E-commerce has revolutionized how we do business; and for better or worse, it’s here to stay. As reported by Entrepreneur.com, being one of the fastest-growing industries in the world today, E-commerce has garnered quite a reputation for itself as an industry with a shallow bar for entry while offering substantial profit potential. Today, all you need is some starting capital, and you can set up your very own small E-commerce business with relative ease, all from the comfort of your home.
That said, while E-commerce may be an easy industry to dip your toes into and make a quick buck, if you plan to stay in the game long-term, you need to start thinking about your E-commerce business development strategy. You may have started it as a side hustle to make some extra money. Still if the potential is there for it to be something more, it is well worth considering the opportunity cost for such an endeavor, and that’s precisely what this article is going to teach you to assess.
Let’s start with a short crash course on how to start an E-commerce business, and then move on to how to create an E-commerce business development strategy for your unique E-commerce goals.
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As with any business, it all begins with an idea. E-commerce is a retail-oriented industry, so it’s all about looking at the market and trying to fulfill some demand or need of the consumer base. For example, if the prices of a certain product are skyrocketing in the market, you could start selling an alternative to that product at a more affordable cost, and try to catch those lost customers with your product. It’s all about solving a problem and filling a gap.
Generally, you do not want to start an E-commerce business because of lower prices compared to the competition. All that leads to is a race toward rock bottom as you and your competitors try to outdo each other’s prices. Instead, try coming up with something new, or take an existing product and put a unique spin on it that only you can provide.
For example, look at Domino’s Pizza. Domino’s was on the brink of disaster about a decade ago. It managed to completely turn its situation around by doing something different with pizza delivery: it made ordering a pizza the easiest thing in the world with its technology. With this, what Domino’s did was it looked at its competitors and saw that the customer base was frustrated at the difficulties of online ordering and delivery. And Dominos solved that problem for the customers. Sure, it took capital investment for the company and was a gamble, but it paid off tremendously to where Domino’s today is the world’s leading pizza chain.
The bottom line is that you need to do your due diligence in market research and find a niche you can fill. Then once you have your conceptual basis for the E-commerce business all planned out, all that remains is execution.
Once you know what you will be selling, and how you will get customers on board, it’s time for execution.
E-commerce is frankly a very easy business to execute. You have tons of different ways to go about selling your product. For example, you could pick any popular social media, such as Facebook or Instagram, and advertise your products thereby by setting up the store itself on Instagram. That’s right, these days you don’t even need to use dedicated E-commerce platforms like Amazon and Alibaba to sell your products, you can set up your own brand on social media platforms and start right from there as well.
The main point of all this is that once you have the concept for your product and selling strategy down, it all comes down to spending the time and money into either creating your marketplace i.e., your website, or using a well-known E-commerce platform like Amazon.
For most E-commerce amateurs, the safest road is to try the dropshipping model of E-commerce, where you essentially act as the middleman and find customers to sell products to for a supplier, with all the shipping and other logistics being handled by the supplier themselves. Dropshipping incurs minimal up-front costs, and it can be incredibly lucrative if you can find a trustworthy supplier to partner up with.
However, dropshipping is not as lucrative long term as establishing your brand. There is a massive lack of control regarding drop-shipping, and your supplier is a single point of failure that can cause the whole business to go under. Plus, drop-shipping has to cycle products consistently and go with trends, which needs a lot of consistent change and adaptation.
When it comes to building your brand and product, it’s a high-risk high-reward type of deal. You will be investing heavily into an original concept of a product, and selling it to your desired niche market. While not as safe and cost-effective as drop shipping, you get a brand, with its own identity and image in return. Instead of trying to sell someone else’s branded product, you will be selling your brand and your product, and you get to control every aspect of it. From inventory management to logistics, everything falls in your lap to manage, and while operating costs will skyrocket, so will profits.
Think about it this way: a drop shipper may sell Nike shoes and make a decent profit, but they will never be as successful as Nike. That’s the difference between being a middleman and being the brand owner.
Ultimately, there is no right answer to how you should approach building an E-commerce business, and both methods are equally valid in their own rights. It all boils down to what you as an entrepreneur can execute. These approaches are also not mutually exclusive. You can always transition from a drop shipper to building your very own brand and line of products once you accrue enough capital to do so.
Before you can even start to craft an E-commerce business development strategy, you need to map out your objectives and conceive a goal for yourself. The strategy part comes in when it comes to fulfilling your objectives.
What we mean by mapping out and defining your objectives can be easily understood when put in the form of a few questions that you should ask yourself:
- What do you want to achieve with your E-commerce business? Do you want to develop your brand, optimize processes, or invest in new products and projects?
- Why do you want to work towards these goals? Are they worth the time and money investment to achieve?
- Which of these goals is the best to pursue now and which can be shelved for a later date?
- Is this goal achievable right now or something to work towards long-term?
And so on. By asking yourself questions like these pouring out your thoughts and ideas for the business’ growth, and consulting with your business’ accounting and marketing specialists, you can map out exactly what your business needs and hone in on that aspect of the business for development.
One of the biggest mistakes that E-commerce entrepreneurs can make is getting tricked into thinking they can, or have to do everything by themselves. This is not the case, and consulting and hiring professionals is absolutely necessary when discussing business development. After you have conceived an objective to work towards for the business, it’s time to assemble the team.
Let’s say your objective for the year is to expand your customer base. You can’t keep doing what you have been doing so far and expect it to work. You have to create a specific strategy to begin progress towards this goal. This is where a marketing specialist comes in. An experienced marketing professional knows what’s happening in the business landscape, and can help you identify what you need to change to appeal to a wider audience.
Similarly, suppose your goal for the year is to reach a certain amount of profit. In that case, you’re going to have to consult an E-commerce accounting specialist to figure out how exactly you can control your business costs and invest your earnings to increase your profit. Here is a comprehensive guide to E-commerce accounting by experts at Expertise Accelerated, titled “A Comprehensive Guide To E-commerce Accounting In 2023” for any entrepreneurs looking to educate themselves on the subject.
Whatever the objective is, the first step to drafting an E-commerce business development strategy to reach it is hiring appropriate personnel for the job. Then once you have the appropriate people on board, it’s time to start development!
Regardless of the goal, once you have your professional resources sorted, your next action will be strategy implementation and business process optimization.
Your base idea of business will still be the same, but you will change some things here or there to lean towards fulfilling your goal. For example, if your goal is increased profitability, you will assess your entire workflow to find unoptimized processes and streamline them to save costs. If something can be done in half the time with a newer method, why keep using the old one?
Similarly, if the goal is expanding your customer base, you will focus on optimizing your marketing strategy to cover a larger audience. This could include the development of SEO-optimized website content marketing, influencer marketing, paid advertisements, and so on.
Whatever the goal, your processes are the main area that will undergo change and optimization to fulfill that goal.
Once you have implemented the suggested and agreed-upon process optimization measures, it’s time to wait and see what happens.
No matter how intricate and well-crafted the E-commerce business development strategy is, it all comes down to practical testing. What are the results when the rubber meets the road and your strategy goes into effect?? You will regularly monitor and adapt your strategy depending on your progress reports. Maybe you tried influencer marketing for a month saw little to no returns and won’t be investing further into that idea. Perhaps the software you started using to save costs was not as useful as you thought, and you will switch to the old one or a new alternative.
Whatever the strategy, it is always open to change and will keep on changing as market trends and the economic and business landscape change. E-commerce business development strategies are never set in stone, and should not be thought of as such. You will keep trying new and innovative methods to achieve your goals and see what sticks and what doesn’t. It’s all trial and error until you find out what works best for you.
Expertise Accelerated is a Connecticut-based outsourcing service provider in accounting and supply chain management. On top of this, EA also offers US entrepreneurs access to some of the best global talent in business analysis and business process optimization.
EA CEO Mr. Haroon Jafree is an expert in re-engineering and has an incredibly successful track record of completely revamping and revitalizing business processes for notable brands like Saffron Road and Sabra.
By leveraging Haroon’s expertise in business process optimization and EA’s offshore business analyst and business process optimization support talent, US E-commerce entrepreneurs can forge a path to their E-commerce business development goals at a fraction of the US cost.