Some people compare running an online store to producing a work of art. It just takes time, creativity and a whole lot of love, they say. Others call it a precision science that requires just the right mixture of solutions X and Y to create the energy and pressure needed to produce a volcanic sales eruption.
Still others claim that all you need to make money online is good old-fashioned hard work.
The bottom line is that for an entrepreneur who has never run an online store before, any of these options may be the answer. However, those who have sweated it out over the years (and perhaps seen their art crumble to the floor or their science experiment blow up in their faces), know that online selling is a combination of art, science and hard work.
Whether you’re a startup pioneer or a seasoned vet thinking about selling online, you should consider (and re-evaluate at least every six months) these five crucial factors:
1. Does your idea or product suck?
Ouch, that was harsh. I cannot tell you how many people have come to me with the “I don’t know why my sales are so low” blues, while the whole time all I can think of is, “Hasn’t anyone who loves you told you this is a terrible product in the first place?”
Yes, the Internet is a wide-open playground where a “weird person” can find a “weird product” that creates a “weird transaction” that still results in money. But before you try to spend money on digital marketing or a new ecommerce platform, you need to spend money researching and determining whether a market for your proposed product even exists. If it does, you need to determine what type of volume your product might generate worldwide, and who your competitors will be, then figure out a way to beat them.
2. What is your business strategy?
It amazes me how many people will spend money on platforms, marketing and inventory without first determining a clear business strategy for each portion of their business. How did you determine the pricing of your product? How are you different from your competition? How will you attract new customers and retain existing ones? What platforms/tools can you afford now, but will allow you room to grow? How will you sustain your growth?
Once you have answered these questions (and many others) and built a business plan around them, you will be prepared to attack the market. Once you have real-life results to prove or disprove portions of your business plan, you can adjust pieces of your scientific formula until you see positive results.
3. How are you different?
News alert. . . you may not be the only person selling a pair of Nikes online. So, what makes you different from any other retailer selling Nikes online? You can’t fight on pricing, because you most likely are contracted to not sell below a MAP (minimum advertised price).
What else about your brand, mission, experience, offerings, etc. might compel someone to come to your site and buy your products? The Internet is a very big place, but if you don’t position yourself in a unique way, you will most likely get lost in the sea of search results. Beware that what may be meaningful to you may not always attract revenue; it may actually cost you more to generate that product than what you make off it.
For example, say that the nicest girl in the world is running an online store that sells only products made in the United States, to help promote job growth here at home. I love her mission, but she isn’t fully aware of how difficult and expensive it will be be to go after the niche market of those who share the same passion as she. She spends her life savings on a noble cause, but ultimately goes out of business. Don’t make that same mistake!
4. What is your funding?
I don’t care how great or revolutionary your product is: If you don’t have a realistic budget for the startup and growth phases, the world will most likely never experience what you are selling. If you do have a budget, you probably need to double it to be realistic. To hit your competitive price point for that product you discovered in your research, you must sometimes buy your inventory in bulk to drive down costs.
Will that cheap ecommerce platform you’re using give you the tools needed to really drive sales? Will there be any money left over to do the hard work of driving traffic? Most companies would admit that nine times out of 10, they underestimated the amount of money they would require. So, after your business plan is in place, expect to double your budget immediately, and then have a plan for how to access more capital when needed.
5. How much sleep do you want?
It is not necessarily easier running an online store than it is going into your 9-to-5 job every day. For those attempting to create supplemental income to their daily labor by creating a online store, I applaud the effort. It will take work, a lot of work.
But all of the planning and preparation to get the site up is one thing. Then you must have a plan for marketing, customer service, holidays, etc. No, that free $100 of Google Adwords you got in the mail won’t replace your income. And, yes, customers will get mad and expect answers when that isn’t convenient for you. You need to make sure in your business planning that you factor in the costs of hiring part- or full-time staff to help you grow and manage your business.
Sometimes, the scientist accidentally adds too much of solution X to solution Y, and the results are spectacular. Or, the artist creating that weird product everyone said wouldn’t sell becomes the next big craze. Sometimes this does happen. But those scenarios are the exceptions, not the norm.
Which doesn’t mean you should give up. People do succeed each day starting online businesses. So don’t get dejected; just be realistic and prepared to execute your business plan, and you may end up with that nice retirement income after all.