4 Steps to Start Your Online Business

Your business model defines your e-commerce business and, as such, can directly affect its future. Choose the right model, and use it as a blueprint to help guide your direction, choices and decisions from the very start. Here are 4 steps to help you along the way.

Step 1: Decide what to sell. Choose the products you want to deal in, also keeping in mind how you’ll handle shipping, breakage, inventory storage and insurance for these items. Consider the pros and cons of selling via your own website, or signing on with an established marketplace like Amazon, eBay and Etsy, and understanding their fee structures. Don’t know what products to sell? Learn how to find hot products to sell.

Step 2: Choose where your products will come from. If you sell physical goods, you can create the products yourself – such as knitting sweaters – or figure out where to obtain them from others. Keep in mind that if you handcraft what you sell, you’ll be responsible for obtaining and managing materials for your creations, and you’ll need to decide whether to custom-make each item or build up an inventory you can draw from. For another example, if you deal in vintage books, you can scour thrift shops and estate sales on your own, or purchase from another book dealer with existing inventory. Alternatively, you may contract with manufacturers or wholesalers to create or provide your stock, or drop-ship, which involves product fulfillment via a supplier, and you won’t physically handle what you sell.

Step 3: Figure out who you’re selling to. Most e-commerce sellers sell directly to consumers vs. to other businesses, so spend some time thinking about the kind of customer you should be targeting. Here’s where online marketing and social media come in very handy – with these tools, you can establish your store’s online image, highlight products, connect directly with buyers and potential customers, and determine how search engines are working to bring browsers to your site.

Step 4: Determine your competition … and how to compete. Once you figure out who’s sharing your space in the marketplace, analyze how you can stay competitive – and, ideally, stay a step ahead. Decide whether your pricing is in line with what others are charging, how your product quality matches up, and how much shoppers have to choose from what you offer. Then get creative: Is there anything else you can differentiate your store with value-adds? These may include warranties, free shipping, generous return policies, special services like gift-wrapping, and getting to know your customers via social media.

The Bottom Line
Assemble the key elements of your e-commerce business model by following the steps above. Once you determine your products, sources, consumers and competition, you can use that information to craft your next steps and long-term goals.