Back when the first e-commerce businesses were setting up in the 1990s, costs were high. Companies like eBay sunk millions of dollars into getting into the online space early. And it took most of them nearly a decade to become profitable. Take Amazon, for instance. The company was founded way back in 1994. It sunk a bunch of money into everything from building the site, to getting stock, to marketing. We think of Amazon today as one of the most powerful companies in the world. But it only made a profit in 2003, nine years after starting up.
Now the world is a very different place. E-commerce businesses aren’t stepping into uncharted territory anymore. Instead, there’s a rich ecosystem of tools ready to facilitate their products. It is now easier than ever to set up an ecommerce site and start trading. After a couple of hours spent on a website builder, like Wix, you can have your own store and product page. And you can even build in things like automatic online payments and merchant banking. What would have taken teams of engineers and millions of dollars is now a couple of clicks away.
Given that the ecommerce landscape has changed so dramatically, what does it mean for startups? The good news, clearly, is that actually getting a service off the ground is a lot easier than it once was. The bad news is that there are now so many firms vying for business, it can be hard to get noticed. So what should you do? Here are some of the dos and don’ts for building a killer ecommerce site.
#1: Do Test Your Product
Many entrepreneurs don’t like to admit it, but sometimes their product isn’t all that great. Nevertheless, they put hundreds of hours into building their websites and doing SEO, all for nothing. The problem is that they only test their products on their immediate circle of friends and their friends. These people often aren’t the best people on which to test a product. First off, they’re unlikely to give you direct, honest feedback on your product. Consciously or unconsciously, they’re biased in favor of you. And second, they’re probably not your target market anyway. If you’re a guy in his twenties, do you think your mates are going to be interested in your online soap business? Doubtful.
In the past, people got around the bias problem by starting their businesses in their sheds and testing their product on a random sample of individuals. Here the emphasis should be on the word “random.” You need to know that you aren’t picking a group of people who will be particularly favorable (or unfavorable) to your product. The next step is to gather some data on what people think. Most businesses do this by sending out a load of surveys, which is fine. But often, there are more inventive methods. Take, for instance, what Innocent smoothies did when it started up. In the beginning, the founders wanted to test whether people wanted to buy smoothies when they were out and about. So they took their smoothie van to various events and festivals and tested their product. To get feedback, they didn’t use surveys. (Who has time at a festival to fill out a survey?) Instead, they asked people to put their empty smoothie bottles into one of two bins. Putting an empty bottle in one bin meant the founders should give up their day jobs. Putting it in the other indicated that they shouldn’t. It turned out that people really liked the smoothies, so the founders did ultimately quit their jobs. The rest, as they say, is history.
#2: Don’t Waste Your Time Sustaining Orders
As a founder of the company, you’re somebody who should be involved at the strategic level. Your role is to manage the direction of the company, come up with new products, and get creative about marketing. In other words, you should be spending the majority of your time on high-value-added activities.
However, what you should be doing and what you end up doing can often be very different things. Many e-commerce entrepreneurs spend up to twelve hours a day, just fulfilling orders. This saps their energy and takes them away from the things that are going to sustain their business in the long term. The best strategy is to outsource the donkey work to a fulfillment center. These centers are often very efficient and have far more sophisticated systems that you’d ever be able to create yourself. Plus, they mean that your flat or house isn’t chock full of boxes all day long.
#3: Do Build A Solid Foundation Before Launching
Entrepreneurs tend to be an enthusiastic bunch. They just want to get going as quickly as possible, and to hell with the fact that they might not be ready. When challenged about problems, entrepreneurs will often respond that they’ll cross that bridge when they come to it. But, more often than not, they are setting themselves up for a fall. The problem is that when business gets going, it really gets going. Often founders have to spend massive amounts of time working on customer support and systems. And this can, again, lead them away from high-value-added tasks.
What they should do, instead, is focus on laying the groundwork as much as possible. This means doing things like automating processes, tracking customers and streamlining operations. All of this stuff can be time-consuming and expensive to fix later on.
#4: Don’t Pack It In Early
Most entrepreneurs believe that it take a few months to go from nothing to a successful ecommerce business. After all, that’s what happened to sites like Amazon, Ebuyer, and Zavvi, right? Wrong. It took years for all those companies to establish a presence on the internet. And it took many of them even longer to get into profit. As we discussed earlier, profitability took Amazon nearly a decade.
Here’s the truth about entrepreneurship. It seems like it’s something that pays off really big – and quickly. But that’s because we only tend to see it once it’s been successful. Nobody had heard of Twitter until, one day back in 2010, it reached a critical mass. And nobody will hear of your ecommerce business, until, one day all your hard work will pay off. According to Seth Godin, it takes six years of hard work to achieve overnight success. And for almost all companies, that’s the case. They toil away on their products and marketing for years. Then, all of a sudden, things start going right, and they make real money.
#5: Do Test Marketing
It is possible to market your business for free online, but it will only take you so far. To get your ecommerce business noticed online, you’ll have to spend some money. Entrepreneurs, particularly in the start, don’t like spending money on marketing. But spending money is important if they’re going to grow their business beyond a fledgling enterprise. Create a budget for yourself that’s exclusively for marketing. Then use this budget to test various marketing channels. For instance, you could try and see if blogging makes any difference to the amount of traffic on your site. Or you could investigate whether website ads have any effect. Test out different methods and try to measure your return. Ecommerce sites are constantly looking for ways to funnel new customers. So they continually check their channels and alter things like color schemes to see if it boosts conversion. They then pour money back into those efforts that had the biggest effect and review them every quarter.