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 Sol Minion 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.
Ready to open your store?
Contact us today