Starting a basic e-commerce business is something that you could, in theory, pull off with as little as $2,000. This is what attracts a lot of people who always wanted to run their own business but had no funds to pull this idea off. The problem, however, lies in the fact that starting off modestly may restrict your growth in the future and running a promising, scalable e-commerce business requires a lot of work and effort. With that in mind, here are five logistical considerations that can help you set your business on the right path towards success.
1. Choosing a field
The first thing you need to decide on when it comes to starting your own e-commerce business is what field you want to specialize in. This is not just a matter of personal preference, due to the fact that it affects your business’ logistics in so many different ways. First of all, the ideal average order value is between $75 and $200, in order for your margin to be significant. Choosing a niche with products that fit these descriptions is usually a good idea. Second, depending on the field, you’ll also get a primary target demographic, which is probably the single most important thing for you to focus on. Lastly, you need to pick a field that will give you a chance to diversify your income instead of having to rely on a single product/single product type.
2. Drop shipments or traditional commerce model
Another aspect that you should consider is whether you should go with the drop shipment model or a traditional e-commerce system. The first offers you a chance to further simplify your logistics behind your business but it robs you of the majority of control over your delivery system. Therefore, even in this day and age, more and more businesses are opting for a traditional e-commerce model. For this to work, you need to work out your fleet management and your warehouse system. This includes various tasks, ranging from finding suitable shipping container transport all the way to choosing an adequate warehouse management system.
3. Independent platform or an online marketplace
This is perhaps the most important logistical issue that you’ll face here. Namely, the platform where you sell your product is incredibly relevant and the choice of which path you take is not a simple one to make. It goes without saying that picking a marketplace like Amazon, may be the simplest way to enter the world of e-commerce. The method itself is quite cost-effective as well, which is why more and more businesses are going for options like FBA (Fulfilment by Amazon). On the other hand, by having your own platform, you’ll have more customization options, as well as more authority. There are so many fake items on these marketplaces that you need every ounce of legitimacy that you can get.
4. Rankings and reviews
As far as digital marketing goes, the most important two factors you’ll deal with are rankings and reviews. When it comes to rankings, if you’re selling on a particular platform (Amazon, eBay, etc.), you need to find a way to rank as well as you can with their internal algorithm. If we’re talking about an independent platform, you should definitely focus on your SEO efforts. Product reviews may be pivotal in whether or not people decide to buy an item, yet, these reviews are not that easy to come by. Therefore, you might want to try incentivizing this and urging people to rate your products whenever they can.
5. The return policy is crucial
One last thing you need to understand is the fact that trust is the most important factor to determine your future success. This is why a return policy acts as a safety net for your customers and a promise that, if the product doesn’t satisfy their expectations, they can return it and get their money back. A lot of e-commerce businesses are reluctant to introduce a lenient return policy, due to the fact that they believe it is nothing else but an unnecessary loss of profit. However, making a customer keep an item that they don’t want will A) result in negative reviews and B) ensure that you never do business with this person again. At the end of the day, it just isn’t worth it.
As you can see, all of these steps are fairly simple and they rely on your ability to understand your target audience, recognize your goals and objectives, as well as establish a strong network of contacts. Those who manage to pull all of this off will set their e-commerce business on a path to success.