If you’ve ever considered starting your own business, online or otherwise, start by considering a virtual marketplace, writes Tim Davies.
Have you ever envied somebody who had their own business?
Ever wondered how they got started, or whether you have what it takes to start a business yourself?
About 15 years ago, a good friend of mine had that ambition. In his mind, being a business owner was glamorous. Eventually his dream came true, and $40,000 later he was the proud owner of an established café.
Just a few years later, he was forced to sell his beloved café, unable to sustain profitability. He discovered the hard way that being a business owner is not always as glamorous as it may seem from the outside.
So what went wrong? There were two major challenges my friend faced:
- Up-front cost and financial risk – Whether you are buying into an established business, taking on a franchise or starting from scratch, the establishment costs of a business can be onerous, and in many cases completely out of reach unless you’re already wealthy, or willing to risk going deep into debt.
- Lack of business management experience – Unless you have obtained a business degree or have gained career business management experience, chances are that there will be some significant gaps in your knowledge and expertise. Very few are born with the innate skills of strategic planning and risk management. These have to be learned, often through painful trial and error. The best university degrees are often not broad enough to provide competence across all aspects of running a small business.
With such odds stacked against us, perhaps the dream of becoming a business owner is realistically out of reach?
What if there was a way of bypassing these two barriers? What if there was a way of starting a business without risking lots of money or debt up-front? What if there was a way you could gain necessary business management skills and experience without the risk of losing everything?
This is where online marketplaces like eBay present an amazing opportunity for small to medium sized businesses.
By reducing or eliminating up-front financial risk and providing a structured framework for sustainability and retail best practice, online marketplaces are a great way to get started. Many of today’s most prominent and successful online retailers began humbly at home and grew organically within an online marketplace before branching out into their own website.
One of the challenges of starting any business is attracting customers. Thousands of dollars can be consumed by advertising with little impact, especially in the early stages of business. Larger online marketplaces eliminate this hurdle by offering merchants and retailers access to a massive pool of existing, qualified customers. As an example, eBay.com.au receives over 7 million unique visitors every month, representing around 70 percent of Australian online shoppers. These people are ready to buy, conducting millions of specific product searches every day. All you need to do is source products already being sought, make them available on competitive terms, and deliver great customer support. Suddenly, you have your own business!
Some of the benefits of starting a business in an online marketplace include:
- Up-front costs are incredibly low – It is possible to pay absolutely nothing until you actually sell something.
- Continuous experimentation is easy – Test different products, pricing and trading terms without risking everything.
- Grow as quickly or slowly as you want – Work within your own budget, resource and time constraints.
- Get paid instantly – No need to hold stock waiting for payments to clear. No credit collections to worry about.
- Seller Protection – eBay and PayPal actively protect you from fraudulent buyers, providing you follow the rules.
- Seller support – Get assistance via phone, chat or email.
- Flexibility – You choose your own hours. Start part-time whilst working in a day job, and then give your boss the flick when you’re ready.
- Work with people you trust – Why not make it a family business? Create a business which can be handed down to your children.
- Put your own personality into it – Learn from other sellers and connect with customers in your own way.
The secret to success in business is to learn what customers want and expect, and to deliver it consistently. The transparency and high benchmark of Seller Performance ratings within online marketplaces encourage standards well ahead of most retailers, both online and offline. In order to further foster this kind of behaviour, marketplaces invest a lot of time and resources into seller education. That’s why eBay recently launched a dedicated Seller Centre in order to provide guidance for new and existing sellers on best practices and ways of growing their business.
At the heart of it all lays trust. The fact that you will likely never meet your online customers makes trust so much more critical to the financial success of any online business. Online marketplaces empower everyday folk to take control of their own destiny, become their own boss, and do all that without going into debt, risking their family’s future, or being left behind by ever changing consumer trends.