Starting an online business is perhaps easier now than it ever has been, thanks to two full decades of infrastructure, technological developments, widespread internet use and the ability to work with ecommerce fulfilment partners to fill in the gaps in your current business.
Most of the time, ecommerce is a pivot; an existing brick-and-mortar business takes their business online to maximise sales or to try and act as a tourniquet for reductions in revenue, but for other people and organisations, this is their chance to build an online-first retail business.
Starting from scratch rather than relying on an existing business can feel intimidating, but it is just as liberating, particularly since there are plenty of third-party logistics (3PL) experts to help you out and fill in the gaps.
To help you get started, here are some of the biggest questions to ask yourself before you get started.
Is Ecommerce Right For You?
The biggest question to ask yourself is whether ecommerce is the right business move to take, and the answer is usually yes if you are willing to commit to it, to work with the right people, to invest in your business and to take advantage of the access it gives you to wider markets.
It is not a get-rich-quick scheme, and anyone who treats it as one often finds themselves out of business as quickly as they entered it. You need to do your research, honestly evaluate your skills and know what you can do alone and what you need help with.
Ecommerce Is Right For You If
- You already have a product to sell with organic demand but want to scale up.
- You have a pre-existing audience or know a market already exists that you can get into.
- You have the capacity to commit for up to a year without consistent profits.
- Have between £500 and £5000 to spend on getting started, from investing in inventory and logistics to marketing and digital tools.
- You know some of the basics of online marketing or are willing to learn on the move.
- You want to cast a wide net for customers.
Ecommerce May Not Be Right For You If
- You need money now, as stores often take time to lay the foundations for profitability
- You do not have a marketing budget, as organic marketing is no longer enough to build awareness for a new store.
- You are not willing to learn everything you need to succeed or work with people who already know.
- You do not have a path to scalability or a fulfilment partner who will help manage the complexities of running a store.
- You do not have a unique selling point, as larger ecommerce businesses will always be able to price you out.
Which Business Model Are You Planning To Use?
In general, most ecommerce businesses are business-to-consumer (B2C), in the sense that the buyer is a dedicated retailer offering products to individual customers directly. However, it is not the only system that exists.
When setting up your business plan, think about your potential customers and how this may change your fulfilment needs and practices.
Business To Customer (B2C)
The most common type of online retailer, B2C ecommerce is the model that has thrived since the founding of Amazon in the mid-1990s.
This is where a business will sell directly to a customer, rather than going through an existing retail network, and this is where customer experience is particularly important.
It means that you need to work with effective fulfilment partners who can supply, pick, pack and ship goods quickly, efficiently and in ways that are easily tracked.
The most successful B2C companies offer unique selling points, curation and an easy-to-use shopping experience.
Business-to-Business (B2B)
Unlike B2C, business-to-business (B2B) ecommerce is where businesses buy from each other, often moving goods from one part of a supply chain to another.
It could be a raw materials supplier transacting with a manufacturer, a manufacturer selling to a wholesaler, or a wholesaler selling to a retailer.
Because business transactions tend to be significantly larger than individual customer purchases, B2B sales is about developing strong, robust and long-lasting business relationships, and having scalable fulfilment to meet the needs of particularly important clients.
Customer To Customer (C2C)
A rarer but not unheard-of business model for ecommerce, customer to customer is a platform or marketplace that allows customers to buy and sell to each other.
Whilst most businesses simply offer a sales platform and little else, some can provide fulfilment and logistics services, particularly for high-value items that may need to be held in escrow.
Customer To Business (C2B)
Finally, a consumer to business model (C2B) involves consumers selling products to businesses, usually products that they have made themselves and are sold by a company with larger fulfilment resources.
What Products Are You Planning To Sell?
Before you can set up a shop to sell goods, you need goods to sell. They need to be the types of products your target market wants, of good value, high quality and easy to ship quickly to customers as and when they need them.
The sweet spot to look for is goods that are highly demanded but not in oversaturated markets, where you can offer a profitable unique selling point.
There are a lot of ways to find the right products, and you may already have ideas, but here are four market research steps you can try:
- Go with the market and buy items that are already popular and that people are searching for. The demand is high, but so is the competition.
- Find a niche target audience and buy products that they specifically want. The competition is far lower, but you need to know your audience very well.
- Look for products that solve problems your target audience deals with every day.
- See what your competition is doing right and doing wrong, and see where there is an opening.
What Products Should You Avoid?
- Patented products unless you either own the rights or have been authorised as a reseller.
- Heavy products, as they often cost more in shipping than you make in a sale.
- Perishable goods, as some fulfilment providers will not accept them and they have such a short life that you cannot guarantee they will sell before they spoil.
How Do You Source Products?
The quality and uniqueness of your products are essential for succeeding in ecommerce; if your range can be bought elsewhere for less, customers will go elsewhere.
Here are some of the most typical ways to structure your stores and sell your products:
- Dropshipping – Products are bought from a vendor and then sold to customers, with products often supplied from fulfilment centres directly to customers.
- Reselling – Products are bought from wholesalers or other B2B retailers before being sold at a higher price to customers.
- Self-Manufacture – Making products yourself and using a fulfilment centre to store inventory and complete orders.
- Partnering With A Manufacturer – Working directly with a manufacturer to produce goods, either under a white label agreement or to custom specifications.
- Print To Order – Goods are manufactured as sales are placed and then fulfilled. This can lead to cheaper storage costs but often requires specialist facilities.
Do You Need A License To Sell And Ship Your Products?
It depends on which products you are selling. It is always worth checking if you need specialist approval to sell your products and what you need to do to get that approval.
For example:
- Alcohol needs a licence as well as a robust system for age verification.
- Tobacco requires a licence and has strict rules regarding online marketing, age verification and clear health warnings.
- Supplements can sometimes be considered food products, but others may need to be approved as medicines or medical products.
- Cosmetics needs to meet strict UK regulations and have clearly labelled regulations.
- Electricals need to conform to UKCA, CE or both safety standards.
Which Ecommerce Fulfilment Partner Should You Work With?
You should work with a fulfilment partner who can fill in the gaps in your supply chain. This is usually a third-party logistics (3PL) company that understands your market sector and the specific requirements that your customers have.
