How to Start an Online Business, Online Store, Ecommerce Shopping Cart
Everything you need to know about starting an Online Business, Online Store, Ecommerce Shopping Cart Website
by Bernard Kohan
In today's business environment, you need to stay current in order to compete.
If your eCommerce site does not have an edge over your competition in every aspect of your online business such as: essential eCommerce features, compelling design, good usability, upsell and marketing features, optimum SEO, and adequate site security and performance, your business will be left behind.
U.S. eCommerce sales reached over $260 billion in sales in 2013, and will reach $370 billion by 2017 according to Forester Research, Inc. Another interesting fact is that Mobile eCommerce sales accounted for about $40 billion (of the $260 billion) for 2013.
Starting an online business can be a profitable venture if it is planned and executed correctly.
In this article I'll go over the essential items that you would need to know in order to start and run a successful eCommerce Business. I also discuss everything from selecting a product, to design, development, marketing, security and performance requirements of an eCommerce business.
I. Selecting the Right Products for your Online Store
Selecting the right products for your online store can have an important impact on success or failure of your business.
1. Product Selection - Important Considerations
- You may want to start with a product category or industry that you really like and are the most familiar with, and research different online trade magazines, journals and forums to see if you can find a need that does not already have a good solution. If you can come up with a unique product that can provide a solution to a problem that has not been solved, you will have the chance to be the first to enter and corner the market.
- Consider selecting niche or specialized products. This will provide a more targeted customer base which is easier to market to rather than the general public. Also, standard products that are sold to the general public have a much more competitive business landscape, and will require lots of funding for advertising and marketing your eCommerce site.
- Consider using vendors or distributors who provide drop shipping services. This means that the products will be shipped directly to the customers from the vendor and will save you a lot of expense in labor, shipping and handling, and warehousing.
- Consider the costs of manufacturing (or purchasing) the products, receiving, warehousing, and shipping to the customer, and compare those costs with the same (or similar) products that are sold by Amazon, Walmart, and other large marketplaces to see if you can compete with other popular marketplaces.
- Consider selling more products and more related products. With more product pages on your eCommerce site, it is more likely that Google and Bing will index your pages higher and more customers can find you. The more related products you have, the more upsell you can make to your existing customers.
- Consider selling products that are disposable or require continued usage. These types of products will create a perpetual business from your existing customer base.
- Select quality products with good reviews and set yourself apart from your competitors by providing either better value or better experiences for your customers.
2. Research the demand for your product
This process will require:
- Researching the gross sales for your product industry.
- Using online tools such as Google AdWords Keyword Planner and Bing Keyword Research Tool to review the number of searches for all keywords relating to your products that the users are typing in Google or Bing.
3. Research the competition
This process will require:
- Researching online for the top competitors in your industry by searching for the product in Google and Bing.
- Using online tools such as Google AdWords Keyword Planner and Bing Keyword Research Tool to research the competition level for the product keywords. Using those tools will display the competition level for each keyword and the cost for advertising for the keywords. (For example, if the competition level is high and the cost of advertising for a keyword is too high, the industry will be very competitive.)
- Research large marketplace sites such as Amazon, eBay, Walmart, etsy.com, or rakuten.com for selling similar products. These sites are very competitive with pricing and delivery cost.
4. Compare the Supply and Demand
Compare the combined number of keyword searches for both Google and Bing and the cost and competition for those keywords. (This research will not provide you an accurate result, but should give you some ideas about the supply and demand for the industry.)
5. Research Vendors, Manufacturers, Distributors
Research to find the best source for producing or purchasing the products, and research the cost per each item including the cost of shipping and handling for receiving or warehousing the products and delivering the products to the customers.
If you are not going to store inventory or do not want to handle customer service or sales calls, you would need to research and find vendors who provide Order Fulfillment Services or Call Center Services. (Just type Order Fulfillment Services or Call Center Services in Google and you will find many companies who provide that type of service at competitive rates.)
II. Write a Business Plan
Once you have selected your products, start putting together a report that itemizes:
- Cost of business operations (employees, rent, marketing and advertising, utilities, Internet, hosting, computers and software, taxes, office supplies, etc.)
- Cost of products plus shipping and handling.
- Competitive landscape report and your business and marketing strategies that is going to set you apart from your competitors and help you attract and earn customers over your competitors.
- Forecast: Products sales, Products Sale Cap, Gross Profit, Net Profit
- Select the type of business entity (Sole Proprietorship, Partnership, Corporation, LLC, etc.)
III. Select a Domain Name and Company Name
It will be important to select a domain name that is catchy and that your prospective customers can remember, spell and pronounce. Unfortunately, finding a good domain name is not an easy task. Most good domain names have already been taken.
Even though most domain names are taken, you can still find a good domain name. Here are some ideas for coming up with a domain name:
- Research for all keywords related to your product and try to combine two keywords that sound good together.
- Select a solid keyword related to your product and add a prefix or suffix to it.
Consider selecting a .COM domain since that is the standard for all domain names and users are accustomed to typing .COM extensions.
Regarding other extensions, try to purchase .NET and .ORG after owning the .COM in order to protect the company brand and preventing people from trying to profit from your brand name.
There are three types of domain name availabilities:
1. Standard - available for purchase immediately at the cost of $10 - $15 per year.
2. Premium - these domains are purchased by domain dealers or brokers who want to resell and make a profit on the domain.
3. Auction - these domains have become expired and have been put up for auction by the domain registrar or domain dealers.
If you cannot find a standard domain and the name that you are looking for is available as a premium or auction name and the price is reasonable, it may be worth purchasing the premium / auction domain rather than ending up with an unfavorable domain.
Also, an important consideration when selecting a domain is that a domain name which may sound good to you, may not sound good or proper to the majority of your audience, so you may want to consult a branding expert about your domain name selection.
IV. Find an Experienced Branding, Web Design, SEO, Marketing, and eCommerce Software Company
I include Branding, Web Design, Marketing and eCommerce Software and Hosting in the same category because they are all related.
It is a good idea to select one professional U.S.-based company that is experienced in every aspect of an eCommerce business. When hiring multiple companies (for example, a design firm to provide the design, an eCommerce software company to provide the software, and a marketing company to provide the SEO), the separate companies tend to have their own methodologies and may not work well together, and in some cases they would blame each other for any inconsistencies or unsuccessful execution of the project.
Also, it is recommended to find a company that is experienced, dependable, and is willing to provide continuous maintenance and support of your project. (For example, comentum.com.)
If an eCommerce company's focus is to mass produce eCommerce sites and they do not provide good options for maintaining and supporting your eCommerce site, they most likely will not be focused on building you a successful site.)
Your goal is to build an eCommerce site that:
- Presents a professional image.
- Has substantial brand impact which allows your customers to remember your brand and website.
- Is user friendly, so your customers can easily browse, find and purchase your products.
- Is Search Engine Friendly, so Google and Bing can better index your website and product pages.
- Is Secure and complies with the PCI Compliance security standards.
- Keeps the site's content and products fresh and updated everyday, by continuously running promotions, adding new products or new informative articles.
- Includes many Upsell features such as "Other customers who purchased product ABC, Also purchased product XYZ", Related Products, Product Combinations, etc.
- Includes Email Marketing (with compliance to the CAN-SPAM Act) to help promote your website.
- Features a Mobile Friendly version of the site, so your customers can easily browse and purchase your products using a mobile phone. (Considering that Mobile eCommerce in the U.S. generated about $40 billion in sales in 2013, including a Mobile Friendly version is important.)
- Has Social Media Marketing.
- Can integrate with price comparison sites such as Google Shopping (http://www.google.com/shopping), Shopping.com, PriceGrabber.com, bizrate.com, nextag.com, shopzilla.com, etc.
The items above are just the essential list for consideration. Let's move on to discuss the most important elements of a successful eCommerce site: Design, Development and Deployment.
Branding, Design and Usability
Developing a brand identity that is unique to your business is very important. This way your customers can differentiate your brand from others.
There are two types of design methods that can affect your branding: Template and Custom Designs. Below are the differences between both design methods:
- Best suited for businesses that want to build a sustainable long-term unique brand identity.
- Having a unique brand may help build a sustainable customer base because people are attracted to appealing and compelling designs and if it is unique, it will be more memorable.
- Best suited for businesses that are testing the water and are on a low budget.
- Having a template design does not separate your business brand from others and people may be less attracted or less loyal to your brand.
Unfortunately, there are a lot of website design and hosting services that are selling Template websites which means that you may be sharing similar brand identity with other sites that are using the same template.
It is a matter of your budgetary requirements and long-term business goals for selecting a templete design or custom design.
If you have the ambition to make your business a success, try to build an attractive and memorable brand from the start.
There are two types of eCommerce software: Professional or Enterprise eCommerce Software and Hosted eCommerce Software. Below are the pros and cons between the two:
Professional or Enterprise eCommerce Software:
- Best suited for businesses that are experiencing substantial growth, require scalability, and are looking for a long term ecommerce solution.
- Can be hosted anywhere.
- Easier to customize or add features.
- Has a higher up-front cost, but lower hosting cost (especially when the site has large traffic).
- Provides better scalability.
Hosted eCommerce Software:
- Best suited for startups with lower budgets for up-front design and development.
- Can only be hosted at the eCommerce software company.
- It is difficult to customize the branding, or customize or add features.
- Has a lower up-front cost, but higher hosting cost especially when the site has large traffic.
Select an eCommerce software that has the essential tools to make your site a success:
- CMS for managing your Blog, Creating Articles and Press Releases
Google and Bing like sites that continuously provide valuable fresh content. You want an eCommerce site that provides you the capability to keep your content updated and new.
- Marketing and Upsell Features
Email Marketing and Upsell Features should be an essential part of any eCommerce website.
- SEO Features
Having a Search Engine Optimized site is the key to acquiring traffic from Google and Bing.
- Custom Design and Branding
People are attracted to appealing and engaging designs — if it is unique and user friendly, you will be building a loyal and happy customer base. Selecting an eCommerce site that is easy to customize and build a unique brand should be an important factor in your decision making process.
- Mobile eCommerce
More and more people are using their mobile devices to research and find products online. U.S. Mobile eCommerce sales was around $40 billion in 2013. Having a Mobile Friendly eCommerce site should be an important part of developing an eCommerce site.
- Security and PCI DSS Compliance
It is important that your site passes all security standards of PCI DSS Compliance in order to keep your customers' credit card and sensitive information secure and your liability of any breach to a minimum.
- Performance and Scalability
Users like fast loading pages and Google ranks faster pages higher than slow loading pages. Having an eCommerce site that is robust and fast loading will require running eCommerce software that is designed and developed to load quickly.
Also, when your site's traffic grows, you will need eCommerce software that can scale and handle the extra traffic without slowing down.
- Order Management and Customer Retention (CRM)
Providing the functionalities for easily managing customers, invoices, packing lists and orders and allowing the customers to log in to their accounts and communicate with you should be crucial to an eCommerce site.
- Integration with UPS, USPS and FedEX
Having the flexibility to select different shipping carriers should be part of any eCommerce software.
- Managing Sales Tax
Having the flexibility to manage sales tax through the eCommerce admin should be an essential piece of any eCommerce software.
- Import / Export Capabilities or Integration with ERP Systems
Having the site integrated with an ERP system and being able to keep the inventory updated is important to make sure customers can view the current inventory on your site.
The above items are essential for building a successful eCommerce site, so ask your eCommerce software provider if they provide at least the above features. Comentum eCommerce software has all of the features listed above.
If you're just trying to test the water or work with a lower budget, you may want to start out using a Hosted Platform or a low cost eCommerce Software. But if you are going to put a lot of your time and effort into building a successful online store, and foresee a substantial growth, you may want to start out right with a Professional or Enterprise eCommerce platform.
Be aware that although some hosted platforms have a very low up-front cost, the monthly hosting can be quite substantial especially if the site's bandwidth usage increases.
A good percentage of most sites' bandwidth usage comes from Search Engine Robots (and other Robots). I have worked on clients' projects and have seen their sites visited by Google Robots and other Search Engine Robots every second – this creates a lot of bandwidth usage for their sites.
Having Google Robots visit your site every second is a good thing. It shows that Google sees continuous changes on your site and wants to keep your site's indexing up-to-date.
Also, if you are going to have a lot of pages or if you're going to build a Search Engine Friendly site with a guided search tool that allows clients to filter and better find your products, the site's bandwidth usage will be substantial from Google and other Search Engine Robots. (Guided search creates an environment of finding your products in many different ways and Search Engine robots use every way to index your pages which uses a lot of bandwidth.)
Search Engine Optimizations and Marketing
There are two types of Search Engine Marketing: Search Engine Optimizations and Search Engine Marketing:
Search Engine Optimizations
This service refers to going through all pages manually or using tools such as Google Webmaster Tools to evaluate all pages for unique and correctly formatted Titles, Meta Keywords and Meta Descriptions.
Search Engine Marketing
This service is more in-depth and will require implementing many marketing tactics to bring traffic through the search engines. It will be beyond the scope of this article to go over this process in detail, but I will list some of the essential items for this type of Marketing below:
- Using Google and Bing Webmaster Tools to evaluate and plan different marketing strategies to bring traffic to the site.
- Using Google and Bing Advertising Tools to evaluate, plan, and strategize keywords and landing page advertising.
- Using Google Analytics to continuously update and re-strategize the site's marketing tactics for bringing better traffic.
- Using third party search engine marketing tools such as Moz.com, Compete.com, Quantcast.com, Alexa.com to strategize even more competitive online marketing tactics.
Write Articles, Blogs and Valuable Informative Content
Writing informative articles and blogs are part of Search Engine Marketing, but it also can be considered a different marketing strategy for attracting and drawing new customers into your website.
You can write informative articles related to your products based on what users are searching in Google. This will bring more traffic and increase sales for your site.
Social Media Marketing
Social Media Marketing can have a large impact in providing traffic and customers to the site. It will be beyond the scope of this article to go over this process in detail, but I will list some of the essential items for this type of Marketing below:
- Create a Business Facebook page, keep it engaging by adding new content and interesting social activities and invite users to be part of the excitement.
- Create a Business Twitter page, invite users to follow your business activities on Twitter and use different Twitter Marketing tools to invite users who are interested in your products.
- Use other Social Media sites such as Instagram and Snapchat to get users engaged and create awareness of your brand.
Ask your customers to opt-in for receiving monthly newsletters and email promotions. Send them monthly newsletters or promotional pieces to bring return business. (Make sure that your email marketing campaign complies with the CAN-SPAM Act.)
V. eCommerce Security and Performance Considerations
One of the most important parts of building an eCommerce site is the security and privacy considerations. If your site is not secured and your customer's sensitive information or credit card information are stolen, you could face major liability and lawsuits.
In most cases, the eCommerce site owner is liable for any security breach and not the eCommerce software development company or hosting company, so you want to make sure that you take all necessary precautions to make sure your site is secured.
You want to make sure that your eCommerce site passes the security standards that are set forth by the Payment Card Industry Security Standards Council called PCI DSS Compliance. This will show that you are following the strict security standards and (in my opinion) this will reduce your liability substantially.
PCI DSS Compliance are the security standards that need to be followed by your eCommerce website, by the Hosting Company that is hosting your site, and any network that is connected to your eCommerce site.
One important item to note is that PCI DSS Compliance is not a one-time implementation. It requires periodic and continuous security scanning and periodic implementation of new security patches. For example, your website may have passed the PCI DSS Compliance last month, but if there is a new vulnerability found in the web server software that you are using, your site will fail a PCI DSS Compliance security scan until you fix the new vulnerability.
Usually, your Merchant Service company will provide you a complimentary PCI DSS Compliance questionnaire and periodic scans that will look for vulnerabilities with your site and hosting server.
If the company that you hire to build your eCommerce site or host your site has experience in PCI DSS security, they should be able to provide you continuous security maintenance and support at a reasonable cost. This is one of the areas of the business that you do not want to cut corners and look for the cheapest and least reliable solution because the liability that you can have if you do not keep your eCommerce site PCI DSS Complaint is substantial.
To go over all of the recommended eCommerce site security is beyond the scope of this article, but I will list some of the essential items below:
- Unless it is 100% required, do not store any credit card information on your website. If your site is a subscription site or you need to store credit cards, you may want to consider using a third party gateway that provides such a service. For example, Authorize.net CIM services allow credit cards to be stored securely on Authorize.net servers and you only send a customer ID token to re-charge a customer.
- Be aware that storing the credit cards on a third party payment gateway still does not completely protect your customers' sensitive information. If the server that your website is hosted from has a breach or becomes infected with a Trojan virus, the Trojan virus can continuously intercept and steal customer's credit card submissiona until you become aware of this breach.
- Use a valid SSL certificate with 256-bit Encryption and install it correctly. Poorly configured SSL certificates can create security risks.
- Continuously scan your site for security vulnerabilities and let your hosting company or eCommerce development company know about the found vulnerabilities and ask them to perform fixes immediately. (Your Merchant Service company should provide you a security scan service complimentary. If your Merchant Service company does not provide that service, there are security scanning companies such as Trustwave or Security Metrics that will provide security scanning.)
One of the biggest issues with many eCommerce sites today is speed and performance. Consider these facts:
- Users do not like sluggish or slow-running sites and may leave your site because of slow performance.
- Google recently added site performance as a factor into ranking sites, so if your site is slower, your ranking with Google can become lower.
I've noticed that many eCommerce site owners use bloated eCommerce software such as Magento out-of-the-box and on top of that, add third party plug-ins that dramatically slow down their eCommerce site. This is not a good idea because it will impact your customers and Google ranking.
Also, you want to select a robust hosting company or a cloud or dedicated hosting company, rather than a cheap shared hosting company where you share CPU and bandwidth resources with thousands of users on the same server.
Simply said, you get what you pay for. If you want the most robust, secure and reliable hosting, you will be paying for reliability, security and better performance. If you are paying less than $25 per month for a hosting service, you are more likely sharing a lot of bandwidth and CPU resources with other sites and your site will run slowly.
VI. Final Thoughts
Starting any business including an Online Store is not an easy, get rich quick process. It will require careful business research and planning, and having good knowledge in web technology, operating and managing a business, marketing, finance and government regulations.
Most people start an online business without any planning or understanding of web technology or marketing. They expect to put up an online store thinking that the orders will pour in by themselves.
In order to become successful in an online business, you will need to work hard and have the will to continuously gain knowledge in web technologies and everything else you need to know about running and operating an eCommerce business.
Also, you will need to be prepared to take financial risk, but you need to know where and when to spend in order to get the best returns for your money.
Some people are misguided by deceptive TV advertisements promising that you can have a successful eCommerce site for as low as $10 per month. If it sounds too good to be true, be cautious. If anyone could start a successful online store for $10 per month, we would all be rich by now.
Starting and running a successful Online Store will require some upfront cost. The table below shows the approximate list of investment requirements (depending on your needs):
|eCommerce Design and Development||$8K - $30K up-front|
|Monthly Hosting and PCI Compliance Security Services||$50 - $500+ p/month|
|Monthly Site Revisions, Customizations, Other Maintenance, and Support||$0 - $1,000 p/month|
|Monthly Search Engine and Social Media Marketing||$0 - $10,000 p/month*
* depending on your needs
- Design of your unique brand and eCommerce site.
- Review and Implement the usability features to make your site easy for your users to find, browse, and purchase your products.
- Implement Search Engine Optimizations.
- Develop Search Engine Marketing and Social Media Marketing strategies and implementations.
- Install and customize your eCommerce site.
- Deploy your site, properly install a SSL certificate and fix any PCI Compliance issues.
- Quality Assurance for usability, functionality, security and site performance.
- Continuous site revisions and customizations (maintenance) if required.
- Continuous Security and PCI Compliance maintenance for your site.
- Continuous hosting services and monitoring to make sure your site is always up and running.