January 28, 2011
Starting an e-commerce business today is easier than it has ever been. There has never been such an abundance of tools, software, experts and resources to teach you exactly what to do and how to do it.
A few years ago, it would cost you an arm and a leg just to get your e-commerce site up. Today however, we have a multitude of shopping cart software to choose from.
In 2001 when I first started selling online, starting an e-commerce business may have seemed like a risky thing to do. Today you hear tons of success stories in newspapers and online media.
Nevertheless, many newbies still make some fundamental mistakes when starting their first ecommerce site. This article highlights three key factors in being successful at e-commerce.
Choose a Moderately Sized, Profitable Niche Market
You cannot, and should not, try to be the next Amazon. Selling everything under the sun is not easy, cheap, or really necessary. It took Amazon millions of dollars and years of operations to finally achieve a profit. Can you afford to do the same?
I’ve always advised my students to “go niche” – in other words, to choose a well-defined and targeted niche market. However, choose a niche market that is too small is a mistake as well.
You’ve probably read e-books that tell you to explore obscure niche markets. It’s true that in such markets it’s easier to make money since there is less competition. However, fewer competitors can also mean less profit on the table, and a smaller audience. What good is it if you can completely dominate an obscure niche market, yet cannot make enough money from it to sustain at least a full-time income?
It makes perfect sense when you think about it! If there was a lot of profit to be made, there would be existing competition to some extent. You’ll
Ideally, your target market should be not too broad yet not too narrow. Look for potential growth in your market as well. You don’t want to end up serving a shrinking market.
Don’t Spend Too Much Time on Software
The right software will make or break your new e-commerce venture. However, some marketers prefer to go for open source systems just because it’s free. What they fail to consider however is that almost any kind of open source software is never a finished product. Unless you want it to look like every other site out there using the same system, you’ll need to work on it.
That’s when most people realize the real hidden cost of open source software – your time! If you choose open source software, remember that it’s still going to cost money and time to develop it into something you want. More often than not, it will only steer you away from your main goal of building a working site fast.
That’s why I always recommend new marketers to go for ready-made e-commerce shopping cart systems that are web-based. This will save you lots of time. The time you save can easily be used to market your site and get more traffic.
Web-based e-commerce systems usually also come with tons of different web templates you can choose from. This helps you to get the design you want for your store. Modifying the templates a little will make your site even more unique.
Paid software also comes with accessible support, whereas open-source programs don’t. Having someone you can turn to when things don;t go exactly as planned is extremely valuable. With open source software, you’ll find yourself begging for help and attention at support forums.
Deal With Back-end Issues As Quickly As Possible
Having an e-commerce store is just one part of a successful e-commerce business. There’s tons of other back-end stuff you need to take care of too. For example, shipping and delivery is a major concern.
A successful e-commerce business always has products in stock and always ships fast. Most successful online retailers has spent tons of time, money and planning to delicately put together an effective stocking, delivery and customer support system. How you need to develop your back-end processes really depends on your market, the size of your company and your level of experience.
However, I strongly believe that if you can identify bottlenecks in your processes and make a genuine effort to address them, you should be able to get a smooth start in your e-commerce venture.
Your cash flow and line of credit is another massive concern, although no guru will teach you about these things in an e-book or seminar. It’s something that you will learn to understand and master with time. When you’re starting out however, a little caution will go a long way. Keep everything simple, and avoid spending on expensive hardware or software.
After all, the kind of hardware and software you really need is pretty cheap nowadays. You can get dedicated servers, help desk systems, merchant accounts and other related tools for under a hundred dollars monthly. Warehouse or storage space is completely redundant if you can find a drop shipper to supply the products and make the actual shipment to your customers.
Take some time to carefully design and test your back end processes. You simply cannot afford to take these things for granted. If you do, you may end up with a lot of grumpy customers and that’s never a good thing for your brand or profitability in the long run.
Gobala Krishnan writes regularly about Internet marketing and entrepreneurial success. For more information on getting the right e-commerce software, check out his BigCommerce review site.