, pet products, health products, small exercise equipment, and kitchenware, but there are many others, so do your research and don’t hesitate to consult as many resources as possible before you pick one.
Relying on your opinion only when it comes to your ecommerce site is never a good idea. You should always have a close eye on your metrics and consistently carry out testing to find the most highly converting version of your site.
A/B testing is probably one of the most powerful tools any eCommerce site owner can use, so use it wisely. Play with different elements like colour schemes, banners, fonts, pictures, and your checkout system so you can optimise them. Be careful to only change one element at a time, however, so you can tell what’s responsible for any fluctuations. Make sure to not only check for conversion either, but also for average time spent on pages, behaviour flow, and bounce rates, among other things.
If you follow these few simple tips, you’ll have a greater chance of succeeding with your ecommerce business. Always remember that it’s a long-term effort and that virtually no one makes it overnight, so use your first ventures to learn as much about the business as you can.