Thinking about starting an online business? It’s a good idea: e-commerce sales are expected to reach $3.45 trillion globally this year. Here are eight steps to take when launching your business, according to successful e-commerce entrepreneurs and advisors in The Oracles.
Bethenny Frankel, Gary Vaynerchuk, and other online sales experts explain how to be part of this trillion-dollar opportunity.
1. Play to your strengths and outsource the rest.
"I don’t even have a laptop or iPad, and I have no idea how to launch an e-commerce business — so I hired people who do. I live by one simple rule: If you don’t know what something means, ask immediately. Don’t pretend. My strengths are marketing, branding, identifying your target audience, and designing a narrative about the product, which are all crucial in e-commerce. Play to your strengths, and then outsource or learn whatever you don’t know."--Bethenny Frankel, entrepreneur and philanthropist; founder of the Skinnygirl lifestyle brand and the charity BStrong, New York Times bestselling author, and Shark on Shark Tank; follow Bethenny on Twitter and Instagram
2. Plan for future buying behavior."From a practical perspective, you need the right infrastructure, such as Magento or Shopify. But more importantly, you need to think about how we will buy in the future. Too many people focus on our current behavior versus the reality three years from now, which is where you want to play. For example, when I launched my e-commerce business, everyone told me they’d never buy something online. Now look at sites like Woot.com, which changed online retail with its flash sales and daily deals.
I believe mobile will become increasingly important for e-commerce businesses. The winners will be the ones who create the easiest, most native and natural way to buy something on a mobile device. But that’s just me. Ask yourself where the market will be in 36 months; then trust your intuition, plan accordingly, and be patient." --Gary Vaynerchuk, founder and CEO of VaynerX; five-time New York Times bestselling author of Crushing It!
3. Calculate this simple equation.
E-commerce is a simple equation: your profit on each order should exceed the cost to acquire a new customer. Whenever I start or consult with an e-commerce business, this is where we focus. First, break down your revenue and costs for an average order. Include the cost of the product, importing and shipping, packaging, and fees for the merchant and warehouse. To identify your customer acquisition cost, run a presale trial before committing to ordering your product in bulk. This will give you an idea of the cost to 'buy' a customer from advertising platforms like Facebook and Google.
Don’t give up if your cost to buy a customer is more than your profit per order. The last e-commerce business I co-founded, alphabetlegends.com, was in this situation. We pushed down costs by negotiating a bigger order with the supplier and increased our profit by improving our landing pages and upselling our customers. Start with confidence in your numbers and clarity on where to focus." —Jay Wright, founder and CEO of the Ecommerce Equation, co-founder of two multimillion-dollar e-commerce stores, and growth advisor to over 200 e-commerce businesses; connect with Jay on LinkedIn