In 2015, I was working as a legal intern at a prestigious law firm in Tel Aviv. Realizing that I did not want to pursue a legal career, I started exploring other opportunities. The e-commerce world always fascinated me, so I started researching the possibility of selling something online.
In this blog post, I explain what I learned in the process of opening my online store with minimal upfront capital investment. From conception of an idea to choosing a product and going to market, I hope this guide saves you time and money, and enables you to be successful online.
The 5 steps to launching an e-commerce business
1. Solve a problem and find a product market fit
The most important (and difficult) part of starting a business is finding a product that will actually sell. While conducting online research and discussing ideas with family and friends, I learned that some dog owners use shade tarps to keep their dogs cool during outdoor activities, such as dog agility competitions, frisbee games, and camping trips.
I identified a problem: Dog owners want to keep their dogs cool during hot outdoor activities, but are unable to purchase a solution at an affordable price. This is when the idea for Be Cool Solutions was born.
I did not invent a product or industry. I figured out there was a problem and discovered the existing solution was too expensive and only available in the US. The lesson is to ALWAYS solve a problem. Don’t create demand. Instead, find existing underserved demand and fill it with well-defined customers.
There are many easy ways to find products to sell online:
- Drop shipping websites (Alibaba is a great solution, but shop around to find the best price and quality)
- High-selling products on Amazon with long shipping dates (you can order that item in bulk, post a listing, and reduce shipping times)
- Products on Amazon that don’t ship to your country (you can sell it on your personal website)
2. Test your product
You may think you have a great product, but the market needs to agree with you. Always test your product before you invest in inventory.
Survey your target market
When I came up with the idea to sell shade tarps to dog owners, I went on Facebook and found groups about dog agility to learn more about my target market. I created a Google Form (for free) and posted it in the groups. The form included basic questions to see if people would buy my products and also asked, “Do you want a 10% discount on my product?” If they answered “yes,” I asked for their email address.
At the time, I didn’t have inventory but I collected 100 email addresses of potential clients who expressed interest. Once I actually launched, I emailed that list, and about 30 of those respondents bought my product, which paid for the initial investment in inventory.
You should also reach out to group members and ask questions to understand their true needs.
Create a test site to build a pre-launch wait list
You can create a test website and direct clients there using Google and Facebook ads. Once they click “Buy Now,” you can notify them that you are out of stock and request their email address to alert them once there is more product available.
Using metrics such as page views, click-through rates, and ad spend, you can calculate your conversion rate and customer acquisition cost. These indicators can help you build a strong business plan and decide if you should launch your product. Of course, once you get the inventory, don’t forget to email that list of people who are willing to wait for your product. It is also important to admit if your product isn’t performing, and move on to your next idea.
Go to events your customers attend and talk to them in-person
The moment I realized I have a good product was when I attended the Agility World Cup – an event for my target market – in Bologna, Italy. I brought 40 units to the event with me and sold out within one hour. This was a very strong validation and a great way to make up my costs.
I also met clients at the event and asked them open-ended questions about their shade needs and pain points. When you talk to potential clients, it is important to let them do the talking, and then make testable assumptions based on that feedback.
For example, my assumptions were:
- Clients want free shipping: Once I offered free shipping, sales increased dramatically.
- Clients want different sizes: I originally created 10 sizes, but reduced it to three sizes, based on my sales per item. I still had a good selection, with low inventory costs.
- Clients want a travel bag: I started offering this free add-on and have received nothing but great feedback from customers.
You need to find your differentiator. It might be free shipping, it might be price. For me, it’s the travel bag that people love.
3. Build a website
Once you validate your product, you are ready to start selling. You need a website to list your products and entice people to buy from you. Building a website is very simple today with several out-of-the-box solutions, like Shopify and other e-commerce platforms. You can choose free or cheap templates (and as you grow, you can hire a designer for re-design).
It’s important to create a SIMPLE website that will explain your product in the simplest manner. When you’re getting started, you don’t need to spend lots of money. You can use websites like Fiverr.com to outsource design, content, digital advertising, etc. to an expert for as low as $5.
[Related article: 3 Ways to Improve Your E-commerce Store]
4. Drive traffic to your website to increase sales
Once your website is set up, you have to get people there. Here’s how you attract and convert visitors:
- Use Facebook and Google ads to reach your audience. Google offers free ads for new users. Start simple and outsource to an expert as your budget grows.
- Create content for your website. Research and incorporate the keywords people use to search for a solution like yours (you can use Google Trends, Google Adwords, and other tools).
- Post high quality photos of your products that show all the ways your product can be used in practice. If needed, create a video from the start.
- Add an FAQs section to save you lots of time answering emails and to increase your conversion rates.
5. Figure out how you will handle fulfillment
If you are struggling with order fulfillment, the good sign is you have a lot of incoming sales. The downside is you are wasting your valuable time picking items, packing orders, and standing in line at the post office. As a business owner, you can’t afford to waste time; the opportunity cost is too high. You should focus on strategy and marketing – not ecommerce fulfillment.
When my first orders were coming in, I found myself getting so excited that I would drop everything and run to the post office with my orders. Shortly after that, I was spending so much time at the post office that I couldn’t focus on the core of my business. That changed when I started using a 3PL.
Outsourcing to a third-party logistics company lets you grow your business to turn your attention to driving revenue, while also reducing your costs.
Discovering the power of 3PL companies for online stores is what drove me to join ShipBob as a Product Manager. I am very passionate about connecting the online and offline world. To do this, you need a great logistic solution that can help you be successful online by letting you focus on the big business decisions. This is the same passion I see in all of my fellow ShipBob colleagues, and is what makes ShipBob a great 3PL solution!
Learn more about how partnering with a modern fulfillment company can help your business scale, and get tips for choosing a fulfillment partner. Download “How to Choose a 3PL for Your E-Commerce Business.”