Have you been thinking about starting your own online store? Online sales are projected to hit 1.5 trillion dollars by 2018. The thing that holds many people back, however, is uncertainty about how to set up and maintain an online marketplace.
Setting up an online store is less expensive and easier than you might think. If you have a product you want to sell, then an online store is a great way to test selling that and other items to see what the demand is.
Although you can sell items on sites like Amazon, Ebay, and Etsy, setting up your own online store allows you to have complete control over branding and to build on traffic over time instead of risk losing regular customers to competitors also on those sites.
To setup and run a successful online store, there are a few things you should consider first.
FINDING A PROFITABLE PRODUCT
Since your goal is likely to make money, you must first find a product that will be profitable for you to sell. This means that you must choose products that are both in demand and that have a reasonable margin of profit between the price you can purchase/make it and the price that the marketplace will bear.
Choosing a Niche for Your Online Store
One of the toughest decisions you’ll face is what niche you want for your online store. It’s important to choose a niche that is narrow enough to help you market your brand, but broad enough to allow you to expand to additional accessories/products.
Selecting a product segment that relates to passion or interest you have
If you hate cooking, selling kitchen accessories likely isn’t the best choice for your online store. On the other hand, if you love everything cooking, then selling the very best pots and pans on the market gives you an excellent starting place from which you can expand into cooking gadgets and even spices and seasonings.
Picking a Niche Where You Can Add Value
One of the key components of figuring out a niche for your online store is choosing one where you can add value. As Andrew Youderian states in his article on eCommerce Fuel, if you try to compete with Amazon on pricing, you are going to go out of business.
Instead, you must make sure you have something more valuable than Amazon to offer to the customer. The solution? Answer the customer’s questions and educate the customer with excellent content. You must first understand the problem your customer faces, offer a way to solve that problem, and the orders will follow.
Choosing a Market Niche that Has Room to Grow
Don’t just focus on one or two big-ticket items that will give you a high return on profits. This is great when the new customer visits your site, but how are you going to market to your current customer base?
Look for a market that has accessories and add-ons you can create to get those follow-up sales. One example would be photography equipment. The initial purchase of a high-end DSLR camera is a big one and will bring you big profits if you sell one. However, you can grow your online sales further by offering camera accessories. You can sell lenses, flash attachments, straps, bags, tripods, and so on.
Targeting the Right Type of Customers
It’s important that you figure out the primary type of customer you want to target. These are the people who you can add value to their lives. One example would be a model car hobbyist. He might be willing to spend money on organizing his model car parts, on an excellent new paint, or even on books and information to help him improve his hobby. The key is to find a customer base that is passionate about the niche.
Customers might include:
- Business owners
You’ll also want to consider every aspect of that customer base, such as gender, disposable income, and age. Do they have enough extra money to invest in what you sell on your online store?
Finding the Right Products to Sell
Once you’ve narrowed down your passion, you have to discern which products to sell. Andrew Youderian suggests looking for a product that will allow you to add value. What is meant by that is simply that it is something people need and will help them in some way or make their lives better in some way.
In The 4-Hour Work Week by Tim Ferriss, he recommends choosing a product with a price point between $100-$200. The reason this is an ideal range is that it is large enough for margins to be right but for you to still provide value.
You also need to consider the fact that you’ll sell more items in the above-mentioned price range. The higher priced an item, the lower the conversion rate. Most people are willing to spend $100-$150 online. In addition, Youderian points out that higher priced items say a $1000 kitchen appliance, often have a lower profit margin.
So, you might make $30 on that $100 gadget but only $100 on the $1000 appliance. That means the $100 item gives you a 30% profit margin, and you will sell more of them, but the $1000 appliance only gives you 10% profit, and you’ll sell fewer.
It’s also important to try to find a product that everyone else isn’t already selling. Seek out unique products no one else offers and you’ll corner the market, at least for a while. One way to discover products to sell is to attend trade shows in your niche area.
Evaluating Market Demand for Your Products
Before you make a final decision on the products you’d like to sell, do a thorough search for online competitors. Who is selling the same or similar products? Can you effectively compete with that company? If they are a readily recognizable name and have top ranking in the search engines, getting your online store noticed may be a real challenge.
Evaluating Product Demand
Take the time to validate whether there is a reasonable amount of market demand for the product you’d like to sell.
If you’re trying to decide between several products, complete the following tasks:
- Test the name of the product for keyword interest. Which products get more searches? A lot of searches for a product name can indicate a lot of interest.
- Check social media sites to see if there are any posts on the product and how many times those posts are liked and shared.
- Check out Google Trends and see if the topic is trending up or down or remaining steady.
Validating Geographic Demand
Now that you’ve looked at keyword trends and saturation, and you know that people are actually looking for the product you want to offer, dig a little deeper and figure out who exactly those people are. Occasionally, a product will be more popular in one geographic area than another. For example, if you’re selling a windshield scraper, it is going to sell better where winter is an extended season.
It’s important to make sure that the most demand for your product is in an area where you can easily ship to. If the cost to ship is too prohibitive, that can kill your sales.
You can use Google trends to discover what countries are searching for the keywords related to your product and which cities have the highest number of searches (this can help with shipping info).
Validating Social Media
You’ll also want to double check social media validation to see how much traction your product might get there. You’ll want to look at the market and product interest on multiple social media platforms to discover not only how popular the topic is but if there are people sharing info about your product.
You can use sites like Topsy to find out how many tweets there are per day. For example, let’s say that you are going to sell a particular type of camera lens geared toward wildlife photographers. You might search for terms such as “camera”, “wildlife” and “outdoor” to see what is trending.
Evaluating Potential Competitors
Start by sorting through the different types of competition you’ll face in selling this product. Let’s go back to the example of the specialty camera lens. You are also going to compete with people selling lenses for other types of photography, other hobbies in some cases, and so on.
How many competitors are online? Is the market so full that you’ll have a hard time standing out from the crowd? There are only so many customers to go around, so if availability outdoes market demand, then you are not likely to be successful.
This is where those unique products come into play. What can you offer that no one else is offering online? How can you offer it in a way that adds value?
Finding the Sources of Products to Sell
Once you’ve decided which products you’d like to sell in your online store, you need to set up the best way to purchase those products. You have a couple of choices.
- Dropshippers: With this method, you wait until a customer orders the product, and then you place your order with the wholesaler who will then mail the item directly to your customer.
- Light Bulk Wholesalers: Some wholesale companies require enormous orders to give you a decent price break on the product. However, some wholesalers offer light bulk options so that you can purchase a smaller amount of a product (say a single case) and resale it for a profit.
One thing to keep in mind with both drop shippers and light bulk wholesalers is that they should not have their own online stores set up, or you’ll be forced to compete with the lower prices they can offer by selling directly. Your best bet is to try the manufacturer of the product first. Do they drop ship? Will they sell light bulk? Once you find the manufacturer of a product you like that will do one or both of these things, then you are on your way to finding the products you need to sell in your online store.
PLANNING AN ECOMMERCE BUSINESS
While it is tempting to jump in feet first, because it is “just” an online store, if you want to succeed actually, you’ll need to make a plan for your eCommerce business. When you realize that ”$4 trillion in merchandise was abandoned in online shopping carts in 2014,” it is easy to see why you need to go in with a plan of action.
Writing Your eCommerce Business Plan
NOLO legal site explains that having a business plan is important because it is the cornerstone of a building. It can help your business be structurally sound. The Small Business Administration (SBA) offers a business plan wizard to help you quickly write your own business plan.
Creating eCommerce Marketing Strategy
Promoting your online store is a bit different than promoting a brick and mortar store. You’ll want to make sure you have a solid eCommerce marketing strategy before your grand opening. You’ll need to make some fundamental decisions, such as:
- Who is your target demographic?
- Which social media platforms you want to have best a presence on and how do you reach that target demographic on there?
- What is your advertising budget and where is the best place to use that to drive customers to your site?
- How will you convert site visitors into customers?
One rule of thumb in business is that it is far easier to sell 20% more to your current customers than to reach a new customer. So, think through additional needs to you can meet as your business grows and you gain a loyal customer base.
Researching Your Potential Competition
If you want to be the go-to online store for people, you need to have a firm grasp not only who the competition is but what they do. You should use tools such as:
- SEOBook – Compare how your competitors name their pages, what meta information they use and phrases that are similar.
- Google AdWords – Use this tool to see how much traffic certain keywords get. While keywords are only part of the equation, this information can help you decide what type of products or content you want to add to your site to draw visitors.
- SpyFu – This is a paid service, but the information you’ll gain is precious. You can easily see what AdWords your competition is using. You can even see which ones were successful and which ones were not. This is basically a way to learn from what your competitors are doing right as well as what isn’t working for them.
In addition to using tools, take the time to study how competitors’ websites are laid out, what content they have, and any special features they offer to visitors, such as a newsletter or coupons.
Identifying Your Target Customers
One of the key ingredients in successfully marketing to customers is figuring out who your target customers are. Before you start your research, you should choose specific demographics to target.
Choosing Specific Demographics to Target
Knowing your target customer allows you to not only customize marketing but even to customize the products you choose to list in your store. This is where creating user personas can really come in handy.
Essentially, you create a profile of the ideal customer for your store. Answer questions such as age, where the person lives, what her interests are if she’s married, if she has children and even reasons why she would buy your product.
You’ll want to define both demographic info and psychological info. Demographic information includes:
- Marital Status
- Annual Income
- Job Description
Psychological information includes:
- Morals and Values
You should also factor in any current customers you have or expect to have and how they fall into the descriptions listed above.
Creating a Customer Profile
Your customer profile or user persona is a mockup of what your ideal customer looks like, Once you’ve gathered the information above, write up a short bio for your idea user. Write it like a bio. You can even name your mock person to keep it personal.
Once you have your user persona created, you’ll want to use this information in every aspect of running your online store. Is your idea user a working mom? Then she is likely going to visit your site in the evenings or on the weekend. This means that you should run special discounts or events at a time that is convenient for her to attend.
If she is a particular age, keep that in mind when creating the font size of your content. You can apply the user persona to everything right down to shopping cart behaviors and getting your conversion rates as high as possible. The better you understand your typical customer, the better you can refine your goals and find success.
Defining a Market Niche
When you’re first starting out, figuring out your targeted niche can save you a lot of time and money. You won’t waste advertising funds putting ads out to people who don’t fit into your target market.
When you’re first starting out, it can be a bit difficult to determine who your target customers are. One way to identify target prospects is through researching competitors as mentioned above. For example, use Quantcast to get information on what types of people are visiting your competitors’ websites. This is excellent information for determining your target demographic.
This information may change after you actually get your store up and running. You can gather additional demographic data by taking polls of your customers and studying web analysis statistics through tools on your website control panel, such as Webalizer and AWStats.
Building a Branding Strategy
Your branding strategy defines your store to customers. Once you’ve researched your competitors, and you’ve figured out your target demographic, you’ll also want to research general information about that demographic. You can utilize tools such as Compete.com and Nielson to determine just what that target audience cares most about.
Setting Your eBusiness Apart
It’s important that you set your business apart from all the other similar ones out there. What are some words that describe your business as a whole? Try to locate words that your competitors aren’t using but will speak to your target demographic.
For example, if you found in your research that your target customer is a working mom, then she may be looking for help staying on top of everything she has to do. You could use words like “helpful” and “time-saving” to draw in that target audience.
Knowing Your Target Customers
By now, you should have a pretty good idea who your target customers are. Dig even deeper past that user persona and figure out exactly what this person wants when she visits your online store. What is she looking for?
There may be multiple levels of things that this customer most needs. Over time, as you get to know your customer base better, you’ll likely develop additional personas, so you know best how to reach each customer type.
Differentiating Your Brand
What is your personality as an online store owner? This should come through in your attitude, your about pages, and even in any ways that you give back to the world as a whole. Some companies pride themselves on being environmentally friendly. What sets you and your brand apart? How can you show this will still staying true to your mission statement.
You’ll want to dig even deeper inside your brand. For example, if you promise time-saving service, what does that mean? Does it mean the order is packed up and shipped within an hour of being received? What will you need to do to ensure that this happens? How many employees will you need to hire or can you handle it yourself?
This can also make a difference in whether you put shipping in the hands of a manufacturer (dropshipping), or you handle it yourself to make sure the product gets out promptly.
Personalizing Your Brand
Picture two different emails landing in your inbox. One email says:
“Hey, Jane. I just wanted to drop you a line and thank you for your recent order of ABC Widget. Since you loved the ABC Widget, I also wanted to let you know that the XYZ Widget is on sale until midnight tomorrow. Thanks for being a loyal customer.”
The other email says:
“XYZ Widgets are on sale until midnight tomorrow. Come and buy one.”
Which email are you going to respond better to? You have to personalize your brand to meet the needs of your customers. This includes the user experience on your website, the emails you send out and even social media marketing. Even your mission statement should be personalized to your customers’ needs.
When developing your mission statement, keep that target audience in mind. What problem are you solving? How does your brand name relate? How can you make that brand stick in customer’s minds?
Developing a Unique Selling Proposition
A Unique Selling Proposition (USP) can help you stand apart from the competition. It is what makes your brand unique. To develop a USP, you need to focus narrowly on your customers, or ideal customers, and what they want.
This means that you may disappoint other people. However, that doesn’t matter as long as you have chosen an active target audience and you understand them well. You will develop a loyal following among those customers. A strong USP:
- Fulfills a high need
- Shows that you know your target audience
- Can be summarized in a sentence or two
If you want to be remembered in the crowded marketplace of the online world, your brand simply must stand out in some way.
Pricing Your Products for Your Online Store
Figuring out how to price products for your online store, so you make a profit while still attracting customers is a balancing act. Shopify offers the following formula to help you figure out how to price products for an online store:
“Retail Price = [(cost of item) ÷ (100 – markup percentage)] x 100”
So, just to give you an idea. If you want to make a 60% profit on an item that costs you $20.00 to buy, the formula will look like this:
Retail Price = [($20.00) ÷ (100 – 60)] x 100 Retail Price = [$20.00 ÷ 40)] x 100 Retail Price = ($.50) x 100 Retail Price = $50.00
So, the item that costs you $20.00 would sell for $50.00. You’ll also have to figure out if you just want to use the manufacturer suggested a retail price, or if you need to make some product move by discounting it.
The key is to make sure you make a profit even after paying out any overhead, such as your web hosting fees and employee costs.
Determining Your Profit Margins
As mentioned before, you shouldn’t try to compete with the prices on Amazon. Amazon will price items at a loss only to run smaller stores out of business. They have the funding and size to accomplish that easily, but if you try to underprice your products, you will quickly go out of business.
That is why it is so important to know your margins. It’s important that you know your margins so you can price low enough to be competitive but still make sure you make a little profit.
Knowing Your USP
USP stands for Unique Selling Proposition. What is you unique factor that keeps customers coming back over and over? Some USPs include:
- Good customer service
- Free shipping
- Items not available elsewhere
- Sense of charity
Whatever your USP, it is important to figure out how you will set yourself apart from the competition.
Another reason it is so important to understand your margins is that you can then figure out what incentives to offer your customers.
Will your profits allow you to provide free shipping? Should you offer half off? You may even want to provide a loss leader. This is simply a product you lose money selling for a low price in the hopes that your other items that do turn a profit will also sell.
Offering Product Diversification
If you’ve done your homework and you thoroughly understand market demand and your target customer, then you’ll easily be able to diversify the products you offer to sell additional items. You can also simply offer more choices for the products you already sell.
A good example of this would be a tee shirt. Perhaps you start by selling it in small, medium, and large and in black. You can quickly diversify here by adding children’s sizes, plus sizes, and different color choices.
Setting up the Project Timeline
Many things can impact how long it takes to get your online store up and running. If you use a platform that is ready to go, such as Shopify, the timeline might go more quickly. However, if you want to customize your online store and self-host actually, it could take significantly longer to get the site set up.
You’ll want to build in time for:
- Complete testing to make sure everything is functioning correctly before you launch your store.
- Unexpected issues that you run into that might delay the launch.
- Pre-launch promotions.
It is better to plan in more time than you think you’ll need. It is far better to launch a bit early than late.
Estimating the Costs to Start an eCommerce Business
According to Entrepreneur, a basic template-based online store can run as little as $250 per month, but an all-in-one solution that is completely customized can cost upwards of $500,000 a year. Obviously, there are many levels in between. Some of the expenses you’ll incur include:
- Domain name registration and hosting fees
- Web design costs
- Customization of eCommerce software
- Procurement of initial product
- Costs to travel to trade shows or to meet with manufacturers
- Advertising costs
- Six months of funding to pay employees and any overhead
Some fees you can save on by starting small and growing as your business grows. For example, there is no need to pay for an expensive payment gateway system when you first open. You can easily utilize PayPal or Google Pay instead.
Then, as the volume of your sales increases it makes sense to pay the fees for a credit card payment processing because it will save you on processing fees, you can add that to your business plan.
Funding Your eCommerce Business
Even if you start with the most basic online store imaginable, you will have some fees involved. There are some ways you can fund your business.
If you have a product you are developing, you can use Crowdfunding to come up with the money to develop the initial product and get your store in place. Some other ideas to gather enough money:
- Host a variety of fundraisers both online and off. Sell products, start a GoFundMe account, etc.
- Ask friends and family to invest for a percentage of future profits. However, always maintain majority control of your business.
- Seek out angel investors.
- Take out a small business loan.
- Pay monthly for your eCommerce site at first until you can afford to develop your own self-hosted platform.
Sometimes it really is best to start smaller and allow room for growth. It’s more important in the early days of new business to have enough cash flow that your business can grow than it is to start big.
ESTABLISHING A BUSINESS ENTITY
It’s important that you protect yourself and your personal property by putting a few things in place before you launch your online store.
Filing Your Business Name
You’ll need to choose the legal structure of your business. The key here is to choose what your corporation will be so that if someone attacks you on a legal level, you personally are not liable for any damages you are required to pay out.
You can form an S Corp or an LLC. The smartest thing to do is to talk to a business attorney about the best structure for your business. The paperwork to file a corporation can be complicated.
While you can potentially register with your state on your own, it will take you many hours to understand the paperwork and the follow-up paperwork that is required every year. It may be more cost-effective to go ahead and hire a professional to handle this work for you.
You’ll also need to choose a name to do business under, or a “doing business as” (DBA). Typically, when you file for your corporation, the Secretary of State will check the database to make sure there isn’t any other business already doing business under that name.
Obtaining Your Employer Identification Number (or “Tax ID”)
Since you don’t want to give your own social security number to suppliers, you’ll also want to register for a tax identification number for your business, or an employer identification number (EIN). You can register online through the Internal Revenue Service for this number.
Applying for a Business Licenses and Permits
What licenses and permits you’ll need for your business varies depending on where you live. You’ll need to check with both state and county officials to see what you need. Some typical things include:
Food permits if running a food business (there may be other considerations as well for food) Retail license to allow you to collect sales tax for your state
The key is making sure you follow any rules for your industry and collect any taxes your state requires you to collect.
Opening a Business Bank Account
Legal Zoom recommends keeping your business bank account and personal accounts separate. There are many reasons to do so, but the main reason is that it keeps your funds transparent for tax purposes and if there is every an audit, they will look first at your business account instead of your personal account. This can save a lot of aggravation and misunderstandings.
Look for a bank that offers some of the specific features you’ll need now or in the future for your online business, such as:
- Direct deposits
- Electronic bill payment
- Credit card processing capabilities
Be careful about fees as they can quickly add up, especially when you are just starting. Always read the fine print and make sure you understand the fee structure of any business account you open.
Opening a Merchant Account to Accept Credit Card Payments
As mentioned above, you should look for either a bank or a separate company that allows you to process credit card payments. A merchant account gives you this capability for your business. There are some ways you can accept credit cards online, including PayPal when just starting to a full-fledged merchant account once you’re doing the volume that will make it pay for itself in fee savings.
You’ll want to avoid overpaying by keeping an eye out for hidden fees. The first step is to read carefully over monthly statements.
Some fees you’ll want to ask about and look for on your statements include:
- Non-qualified discount fees
- Interchange differential fees
- Monthly minimum fees (if you don’t hit a certain transaction amount)
- PCI assessment fees
- Quarterly fees
- Setup fees
- Early termination fees (many processors have a required contract length)
Checking Flexibility to Process More Sale Transactions
Another thing you’ll want to ask before you choose a credit card processing company is how they will handle it if your sales suddenly take off. Do they have the ability to process more transactions easily? What is the fee structure? Do the fees go down if you have more sales?
Choosing a Merchant with a Good Reputation
Finally, you’ll want to choose a merchant with an excellent reputation. Read reviews online and check with the Better Business Bureau in the state the company is headquartered in. Some red flags you should pay attention to include:
- Poor customer service (this can also make you look bad to your customers)
- Non-payment or late payments
- Too many hidden fees
- Faulty equipment
Take note of who else is using the same transaction processing company and don’t hesitate to reach out to those companies and ask if they are happy with the service.
SETTING UP A BUSINESS ONLINE
Now that you have your planning in place, it is time to get down to the work of setting up your eCommerce business. The steps you’ll need to take are listed below.
Registering a Domain
Once you’ve chosen a niche and recorded your name, you’ll need to find a domain name that isn’t taken that will also allow customers to remember the path to your website easily. This isn’t as easy of a task as it used to be. You may need to spend a little money to purchase a premium domain name or buy it from someone who always holds the rights to that domain.
Expect to pay a minimum of about $15.00 per year for a dot com. More than likely, though, you’re going to have to pay much more for a premium name that will be easy to remember and will rank well in search engines.
Understanding Domain Names
Websites actually live on IP addresses or servers. The IP address is a number that indicates where that web page is located. However, numbers would be tough for people to remember. Instead, domain name registrars offer easier to remember names made up of words (and occasionally numbers). So, instead of having to remember to type “126.96.36.199,” you simply have to remember to type “amazon.com.”
There are different extensions you can choose besides .com, but because a dot com is the default, it is easier for most people to remember.
Importance of Choosing the Right Domain Name
Selecting a domain name is similar to naming a brick and mortar business. You want something that is easy to remember, showcases what your brand is about, and that no one else is using. A .com is the most memorable type of name, but in the United States .biz is a solid second choice. In other countries, you may want to use a location specific choice, such as .co.uk.
If you’re able, go for a domain name with popular keywords in it. So, if you’ve researching trends and discovered that “argon oil conditioner” is a highly searched for the term and you can grab the domain name “argonoilconditioner.com,” then that is a smart move.
However, some recent studies indicate that exact match domains (EMDs) are not as effective as they were in the past, so don’t spend money you don’t have just to secure one. If you can grab one for a reasonable price, then do so. If it is $10,000, you might want to think twice.
A domain name that is hard to remember, too much time, or too uncommon will be difficult for your site visitors to remember. If a site visitor fails to bookmark your website, she might never find it again as she won’t be able to remember the name.
One of the key advantages to purchasing an EMD is that it may already be receiving traffic just because of the keyword phrase within the name. Do your research and see if it is worth the cost to purchase that domain name or not. Keep in mind that all the traffic in the world won’t help you if it isn’t targeted traffic, though.
Choosing a Web Hosting Service
Once you have a domain name, if you plan to create your own storefront rather than using a service like Shopify or Facebook Stores, then you’ll need to find a hosting company where your site will reside. The costs and features can vary. For an online store, make sure the hosting company offers a minimum of:
- SSL capability
- Unlimited bandwidth (it is never completely unlimited, but this is a good place to start)
- Excellent customer service and 24/7 tech support
- Enough space for your site to grow as you add products and content
Before you make a final decision on a hosting service, be sure to check thoroughly out online reviews. Some require payment a year in advance, and the last thing you want to do is pay out a year’s worth of hosting fees only to find out that the hosting company is unreliable. If the host offers a free trial, take advantage of that before making a commitment.
Choosing an eCommerce Platform
Your next step is to choose the shopping cart for your online store. Take your time and pick a platform you think you can grow with. If your dream is to have a mega-store, then a self-hosted solution is probably better than a hosted one.
- Hosted eCommerce Solutions – A couple of these have been mentioned before, such as Shopify. Some others include Volusion and BigCommerce. A hosted solution is hosted on the software provider’s website and uses their platform. The customization options are limited, but most can be customized a bit.
- Self-Hosted Shopping Carts – A self-hosted allows you to install the software of your choice on your own server. This might be open-source eCommerce software, or it could be something you have designed specifically for your online store. The less expensive of the two options is to take open source software and customize it to your needs. Most open source shopping carts have developers working on themes and plugins that will expand capability.
Choosing a Payment Gateway
Choosing a payment gateway options is one of the most difficult decisions for many online store owners to make. The best thing to do is to look at some of the top gateways and see what features are available and which ones most easily integrate with the shopping cart you’ve chosen. Here are some of the most popular options:
There are many other options available as well, including local and national merchant accounts which will integrate with an online ordering system. The key is to figure out which will offer you the best processing fees based on the volume of business you are doing today. You can always shift to another company later if that makes more sense for your business and your credit card processing costs.
Different eCommerce platforms integrate with various payment gateways. For example, because of limitations with Square’s apps, it does not integrate easily many places. On the other hand, PayPal has many third-party developers and has developed apps that allow it to integrate with almost every payment gateway out there.
Considering All-in-One Payment Service Provider
If you want to simplify your bookkeeping and how many payment sources you have to keep up with, find an all-in-one payment service provider.
An all in one provider will allow you to:
- Process transaction
- Run reports
- Set up fraud detection
- Process returns
- Download tax information
Choosing a provider that does everything will also give you some flexibility as your online store grows without having to research merchant accounts all over again before moving your transaction processing.
Comparing the Payment Service Providers Fees
Processing fees can quickly eat into your profits. It’s important that you fully understand any fees involved before signing up for a merchant account.
- Per Transaction Fee: Some companies charge a per transaction fee for each order that is processed. Typically, this is a flat fee that is under $1.00. This can vary, though.
- Percentage of Sale: Most merchant account companies charge a fee based on the sale price of the item. This may be around 2.99% if you don’t do a very high volume of business but tends to go down the more your sales volume.
- Account Fees: Some companies charge an annual, quarterly, or monthly fee only to keep your account open. Look for businesses that do not charge you a fee as long as you are making a few sales.
For example, Authorize.net charges a monthly fee of around $25 plus transaction fees of 2.9% + $0.30. However, you can take money from 5 countries in 6 different currencies, and they accept all major credit cards and mobile payments.
On the other hand, Beanstream charges no monthly fee and 2.25-2.65% transaction fee. It is only available for three countries in 2 different currencies.
You can find a complete chart that outlines fees and percentages on FormStack. You can compare at a glance which gateways have the features you need with the lowest cost.
BUILDING AN ONLINE STORE
Once you’ve chosen the software you want to use, it’s time to get down to customizing your store as much as possible. Even though you might be tired of making decisions at this point, carefully considering a few things will help your website be more attractive and user-friendly to customers.
Picking the Right Theme for Your Online Store
According to Time magazine, you have about 15 seconds to grab the interest of the site visitor who lands on your page. Some might argue you have even less time than that, but even if you have a full 15 seconds, remember that is a very short window to make a great first impression.
To make a great first impression, you’ll need:
- A clear navigational structure. The reader should see how to get from Point A to Point B quickly.
- Write amazing content that grabs the reader’s interest.
- Uncluttered look that draws the eye where you want it to go. For example, if you want to funnel your site visitors to your clearance items, what is the first thing they see when landing on your home page? Is it the clearance items or link to them?
Keep all of these things in mind as you choose a theme. Will it give you the uncluttered, easy to navigate page you are seeking?
Customizing Your Store’s Appearance
If your store looks just like every other store out there, then it is going to be hard to establish your brand. In addition to adding your logo and unique spin to the overall appearance of your store, you’ll want to consider the colors you use and how they tie into your overall brand image.
According to KISSmetrics, color increases recognition of your brand by as much as 80% and can lead to consumer confidence.
You’ll also want to add features that make sense for your niche. For example, if you’re selling clothing, then you’ll need to add options for sizing choices. On the other hand, if you’re selling kitchenware, color options, and sizes are likely limited, so you may not need this feature.
Designing eCommerce Website Information Architecture (IA)
While information architecture may sound a bit like site navigation, there are some fundamental differences. While the two are related to each other, the architecture of a site is the skeleton of the site. The architecture includes the bones of the site and how all the elements work together to bring information to the end user.
IA can include elements such as:
- Inventory of content
- Standardized naming or editorial style
- How things are grouped together
The IA is of vital importance because you will build upon this basic structure as your site grows. A good structure can make or break you when you hit growth peaks.
Creating Awesome Product Images
You can create the most amazing online store ever, but if the consumer can’t clearly see the item you’re selling, then you may wind up with a lack of sales to show for it.
You have a few basic options when it comes to adding product images:
- Use manufacturer provided images (as long as you have permission to do so). Many manufacturers hire professional photographers to create beautiful photos of their products. The drawback is that other people selling the product will likely have the same image on their sites.
- Hire a professional photographer. You could potentially hire a professional to take photos of the products. This, however, can be costly, especially at first when you may have a limited budget.
- Take the photos yourself. This can be challenging. You’ll need a white or black background for most items. A light box can come in handy. You can buy one very inexpensively on sites like Amazon for smaller items. It is also smart to invest in a good DSLR camera for the best resolution.
As you add images of your products, try to look at the item as though you are the customer. What would you want to know about the product? Which angles would you want to see the item from? What details are important to the consumer?
Writing Compelling Product Description
Your goal with a product should be to grab the customer’s interest while still providing enough detail for her to know whether or not she wants to buy the product. If you can create a unique voice for your descriptions, you’ll likely see an increase in sales conversions.
For example, let’s say you are selling kitchen towels. You can just describe the fibers, the size, the color and the quick drying time of the microfiber side like every other site out there does.
Or you can create a story about a home cook who uses the towels because she loves the variety of colors, it saves her time because of the microfiber drying faster, and so on. Do you see how one is more compelling and personal than the other?
While you don’t have to create a fictional story for each item, you should describe it in a way that the reader can picture herself using that item. Try to spark the site visitor’s imagination.
Optimizing eCommerce Site Navigation
When it comes to site navigation, just having a structure and buttons that are easy to find is not enough. You must also consider how users navigate to specific products they want to find. This becomes even more important the more products you have on your site.
According to Smashing Magazine, the key is to make sure customers can find the products they want to buy. So, you’ll need to consider everything from how to organize categories to the best way to get customers to search and what those search results on your site will return to them.
This means you’ll need to have strong parent categories. You should also add filters that allow the user to narrow the search by things such as “what’s new,” most popular”, and “lowest price.”
Designing an eCommerce Checkout Flow
The average shopping cart abandonment rate is 68.95%. If you want to improve that and convert site visitors into customers who place an order, you’ll want to think about the flow of your shopping cart.
The customer should be able to see clearly how to checkout from the moment he adds the first item to the shopping cart until the order is complete.
- Put shopping cart review and checkout buttons in clear locations.
- Make check out easy – don’t force users to register to checkout. Provide a guest checkout option as well.
- Install software that sends a second chance offer if the user abandons the shopping cart.
The easier you can make the checkout flow, the higher your conversion rate will be.
Building Product Detail Pages
Product details will help users completely understand what they are purchasing and should reduce your return rate. You’ll want to include information such as:
- Material used to make the product
- Technical Specifications
The more detailed you can be, the easier it will be for your customers to determine if the items are what they are looking for. However, it is usually best not to clutter up item pages with the details. Instead, provide a link where the customer can click, and more information will pop up. Or, place the information under the images and description info.
Making Customers to Trust Your eCommerce Store
There is a reason that most consumers buy from brands they recognize. It is because those brands have built a reputation and the customer knows he can trust that brand to deliver a quality product and deliver what is promised.
If you don’t yet have that name recognition, then you need to provide some more information than a site that has it. You’ll want to include information such as how many orders you’ve already fulfilled, clear contact information, and emblems that show you are a verified reseller or retailer for specific brands that are recognized.
Including membership info for any organizations you belong to is also a way to build trust and loyalty.
Configuring eCommerce Site Security
Your customers trust you with personal information. The quickest way to kill the trust they place in you is to leave your eCommerce site open to hackers. It is vital that you invest in security and stay on top of new security threats throughout your store’s life.
- The first thing you should do is start with a web server configuration that is secure. SSL, for example, will encrypt sensitive information, adding another layer of protection.
- Add a firewall to your server or make sure your server has installed a firewall for protection. Most shopping carts have firewall plugins you can install.
- You’ll also want to install software that scans for threats, viruses and hacking attempts.
You’ll want to analyze your website’s security with a baseline security analyzer such as the one by Microsoft. If you’re unsure how to secure your site, you should make an investment in security by hiring an online security specialist.
Complying with PCI Data Security Standards
The PCI Security Standards Council has set down some standards of security for eCommerce sites to help store owners understand the best way to keep sensitive information safe.
The site offers tools to help you ensure you keep your site secure and customer information safe, including documents that explain how to secure your site and tools that help you assess the security of your site and figure out ways to solve any security weaknesses.
PREPARING TO LAUNCH A WEB SHOP
Once you have everything set up, there are some pre-checks and tasks you’ll want to complete before you actually launch your store. By taking care of these things ahead of time, you’ll be able to focus your full attention on excellent customer service and fulfilling orders quickly.
Setting up Site Monitoring
Site monitoring will notify you if your server goes down or there are other issues with your site. The last thing you want is to spend your hard-earned money on advertising, drive traffic to your site, only to have the visitor realize the site isn’t working.
You’ll also want to set up analytics so that you can track how your site is performing overall, where traffic is coming from, and which keywords are performing best.
Establishing a Newsletter
Not everyone who comes to your website is going to buy something on that first visit. However, if you can entice them to sign up for your newsletter, you suddenly have a way to keep the lines of communication open. You can also persuade them to come back to your site by showing them new items, what’s on sale, or offering a discount.
Getting Setup on Social Media
46% of consumers who are online turn to social media before making a purchase. It is important that you establish a social media presence and get the buzz going before you ever launch an online store. At a minimum, you should have a presence on the two largest players Twitter and Facebook.
However, you should also look at your target demographic and which other social media platforms might be a good fit for you. For example, if you want to market to young people, try Instagram. If you want to draw women to your site, check out Pinterest.
Developing a Site Backup Plan
No matter how many security measures you put in place or how well you prepare, sometimes the unthinkable happens and your site goes down, or hackers take it over. Make sure you have a plan in place that automatically backs up your important database files.
It is also smart to have multiple backups. Most web hosting companies create a full site backup that will allow you to rewind your site to a previous date a week or two in the past. You’ll also want to keep backup files of your full site on an outside hard drive.
Finally, go ahead and install software that creates backups for you on a regular basis. Most content platforms feature plugins you can install that will do this work for you in the background. You only set the backup for how often you wish to complete them.
Protecting Customer Information
If you want to develop trust with your customers, you must put security and policies in place to protect the private information your customers share with you. You should also publish these policies so that your customers can see what you do with their information and the steps you’ve taken to add security to your site.
Choosing a Shipping Strategy
It can be difficult to know the best shipping solution for your business. You have to figure out the weight of the products you’re shipping, where the majority of your customers are located, how to handle rush orders and what the costs will be.
You can find rates for some of the major shipping companies online, including USPS, FedEx, and UPS. If you’re just getting started, you may want to do some comparison shopping to see which shipping vendor will offer the best price. You can use a site such as iShip.com to figure out which would be the fastest, cheapest, or best way to send your orders.
Deciding on Your Store Key Performance Indicators (KPIs)
Choosing the right key performance indicators (KPIs) for your store is something you should have in place before you launch. However, your KPIs should also be fluid as they may change over time. Since you’ve already set some goals and mission for your business, these should tie into your KPIs.
So, for example, if your goal is to increase sales, you would look at daily conversion rates, daily sales numbers and traffic stats.
Finalizing Your Launch Promotion and Strategy
Before you get ready to launch, you’ll also want to have a meeting with your marketing team. How are you going to get the word out about your grand opening? This is a time when you should be able to drive a lot of traffic to your site, build your mailing list and hopefully gain some loyal customers.
Promotions for your launch should include at a minimum:
- Press releases to online and local media
- A party where you invite key influencers (can be held online)
- Giveaways or special discounts the day of the event
- Online chats where experts come in and talk to your customers, thus driving traffic to your site via a chat platform. For example, if you are selling golf equipment, you might have a professional golf player talk about how to improve your follow-through.
Try to think outside the box when planning your launch strategy. Anything you can do that will make you stand out from the competition is a good thing.
DRIVING TRAFFIC TO YOUR NEW ONLINE STORE
Even the most beautiful online store isn’t of much use if your customers don’t know where you to find you. If you want to be successful, you must drive as much traffic as possible to your store.
Reaching out to Bloggers and Press
Who are the key influencers in your niche area? BuzzSumo is a fantastic tool to help you identify the most talked about bloggers within a keyword or phrase. Just type in the topic and see what comes up. The most influential bloggers are those you want to connect with.
Drop them a line and ask if they’d be interested in an interview, article, or sharing shout outs for one another.
Posting Your Store to Reddit
Reddit is a platform that people use to find content that interests them. One of the guidelines the site offers is not to just blatantly self-promote. This is where a blog related to your store can come in handy. Only write a topic that relates somehow to your online store, linking back to a product or two that makes sense within the scope of the article and then post the useful information of the article to Reddit to promote the content and hopefully, in turn, drive some traffic to your online store.
Creating a Board on Pinterest
Two-thirds of those who sign up for Pinterest are women. If your target demographic is women or even partially women, it is smart to create a board on Pinterest. However, you also have to understand Pinterest’s dynamic to understand really how to market on there.
For the most party, those who visit Pinterest are a crafty bunch. If you want to reach them and encourage them to share your pins, you’ll want to turn back to your content on your site. Selling cookware? Offer a recipe. Clothing? Create a pin that showcases the perfect outfit for a night on the town.
Leveraging the Comparison Shopping Engines
Comparison shopping engines (CSEs) have become increasingly popular among consumers who use them to find the best price on a particular item. They are also a way you can gain more sales for your online store.
Basically, you sign up and pay per click when someone comes to your store through the CSE. However, this is extremely targeted advertising. The person who clicks on that link has already searched for the product you’re selling and is looking for a place that has a good price where she can purchase it. The conversation rates are likely going to be a lot higher than from general traffic from search engines.
Starting a Blog
As mentioned before, a blog can help provide content that you can share on sites such as Reddit, StumbleUpon, and even that other bloggers will link to. You can also use articles on your blog to add value for your regular customers as you educate them on a broad range of topics related to your products and niche.
Ideally, the blog should be part of your website, so that when people come to read an article they are already on your site and can easily click through to go shopping or buy specific items.
Reaching out to Instagram Power Users
As of September 2015, Instagram had about 400 million active monthly users. Out of those users, some are known as “power users.” These are the users that have a massive following and post photos regularly. The key to connecting with a power user is to post a photo that relates to them in some way and mentions them in the comments. While this technique won’t always find success, it is worth the time investment. If just one power user mentions your store, it can increase your exposure.
Like most social media networks, the key is to add something valuable and that will grab the interest of the power user’s followers.
Tweeting on Twitter
There are more than 1.3 billion registered users on Twitter. At least a portion of those users is going to be interested in what you have to offer. When it comes to Twitter marketing, you will get back what you put into it. If you want people to follow you, retweet you, and share your content, you’ll need to return the favor. Also, make sure you tweet things that are worthy of sharing and that you aren’t just self-promoting all the time.
Engaging Facebook Followers
Facebook has around 1 billion daily active users. One of the unique things about Facebook is that you can create a separate page for your business without having to create a separate account. Facebook also offers highly targeted advertising where you can specify everything from the types of interests those who see your ad should have to an age range.
Getting Friends and Family to Share
If you haven’t already realized, you have a pretty strong marketing street team already in your inner circle. Your family and friends likely want to see you succeed with your online store. Don’t hesitate to ask them to share information about your store with those they know.
FINALLY LAUNCHING YOUR ONLINE STORE
You’ve spent months preparing for the launch of your online store, promoting it to everyone you know, and getting word of mouth going. Once the launch date arrives, you’ll still need to work on some additional tasks to keep the store running smoothly.
One of the key advantages of an online store is that inventory tracking is automated. At a glance, you can see which items have small stock and what you have too much of. However, it is also important to understand how long it takes to get a given item from suppliers. For example, if you order some items from overseas, it can take many weeks to receive them.
Over time, you should be able to see some sales patterns and know that when you get down to a certain number of a product that you need to place a new order.
If you are using companies that drop ship, you’ll need to coordinate with their systems to make sure you aren’t selling items that they have discontinued or that are out of stock on their end. The worst way to start your reputation as an online store owner is by making customers wait on their orders.
Handling Fulfillment and Shipping
In addition to the online system running smoothly, you’ll want to be sure you have processes in place to quickly fulfill orders and ship them out.
- If you carry items you store in a warehouse (or even just a spare room in your home for now), you’ll want to be sure that you create a cataloging system that allows you to find that item easily. Think about how the books are arranged in a library and see what kind of number or letter system you can create that will work for the products you offer. Make sure you include this number within the shopping cart system as well for secure location.
- By now, you’ve probably decided what shipping services you’ll use for your online store. Also, keep in mind that you’ll need to have supplies on hands such as boxes, packages, packing tape and bubble wrap.
- Always double-check that the order has been filled correctly and everything is in the shipment that was ordered.
- You’ll want to include an invoice with every order so the customer can see at a glance that all the items have been shipped.
Dealing with Customer Problems
Word-of-mouth advertising is a powerful force. People will spread both the good and bad about you. One unhappy customer may tell ten others, or in the case of social media, thousands of others. When a customer is unhappy:
- Respond immediately upon receiving a complaint.
- Rectify the problem. Replace damaged or non-working items, provide return postage or offer an exchange.
- Remember the mission of your site. Is your mission only to make money? While money is important, you likely want to get into your own business for many other reasons. How does your customer service measure up to your goals?
If you can solve a problem, you may gain a loyal customer for life.
Handling Product Exchanges and Returns
If an item arrives at the customer damaged during the dropshipping process, you’ll need to file a complaint on their behalf with the wholesaler that provided the drop shipping service. Or, if the item simply doesn’t work or is flawed in some way, the manufacturer should be happy to replace it free of charge. That means that the return postage for the damaged product is taken care of and costs the customer nothing.
On the other hand, if the item was damaged in shipping, any insurance you had on the item should cover your costs of replacing that item. You’ll need to file a claim, of course, to receive reimbursement and there may be a delay before you receive payment. However, you shouldn’t make the customer wait before you replace the item.
Optimizing eStore to Increasing Conversions
Once you launch your store, you should be able to see clearly some patterns. You’ll want to conduct some A/B split testing to see if particular landing pages funnel traffic more efficiently through the shopping cart and to a completed sale.
You can test anything imaginable by tracking analytics and doing A/B testing. Test different color buttons, free shipping or reduced shipping, and even different descriptions or other features.
Some other things you can do to optimize your eStore is:
- Looking at your site as a customer. What draws your eye? What is complicated or confusing?
- Check to make sure prices are clearly marked.
- Add reviews and testimonials to create a sense of trust.
- Leverage special offers to segments of registered users
By using Google Analytics and your site statistics, you can learn a lot about what isn’t working to convert visitors into customers and make changes accordingly.
POST LAUNCH ECOMMERCE SITE MARKETING
Once you’ve launched your online store, you’ll need to continue your marketing efforts on a regular basis, or you’ll risk slowly losing momentum. Some of the things you’ll want to do on a regular basis include:
Allocating a Marketing Budget
Whether you had investors, took out a loan, or used savings, your initial launch marketing budget will get used up quickly. It’s important to allocate a percentage of your profits to marketing if you want to continue to reach new customers.
A good rule of thumb is to spend up to 20% of your profits on advertising.
You’ll also need to decide what your goals are. For example, is your focus on lead generation or increasing sales to current customers? Then, look at which advertising channels have been most effective to meet those goals and allocate more funding toward those venues than others.
Starting an Advertising Campaign
As with most parts of running an online store, your first step is to figure out what your goal is for the ad campaign. What do you wish to accomplish?
Next, you’ll want to think about the target demographic you want to reach with the campaign. This will tell you where you should launch the ad campaign and which social media platforms would work best to meet your goals.
Finally, you’ll build the campaign on the platforms of your choice and should test the ad for effectiveness. You may want to make adjustments to get the most leverage out of your advertising budget.
Working on eCommerce SEO
Now that you’ve launched your site, your next goal should be ranking higher than any of your competitors do on search engines. Optify conducted some research that showed that the number one ranking website for a given keyword had a click through rate double that of second place.
You’ll need to continue to do both keyword research and competitor analysis as mentioned at the top of this guide. When you don’t rank as well as a competitor, study their page and figure out why. Often, it is a matter of who has the better content these days, so your blog can help with this as well as how detailed your product descriptions are.
Fix any problems, such as typos or grammar errors. In short, make your page the absolute best it can be.
Continue Social Media Marketing
With social media marketing, you develop a relationship with your followers. Developing a voice and a style is important. You’ll also want to share a percentage of things just for fun and not with any intention of making a sale. Followers appreciate a sense of humor or useful information and will share that with others.
Setting Up eMail Marketing
Decide on a schedule for email marketing. How often do you want to send subscribers a newsletter? What about coupons and special offers? How can you reach out with those without making it seem like you’re just selling to them?
Consider writing an ebook or guide and offering it in exchange for subscribing to your newsletter. This can give site visitors an incentive to sign up.
Setting Up Affiliate Program
Do you want to offer an affiliate program to others? This can be an excellent way to get a unique product on multiple websites.
- Make sure you have enough inventory to fulfill orders.
- Choose a compensation structure that allows you to make still enough of profit to meet overhead costs.
If you’re using a site such as Shopify, you can easily integrate an affiliate program. If you are self-hosting, then you’ll need to look into options that allow you to implement affiliate tracking IDs so you can properly credit the affiliate who sent you the referral.
Building a Loyalty Program
Do you want to encourage customers to order from you time and time again? Implement a loyalty program that rewards customers for ordering a certain amount of product or a particular number of occasions. You can reward them with cash to spend, a discount, or even small gifts from which they can choose. Some sites that do this effectively include Sephora, Kohl’s (Kohl’s Cash), and Old Navy.
Think about what rewards will keep your target customer base coming back time and time again.
Running your own online store gives you the chance to be a business owner without investing as much cash up front as you’d have to for a brick and mortar store. If you plan properly and stay on top of trends and marketing, you should be able to build a very successful eCommerce business.