Opening a store offering online sales is an investment, and you are an investor, which is why it is very important to prepare for the challenges that you will face. In this article, I would like to draw your attention to particularly important aspects related to Internet commerce as well as to the specifics of the e-commerce market.
I can say from experience that the foundations of entrepreneurs’ failures in e-commerce lie primarily in the lack of knowledge necessary to make accurate business decisions. Already at the very beginning of the investment one should realize that the return from it, usually starts to appear between 8 and 14 months of online sales beginning.
In this article I will address the issues:
- Your strengths,
- Selection of market and products,
- Target group,
- Competition analysis,
- Your commission,
- Own brand,
- Trading platform,
- Distribution and marketing channels,
- Channels of communication with clients,
- Customer service,
- Marketing strategy.
How to prepare for trading on the Internet, so as to increase your chances of success?
You should start by scheduling your budget for the whole year in advance. Here, too, it is worth thinking about its possible additional sources of financing. Then comes the time for assumptions, analysis and planning. However, from size of the budget will depend the decisions made and the range of possible actions and available solutions. Many entrepreneurs assume financing the next months of activity from sales revenues, which is based on more or less complex estimated calculations. This optimistic scenario, in practice very rarely happens, because usually the e-store in the first months of its operation requires a constant external source of financing. Therefore, if from the very beginning of your online store, your sale covers advertising expenses, you are in a very comfortable situation that allows you to further scale your business.
It is important to be aware of your own experience and limitations. I recommend you to do a SWOT analysis for yourself, based on which you will have a clear, though subjective view of your capabilities and needs. On strengths, you will base your business, weaknesses will create a list of tasks that you can be delegated to employees or external companies.
Selection of market and products
A lot depends on your predispositions, first of all it is good to rotate in the industry or among the products that are known, it will be much easier for You to understand the needs of consumers as well as navigate in a given industry. Therefore, the issue of choosing an industry is an individual matter of every entrepreneur.
If you do not have the capital that will allow your store to compete with large brands, choose a niche and focus on it. And best if it’s a niche in a niche. Consumers prefer purchasing specialized products in specialized stores and this fact alone will give you a competitive advantage at the beginning of your business.
It’s nice to have a unique idea for something special, however, I have often met with the fact that the innovative concept was not reflected in the demand on the market, and the cost of producing such demand on it by the entrepreneur exceeded its financial possibilities. Please remember that in order to stay on the market, there must be a sufficiently high demand for products from the offer of your store. If you intend to launch a new product on the market that is not in sold at least in your region, you need to prepare yourself to promote this product or brand. It will be associated with months of promotional spending, which they not will turn to you until the consumer’s interest arises and demand arises on that product.
Consumer trends can be analyzed using Google Trends, here it is good to combine selected products with others, even from outside the industry, in order to have a reference point that will illustrate the size of the market. Personally, I also use for this analysis the tool provided in Google Ads – a keyword planner. It shows provides specific amounts of user queries over a selected period of time, however, using this tool you should be careful to only analyze “closely related ideas” of keywords and derivatives phrases.
Building a person model – the customer model is important because it will allow for a good selection of marketing activities and communication channels. It will also allow you to “personalize” the offer for to selected target group, which will directly translate into its attractiveness for customers and the increase yours in sales.
I meet with the fact that customers who come to me consider their products to be universal and characterize the target group as “everyone”, sometimes only by limiting it with age or the gender of recipients. Such an approach is erroneous because it does not allow for find of possible places of contact between consumers and the client’s brand, and the choice of communication channels and marketing activities is made on the basis of the popularity of the channels themselves, not on the basis of their attractiveness for the store’s customer. The offered products are also not personalized, or suited to consumers, which translates into lower conversion rates in the store, and thus a significantly lower return on investment.
When defining the target group and building a person model at the very beginning, it would be necessary to carry out segmentation of the market, i.e. to define and isolate all larger groups of customers, in order to be able to consciously choose these the most attractive for you. Once you’ve decided on a specific audience, it’s worth answering the following questions:
- Do you know the needs of the selected target group, its shopping behavior? Do you know what the average day of a person in this group looks like?
- Is the selected target group sufficiently profitable and large enough to achieve the assumed sales volume?
- Do you realize how much the customers will be able to pay for the products?
- How to reach the selected target group? What media does they use? Which online portals is browsing?
- Why, from their perspective, it is worth buying in your store?
Monitoring and analysis of competition is very important especially in trade, where a huge part of your assortment or its substitutes will be on the competitors’ offer.
When analyzing the competition, create a list of competitors and specify the criteria that are important to you. You will get a list of the competition by searching for your products in Google search engine, in local price comparison websites, ebay auction site and amazon.
Once you know who specifically works on the market, you can go to each competitors analysis on the basis of criteria such as:
- What are the competitors target groups and how they are communicated with them?
- What products does the competitor or their substitutes offer and at what prices?
- What additional values a competitor offers to his clients?
- Which sales channels does the competitor use?
- What does a competitor stand out from others companies?
- In which aspects a competitor has an advantage over you, what are its strengths and weaknesses?
- What is your advantage over the competition?
- What marketing and promotional activities does the competitor run?
- How does the competitors meet the needs of your target group?
- What are the consumers opinions about the competitors and its offer?
I meet with two approaches of entrepreneurs to the commission and earnings of their e-enterprises. The most popular business model assumes sales with a high gross margin, the margin itself is strictly dependent on the industry and can range from 20% upwards. Please remember that you should deduct the company’s costs and advertising expenses from such a profit. Noteworthy is also the method of gaining market advantage in this model, consisting in building a strong position of own brand and its products, by allocating significant funds for their promotion.
The second business model that I’m meeting with, assumes generating millions of turnover at a margin of 1-4%. In this case, the competitive advantage of the e-store is based on a low price, and the company’s profit on the increase in turnover and optimization of costs and processes.
The strategy of your company will depend on which business model you choose. Achieving profitability is a process in the over time, which is why it is important to allocate available resources reasonably, because you can not expect that the company will be earning money from the first month of its operation.
Building my own brand and its awareness among consumers, in my opinion, is crucial to achieving financial success in e-commerce. Looking at my clients’ brands and how they changed over time, I can say that strengthening their image on the market has a direct impact on their financial results – their products are more willingly bought, and consumers need less time to make the purchase decision themselves, which translates into lower conversion costs, up to 60%
The e-store brand will be the name of its domain, so it is important to make it easy to remember and refer to the assortment offered by the store or the slogan – the main idea.
I suggest starting from the slogan, the main idea with which you and your clients can identify. This will allow you to choose the direction in which the brand will follow.
When you creating a professional Visual Identity of your company is sensible to be commissioned this task to an agency specializing in this. Your company will also need standard marketing materials, enriched with any customise boxes, wrapping paper, tapes and protective foils for shipments.
If you have the possibility, it is good to reserve the name of your own brand as a trademark.
From the first week of your online store activity, you should collect consumer reviews about your store. Opinions are very important because they are social evidence, which thus influencing another customers purchasing decisions. Popular sources of reviews: Google Consumer Reviews, Trusted Shops. It is also if only worthwhile if the selected target group is suitable for this, integrate your store witch the social media services.
The choice of a commercial platform for e-commerce should be based on the company’s financial capabilities and its needs. I often meet with clients who released most of their resources building a store, leaving almost no funds to promote it. It is important to stay reasonable in the calculation of expenses and be aware that the store will not sell anything by itself, and customers will not come of nowhere. The most important should always be acquiring customers.
When choosing a platform, you will be to decide between SaaS solutions (subscription solutions) and dedicated, for example, open source. With a very low budget, I advise you to choose one of the popular SaaS platforms, but you must remember that the SaaS store is not yours, and the service provider usually collects data about your clients. Therefore, if you have the right resources, the right choice will be your own trading platform based on one of the popular store systems like Magento or WooCommerce. There are also fully dedicated solutions based, for example, on Symfony and built from scratch, they will be the right choice if you plan to strengthen the existing sales network of your stationary stores and intend to reach new customer groups via online channels.
What kind of store system you would not use, it is important that it has the functionality you will need, and they can be: Integration with courier companies, payment systems, circulation of company documents, invoicing system, warehouse program, integration with price comparison sites and auction sites, importing products from wholesalers or integrating with a dropshipping supplier.
The store itself should be primarily practical, visually attractive, intuitive, fast to load on both computers and mobile phones and be “SEO friendly”. For testing the already launched trading platform, I recommend Google PageSpeed Insights.
The store platform should be have implemented the Google Analytics digital analytics with the e-commerce reporting module, Google Tag Manager and Google Search Console along with the map of the store site. You will also need technical support, a SaaS team or your own programmer if you use dedicated solutions, which will modernize the store, add new functionalities and most importantly, fix the detected problems. I would like to draw attention to the fact that with SaaS platforms, the individualization of the store is very difficult, usually limited only to the graphic template.
Personally, I recommend to talk to other entrepreneurs who are already using a given solution before You making the final choice of the system or contractor. Such conversation will save you a lot of time, money and unnecessary nerves.
Dropshipping is, by definition, a logistic and business model in which the role of an online store is limited to brokering in transactions between customers and the provider . In this model, the store earns a commission on sales.
Dropshipping has its pluses eg you do not need to store goods but also cons – it is very difficult to create your own brand and credibility and you have no influence on the quality of after-sales service. For me, the issue of dropshipping always remains open and individual, because the relationship between the e-store with the supplier and the conditions of cooperation described in the contract are very important.
Some of my clients have developed a slightly different sales model, namely they integrate with wholesalers and suppliers, placing products from suppliers offer in his stores, but the goods are ordered only when it is purchased by the individual customer. Contrary to the widespread opinion that selling a product that is not in stock is reprehensible, in my opinion this business model is fine as long as the information requirements are met and the consumer is aware of the actual time of delivery his order.
Warehousing of goods
If you do not work in the dropshipping model or do not use the services of a logistics company, you will need a warehouse for goods in the your store. The size of space needed will depend on your offer and the turnover of the store itself. From conversations with clients, I know that turning your home into a warehouse is not the best idea, so it’s good to think ahead of time about the storage place, which will also allow you to complete and pack your orders.
Being on the topic of the magazine, think about the amount you can initially spend on product stocking and where and from whom, you will buy the goods.
Packaging – boxes, envelopes, foils, adhesive tapes, wrapping paper, and all with the logo and address of your store. Remember that packaging should be an indispensable element of promoting your brand. Personally, I know stores that save on packaging and send goods wrapped in bubble wrap and stretch. It looks sloppily and the same message carries about the brand. I also have home packaging in which I received the purchased products, which I did not throw away, because they are too attractive. The issue of packaging leaves a large field for creativity – multifunctional packaging, reusable packaging, aesthetic and fun packaging. If the customer stops your package and uses it, every time he looks at it, he will see your brand.
At this stage, entrepreneurs should think about what, in what quantities and how, they will pack the purchased products and what dimensions and weight will be have complete shipments.
Distribution and marketing channels
Distribution channel (sales) I name each form of customer interaction with the brand by which he can enter the shopping path and place the order. Shopping for the consumer is an inspiration that will change his life for the better, bring new values to him and satisfy his needs.
Omnichannel consists in combining many distribution channels into a coherent sales network, based on the preferences and interests of the selected target group. Shopping should be fast, convenient and able to be implemented from anywhere, anytime.
The problem of marketers and entrepreneurs themselves at the current stage of technological development of e-commerce is the lack of possibility to identify the user in every point of his contact with the brand. This prevents the precise valuation of distribution channels and makes it difficult to know their full value for the company. Nevertheless, multi-channel contact between the consumer and the brand is a fact. I suggest, for this reason, to rely on assumptions that are also supported by facts about selected target groups. I will use an example: Conversion rate and the sale itself via mobile devices is lower than among clients shopping from computers. However, by selling goods to the target group, which uses 70% of the interaction with your brand and the offer uses mobile devices, it is first of all necessary to focus on the distribution of content and establishing communication on these devices. It is a fact that the majority of consumers prefer to place orders by computer for convenience, while they search for products and make contact with the brand using phones. In principle, it should be that where your clients are, there is your brand.
I divide distribution channels into intermediate and final channels, which will depend on your company’s strategy and your communication strategy with clients.
The final channel will be the place where the customer can place an order, usually they will be: an online store, an auction site, a phone, a chat on the store’s website, a chat or a Facebook / Instagram store. Due to the omnichannel phenomenon, the end channel can also be an intermediate channel depending on the individual preferences of the consumer. Multi-channeling is the basis of modern sales and marketing activities, and it is based on the fact that the brand understands the needs of its clients by providing them with the most convenient contact channels for them. At the same time, it takes care of providing customers with consistent shopping experience, regardless of the channel they choose.
Intermediate channels (marketing communication channels) are used to reach the selected target group, present its e-store offer and its value (marketing message based on the communication strategy) and direct the client to the final channel in order to finalize the sale. Indirect channels rarely change into end channels, this usually happens only in individual cases or during transformation of the channel itself (evolution of the distribution channel). Popular marketing channels are: Google ads (graphic, search engine, product), store positioning, fanpage on social websites, price comparison websites, internet forums, newsletters, Facebook and Instagram Ads, remarketing, content marketing, SMS messages, materials and video ads ( e.g. on YouTube), consumer reviews, word-of-mouth marketing, viral, mobile applications and advertising targeting mobile devices and push notifications.
Worth mentioning are two more popular consumer trends: multiscreening, ie browsing the store’s offer on several different devices at the same time (phone and computer) and multichanneling, that is starting shopping on one device and finalizing the transaction on another, eg logging in using phone in the online store as its customer, adding products from the store’s offer to the cart or “favorites”, and then continuing the ordering process already on the computer.
Channels of communication with clients
A channel of communication with clients, I call it every possibility through which the consumer can contact the “e-store customer service”. Communication channels should be included in the communication strategy, i.e. based on the analysis of your target group. You schould choose the form and channels that will be the most optimal for your clients and are used by them eagerly.
The most commonly used communication channels: e-mail from store, contact form, chat on the e-store website, telephone, Skype, WhatsApp internet communication, internal communication on social networks via comments and built-in messenger, video chat and Newsletter. Yes, the newsletter should be a two-way channel. It is worth asking his recipient for feedback, let him express his opinion, let him communicate with your brand by replying to this email, all in order to engage in a deeper relationship with your brand.
I will pay attention to outbound communication, which is the most often call back or email who is sended to the client. It is worth already at the beginning of the store’s activity to specify the situations in which the store’s customer service will contact the customer and in what form he will do it. The reason for contact may be delays in the execution of the order, shortages of the goods and other problems, but also ‘thank you’ for the order, transfer of the rebate, sending a request for any purpose. It’s worth taking the initiative and making contact with the client, first of all to get to know his needs better and find out what kind of experience he received at each stage of the shopping path. This will allow you to optimize and improve the company’s processes and improve the shopping experience of the store’s customers.
If you care not only about keeping the customer, but also turning it into an ambassador of your brand, it will be necessary to maintain relationships with him through communication and increase his satisfaction resulting from the possibility of communing with her (eg offer only available to regular customers, including rebates, products test, freebies, promotions, educational and specialist materials, invitations to events / events and all other values that a brand can give to its recipient).
The quality of customer service is very important for every online store, because it depends largely on whether the customer will make a purchase, what opinion he will send about the company and whether he will come back again. Many e-businesses do not have developed standards of customer service, which in practice means that from the creativity of a given employee depends on how the customer will be served, and how and to what extent the help will be received.
It should also be remembered that if a customer takes up an action and asks you as a help he expects to be contacted as soon as possible a person who is friendly and professionally. The worst practice is the sluggishness of service or lack of contact with the client, usually resulting from the fact that the company’s employee is also responsible for other tasks, such as packing orders, running a warehouse or updating the product database in the store.
Customers evaluate the quality of the store’s service in terms of the speed of response to their inquiry, satisfaction with the help they have provided, and based on the relationship with the person with whom the contact has been made.
I happen to meet entrepreneur who think that since the competition sells the same products as they do at the same prices, it is enough to take them some traffic from the website and he can already sell own products. Nothing more misleading, You will not take customers of the competition, only by the mere fact of You existence on a given market.
The marketing strategy is a coherent summary of all the aforementioned analyzes and findings and a set of rules describing what and how to do to distinguish your brand and product from the competition. All this so that your offer responds as much as possible to the needs of the selected target group, which will allow you to gain a competitive advantage in the market.
We go through the process – from – what segment of the market you are interested in, who is the selected target group and what characterizes it and what it has needs – by this – how to reach selected recipients and how to communicate with them – after – analyze your competition and how it affects the target group you choose – to determine – what you can do to make your offer more attractive than the competition and stand out.
By preparing a Marketing Strategy for your store, you significantly increase your chance for success, because you know what and how to sell at the very beginning. Having a strategy, you will also be aware of how to meet the needs of customers in a way that in wich your competition does not do it.
Finally, I have advice for you. You should to discuss all your assumptions and strategies before implementing them with someone experienced. It can be an advertising agency, an expert in a given industry or another entrepreneur running an e-commerce business. It is worth talking with people who can help and advise us.
When I look at the clients who have been successful in e-commerce, I see a common feature for them, it is passion, they run their business with pleasure, and work gives them satisfaction. That is why it is important that you do what you like.