Online shopping is booming and retailers are growingly interested in taking their business online. Our step-by-step instructions will help you build that successful business online.
Online trade is conquering market shares around the world. It is tempting to be there and to open your own online shop – especially since you can also use the Internet to sell goods all over the world. But before you venture into online retail, you should clarify two important questions.
Question 1: Is it worth it?
Before you invest a lot of money and even more time in your own online shop, you should carefully analyze whether this can be worthwhile and whether your own business idea is promising. You should ask yourself the following questions:
Can I stand up to the competition?
What is the price level of the competition? How long have the competitors been on the market? What prices, what quality and what service do they offer?
Suppose you want to sell fishing tackle. If you google for “fishing accessories”, you will get 929,000 search results. The complete first search results page is dominated by online shops that only offer fishing accessories, many of which have matching domain names. Amazon also offers fishing accessories. Many of the shops have been active for many years – everything indicates a price war. It is unlikely that you can survive as a newcomer in such a market if you do not have a real competitive advantage.
Can I Afford an Online Shop?
Running an online shop costs money. Here you don’t just have to take into account the one-time installation costs. There are also costs for hosting, payment methods (SSL certificate), and any updates. Another big expense is marketing expenses. In addition, there are the costs associated with the products: manufacturing costs, storage costs, packaging costs, and so on. Is there a reasonable profit margin left over attainable prices?
Are my products suitable for online sales?
Is there a demand for my product? Have I successfully sold it in the analog world or on online marketplaces like Amazon or eBay? How “trendy” is my product? Will there still be demand for it in several years?
Do I personally have the necessary qualifications?
Before opening an online shop, you should be honest with yourself: How well prepared are you for running an online shop? Do you have any idea how to lure internet users to your site? What is your experience with warehouse and shipping logistics?
It makes sense to deal with topics such as user guidance and conversion rate optimization before planning your own online shop. You don’t have to be a professional in all areas. But only those who have a clue about the matter can ask the right questions to programmers or agencies and give clear instructions. Knowing these basics also helps avoid expensive mistakes when building an online shop.
If you are still thinking about opening an online shop, now comes to the second important question:
Question 2: What are the alternatives to your own online shop?
Would it be conceivable to instead sell your own products via online marketplaces such as Amazon or eBay or even a classic online business?
The following points speak for the sale via an online marketplace like Amazon:
- Lower start-up costs: Depending on the features of the online shop, you can expect start-up costs of several thousand dollars. The opening of a “shop” on Amazon or EBay, on the other hand, involves negligible start-up costs.
- Less previous knowledge required: Anyone who invests in their own online shop must first conduct market research, analyze their own target group and their wishes and acquire a solid basic knowledge of shop systems and online marketing. You can learn how to use the marketplaces very quickly.
- Greater reach: Attracting potential customers to your own online shop is a complex and costly affair. If you don’t dare to do this, you are better advised to sell your products through a marketplace.
The work only starts once the decision is made. These are the most important steps:
Step 1: Find Domain Names
If you want to open an online shop, you need a good, memorable Internet address. The most important rule: short domains are better than long ones. It’s easier to remember and there are fewer ways to make a mistake.
Finding a good domain is becoming increasingly difficult because almost all attractive names have already been taken. So how do you find a suitable domain for the online shop, what makes a good domain and what legal aspects have to be considered?
Step 2: choose payment methods
Which payment methods a webshop should offer depends primarily on the target group. For example, if you address a young target group and only offer the payment methods “advance payment” and “invoice”, you will certainly lose sales.
Step 3: Realistically calculate costs
Experts estimate that you have to invest at least 50,000 to 80,000 dollars in a new online shop if you want it to be successful! Because the competition is now too good and too big to be successful with half things. Our overview article shows which cost points you can expect – and where you can save.
Step 4: Exchange with e-commerce consultants/web designers
If you want to do everything yourself when opening an online shop, you are either a genius – or (and this is far more likely) a fantastic person. A consultant who helps you set the right priorities and select suitable partners and software is essential for most.
Step 5: Select Shop Software
There are numerous free templates for online shops online. In the end, however, these are often not at all free, because you just have to get a programmer to adapt the template to your own needs. A paid package solution can be worthwhile, especially since there is also customer support.
Step 6: Purchase software for merchandise management and mail order
If you want to build a real, profitable business, you need software that supports you and automates as many work steps as possible, such as invoicing and managing customer data. A combined ERP and mail-order software takes over these functions. It is also often advisable for online shop founders who already run a brick-and-mortar store to choose software that was developed directly for e-commerce instead of building on the existing merchandise management systems of the brick-and-mortar store.
Step 7: Build a warehouse and purchase hardware
Some founders of online shops store their goods in the living room, but that only works as long as you are not really successful. And that’s exactly what you want to be. So, you need a warehouse and equipment: packing table, storage shelves for products, hand truck, pallet truck, shelves for shipping utensils, barcode scanner and so on.
Step 8: Hire photographer and copywriter
Good product pictures and descriptions are essential. After all, you want to convince customers to click “Buy”. Here you should be honest with yourself: as a photographer and copywriter, are you really so talented that you can take on the task yourself?
Step 9: Do Marketing
Even the best online shop will not be successful if you don’t lure customers to the site. A simple calculation shows how many visitors an online shop actually needs:
500 visitors come to the webshop every day. We assume an optimistic order rate (conversion rate) of one percent, which results in five purchases. Assume the average order value is $100 and the gross profit is $15 per order. Then there is a gross profit of 75 dollars per day and 2250 dollars per month. However, all costs have to be deducted from this, e.g. for advertising, storage, shipping, software, and so on.
The example shows: If you want to be successful with a webshop, you have to attract thousands of visitors to your site every day. There are several ways to do this:
Step 10: Get legal advice
A warning can quickly lead online shop operators into financial difficulties. It is important from the start to avoid every reason for a warning. Frequent warnings are violations of the labeling obligation, imprint, data protection, consumer protection law or the right of withdrawal. Of course, you can also make yourself smart and read online which criteria a webshop has to meet in order not to risk any warnings. However, it is safer to commission a law firm. The lawyer is then liable for any errors that later lead to warnings.
