What is E-commerce? The Complete Guide to E-commerce
E-commerce is now a popular business venture most people do today. If you have, at one point or the other, bought or sold a product or service via social media, a website or an online marketplace, then you have been involved in E-commerce.
While the e-commerce business model is a promising one that could help you generate a lot of revenue, it is best to follow the right strategies and procedures.
Regardless of whether you want to sell a craft, product, or service, knowing how the business works is key.
Incorpuk in this guide, outlines all you need to know about e-commerce, including the steps to follow to start, what the business model entails, the benefit to be derived and lots more.
What is E-commerce?
E-commerce can simply be defined as the act of buying and selling online. It involves the process of buying and selling goods and services through the Internet. Almost every kind of products and services today can be sold through the online world.
This could be anything from automobiles, clothings, educational tools, kitchen utensils, health and safety materials and digital tools and online courses or services. Ecommerce also entails the process of making orders online, completing payment transactions, fulfilling delivery processes and lots more.
Until a customer receives the product or service which they pay for, an e-commerce transaction is never complete. There are several types of e-commerce, including business-to-business, business-to-consumer, consumer-to-consumer, and consumer-to-business.
How to Start an E-commerce Business
Below are the steps to take to start an e-commerce business today.
1. Choose a Niche
The first step to starting an e-commerce business is to determine the business niche in which you want to sell. As you'd expect, there are several areas in which you can sell and market your products.
Do you want to focus on the mother and child niche, do you wish to sell kitchen or health products, or do you want your product to serve entrepreneurs or business owners? These are the kinds of questions you need to ask when deciding on the business niche to dive into.
Identifying your business niche gives you a guide into the kind of products you could sell, helps you determine your target audience and simplifies your marketing options.
While choosing a niche, you would want to consider the most successful trends, what people need and what they are most likely to spend on, your interest and passion and lots more. You might want to consider two or more niches at this stage before further narrowing it down.
2. Conduct Market Research
Once you’re able to identify the niche you want to dive into, the next step is to do market research on the niches you’ve identified at stage one. You would be required to identify the trending products in the niche, your potential customers and their characteristics, and competitors.
Moreso, you would want to take a look at what your competitors are doing and how you could improve on it. While you could improve on already existing and trending products, you might also create an entirely new product that meets people's needs.
At this stage, you should note that selling products that meet the unique needs of a target audience is key to succeeding in e-commerce business. As such, you should know your target audience and be able to render a product or service that suits their demand.
3. Create a Business Plan
Creating a business plan is the next step. At this stage, you would need to design a detailed business plan that explains the roadmap in which you wish to take your business.
A solid business plan should contain the overall finance you need for your business and how to source for them, the product to sell, branding, marketing and sales strategies. It should also explain who your target audience is and how you wish to reach them.
Moreso, It should expatiate the goals and objectives of the e-commerce business and the ways to achieve them. In all, a business plan is like a guide that describes the pattern, methods, strategies, and steps to take to achieve a business goal. Not only is it useful to business owners and their teams, but it is a vital document that might be required in sourcing for business funds.
4. Select a Business Name and Start your Branding
Business name is another important element you would want to figure out early. Your business name should preferably be simple and memorable and should represent the nature of the business that you do. Beyond that, you would also want to ensure that the name is unique and hasn’t been used by any other business within your state.
You would want to check social media handles, web domain and your secretary of state's website to be sure it meets the uniqueness criteria. Also, your business name should meet up with your state naming rules and as such, must not be abusive, offensive or sensitive.
Once you've determined the business name to choose, you would want to focus on the branding aspect. With that, you should come up with your ecommerce business logo. You might also want to hire a designer who would simplify your branding options.
5. Register Your Business
To make your e-commerce business a legal one, you would need to register it with your secretary of state. To do that, you would need your business name and, more so, be required to select a business structure to register. You could, therefore, choose to run your business as a sole proprietorship, partnership, Limited Liability Company or corporation.
Once you're able to incorporate your business, you should also consider obtaining an Employer Identification Number and the necessary licences and permits. So you would need to find out on the specific licence and permits that would be needed depending on the products you sell, your location and so on.
6. Source for the Products
This is the time to start sourcing for your products. Depending on the kind of products you wish to sell, you might want to consider manufacturing them yourself, sourcing from a manufacturer or wholesaler or even going into dropshipping.
If you will be dropshipping, then you don’t need to keep a stock of your product as your supplier will always handle your product delivery. On the other hand, if your e-commerce business involves craftsmanship, then you might need to design and develop your product from scratch.
Beyond that, there are many wholesalers and manufacturers who will be willing to sell unbranded products to you. This way, you can brand the product to your own taste and sell out as the main owner.
Overall, you should ensure a straight and seamless process to obtaining your product, source for as many suppliers as possible, identify where to get raw materials if you are producing from scratch and lots more.
7. Create your Business Website
Through a business website, customers will be able to view your product, make selections for them, pay and track shipping and delivery. As an e-commerce business owner, a functional business website is one thing you should always put in place.
The website should showcase what you sell, how customers can shop and how they can easily contact you. Beyond having a clear and concise business website, you would also want to create social media pages for your business.
With social media handles, you would be able to reach a wider range of audience, engage many people, increase your business visibility and awareness and lots more. You might also want to consider using some online marketplace like Shopify, Etsy, Amazon, etc, to market your products.
8. Determine your Price and Payment Methods
Next is to determine your product price and the payment methods to use. You would want to do some research when it comes to the pricing of your products. While you wouldn’t want to overcharge your customers, you would also want to ensure that your business is profitable.
Consider calculating your overall cost before setting a price, and more so, you need to look at your competitor's prices to determine a suitable price. While you don’t have to sell at the same price as them, ensure your offer meets up with your price.
Also, you need to set suitable payment options for your customers. This way, you would want to ensure a smooth and stress-free payment method. Some of the popular payment methods include credit and debit card payments, bank transfers, digital wallets, and cryptocurrencies.
9. Market your Business
You also need to devise effective marketing strategies for your business. Being able to reach the right audience is vital to running a successful e-commerce business. While you might want to consider most of the organic marketing methods you know, it's also important to go for inorganic or paid ones.
Start by putting up relevant content on your social media handles. With this content, you will be able to reach a lot of audiences and engage them. You should also try and run a social media ads campaign. Facebook and Instagram ads are some of the cheapest and most effective ones to start with.
However, you need to identify your target audience, where they are, what they like doing, and their specific characteristics in order to reach them. Beyond that, there are other marketing options like email marketing, influencer marketing, running social media content, affiliate marketing, etc., you might want to consider as time passes by.
10. Analyse and Optimise your Business Strategies
Lastly, as an e-commerce business owner, you would need to take note of the business strategy that works best for your business. These include marketing, sales, pricing strategies and lots more.
You should devise a means of accumulating data from your customers and the business in general so as to analyse the areas that need improvement. You should also regularly observe which products are most favoured by customers and more so how you can regularly satisfy them and enhance great customer experience.
Benefits of Starting E-commerce
There are so many benefits to be derived from starting an e-commerce business. Here are some of them you should know.
1. Offer a Consistent Shopping Experience
As an e-commerce business owner, there aren’t limitations to when customers can order for your product. Once you have a functional website or online marketplace, your customers can order goods 24/7. This way, you can ensure a consistent buying and selling pattern. Customers from several parts of the world do not have to wait before they can order.
2. Ability to reach a wider audience
With an e-commerce business, you have the chance to reach a wider audience. You can sell to people from different parts of the world, receive payments for their orders and even deliver to them. Structuring and streamlining an effective way to track orders and deliver them even makes e-commerce business much easier. With a physical store, you will only be limited to selling to people within your locality.
3. Limited operational costs
Setting up an e-commerce business is quite cheap compared to a brick-and-mortar business. As an e-commerce business owner, you do not have to worry about rent costs, utility bills, storage facilities and lots more. In some cases, you do not even have to produce the product you sell. This way you will be able to minimise cost while also generating enough profits.
4. Provide a Convenient and Effective Way to Shop
Apart from the fact that business owners do not have to worry about setting up a physical shop, consumers also do not have to visit any location before they can get their products. Just with a few clicks on a website or social media platform, they will be able to make an order, pay and get the item delivered to their doorstep.
5. Access to meaningful data
While running your business online, it is easier to gather data about customers, trends, purchasing patterns and experience and lots more. Most of this information is used in strategizing the right marketing options, targeting the right audience, meeting customers’ demands, improving product offerings, and lots more.
6. Ability to Scale easily
With an e-commerce business, you can easily scale. With the right online tools, it's much easier to grow your business and generate more revenue. Beyond that, you can enter a new market, join trends, identify new product lines and meet up with the increasing demand of customers.
Challenges Associated with the Business of E-commerce
While e-commerce is actually a great business to start, there are a few challenges that beginner e-commerce business owners are faced with. It is, therefore, important to be aware of these challenges to actively prevent them from occurring.
1. Logistics and Order Fulfilment
A transaction is never complete until it is delivered to the customer. Meeting up with logistics and delivery is one common challenge most e-commerce business owners face at some point or another. This is most of the time as a result of using ineffective delivery agents and companies. To eradicate this, be sure to connect and partner with reliable logistics companies that can fulfil your order right on time.
2. Cyber security Challenge
Since e-commerce involves buying and selling online, most times, customers do need to share some sensitive payment details. These details or information, if not handled properly, can be targeted and used for fraudulent activities by fraudsters. As an online business owner, you would want to ensure that effective cyber security measures are provided to protect your customer’s information.
3. Customer Experience
Since there are plenty of business owners selling similar or the same product as yours, you would most times need to put an extra effort to ensure your buyers have the best customer experience. You have to take note of every complaint made by them and improve. Beyond that, you must actively build their trust and loyalty to stay relevant and competitive in the online world.
4. Competition
There are billions of e-commerce business owners seeking visibility and attention in the online space. To succeed, you must strategically streamline the right marketing, branding, and pricing options to get noticed by potential customers. While online buying and selling could help generate a lot of income, it requires a lot of effort, especially for a beginner.
Incorporate Your Company with Incorpuk Today
At Incorpuk, we will help you file accurate information when you register your company through us. We will help you with incorporation articles, a registered office address, and all you may need to register your company in the UK. Contact our team if you seek any information; we will gladly assist.
Conclusion
Starting an e-commerce business is an exciting one. While there is a lot of revenue to be generated from the online world, putting the best strategies in place and analysing the markets is key to success. As such, you need to work out your branding, marketing, inventory management, logistics, pricing and lots more.