How to Start an Online Business: A Quick-Step Guide

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

Shopify online businessTo 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

Google analytics for small business  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.

Facebook page

Facebook page for online storeRunning 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.

Blog Reviews

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

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

social media for online businessRunning 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

Get an Online Business NOWI’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

ship wire third party logisticsBeing 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.

Conclusion

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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25 thoughts on “How to Start an Online Business: A Quick-Step Guide

  1. Hello Rob well done article and some very good information. It is tough for businesses wanting to start online understanding the issues and wading through the information available.

    You choice of Shopify might be good in some situations but is it not an Australian focused or hosted solution. Many people do not like the idea of the cart provide collecting a percentage of the sales as Shopify does. But they are a very professional solution and as a yard stick to compare local solution providers not bad.

    Similarly Shipwire does not yet support warehousing in Australia as far as I am aware. Although there are some good Australian alternatives.

    So your experience in establishing for an international market is really excellent and congratulations on your success. I think many SMBs in Australia are really looking to first be successful in their own local market before they can go international.

    Reply
  2. Hi John,

    Thanks for your feed back, we’ve found that Shopify is a great solution for both domestic and international markets. In regards to transaction fees we were originally on a $26/month plan with a 2% fee, but quickly upgraded as the sales increased to a plan with 0% transaction fees. The thing I like about Shopify is that it’s completely scaleable and there’s no contracts so you can mix and match the best deal, depending on your level of sales.

    Your right about Shipwire they don’t have a warehouse in Australia so we send out the stock in Australia ourselves through Australia Post. They are opening a new warehouse in Hong Kong and we are going to partake in the beta testing. Shipwire have however made it easy for us to sell into 65 other countries with warehouses in Canada, USA and UK.

    Could you recommend a good 3PL in Australia that can offer a similar level of service and integration? We would love something similar in Australia.

    We never really look at our setup being targeted at international or domestic markets, we believe this to be one of the main advantages of trading online. The advantage is that with the same amount of cost and energy it’s possible to market and sell to billions as opposed to just 20 million.

    Reply
    • Adrian
    • 2nd March

    Rob, check out some of the local 3PL providers we have featured on Power Retail
    http://www.powerretail.com.au/solution-providers/category/shipping-and-logistics/
    Cheers,
    Adrian

    Reply
  3. Thanks for sharing this information. It is definitely really helpful, especially for people who are new to IM and they do not know what to do. A great way of making people avoid online scams.

    Reply
  4. I understand if you researched and sourced a unique product. But what is the point of sourcing the product through Alibaba or drop-shippers?
    The product is not yours – so anyone can do it. Shopping cart is not yours either – so very little opportunity to add value to the selling process, present it in some unique way etc.

    Reply
  5. i do agree thanks for sharing valuable post. It is definitely really helpful, especially for people who are new to IM and they do not know what to do. A great way of making people avoid online scams.

    Reply
  6. Hi Sergei, I agree it’s better to develop your own product but not everybody is in the position to do so. I actualy know of people who have just sourced their own product and started very successful business so I thought it’s worth a mention.

    Reply
  7. Rob,

    Thank you for highlighting Shipwire in a really nicely written post. Also for very nicely articulating that we don’t yet have an Australian facility plugged into Shipwire; but, we have Hong Kong in beta right now.

    —-

    Shipwire is very customer driven and Hong Kong was a more requested facility than Australia. So, if users want Shipwire to go to Australia might I suggest telling us.

    Here is our “interest” form for Australia. It is on our radar in a big way.

    http://info.shipwire.com/Australia_Warehouse_Interest.html

    —–

    Nate Gilmore
    VP
    Shipwire

    Reply
  8. I have read a few articles om how to get started doing retail online, but this is really helpful information. My challenge at the moment is actually getting the store built and moving a bit away from the business model I use right now – which does work well for me – to a bit more retail. Thanks for this. I’ll come back and let you know how it went. 🙂

    Reply
  9. Hi Christi, good luck with your online venture, I hope it works out for you.

    Reply
    • Dan
    • 15th March

    Great article Rob, packed with info. It was exactly the kind of thing I was looking for.

    What is your experience with having 360 spins on a site ?

    Not embedded but more like having a 360 logo below the product, and a URL is behind it. When you click the logo then a window pops up showing the animation. I am looking at using Magic Toolbox as the viewer.

    Reply
    1. Hi Dan, Sorry I don’t really have any experience with 360 spins to report. I do believe in giving the customer as much information as possible without being distracting. Distraction can kill conversion.
      Cheers Rob

      Reply
  10. I really like this article. Our business builds ecommerce businesses for people who really need to be guided in all aspects from product procurement through to marketing and social media. I have found the businesses with the highest success rates stick to our formula. One key is being able to find a new product in their industry and gain exclusive distributor rights to that product. That way, you increase your retail and wholesale markets. I have found shopify too difficult for many of our clients.

    Reply
      • henry
      • 26th January

      Pls i am interested in opening an online store. If you could get me your contacts i would deeply appreciate it.

      Reply
  11. Thanks Rob for an interesting article!

    We’ve been using Magento as our platform for e-commerce sites and WordPress for everything else. but it’s always useful to know about alternatives. We’ll check out Shopify.

    Reply
    • Ira
    • 2nd April

    Nice article, I really want to open an online business and I know that I will be good at it once I start, but just can’t do that first step, Not sure how to initiate that first step. What to sell where to buy….

    Reply
    1. Hi Ira, I know what you mean by not knowing where to start. I was in your shoes few years ago and felt exactly the same.

      Reply
  12. Hi Rob,

    This is a very informative article that I believe will help others to make up their mind about starting an online business. I would like to add few things:

    1. You mention the following:
    “Look for a niche you can compete in by offering a better product, a more convenient service or a better price.”
    and I have to strongly disagree with the suggestion to compete on price. This initiates a race to the bottom, which is not good for the market and business in the long term. In fact, I believe one should charge higher price (with a good profit margin) and instead compete on value. You can win customers by offering more quality product/service, faster shipping, better after care, better customer support, more features in the product, etc. In the long term this is the way to build a profitable and sustainable business.

    2. As for the tools, Shopify is great but it’s also worth to consider WordPress.org and WooCommerce, for example. In the long term it may be a better choice.

    3. I’d like to emphasize the part where you mention getting online early, without waiting until your shop/product/service is 100% perfect. This is very true and one of the best advices one can get when starting an online business. You should launch as early as possible (in line with the philosophy of minimum viable product) and improve/optimize as you go by analyzing customer feedback and analytics data. When you develop something along with customers, you see exactly what they want and what they don’t want, so you avoid ending up with something that is not suitable at all.

    So, if you want to start an online business, just get going. And if you need help with starting up, take a look at DoNotPostpone.com

    Reply
    1. Piotr, thanks for your comments and I relies that there are number of ways of skinning a cat so I’ve tried to mention a few.

      Firstly I will always choose to sell a premium product at a premium price where I own the brand and the IP, but there are other ways go doing things and thats why I made mention to price.

      We did actually start out on a WordPress site but this roved to be a mistake for us as when Ashton Kutcher twitted about our first product the site crashed straight away on a supposedly unlimited plan. We then received another 500Gb of bandwidth and that was gone within 30min again we received another 500Gb and after missing thousands of sales within a 24hr period we realised we needed a better option. Shopify has been great and can process and manage thousands to tens of thousands of orders a day if need.

      Cheers – Rob

      Reply
  13. Thanks for a great article…I have been selling my Aged Care Activity products online through my Shopify store for a year now. Haven’t given up my day job yet (also in aged care) ! Still got so much to learn so I really appreciate articles like this. Thanks Rob – some great tips. 🙂

    Reply
  14. This is a pretty solid article on what to do when setting up an e-commerce business. We provide analytics for e-commerce so we see all ‘shapes and sizes’ in terms of businesses.

    We would strongly recommend you also:

    1. Also make sure you are looking at things from a profit margin point of view. Its great to see stock but make sure you are doing at profit.

    2. Build for mobile from day one so when looking at an e-commerce platform consider how it would work on a mobile.

    3. Test all your marketing activity and then alter your plans based on the results.

    4. Your products are as important as your client so make sure you are stocking and promoting the most valuable stock to your business. Also make sure you are moving he stock that is sitting on books.

    5. Remember to connect with customers and break them up into segments.

    Best of luck with your e-commerce business!

    Reply
  15. Hello Rob,
    The article is really useful specially I like the part of build an online store. I do agree with that an Online store can help a a lot the business at a big level and can increase the sales. But before having an online store certain things should be known in order to not get any complications latter like navigation on site sholud be easy, buttons are large enough to catch the eye and payment methods should also clear and can be done in few clicks.

    Reply
  16. Hello Rob,

    Great and informative article. I just had a quick look at some of your smartphone products, very innovative, well done.
    I have an Australian client that uses ShipWire to ship products to Europe from a UK warehouse and swears by their service.
    I also highly recommend the award winning e-commerce platform from PrestaShop. PrestaShop offers a free open solution that is fast, seo friendly and scalable.

    Reply
  17. I would personally still advise an SSL cert on any store, because you are storing customers, emails, passwords, addresses etc which still should be passed over SSL.

    Reply

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