The new capital brings Udaan’s total funding to date to US$1.15 billion. Indian Business-to-Business (B2B) ecommerce startup Udaan announced on January 6 that it has raised US$280 million in additional financing from existing investors Lightspeed Venture Partners, DST Global, GGV Capital, [...]
By Kobe Lai
With the popularity of ecommerce soaring through the roof, what do you need to get your online business up and running?
The beautiful thing about starting an ecommerce business is versatility. Whether as a full-time commitment selling products you’ve personally designed and manufactured, or as a side gig to bring in extra income, there are many ways to approach starting one up. But no matter the form your ecommerce business takes, there are a few elements that are essential for online businesses of every size and stage.
Perhaps you’re in the process of setting up a landing page to validate your business ideas and determine your customer persona, or maybe you’re just starting to consider a new business venture.
Regardless of the stage you and your business are at, here are some general must-haves you will need in ecommerce.
Setting up shop
First things first, an ecommerce business will definitely need an online hub to sell its products. To save time and money, it is recommended to either join an ecommerce marketplace, or to create your own website using an independent platform.
For those who are eager to get their product on the market quickly through a marketplace, they have numerous options at their disposal, including Amazon, which needs no introduction, or Etsy, an online marketplace for consumers seeking handmade or vintage products.
Alternatively, for those who want a more personalized approach to customer experience management, they can build their own websites through content management systems (CMS) such as WordPress (WordPress offers WooCommerce, an open-source ecommerce plugin), or platforms that specifically cater to ecommerce, such as Shopify.
After choosing your desired platform, you will need to choose and buy a domain name (this can be done internally when using WordPress or Shopify). Although not required, you could hire a web developer to manage the operating and aesthetic end of your website.
A crucial component of ecommerce is payment processing. If you plan on using platforms such as Etsy, Amazon Marketplace, or Shopify, they each have their own integrated payment gateway system (but still accommodate third party payment gateways), meaning that you won’t have to figure out how to collect payments from your customers.
However, if you’ve created your own ecommerce website or are using another platform such as WooCommerce, you’ll need to set up and connect a payment processing gateway yourself.
Luckily, there are various third party payment companies to choose from (depending on your country’s providers), including Alipay, PayPal, and Stripe. Judging by factors such as transaction fees and monthly subscription fees for their service, you can figure out which one is most suitable for your online business.
Delivery and Shipping
The next step after setting up a payment system is getting the goods to your customer’s door. Unless you’re selling digital goods or running a dropshipping business, chances are, you will have to get your hands dirty when it comes to shipping to your customers. In general, you can opt to either work with third-party logistics providers or fulfillment warehouses, or handle deliveries yourself (self-fulfillment).
Third-party logistics (3PL) will help automate and handle the shipping on your behalf, giving businesses shorter shipping times and cheaper shipping rates. Despite these advantages, a fulfillment warehouse may limit your ability to use packaging to compete in brand experience, and may charge warehouse storage and ‘pick and pack’ fees. These considerations make it important to first gauge your need for a third party to handle your orders. Amazon FBA is one of these seller-centric fulfillment services – sellers only need to get their stock to the Amazon fulfillment center.
For smaller businesses, self-fulfillment may be more cost-effective, but it also means that you will have to use shipping providers such as FedEx, DHL, and UPS. Normally, you would need to get your own account with each of these carriers and negotiate your own discounts (often based on your previous shipping volume), but some ecommerce platforms now offer integrated shipping solutions like Shopify Shipping. Boasting pre-negotiated rates and an easy to use API management system, they make life easier for newly-established companies that already have high business costs.
Selling your products internationally also means overseas shipping rates, but several platforms offer add-on extensions which lessen the burden of having to calculate these additional costs.
Growing your online business
Building (more) traffic
Having sorted out the technical side of your ecommerce site and operations, your focus should now shift toward the marketing end of the business. This can be done through advertisement in the form of digital content (most commonly PayPerClick (PPC) advertising) – using Facebook Ads and Facebook retargeting, sponsored Twitter and Instagram posts, and similar services.
In order to do this, you should have official accounts set up for your business, especially on the platforms that are popular with your target demographic (e.g. more older adults use Facebook).
At first, you may rely heavily on a paid strategy to achieve traffic, but as your business grows, it is important to branch out and explore other methods of raising brand awareness. One of these methods is content marketing.
This more creative approach has a proven track record: 78% of consumers prefer to get to know a company and its products via articles as opposed to ads, and 70% believe that organizations providing custom content are interested in building good relationships with them.
Similarly, a method popular with ecommerce sites is email marketing, to which companies are attributing 23% of their total sales. A successful email marketing channel requires a mailing list, which you can grow through techniques such as pop-ups that appear on your site and provide people with a coupon in exchange for their email addresses. It will also require a personalized approach to create a relationship between the seller and the buyer, in hopes of generating more sales.
If you are also seeking an additional stream of revenue, affiliate marketing might be for you – earning money through allowing ads or sponsorships to be run on your website, effectively using it on your site to promote another company’s products.
Conversion matters: go for optimization
Once the website and marketing has been established and data is made available to you, you should be looking for ways to improve both areas through Search Engine Optimization (SEO), Conversion Rate Optimization (CRO), and extracting information from data analytics.
SEO in ecommerce refers to the process of making your online store more visible in the search engine results pages. You want to rank high when people search for products that you sell, so that there is more traffic on your site, leading to more potential sales.
Conversion rate optimization is the process of increasing the percentage of website visitors that convert on your site (those who buy products as a percentage of total site visits).
Analytics refers to examining data on your store’s recent activity, online store speed, and transactions, to provide you with insight into your visitors and store performance.
Often, analytics work in tandem with efforts to optimize SEO and CRO. CRO can be improved through understanding where there might be a bottleneck in the process, leading consumers to abandon a transaction before making a purchase. Analytics can show when users tend to leave the site, giving you a starting point when investigating why they didn’t convert.
Complex optimization processes like SEO and CRO take dedicated learning to fully understand, but many ecommerce platforms and website builders have SEO and analytics functions or plug-ins built in. It is up to you to utilize these tools to better your website and overall, your business.
Once the tech side of your ecommerce is established, you might consider incorporating your business. This can offer benefits such as tax deductions and protection of personal assets (otherwise known as limited liability), which can shield you from potential financial hiccups during the lifetime of your business.
Moreover, as the business expands, you might want to consider hiring more people to help out, such as content creators, a social media manager, or a financial consultant/bookkeeper. Managing a larger business will also require the use of other technologies, such as the cloud – used for storing data, cloud accounting – or corporate communication platforms like Slack or the newly-launched Workplace by Facebook.
A final and often-ignored pointer for running a good ecommerce business is good customer service. Around 45% of US consumers will abandon an online transaction if their questions or concerns are not addressed quickly, and given that repeat customers are five times cheaper to acquire than new ones, customer service is critical to your business’ long term success. To give your store valuable social proof, you should create self-service content and a detailed FAQs page, offer live chat support, maintain an engaged and interactive community on social media, and offer direct lines of telephone support.
Although there seems to be a long list of requirements for a successful ecommerce business, platforms such as Shopify offer integrations which simplify the process, making the process of setting up an online business more efficient and more appealing than ever.