How to Start Your Own Online Shop
The online trade is conquering more and more market shares. It is tempting to be there and to open your own online store - especially with the Internet can also sell goods in the world. But before you dare to go online, you should answer two important questions.
Question 1: Is it worth it?
Before you invest a lot of money and more time in your own online store, you should thoroughly analyze whether this can even be worthwhile, and whether your own business idea promises success.
You should ask yourself the following questions:
Can I stand up to the competition?
What is the price level of the competition? How long have the competitors been on the market? Which prices, which quality and service do you offer?
Suppose you want to sell children's shoes. The complete first page of search results is dominated by online shops that only offer children's shoes. Amazon and Ebay also offers children's shoes. Many of the shops have been active for many years, everything points to a price war. It is therefore unlikely that you can survive in such a market as a newcomer, if you bring no real competitive advantage.
Can I afford an online shop?
Running an online store costs money. Here you do not have to consider only the one-time installation costs. In addition there are costs for hosting, for the payment methods (SSL certificate) and for any updates. Another big expense is the marketing spend. Added to this are the costs associated with the products: manufacturing costs, storage costs, packaging costs and so on. Does a reasonable profit margin remain at the achievable prices?
Are my products suitable for online distribution?
Is there a demand for my product? Have I already sold it successfully in the analog world or on online marketplaces like Amazon or Ebay? Also, how "trendy" is my product? Will it still be in demand in several years?
Do I personally have the necessary qualifications?
Before you open an online shop, you should be honest with yourself: how well prepared you are to run an online shop? Do you have an idea of how to attract internet users to your own site? What experiences do you have regarding storage and shipping logistics?
It makes sense to focus on topics such as user guidance and conversion rate optimization before planning your own online shop. You do not have to be a professional in all areas. But only those who have a clue about the matter can, for example, ask the right questions to programmers or agencies and give clear instructions. Knowing these basics also helps avoid costly mistakes when building an online store.
Anyone who still thinks about opening an online shop now comes to the second important question:
Question 2: What alternatives are there to your own online shop?
Would it be possible to sell your own products instead via online marketplaces like Amazon or Ebay or even a classic shop opening?
For sales through an online marketplace such as Amazon, the following points are true:
- Lower start-up costs: Depending on the equipment of the webshop, you have to expect start-up costs of several thousand dollars or euros. The opening of a "shop" on Amazon, Ebay or Etsy, however, is associated with negligible start-up costs.
- Less prior knowledge required: Anyone who invests in their own online store must first conduct market research, analyze their own target group and their wishes and acquire a solid basic knowledge of CMS and online marketing. The use of marketplaces, on the other hand, can be learned very quickly.
- Greater range: Attracting potential customers to their own online shop is a complicated and costly affair. Anyone who does not believe this is definitely better advised to sell their products through a marketplace.
Open online shop in 10 steps
So should it really be your own online shop? Once the decision has been made, the work starts.
Step 1: find domain name
If you want to open an online shop, you need a good, memorable internet address. The most important rule here: Short domains are better than long. Buyers will remember them better and fewer opportunities for typos.
Finding a good domain is becoming increasingly difficult because almost all attractive names are already taken. So, how do you choose a suitable domain for the online shop?
Step 2: Choose payment methods
Which payment methods a webshop should offer depends above all on the target group. Who appeals to a young target group and offers only the payment methods "advance payment" and "bill", will certainly forfeit sales. The most important payment methods are currently:
- Credit Cards
- Mobile Payments
- Invoice purchase
- Bank Transfers
- Prepaid Cards
- Direct Deposit
- Cash on delivery
Step 3: Calculate costs realistically
Experts estimate that several tens of thousands dollars or euros must be invested in a new online shop if it is to be successful - at least! Because the competition is now too good and too big.
Step 4: Working with ecommerce consultant and web designer
Anyone who wants to do everything themselves when opening an online store is either a genius or (and that is far more likely) a fancier. A consultant who helps you set the right priorities and select the right partners and software is essential to most.
Step 5: Select shop software
Of course there are numerous free templates for online shops in the net. However, these are often not free at the end because you have to run a programmer to adapt the template to your own needs. A paid package solution can therefore be worthwhile - especially since there is also a customer support.
Step 6: Purchase software for retailing and mail order
If you want to build a true, profitable business, you need software that supports it and automates as many work steps as possible, such as billing and managing customer data. A combined merchandise management and mail order software takes over these functions. Even for founders of online shops who already have brick-and-mortar stores, it is often advisable to choose software that has been developed directly for ecommerce - instead of building on the existing in store retail management system. Two popular manufacturers used by many online retailers are JTL and Pixi. It is important that the software can grow with the online shop and, for example, you can buy certain functions that you do not need at the beginning.
Step 7: Warehouse and equipment
Some online shop founders store their goods in the living room - but this is only as long as you are not really successful. And that is exactly what one wants to become. So you need a warehouse complete with equipment: packing table, product storage shelves, hand truck, pallet trucks, shelving for shipping utensils, barcode scanners and so on.
Step 8: Engage photographer and copywriter
Good product pictures and descriptions are indispensable. Finally, one wants to convince the customers to click on "buy". Here you should be honest with yourself: Are you really gifted as a photographer and copywriter so that you can do the job yourself?
Step 9: Make Marketing
Even the best online shop will not succeed if you do not lure customers to the site. How many visitors an online store really needs is shown by a simple calculation:
500 visitors come daily to the webshop. We assume an optimistic conversion rate of one percent, which results in five purchases. Let's say the average order value is $100 and the gross profit is $20 per order. Then there is a gross profit of 100 dollars per day and 3000 dollars a month. Of this, however, all costs still have to be deducted, for example for advertising, storage, shipping, software and so on.
The example shows: If you want to be successful with a webshop, you have to attract thousands of visitors every day.
There are, among others, the following ways:
- Ads using Google AdWords
- Search Engine Optimization (SEO): Search engine optimization ensures that a customer who is googling for your products, will see your your shop displayed in the hit list.
- Online advertising, such as banner advertising on other websites.
- Content marketing: Content marketing attempts to establish itself as an expert in the eyes of customers with content related to its own product - and in the end, sell more. For example, a tool shop might publish instructions on how to properly use the tools or a photographer's tips on photography.
- Social media marketing and advertising: Social media platforms such as Facebook, Twitter or Instagram allow you to communicate with your target group, increase brand awareness, promote your image or introduce products.
Step 10: Get legal advice
A warning can quickly bring online shop operators into financial trouble. So from the outset it is necessary to avoid any reasons for the warning.
Frequent warnings are violations of the labeling obligation, the imprint obligation, the data protection, the consumer protection right or the right of withdrawal. Of course, you can also make yourself smart and read on the net, which criteria a webshop must meet in order not to risk warnings. It is safer, however, to hire a law firm. For any errors that later lead to warnings, then liable for the lawyer.