What I Wish I Knew Before Starting My E-Commerce Business When starting an E-commerce business, people don't know where to start and will most probably make mistakes that will cost them money. This article highlights some key points to consider before starting out in the E-comm world to help people avoid mistakes and fast track their way to profit.
By Michael Fenech Edited by Joseph Shults
Opinions expressed by Entrepreneur contributors are their own.
The internet has provided so many great opportunities for businesses to reach an audience and potentially make money. Literally, in the palm of our hands, our phones allow us to sell something in front of an online audience and hopefully make money. The rise and rise of the e-commerce space has now put this business model in the sights of many people who are looking to "leave the rat race", "live life on their terms" and so forth.
If you're reading this and you've got the urge to start selling e-commerce products online, this article is for you. You are entering the world of e-comm, and while it can be exciting and fun, you do need to be careful to ensure you do not lose money.
I have been down this path, from different angles and my aim is to share with you all the lessons I've learned the hard way to help you take the path of least resistance and not make the same mistakes I've made.
Here are the things I wish I knew before starting my e-commerce business:
Dropshipping is tough
Related: 5 Things I Wish I Knew Before Starting a Dropshipping Business
What is dropshipping I hear you say? Well, this is an e-commerce model where you don't need to own inventory. Instead, when a sale comes in, you purchase the unit from the supplier who then directly ships the goods to the customer. This is a tough way to introduce yourself to the e-commerce space because there are so many moving parts. You need to create an online store, find products, advertise your store, and provide customer service.
This baptism by fire in the e-commerce world isn't for the faint-hearted or lazy entrepreneurs out there because you need to learn multiple skills at once, and quickly. If I had my time over again, I would have potentially bypassed this model altogether and saved lots of money. Having said that, I felt drop shipping helped me serve a solid apprenticeship.
People want fast shipping
So, you've made your first sale on your e-comm store, and your product is on its way to the customer. Now what? Well, get ready to wear the customer service hat. And this comes with a warning. Your customers will be emailing you asking where their goods are. Why? Because they have been spoiled by Amazon's Prime two-day delivery.
The unfortunate thing is your customers will expect the same shipping options and speed as Amazon.
Get ready to compete against Amazon
This is where things get interesting. If you're dropshipping goods to the US especially, your US customers will no doubt have an Amazon account. And with that, you are fighting a tough battle. And that battle is the battle of trust. People are more inclined to trust Amazon, rather than spending their hard-earned money on a product from an e-comm store they have never heard of. People want comfort.
This is tough! What can help you here are certain things such as having a 24-hour support hotline on your site to convey service and comfort to those who are thinking of buying from you. This tip alone can help increase your conversion rate.
If you can't beat them, join them
Related: Start an Amazon FBA Side Hustle Today
Amazon FBA. If you've never heard of this term and you are keen to build an e-commerce brand, go to Google and start researching. Amazon FBA (Fulfilled By Amazon) is an e-commerce model which allows you to white label a product, ship it to Amazon's fulfillment centers, create a listing and put your product in front of millions of customers on Amazon.
On top of this, you tap into Amazon's super-swift shipping options and when a sale occurs, Amazon picks, packs and ships your product to the customer. You essentially partner with the biggest e-commerce brand in the world, use their multi-billion-dollar logistics capabilities and they look after your customer service.
I wish I went straight to this model from the start. In my opinion, this e-commerce model has the least amount of risk and can help you maximize your earnings potential, providing you select the right product to sell. In conclusion, being in the e-commerce space requires a special kind of mindset. You need to be very commercial with your thinking and have profit at the forefront of every decision you make.
You need to remember that when you sell a product online, there are multiple costs involved to get the product to your customers' front door. Unit cost, ad budget, shipping fees and more. So, the name of the game is to have a thing called "leftover". When you take out all your costs, the aim is to have money left over which is also known as profit. You get that right, and partner with Amazon, you could start seeing some crazy sales numbers because Amazon is a beast!
Related: 3 Ways to Make E-commerce a Stress-Free, Money-Making Business
