This article is divided into two main parts. In the first, we will describe the prerequisites of building an online store, by giving you an overview of what is a niche, what business model you can choose (e.g.: dropshipping or selling your own product). The second part will be more technical. We will show you how actually you can set up your e-commerce system.
If you already have a niche and a business model, you can skip directly to the setup part.
Choose your niche and product
Before starting any type of business, you need to decide what you want to sell. Finding a good niche is a tricky process, which includes a lot of validation. If you know what you do and you’re lucky, maybe you will hit the jackpot.
What’s an e-commerce niche
A niche is basically a category into which your products fall. It might be a broad or narrow niche. An example of a broad niche is electronics and for a narrow are laptops, smartphones, etc… you got the idea 😉
Broad vs narrow niche
We recommend always choosing a narrow niche, especially when you start a new e-commerce business. That way it will be much easier for you to build a target audience and sell your product online.
If you have already developed a store and want to bring it online, then picking a niche it’s not your problem. You already have one
We recommend not going all-in blindly into some specific niche or product, instead, try to validate it first. The validation is basically just testing. Allocate a small budget, make a validation strategy and execute. If you find a market fit, then congratulations, you found the winner. Otherwise, try validating until you find the right niche or product.
Choose a business model
In this step, we give you an overview of the two options when starting an online business. Hopefully, you will be able to decide on your own, which approach is more suitable for you.
In the last couple of years, there were huge improvements in online marketing, technologies, and logistics, which led to this emerging way of selling online – dropshipping. It is a popular preferable way of selling online, especially for young entrepreneurs and people who look for low risk and low barriers to start an online business.
What is dropshipping
Dropshipping is a method in which the retailer doesn’t have inventory but instead transfers its customer’s orders details to a third-party. The third-party might be a manufacturer, another retailer or a warehouse. Usually, the products are shipped with your logo and information. You make revenue from the price difference between the wholesale and retail price.
What you need when starting dropshipping:
- Building an online store
- Online marketing skills (ex. Google and Facebook ads)
If you’re serious about making dropshipping, you need a good marketing skillset. We’ve created two marketing guides, which are a great starting point when starting your dropshipping business:
5 reasons why is so easy to start a dropshipping business:
- You don’t hold any inventory
- You don’t need capital to purchase your items upfront
- You can build your online store at zero risk
- No warehouse costs
- No effort in picking and packaging the orders
3 pitfalls of dropshipping
- Low barries to entry
- No control over fulfillment
- Problematic product returns
Dropshipping sounds like a super tempting way of making a business, but keep in mind that usually, the barriers to entry are very low. This means the competition can escalate pretty quickly.
By having no inventory, you have zero control over the fulfillment. If the vendor screws up, your customers will be pointing fingers at you. Of course, if you have proper contracts with the third-party, maybe you can avoid this issue.
Allowing product returns always increases sales, but in your case, it might be problematic to organize the returns. You need to discuss this scenario with the warehouse and create a return policy.
Selling your products
This is a more standard approach, which is completely different from the dropshipping business model. It brings a lot more flexibility but also risks with it. In this model, you have an inventory. There are two ways of getting your products initially. You can produce them or buy them from some warehouse or manufacturer.
The biggest advantage here is the control over the fulfillment, packaging and the actual product. You could have shorter delivery times and a lot of flexibility. Keep in mind that this advantage has a price, which is the higher risk that you take. You need a big upfront investment.
Nowadays there are various ways of building an online store. You can create a product, resell from a manufacturer or wholesale or just drop ship them. In the end, the question is what business you can afford to start and maintain. But one thing for sure, you need an e-commerce system and knowledge in marketing.
In the rest of this article, we will show you how to build an online store. We will walk you through the actual steps, so just stick with us.