Whether you’re starting from the ground up or turning your existing brick-and-mortar business into an eCommerce store, you will need to build a solid foundation for your online store. Oh, and don’t forget that business plan!
When we begin planning your online store, we will look at the following:
- Can we connect to your suppliers for product availability, creating a virtual inventory? Or, will you be carrying your own inventory?
- Will you integrate with other platforms, such as Amazon and Shopify?
- Are there special requirements or regulations around your products, such as medical/vitamin supplements, alcohol, etc.?
- You’ll need to gather all of your shipping data, such as shipping weights, dimensions, etc.
- Do you have a large number of SKUs? Think sizes, colors, and other options.
- You will need a good digital marketing plan to drive sales. Think digital ads on Facebook and Google, remarketing, and content.
Now that you’re brain’s working on these, let’s take a look at what comes next.
What Next? The Online Store Launch
If you’re ready to start moving down the road to building your online store, you will need to decide what kind of store platform to use and what types of things to budget for. Let’s go over those.
Custom versus Existing Marketplaces (Amazon, Etsy, Shopify, etc.)
You have two basic options to build out your online store: a custom solution from a software developer like Ping! Development, or a ready made solution like Amazon, Etsy, Shopify, etc. Both have their advantages. Let’s take a look.
- Custom Solution: This option gives you the largest gross margin on sales (more money!) and control over your customer’s experience with your store. Additionally, you’ll be able to control the data and reporting to help you maximize your store’s performance.
- Hosted Solutions: These pre-built solutions offer the basic tools that you'll need to manage your store. These tools can cut into your overall margins and can be frustrating in their lack of customization.
Choosing between the two is like choosing your own concept versus going with a franchise. In the end, doing your own thing can produce the greatest sense of accomplishment and financial rewards.
How to Budget Wisely for an Online Store
Whether you go with a custom solution or a hosted solution, there will be setup and development costs, as well as ongoing fees. There are also logistical costs and other costs of running an eCommerce business.
Here are some common costs associated with an online store:
- With hosted solutions, there is a monthly hosting cost, transaction fees, and some charge a percentage of your gross revenue. Be sure to know the cost model for your platform.
- Once a sale is made, you have to fulfill it. It’s the old, “Shipping and Handling” fees. Yes, they’re real. You’ll need to move boxes around, package up the goods, pay for shipping, drive them to the shipping company or have them picked up by your shipper. Will you put fliers or catalogs into your shipments?
- Returns and Damaged Products. We don’t like to think anybody will return their purchases, but they will. Plan for it. Over time, you’ll learn what percentage of sales come back.
- Shipping Charges. Don't come up with some fancy way of calculating a shipping charge. Charge by weight (with a nominal handling fee) or offer flat rate (but account for shipping cost by weight because that's what you'll have to pay UPS, FedEx, or the Post Office when you ship).
Common mistakes when building out an online store
Taking your existing business online can seem like a no brainer -- no rent, no hours, reduced inventory (i.e. frozen cash). Those are all true, and building an eCommerce solution is often a great way to go. But don’t let that cloud your vision. Avoid these common mistakes:
- Not accounting for, or errors in calculating, shipping costs. “Free Shipping” is enticing in the face of Amazon Prime, but you need to account for that in your financial analysis.
- Understand the playing field on third-party platforms like Google and Amazon. A simple misunderstanding can lead to your products getting pulled from the digital shelf.
- Taxes. Make sure your system adds the correct sales taxes for each state when appropriate.
- Missing the market niche and instead going head-to-head with giant competitors.
- Launching with a platform that isn’t user friendly, both for you and your customers. You also need a solution that feeds you data, so that you can adjust your tactics and boost sales and profits.
- Building out an online store without a plan to find customers -- i.e. marketing.
- Too many products at launch. Start with proven sellers and expand out, otherwise you risk creating confusion and indecision with your shoppers.
The Bottom Line with eCommerce
Running a successful online store is all about planning and analysis. Find your niche, and place the best products out there through a well-targeted marketing plan. Build out good reports that keep you on top of your key metrics, such as your Sales Conversion Rate, Cart Abandonment Rate, Average Order Value, and others. And plan. Be ready for specials, events like Black Friday, and any changes coming from your vendors.
You will need to allow your site a good three-to-six months to get up and running -- indexing from Google alone can take 6-8 weeks. Give it time, don’t make rash decisions, and let the data help you make informed decisions. Do all of this while avoiding the common mistakes, and you’ll enjoy the benefits of a well-run online store.