- What are you going to sell online?
- Who are you hoping to sell to?
- How much can you spend on advertising?
- How will you ship and what will it cost?
- How will you accept payment?
1. What are you going to sell?
Do you already have products to sell or will you be looking for wholesalers / drop shippers?
If your online store is going to be an extension of your bricks and mortars store then perhaps you are already on your way to a good start. The most successful online stores happen to be the ones that we are already familiar with and can walk into on any given day, such as Home Depot, Best Buy, etc. Of course stores of this caliber are already hugely popular and enjoy the benefits of generic hits (visitor traffic that is not paid for by PPC campaigns) but you can still compete effectively online.
What you have in common is the fact that you are already generating revenue (hopefully) and may have funds available for marketing online. Additionally, you may already have inventory to offload, essential product knowledge and established a reputation for your business.
If you are starting from scratch you will most likely need to find wholesalers and/or drop shippers. You will also need to establish credit, open reseller accounts, gain product knowledge and develop procedures for processing orders, managing your online catalog and providing customer service.
In most cases you will need to attend trade shows and conduct extensive research in order to find suppliers and then go through the process of setting up reseller accounts which may not be so easy if you are new to selling.
If you research drop shippers online you will find many companies offering thousands even millions of items at "wholesale" prices. Some ask for fees up front and some charge monthly. You will also find many companies offering lists of wholesalers and drop shippers, you will have to pay for these.
Be careful with companies of this sort, remember the old saying, "if it seems too good to be true then that's probably because it ain't."
You may find that some drop shippers don't really offer competitive pricing, especially if you are asking them to ship one item at a time, every now and then, it simply is not profitable for any warehouse to conduct business in this manner, remember wholesale pricing was designed for selling wholesale. Therefore you will most likely pay drop ship pricing. In most cases you will need to sell in higher volumes per month in order to enjoy better pricing.
With the drop shippers / wholesalers lists you may find that many of the companies on the list do not exist or may not want to deal with individuals or those who have not already established an online business. Though some list may in fact save you some time by providing you with some decent leads, you will find that most legitimate companies are listed all you have to do is pick up a business to business directory and search for the companies you are interested in doing business with.
You may also find that some companies will only open accounts with resellers that already have a functioning website or sometimes even require that you have a showroom. Also some companies prefer not to drop ship or even deal with internet based businesses.
2. Who are you hoping to sell to?
While sourcing your products you have probably asked yourself few times, who will buy this?
Hopefully the answer included those in the demographics of the typical online shopper, otherwise you may be in trouble. Online sales have been steadily rising since the birth of ecommerce, but so has competition. The online economy has grown substantially but market share has been spreading thin due to the growing number of internet retailers.
Still, however, it is possible to compete effective online, even with some of the giant retailers. Online marketing is composed of various campaigns all designed to drive traffic to the website and convert visitors into paying customers. Popular strategies include, pay per click/action campaigns, affiliate marketing and the standard pay for placement ads. While any of these may prove successful by itself, a successful campaign may include all or any combination of the three.
There are other methods of advertising your website, such as directory listing, social networking, blogging and through forums but these may not directly target your particular market audience. It is certainly more effective to pay for an ad for a particular video camera and target those looking for that item than it is to simply put a reference to you website in an article about home videos.
Let's investigate the two most direct methods of advertising, ppc campaigns & affiliate marketing.
Pay Per Click Campaigns
Pay per click campaigns include those available through search engines such as Google, Yahoo and MSN or campaigns available through comparison shopping websites such as Shopzilla, Shopping, Pronto, etc. Both can directly target parties interested in your products and services. Let us examine the similarities and differences.
PPC campaigns for search engines and comparison display relevant ads based on the keywords that the searchers use. For instance if someone enters the keyword "digital cameras" in a search box both the search engine and the comparison website will display the ads of the clients paying for (bidding) on the keywords "digital camera".
A search engine will also display ads by non paying parties simply based on the relevance of the keywords based on the content of the website and any other data the particular search engine uses to rank listings. The paid client's ads will normally be displayed in designated areas and labeled as sponsored links. Clients will not pay if the ad is displayed, they only pay when the ad is clicked on. The amount that is charged is based on what the client bids for the keyword. Better placement, such as first page and first position goes to the highest bidder and therefore prices are based on the competitiveness of the keyword and the price that the client is willing to pay.
A comparison shopping website only displays ads from paying clients. The ads are displayed in order of highest bidder to lowest. When placing an ad in a comparison shopping website the advertiser actually uploads information about particular products, including a brief description, pricing and a hot link to an image on their website. Usually clicking on an item from a comparison shopping website will take the customer to the item on the actual website of the advertiser, it is upon this click through that the advertiser is billed. This allows potential customers to look at items, perhaps the same item, from various resellers and then be redirected to the website of thier choosing for further information and hopefully a purchase.
In both scenarios pay per click is exactly that, you pay when someone clicks on your ad. Affiliate marketing works a little differently. While you can set up an affiliate program and pay per click as well, it is normal practice to pay for actions instead. Actions can be simply filling out a form for a quote for service, to dowloading a trial version of software to completing a purchase, or any other determined action.
Affiliate programs can basically be thought of as referral programs or commission based sales initiatives. You can easily set one up on your own and find yourself affiliates. You could then ask customers how they heard about your service or product and then compensate your sources however this may not be a very efficient way of managing an online affiliate program. Normally affiliate programs require coding to track visitor source and also keep records of visitor information in case a customer referred by an affiliate returns to make a purchase within a few days or weeks. If you do not have the technology to support such a program you can sign up with an affiliate managment company. Commission Junction and Double Click are two of the more popular affiliate managment companies. You will be able to setup and manage your programs and find affiliates willing to sign up through their large databases of users.
There will most likely be a fee for setting up an affiliate program on top of commissions you will be paying out. If you have purchased a website through sell from the web then you may already have a built in affiliate program setup with your shopping cart. This option may be more friendly to your budget as you will not incur monthly charges for the program but you will have to find your own affiliates. How you handle your marketing will greatly depend on your alloted budget.
How Much Can You Spend On Advertising?
Advertising is crucial to the survival and prosperity of most e businesses. In order for you to conduct business online your website must receive convertable traffic. Depending on the size of your operation your advertising can amount to thousands, even ten of thousands of dollars per day. This may seem astronomical to someone with a simple bricks and mortars store selling handbags that wants to expand business online. The difference is that a website will never attract a passerby because there will never be someone "walking by" your website. Unless your website can rank well in a generic search, based solely on your content or domain name, you will simply never be found online.
But never fear, you can always start small, you can always set your pay pay click bids to the maximum amount you are willing to pay, perhaps the minimum allowable bid, and while you may have less traffic to start with, you may build your operation slowly but surely, of course, only if you can successfully convert visitors to customers.
Additionally, you can always find ways to advertise offline. The most successful and popular retail websites are those that are extensions of bricks and mortars operations, such as Home Depot and Best Buy. This is because customers are already familiar with the brand. One major opstacle facing most online ecommerce companies is developing a "presence" online. Naturally the only "tools" you have as an online business is the experience you provide your visitors and the attractiveness of your website.
If you are planning on starting small then you should focus your attention on your niche, or creating one, if you don't already have one. For instance, if you decided you wanted to sell digital cameras online you will find that you have plenty of competition, you could muscle in on the Ebay market, or spend tons on competing with large websites such as Best Buy or B and H camera and video, or you can find a niche. Perhaps there is a market for digital SLR cameras and you can develop a website dedicated to the SLR camera. You can post information on the history of the SLR, stories from photographers that prefer to use SLR and maybe even famous images produced by the very cameras you are selling. Basically when someone interested in digital SLR cameras visits your website they should be convinced that you are the authority on digital SLR cameras. You would also focus you attention exclusively on marketing one or two cameras, these should be the ones you can offer a good deal on, of course you should beat most of your competitors prices on those particular products or else your visitors may get all their information and inspiration from your website and then go elsewhere to purchase because of a few bucks, who knows. But basically this will significantly reduce your overhead. Instead of advertising your website in general and mainly serving as an online catalog and information center for SLR cameras, advertise a specific product or two, perhaps the newest or even the oldest but still popular and favored brand or model. Once you have been able to capitalize on your niche market you can expand or simply be a specialist and stick to your niche, sometimes simple is better, but if you are trying to build an enterprise then handle your business.
What will you ship and what will it cost?
When you are selling online you will need to be able to track orders. Unless you use a drop shipper or fulfilment center you will need to handle shipping and returns as well. If you are a small operation you will need to have an account setup with a courier company such as FedEx, UPS or USPS. You will also need to determine what it costs you to ship your products, also make certain that you have the necessary insurance in case of loss or damage, or at least some type of disclosure on your website in regards to your policies.
If you are selling a single product or products that are similar in weight or size then you may be able to calculate a fair price for shipping throughout the United States or your market area. Otherwise you may need to have a shipping calculator built in to your website. Most often shipping costs are calculated based on destination, size and weight. You may also need to consider custom shipping for item that are overweight or require additional service such as liftgates. Be careful to disclose all information regarding the shipping rates and policies, including returns.
In most cases shipping companies will not assume responsibility once an item has been signed for. If the customer discovers a damaged item in a box that they signed for they will expect a refund or replacement. You may not be compensated for this damage and may be responsible unless you have informed your customer to inspect before signing and that once they have signed neither you nor the shipping company are no longer liable.
You should also include in your return policy any restocking fees that may apply in case the customer is simply not satisfied with the product. Remeber that even if you allow customers to return a product for any reason, you will still incur the fee for shipping and return shipping. Most online retailers will charge a restocking fee that at least partially offsets the cost of shipping and returning to their suppliers products returned from customers.
How Will You Accept Payment?
If you are going to accept payment online you will certainly need to have a way to accept payment. Of course you can always take payment information over the phone but most online shoppers expect to pay online so you will need to setup a payment gateway. Two common payment gateways are Authorize.net and Eprocessing Networks, both work well with most shopping carts and may have modules built in.
If you are starting small or just selling online part-time you may not want to pay expensive fees to setup a merchant account and you may not want to pay monthly fees. You can start with a standard Paypal account. There are no monthly fees and you will only pay a fee once a customer has made a purchase. Once you have started building your business you can always upgrade.
We hope this general information has helped you learn about selling online check back soon for more valuable information and feel free to share your ecommerce stories, good or bad.
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