eCommerce is undoubtedly one of the most rapidly growing industries worldwide. Recent statistics report that 40 percent of global customers purchase online, which accounts for over one billion buyers. And with the cultivation of new mobile technology, those numbers are only going to increase!
Like all types of new businesses, establishing a new eCommerce start-up has its fair share of pitfalls, which usually have less to do with the quality of the products and are more about marketing and sales initiatives. The internet is rife with competition in almost every area; breaking through as the new kid on the block is by no means impossible, but requires the right data and strategy.
Successful eCommerce players pay attention to the fine details, such as proper site navigation, setting a price point, and remarkable branding. Khuram Dhanani is a veteran tech entrepreneur and investor, who has built and sold multiple successful e-commerce companies. He is currently the CEO of Linked, a platform company formed to consolidate the trillion-dollar e-commerce industry.
Here are his five pieces to creating a successful eCommerce business:
1) Marketing--Starting With The End In Mind
When many entrepreneurs think about starting an e-commerce business, marketing is usually not the first thing that comes to mind. The key to being successful is having a low enough customer acquisition cost to be profitable on the initial sale. You see, many e-commerce companies actually lose money on the first sale and think of it as a loss leader. Their model relies on repeat purchases to eventually become profitable.
However, as a start-up, you aren't interested in that. You want to make money on every single sale. And the best way to accomplish that is to start with the end in mind. Analyze where your customers are going to come from, how much it will cost you to acquire them, and whether you can be profitable on that initial sale. The most popular marketing methods for e-commerce include Search Engine Optimization, Pay Per Click, Affiliate Programs, Banner Ads, Comparison Shopping, Public Relations, and Social Media.
2) Products--High Quality & High Margins
When you run your own business, you only have one boss--and no, it's not yourself. It's the customer. And the customer today is the smartest, most demanding, and best judge of quality you'll face. When it comes to products, think quality above all else. This is the foundation of your business. The best marketing in the world cannot sustainably sell a product of poor quality. Poor quality products do not get purchased twice, they don't go viral, and they make it impossible for every other piece of this puzzle to fit.
Once you have the quality figured out, it's just as important to ensure that there are enough profit margins for every product sold. The e-commerce industry is notorious for having companies that have zero, and in some cases, negative profitability. Don't be one of them. Combine high quality and high margins for the win.
3) Service--This Can Make or Break You
We've already covered your marketing and your products. The truth is, unless you develop your own product line, you will have competitors that likely sell similar products and also do similar marketing. Service gives you chance to stand out. Take pride in having unbelievable customer service. Customer service so good, your customers become raving fans of your business.
No one exemplifies great customer service like Zappos does. They have free shipping both ways, a 365-day return policy, and 24/7 customer service. There are numerous stories of Zappos staff bending over backwards to satisfy their customers. They have sent flowers to customers, overnighted free shoes to the best man at a wedding, paid toll on the Massachusetts Turnpike, and the list goes on. You don't have to go those extremes, but great customer service can truly make or break you.
4) Price--Don't Be The Lowest
Yes, you read that sub-headline correctly, don't have the lowest price. Customers buy from you for many reasons, and while price is one of those reasons, you don't have to compete exclusively on price. By having superior customer service and superior product quality, you can overcome not having the lowest prices in your market. When a business competes exclusively on price, it's a race to the bottom, and our goal is to race to the top, not bottom.
Let's also not forget, it cost money to acquire a customer, and by having higher prices, you can spend more money on your marketing. It also cost money to have amazing customer service and unsurpassed product quality. If there was a choice between having the lowest price versus having better marketing, customer service, & product quality--the choice is fairly obvious. Unless your business is going to be an anomaly that goes public, loses money, and still manages to have a $240 billion market-cap--don't have the lowest price.
5) Brand--Time To Instill Loyalty
This is the last piece to our e-commerce puzzle and should fit nicely if you've followed the other four steps closely. When it comes to branding, the four core principles we've discussed are an absolute minimum. Going beyond those, what do you want your customer to think about when they think of your brand? Ideally, they will think about something positive that will instill loyalty to your brand.
The idea behind branding is to find a unique and exciting way to grab the attention of your customers while still being able to express your message. Relate to your customers in a way that they feel connected to your brand. Earn their trust so they become your biggest advocates. Having a quality brand is priceless and will pay dividends years to come.
Source: http://www.inc.com/molly-reynolds/5-ways-to-create-a-highly-competitive-e-commerce-business.html
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