8 Important Things to Consider Before Starting an Ecommerce Business

Every day, the number of online buyers continually increases, making more businesses transform into eCommerce ventures. The digital era is welcoming conventional as well as new business concepts to have online startups.

For some, it is easier to take the plunge, whereas for others, it is a nightmare. To help you easily plan your journey to become a web entrepreneur, here I am sharing the essential considerations on how to start an eCommerce business.

1. Select products after extensive research

The biggest challenge is choosing a product or service to offer on your eCommerce website. We often copy an online business's complete business model when we know that it is earning a lot by selling a particular set of products.

It is a viable strategy if a few stores deal with similar products. However, as soon as more stores join the bandwagon, your store may face tough competition. It may make you close the eCommerce business or move on to another niche. Therefore, thinking twice before offering products or services online is mandatory.

Do your market research. Visit local markets to view what is available and what is not. Look into industries where the existing product or service quality needs an innovative solution. Try to be creative in deciding on a product that is not replaceable in the same form so that your target audience remains glued to your eCommerce business for the near future. 

2. Define your target audience

Defining your target audience also involves understanding the region where you would like to operate. With a proper understanding of who your target audience is, you will be able to use the right communication and platforms to reach them. Such vital details form part of what leading mentor programs like the Ecom Warrior Academy teach budding entrepreneurs.

Decide on the product or service and find the target audience for it. Learn their buying habits. Do they use mobile devices, or are they still habitual to browsing on personal computers? Understand their cultural preferences and geographical differences to better cater to their needs.

Knowing your audience may help you devise an effective strategy for your eCommerce business. You may be offering products and discounts without any fruitful results. For example, you can choose women over 30 in the local town to reach them with attractive cultural attire. 

3. Speculate your sales figure

Product selection is half the game. The real thing to consider is the volume of sales. On one hand, a cheap product with higher sales may yield more profits than an expensive item with fewer conversions. Evaluate your product or service, assign budgets accordingly, and expect realistic profit margins.

Deciding the sales figure of a local eCommerce business is more accessible, but it becomes challenging when you think of expanding to other territories. You can run multiple checks along with competitor’s analysis to find how much money they have injected into their business and their return on investment. With this, you can plan finances and expect to earn that initially covers the costs.

4. Price your Products

Product pricing is also tricky in the eCommerce business. A product or service can be priced in line with your business strategy. For example, you can set monthly subscription charges for digital products like web applications or magazines. The subscription-based model also works well for products consumers order frequently, such as skin and beauty care products or grocery items.

You may often consume to set a product price above, below, or equal to your competitor. However, this is malpractice. Evaluate your product independently and know the price your potential consumers are willing to pay. For example, if you sell highly customized shirts, your customers may pay twice the price of a simple shirt available in every random store. Improve your catalog quality, which may compel you to construct more consumer-centered pricing strategies. 

This is where Conjointly's Van Westendorp PSM may come in handy. How, you ask? This tool can help you determine the optimal pricing strategy by assessing consumer perceptions and willingness to pay across various price points. By gathering and analyzing data on how much customers value different pricing levels, you can identify the price range that balances customer demand with profitability.  

5. Do a rigorous analysis of your competitors

Competitors’ analysis is as vital as deciding over the products or services for your eCommerce business. It is a significant factor in product selection as entering a competitive market requires you to offer outstanding quality, the lowest rates, and an impeccable marketing strategy.

Despite this, you may also need to develop an innovative solution that is unavailable in the market. The competitors’ analysis helps you make firm decisions. Therefore, build your business strategy only if you know what the competitors have in store for the target audience so that you can formulate a different approach.

6. Plan your inventory

Selling digital products does not require a warehouse or an inventory management system. However, if you are selling physical products, you may need to plan to manufacture, order, and hold the inventory.

To manage inventory effectively, you may need to use different web applications compatible with the eCommerce platform you aim to use. Most companies buy a desktop solution for inventory management, and when they seek to go online, they are unable to carry forward the data.

A small eCommerce startup may not initially need a dedicated warehouse, as its sales volume may not permit it. Instead, it can share a warehouse, hold the stock in its garage or dormant room, and move to a dedicated facility as sales grow.

7. Allowing order tracking

Your eCommerce business can allow tracking orders until it is in your hands. Tracking it in transit depends on your courier company. Check if they offer order tracking or not. If yes, you may need to find out if you can configure their order tracking in your web portal or not.

8. Engage with reliable shipping partners

Every shipping service provider has terms, conditions, and territory to cover. Collaborate with local courier services for cheap and fast deliveries while engaging reliable companies for international consignments. It may help you in routine business operations and in pandemics like COVID-19. You may need commercial fulfillment services to streamline your product fulfillment and logistics.

In a situation of strict lockdown, when everyone is advised to stay home, a few courier companies are making e-commerce operations possible. If such a widespread disease occurs, your eCommerce business must be capable of serving your customers. Otherwise, it may badly affect your sales and goodwill. Learn how COVID-19 is affecting e-commerce and take preventive measures to make your online business a success.

Final words

It takes a whole lot of effort to plan and launch an eCommerce business. Every step takes excellent care. Missing any of it or committing mistakes can be devastating. Plan ahead of any misfortune by taking care of the above factors and keep your online business safe.