The landscape of online business has witnessed innumerable changes over the past 20 years. Trends that were once popular have long been irrelevant, and businesses that generated consistent profits for years have become obsolete overnight. On the opposite end of the spectrum, certain business models have managed to stay evergreen since the emergence of the internet - the e-commerce business is a perfect example of this.
But while most people are aware of how profitable an e-commerce website can be, few are aware of the steps involved in setting it up. To help you get a baseline understanding of how an e-commerce site is built, we will detail the process of creating a successful online store from scratch and outline some of the key variables you should be aware of before you start building your own online shop.
What You Should Consider Before Opening Your Own Online Store
Before you start the process of building an e-commerce store, you must first take a few factors into consideration. Here are the points you should focus on when preparing your e-commerce project.
Finding a Niche
The first thing you should do is pick a niche for your online store. This is a critical step that will play a determining factor in your success and ability to generate long-term revenue. In fact, most failed e-commerce ventures are the result of a bad niche selection strategy.
Determining your niche will not only help you figure out your potential profits but also give you an idea of the kind of customer support you need to put in place and the frequency of repeat customers you can expect.
An effective approach is to narrow the scope down to profitable niches that have an established target audience and good, long-term prospects. Here are some of the characteristics that you should look for in an e-commerce niche.
- High-priced items: Many beginners make the mistake of targeting niches that have hundreds of cheap products. Naturally, generating any sort of profit in these markets is predicated on selling hundreds of items, which is something most new small business owners are unlikely to achieve. This is why you should target high-ticket items from the start, as this will allow you to earn more money in both the short and long run.
- Multiple products: Another hallmark of a profitable niche is the range of products that are available to sellers. Unless you are planning on selling your own products, you should aim for a product category that has many sub-niches, various secondary and tertiary items, and a host of complementary accessories. Such markets give you the ability to build a small store around a single product and steadily increase the volume of your sales by gradually adding more items.
- Products that solve a problem: When it comes to picking a product category for your e-commerce store, it is advisable that you focus your efforts on unearthing items that solve a problem for consumers. An audience that is desperately looking for a solution to a specific problem is more likely to spend money on a product that solves whatever they are dealing with. Examples of problems that potential customers might face include weight problems, unmanageable debt, and anxiety.
- An existing market: Exploring an uncharted market as a beginner is a risky strategy. Ideally, you should opt for an established niche that has an existing business model and where money is being spent by customers. To make sure your niche fits this criterion, head over to Google and analyze some of the sites on the first page. The signs that point to an established market include the existence of online stores, the use of Google AdSense or other advertising networks, and the presence of affiliate marketing links.
Picking a profitable niche is only half the battle. In fact, you still need to implement a strategy that drives organic traffic to your store, and this is where keyword research comes in. Targeting niche-relevant search phrases should be at the center of your marketing strategy when building an online store.
When conducting keyword research for an e-commerce store, the recommended strategy is to focus on phrases that have buyer intent. For instance, a keyword like "best handheld showerhead" reflects a clear intent to purchase and indicates that the people searching for the term are in the final stage of the purchase decision - any traffic received from this keyword can be converted into sales on a consistent basis.
There are several tools that can help you carry out thorough keyword research. Ahrefs, SEMrush, and Long Tail Pro are just some of the tools that provide users with in-depth keyword and search engine optimization (SEO) insights for a host of niche markets.
Carrying Inventory vs. Dropshipping
Another important factor to consider before starting a store is deciding between holding your own inventory or dropshipping. Holding inventory requires you to purchase the items, store them in a warehouse, and handle all picking and packing tasks. On the other hand, dropshipping involves buying products from a third party that handles all storage and shipping activities.
Dropshipping offers a number of obvious benefits to new sellers. First, the barrier to entry is very low, and the startup costs are significantly lower than what holding your own inventory would cost you. The other advantage of using this business model is the fact that sellers can get their business up and running fairly quickly and without having to deal with the logistical challenges associated with sourcing, storing, and shipping products.
Despite these advantages, there are some drawbacks to using this fulfillment method. The main one is the lack of control you have over the fulfillment process. Not handling storage and shipping in-house means that you are always at the mercy of third parties - any mistake or oversight on their part can affect your ability to run your store. Additionally, dropshipping creates headaches when it comes to handling product returns.
Step-by-Step-Guide to Creating an Online Store
Once you're done with the planning process, it's time to start building your online store. Here are the steps involved in the process.
Pick a Business Name and Register Your Domain Name
The first step you should take is choosing a name for your business and registering a domain name. Since this is the first thing potential customers will interact with, it's best that you put some thought into coming up with a catchy name. Here are some of the best practices you should adhere to when picking a brand name:
- Pick something that is easy to pronounce.
- Avoid long names.
- Make sure the name is relevant to the niche.
- Opt for something that can be branded.
Once you've settled on a name, you can use a registrar to register a domain name for your business. Domain names can cost anywhere from $0.99 up to $12 per month. Ideally, you should go with a ".com" domain, as they tend to rank better on search engines and are generally perceived as more professional than other extensions.
Form a Legal Entity
If you are starting an online store with the aim of generating long-term revenue, you should look into forming a legal entity. Your main options are a sole proprietorship, corporation, and limited liability company (LLC).
While each legal entity has its own set of pros and cons, the structure of an LLC makes it perfectly suited to the needs of e-commerce businesses. By setting up an LLC and opening a business bank account, owners can separate their personal and business finances, benefit from asset protection in the event of liability, and write off some of their business expenses thanks to pass-through taxation.
Choose an E-Commerce Platform for Your Store
The next step of the process is picking the e-commerce platform that you will use to build your store. Below is a brief overview of some of the options that are available to you.
- Wix: Using Wix eCommerce is relatively simple. Sellers can set up a store in a matter of minutes by choosing a template and adding products from the Store Dashboard. The platform offers more than 500 templates, which makes it easy to customize your store the way you want. Other noteworthy features of Wix eCommerce include the unlimited bandwidth, a multitude of payment gateways, and the built-in dropshipping functionality.
- Shopify: This platform has become synonymous with dropshipping in the past few years. However, Shopify is just as convenient for sellers who want to maintain inventory. The platform comes with a dedicated subdomain and web hosting space for your store and includes a point of sale (POS) system that enables users to manage their sales and inventory in one area.
- BigCommerce: Despite having a subpar website builder relative to the competition, BigCommerce is still a viable option for new business owners. Sellers get real-time shipping cost calculations and have the option of integrating third-party payment methods without incurring any extra fees.
- WooCommerce: This is a WordPress plugin that adds e-commerce design elements and functions, such as listings, shopping carts, checkout pages, and payment options, to a working WordPress site. Thanks to the thousands of themes that are available to WordPress users, the platform ensures a lot of flexibility when it comes to store design.
- Etsy: If you're planning to sell products that fall in the vintage or handmade categories, you should consider Etsy as a potential e-commerce platform for your store. The main advantage of using such a niche-specific platform is the easy and targeted traffic that your listings will receive from the Etsy marketplace.
- eBay: Creating a storefront on eBay is another streamlined approach to building an online store. Getting a store up and running is relatively effortless, and the platform puts at your disposal a wide range of features that facilitate the organization of inventory and personalization of your store.
- Amazon: Having a store on Amazon gives sellers access to one of the largest customer bases in the world. One notable feature of the platform is the Fulfillment by Amazon program (FBA). Thanks to this service, sellers can focus on marketing the products and growing their business while Amazon handles storage and shipping.
Market Your Online Store
After building a store, it's time to start thinking about ways to market your new products to potential customers. The first strategy you should implement is using SEO techniques to rank on the first page of Google. Here is a basic SEO checklist to get you started on the right path:
- Include relevant keywords in your product descriptions.
- Make sure your store is optimized for mobile devices.
- Optimize product images by adding alt tags.
- Get an SSL certificate.
Another marketing channel that you can use to get your first sale and drive consistent traffic to your store is social media. Get the ball rolling by using paid advertising on platforms like Facebook and reach out to influencers in your niche and inquire about their pricing for sponsored content.
Improve How Your Online Store Operates
Running an online store involves dealing with a lot of moving parts. As the volume of sales increases, staying on top of every aspect of your finances may become unmanageable. This is why you should consider using advanced software solutions to improve the way you handle your financial management tasks.
Skynova's accounting software is a comprehensive accounting module that helps you manage all your finances in one place. This includes tracking your expenses, sales tax, income, and generating financial reports with a click of a button.
Leverage Skynova's Software Solutions to Grow Your Online Store
A major part of building a successful business is knowing which tasks should be prioritized. When it comes to e-commerce, the primary focus should always be on revenue-generating tasks, such as optimizing your listings, testing new products, and managing email marketing campaigns. Skynova's accounting and template solutions help you achieve this focus by streamlining your financial management processes.
To learn more about Skynova's software solutions, head over to our product section.