If you’ve been thinking about getting an online retail store up and running, Director of Annex Products, Rob Ward, shares his experiences of getting online, and offers some tips to help you get started.
How to Start an Online Business
Following are a few pointers to help others wanting to start up their own online business. The information below is based on my experience over the last 6 months. Using these simple strategies and online tools we were able to sell thousands of units all over the globe in a matter of months. Both my business partner, Chris Peters and I, have now quit our day jobs and are currently launching other online stores.
I don’t want to go into details about products or business ideas, but rather the mechanics of setting up an online business and the awesome tools available to entrepreneurs today. It’s never been easier to setup an online business and start making money straight away.
1. Decide what your online business will sell
This is an obvious one! But keep a few simple rules in mind before you start your online business:
- Products need to be shipped – the larger the product the harder to ship.
- Look for a niche you can compete in by offering a better product, a more convenient service or a better price. You don’t have to find a market with zero competition – most markets with zero competition will have zero money in them!
- A product doesn’t have to be a physical item. It could also be a digital download such as an e-book or app. You don’t even need to make these products yourself.
- Physical products can also be sourced from websites such as Alibaba.com, where products can be bought and imported at close to manufacturing costs.
2. Build an online store
To sell online you’ll need a store. In my opinion Shopify is a great e-commerce platform to work with, and the best part is it’s FREE to get started. Shopify delivers absolutely everything needed to start selling online straight away. Just pick a store name, choose a theme, upload the products, plugin a PayPal account and you’re selling online. Of course you can get more involved with different credit card gateways and customising themes. But just get something up and running, and then look into updating and optimising the store as you go.
Other huge advantages of using Shopify e-commerce platform include:
- No programming knowledge necessary.
- Easy to plug in Google Analytics and Google Ecommerce tracking.
- Totally scalable – you can sell 1 unit or 100,000 units a month.
- Many awesome apps to expand usability.
- Easy to plug in third party logistics (such as ShipWire).
- Good support and many online resources available (checkout the Shopify blog).
3. Track your store’s performance
When a store is online and not at a physical address, it’s difficult to get the feedback that you would when standing behind a counter and talking to each customer that walks through the door. Tracking your store’s performance is extremely important as it advises on what’s working, what’s not, where your traffic is coming from, what countries are visiting your store, who’s buying and much, much more. With resources like Google Analytics. you can now know exactly what’s happening in and around your online store. Keep an eye on the following statistics:
Conversion Rate (%) – percentage of visitors that actually purchase. The higher, the better.
Traffic Sources – locations of where visitors are coming from.
Unique Visitors – total number of uniques visitors to a site. The higher, the better.
Bounce Rate (%) – percentage of visitors that leave from the page they enter. The lower, the better.
Map Overlay – Countries/States that are visiting a site.
Product Performance – most and least popular products.
4. Advertise your store
Once your online store is set up, you’ll need to advertise to start driving traffic. This can be done in many ways. It can be expensive ,or it can be free depending on how it’s implemented. A combination of both free and paid advertising is a good way to start. Also decide upon what will work best for your specific store.
For example, Opena Case (iPhone bottle opener) wasn’t the kind of product buyers would search for, but rather a product that people would need to be made aware of. When it came to marketing the product, it was decided that Facebook would be a better suited advertising platform. If I had a product that I knew people were searching for, then Google AdWords or SEO may be a better option. Normally, there is not one golden solution but rather a combination that will work best.
Running a Facebook page to complement an online business is a great way to start advertising. Just because it’s free doesn’t mean it’s any less important or effective. See the following as a example of the power of social media.
Share your page with 300 friends.
20% of your friends share = 60 friends
60 friends X 300 of their own friends = 18,000 extended friends
18,000 extended friends = you’re more popular than you know.
Once the page has been shared with all of your Facebook friends, investigate Facebook Ads, which allows you to advertise either a store or Facebook page to a target market. With Facebook Ads, you can focus on an exact target market by specifying geographical location, age, sex, gender preference, marital status, education level, interest and likes. When deciding where you want your Facebook Ad to click through to – your online store or your Facebook page – consider that the CPC (cost per click) of advertising a Facebook page is a lot cheaper than advertising an external online store.
Another huge advantage of advertising your Facebook page is that when visitors like your page (as apposed to just visiting your site), you are then able to market to them through their Facebook feed for free. If they were to just visit an online store once, they may never come back and you have no way of marketing to them in the future.
Getting your products reviewed by a blogger is one of the best ways of driving quality traffic to your website. This can be achieved by either sending out a press release or actually sending out ‘review units’ (i.e. products that can be tested) to websites that you know your target market would frequent. I find this method of providing ’review units’ an extremely effective and economical form of marketing. Do the maths for your product using the actual costs and number like this:
50 ‘reviews units’ at a cost of $5 each = $250 total cost.
You may get a 30% hit rate = 15 reviews ( it could be higher).
15 reviews X 150 visitors to your store = 2,250 total unique visitors.
2,250 visitors at 3% conversion rate = 67 purchases (often higher after a good review).
67 purchases of a $40 product = $2,680 revenue from a $250 investment.
Keep in mind these numbers are very conservative as I’ve had individual reviews produce over 8,000 unique visitors!
Google Adwords is a great way to be found by potential customers searching for your products online. See the video below for an easier to understand explanation:
SEO your online store
SEO is the process of optimising an online store so that a website is displayed within Google’s organic search results for free. SEO is a powerful tool and should definitely be worked on over time. It’s also worth mentioning that SEO takes time and a brand new online store won’t rank highly straight away.
5. Create a community
Running an online business gives you a great chance, not just to sell to customers, but to create a community around what you’re doing. Using social media like Facebook and Twitter is one of the easiest ways to create a community but it relies on you to engage customers. I find one of the best ways to engage your social media community is with questions, as these then produce answers and therefore activity on your page.
It’s also important to advertise social media channels on your website without being distracting. Most Shopify themes have social media icons integrated – just add the links to feeds.
Social media accountability
Keep in mind that social media is a two way street where both a business and its customers can have their say. This is fine, it just means that now more than ever you have to supply a good product with good customer service. In the past, customers would contact businesses privately through either a phone call or an email. But social media is now becoming the preferred channel for many consumers to give praise and raise issues. We find that a huge amount of the customer feedback we receive is through either Facebook or Twitter, so it’s extremely important to manage these feeds closely and provide excellent support because everything is now public.
6. Get Online NOW – nothing is ever perfect
I’ve found that many people think that their stores need to be 100% perfect before they launch, but I definitely don’t agree. It’s more important to get a store up online and to start trading straight away. Making changes and optimising an online store while it’s live is a huge advantage, as every change will be measurable.
When www.openacase.com was launched although it wasn’t perfect, we did start taking orders straight away. For the first few weeks, we were running at a 2% conversion rate. As a result, two large “Buy Now” buttons were positioned on the homepage and immediately, this simple change increased the conversion rate to 3%.
7. Importance of conversion rate
It’s important to constantly track conversion rates, as this small % figure has a massive effect on an online store’s bottom line.
Let’s pretend we have an online store that’s enjoying 1,000 visitors a day, at 2% conversion rate, selling a $40 product.
1000 visitors with a conversion rate of 2% = 20 purchases a day
20 purchases X $40 each = $800 a day
$800 a day X 365 days a year = $292,000 a year
Change store and increase conversion from 2% to 3% = “BUY NOW” button
1000 visitor with a conversion rate of 3% = 30 purchases a day
30 purchases X $40 each = $1,200 a day
$1,200 a day X 365 days a year = $438,000 a year
$438,000 a year – $292,000 = $146,000 increase
$146,000 extra a year = You’re glad you added that button!
8. Third party logistics
Being able to fulfil orders is just as important as making the sales in the first place. For this reason it’s important to have a system set up that allows you to concentrate on making new sales rather than fulfilling the old ones. Being based in Australia with a market of only 22 million people, it is vital to have access to international markets. Choose a platform that makes it easy to accept orders from all over the world and make sure look into a third party logistics service that integrates with very little effort. Most logistics companies can store your stock and ship it out automatically as soon as a sale is made.
With the combination of Shopify, ShipWire and other strategies mentioned above, we were able to sell our products to over 30 countries in just a couple of months.
This article was republished with the writer’s permission from an original post by Rob Ward.
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