5 Things to Consider Before Starting an eCommerce Business
July 12, 2022 by Amber Amato de Guerrero
In an increasingly digital world, eCommerce has shifted from ‘nice to have’ to ‘necessary to thrive’ for many small businesses. Consumers enjoy the convenience of online shopping while retailers benefit by reaching a larger audience.
If you have a brick and mortar business, you may be considering eCommerce as a way to increase your revenue and attract more customers. Before you dive in, consider using “the 5 Ws” to help guide you in your next steps.
- Why do you want to add eCommerce?
Just because ‘everyone is doing it’ does not mean eCommerce is right for your business. Are your customers asking for online ordering options? Do most of your industry competitors use eCommerce? Are you trying to add a revenue stream to your small business? You should be answering ‘yes’ to most of these questions if you are considering investing time and resources into developing an eCommerce strategy.
- Who is your target customer and do you have competitors?
It helps to consider your target market when developing an eCommerce website. Local customers who already know and love your products will be less concerned if your website is polished and your branding is added. For an online shopper meeting your business for the first time, the quality of your website and content can mean the difference between a sale and a nonsale. Think about your ideal customer, their expectations and needs, and tailor your visual images and messaging to that customer.
Next, research your direct competitors. Look at their online presence, how they use social media, and make notes about anything that stands out – positive and negative. It also helps to explore major brands in the same industry. While your eCommerce presence will be simpler, these companies have expert marketers and are an excellent resource to model for best practices and inspiration.
- What will you sell on your site?
You can sell products, services, and even information online. For a small product line that rarely changes, many small business owners can build their own website using a basic eCommerce package. If you sell one-of-a-kind items, plan to invest more time to create product listings with quality images and descriptions. If you want to sell a large number of items online or offer personalized products, you will need more technical expertise and a more robust platform.
Once you’ve decided your product lineup, think about whether you will sell products for in-store pickup, local delivery, or shipping. For in-store and delivery, how will you fulfill and organize those orders? If you plan to ship products, you will need to test different packaging options and compare carrier rates. Weight, package dimensions, and destination are all factors that can impact your shipping costs. Flat rate boxes and envelopes can be a good starting point.
- When should you add eCommerce?
It can be a challenge to know when is the right time to add eCommerce to your brick and mortar business. If you are opening a restaurant or other business in a neighborhood with a lot of local competition, you may need an eCommerce presence from the beginning to be competitive. If you have an established business, then consider your budget and ROI (return on investment). How much money – and time – can you commit to nurturing eCommerce? Do you have enough inventory and employees to manage fulfillment? How much additional revenue will you need to make eCommerce profitable, including startup costs and ongoing maintenance fees?
- Where will you sell your products and services?
There are many options for launching into eCommerce. Social media can be a fast and low cost way to get started, but you typically have less control. Algorithms can change, suddenly making it harder or more costly to reach customers. There is also plenty of fine print! Accidentally breaking the rules in advertisements can result in an account suspension shutting down your online shop for days, weeks, or even months.
Marketplaces are another popular option because there is a built-in audience, limited tech requirements, and plenty of automation to save you time. There is also more competition and costs associated with that convenience – listing fees and commissions will need to be built into your pricing model.
Building your own website – either with a developer or do-it-yourself – gives you the most control over how you present your products and services online. However, it requires more technical knowledge and you’ll need an effective marketing strategy to drive traffic to the website. You also need to be aware of the true costs when you explore website platforms. Most introductory eCommerce packages are affordable but have limited functionality. The cost can increase sharply as you add features to create a more robust eCommerce solution.
Consider your capacity to take on something new. If you are struggling to manage the day-to-day operations, it may not be the right time to tackle eCommerce. Also consider the competitive landscape. If most small businesses in your industry offer online ordering, you may need to prioritize eCommerce just to remain competitive.
If you are trying to create a new revenue stream, think about how eCommerce expands or enhances your existing business. Implementing eCommerce will not magically increase sales – it requires dedication, marketing, and quality products and services. If you are struggling to sell through a retail location, your product or service may not have success selling online (unless you have a very niche product and simply need to reach a larger audience). eCommerce only makes sense when it adds value – both to your customers and to your bottom line.
If you are feeling overwhelmed by the many considerations around developing eCommerce for brick and mortar businesses, you can reach out to your local SBDC business consultants for one-on-one, confidential consulting and education around your digital marketing needs.
If you are ready to start your eCommerce journey, read our “What eCommerce Retail Channel is Right for my Business” blog post. Visit the PA Business One-Stop Shop to learn more about operating and growing a business in PA. Be sure to follow us on Facebook, Twitter, and LinkedIn for even more resources to grow your eCommerce business presence.
Amber Amato de Guerrero
As a bootstrap entrepreneur who grew a successful catering business, Amber Amato de Guerrero brings first hand knowledge of the unique challenges a small business faces throughout its life cycle.
In her role as a Business Consultant with the Bucknell University Small Business Development Center, Amber is passionate about helping entrepreneurs start and grow successful businesses. She also brings nearly a decade of banking experience to her role, and is well versed in business finance and lending.
A graduate of Penn State University with a BA in Psychology and a minor in Spanish, Amber considers herself a lifelong student. Her current areas of interest include personal development and online marketing and branding.