Starting an e-commerce business is a great way to earn a living or bring in some extra income. If you own a brick-and-mortar store, for instance, an e-commerce shop can add to your revenue and give customers a convenient option for purchasing your products.
An increasing number of Aussie shoppers are making purchases online. Australia Post data shows that despite a slower period of growth for the retail industry, online spending surged 9.1% to $63.6 billion in 2023. With 8 in 10 Australian households (9.5 million) making an online purchase in 2023, there are a lot of opportunities for small businesses operating online.
Yet it’s important not to rush into the e-commerce space without a solid plan. When setting up your business, consider following a few key steps to help ensure your online store is successful.
Six steps for starting an e-commerce store from scratch
In a highly competitive e-commerce marketplace, it’s challenging to establish an online presence that makes an impact. Before you commit to launching an online company or presence, take the time to understand the best approach for your business.
There are a variety of e-commerce models, so it’s important to research your niche, determine the appropriate tools needed to set up the company, and discover ways to control costs.
1. Understand the various e-commerce models
There are four e-commerce models to consider when developing your online company:
- Business-to-consumer (B2C): with this model, a business, such as Kmart or Amazon, sells products or services directly to customers.
- Business-to-business (B2B): B2B businesses provide products and services to other businesses. IBM, for instance, offers technology and consulting services to businesses.
- Consumer-to-consumer (C2C): a C2C business, such as eBay, is typically an online marketplace, where consumers connect with each other to buy and sell merchandise.
- Consumer-to-business (C2B): with the C2B model, individual consumers and end-users of products and services offer expertise to businesses. A beauty influencer, for instance, might get paid by a cosmetics company to create a blog or video that offers expertise to consumers about how to apply the company’s products.
Choosing the appropriate e-commerce model helps you connect to the right networks and uncover opportunities for sales and growth.
2. Identify your target market
Once you know the type of e-commerce model that matches your business, focus on the exact market that may likely be interested in your product. Carefully research your target market and the online channels that are important to them, such as social media platforms and online forums, to understand their pain points and preferences.
3. Research your competition
Who are your competitors? How do they sell their products and services? What do they do differently to set themselves apart to attract customers? Which online marketing channels and social channels do they use? A competitive landscape analysis aims to answer these questions and more.
IN A HIGHLY COMPETITIVE E-COMMERCE MARKETPLACE, IT CAN BE CHALLENGING TO ESTABLISH AN ONLINE PRESENCE THAT MAKES AN IMPACT.
It’s also useful to create networks by setting up conversations with vendors and customers in the space to see what they like and don’t like about the competition. Defining what types of products and services your competitors are already providing helps you discover the key differentiators and address gaps in the market.
4. Write a business plan
A business plan is vital to your e-commerce store’s success. The business plan sets out your goals, mission/vision, operational strategy, and the activities you’ll prioritise. It sets a roadmap for growth, gives you a benchmark to measure your progress against, and allows you to evaluate your ideas to determine which initiatives have the best chances of success.
When drafting a business plan, ask yourself important questions about what you want your business to be, what your goals are, and how you’ll deal with any obstacles that may arise, so you can make sure your business is prepared for future success.
5. Take care of the details
The details matter. You need a business name – one that’s easy for customers to remember – and a registered domain, as well as a logo. You may also need to build an e-commerce website that includes captivating product descriptions, engaging photos and videos, and effective search engine optimisation.
Ensure you’ve finalised these details before launching your online store. Be prepared to remain flexible by making revisions to your e-commerce business as you learn what works.
6. Select and test an e-commerce platform
As you research similar businesses that share your e-commerce model, consider researching their preferred e-commerce platforms.
Many modern platforms not only include tools to manage inventory, report revenue, and handle shipping details, but they also help you market your business to expand its reach.A platform may also integrate with your accounting records, so you can get a real-time look at your finances.
What are the challenges faced by e-commerce businesses?
E-commerce business owners may encounter several challenges. Some of the most common include:
Higher customer expectations
As an increasing number of customers shop online, more and more e-commerce businesses are trying to win shoppers’ loyalty. In such a crowded marketplace, make sure your offerings meet or exceed customer expectations.
Customers often look for discounts and exclusive deals when choosing where to spend their money, but they’re also attracted to perks like free returns, free shipping, easy-to-navigate websites, timely customer service options, easy pay options, and personalised shopping experiences.
Increased customer options
Customers have a wide variety of options for making online purchases. They can go with big online retailers that offer fast shipping from sellers around the world or opt for local e-commerce businesses that provide locally sourced goods. They can also shop through online marketplaces, rather than visiting a merchant’s website.
Consumers are also no longer limited to buying only within their own country. It’s now easy to buy from e-commerce stores that ship internationally and customers can quickly compare products and prices online. With so many options available to customers, your online store will need to differentiate itself.
Difficulty attracting customers
Given all the options available, it can be difficult for e-commerce businesses to attract new customers. Customers now learn about products and brands from many sources, including social media, search engines, influencers, and online advertisements, adding another layer of complexity.
If you want to attract consumers, you should figure out how and why your they make purchases. That includes understanding the types of people they trust to guide them in their purchasing decisions, and how your business can be top of mind when people are buying online.
Maintaining profitability in the long term
It may be tempting to offer the lowest prices and provide as many perks as possible, but if you go too far, your company may not turn a profit.
To survive in the long term, e-commerce retailers should also find as many ways as possible to reduce costs, such as lowering their overhead, trimming shipping costs, and cutting inventory expenses.
Choosing the right technology
Technology is constantly changing, so e-commerce business owners must be willing to conduct ongoing research to find the most appropriate tools that can assist with selling their products and services.
You may need to employ integrated software solutions to help manage your marketing content, keep track of inventory, create seamless buying experiences, and improve the flow of products and services to customers.
Key takeaways
E-commerce business owners often encounter a variety of challenges when starting their own companies, including meeting higher customer expectations, operating in an increasingly competitive landscape, and keeping up with constantly evolving technology. Businesses owners can navigate these complexities by researching the competition, finding ways to appeal to their target market, and drafting a detailed business plan. Taking these steps can help you launch and sustain a thriving online store.