Working for yourself doesn’t have to mean sinking tens of thousands of dollars into starting a business. There are a variety of ways that entrepreneurs are launching businesses with minimal funds. One such opportunity is e-commerce. With low startup costs and a high potential for growth, e-commerce is a smart way for fledgling entrepreneurs to enter the retail sector.
There are a lot of benefits to opening an online store, such as:
Low Startup Costs
Compared to brick-and-mortar stores, online shops require minimal investment. For most e-commerce entrepreneurs, the website is the biggest expense required to launch their business. Thanks to drag-and-drop website builders with e-commerce compatibility, even a professional website doesn’t have to cost a lot.
When you’re not investing thousands of dollars to start a business, you take on much less risk than most entrepreneurs. In fact, many e-commerce entrepreneurs can self-fund their startup without taking out business loans.
High Growth Potential
E-commerce is growing rapidly with no signs of stopping. While e-commerce only accounts for 14.3% of overall retail sales, that represents more than $500 billion in online sales per year.
Labor costs can cripple small businesses, but not e-commerce entrepreneurs, who can use automation tools and outsourcing to minimize labor needs.
How to Get Started in E-Commerce
While e-commerce has a much lower barrier to entry than brick-and-mortar retail, that doesn’t mean it’s as simple as building a website and listing products for sale. There are several considerations, from branding and advertising to growth hacking and market research, that entrepreneurs need to make before launching an online store.
Off-The-Shelf E-Commerce Platforms vs. A Custom Store
Off-the-shelf e-commerce platforms like WooCommerce and Shopify making launching an online store easy. A readymade platform isn’t only convenient, but it also comes with basic features you need to run an online store, such as web hosting, search engine optimization, and content management systems, among others.
But, off-the-shelf platforms are limited in their customization options. Installing add-ons and plug-ins can also drive up the total cost of using a platform. Nonetheless, it’s usually the best option for new e-commerce businesses. While there are perks to building a custom online store, particularly when it comes to customization and control, the costs are significantly higher.
Stocking Inventory vs. Dropshipping
Whether to stock and manage physical inventory is one of the biggest questions facing e-commerce entrepreneurs. While managing your own inventory offers maximum control over branding, packaging, and customer service, it’s significantly more costly than the alternative. To stock inventory, you need the funds to pay for it, a space to store it, a means of tracking it, and adequate staffing to ship orders on schedule.
For most beginners, dropshipping is a simpler option that mitigates risk and overhead costs because there’s no need to pay for inventory before an order is placed; instead, merchandise is shipped directly from manufacturers to customers. However, not all products are suited to dropshipping, so it’s critical to research dropshipping merchandise options before taking this route.
In-House vs. Outsourced Customer Service
Customer service is what makes or breaks an e-commerce store. When an e-commerce store is small, it may be possible to manage customer service in-house using customer service software like Freshdesk and Zendesk. However, it doesn’t take long before an online store’s customer service needs exceed what a single person can manage. That’s especially true when you consider that online shoppers expect to receive customer service on multiple channels with rapid response times. To meet the demand, e-commerce entrepreneurs should look to outsourced customer service as an affordable alternative to in-house staff.
It’s All in The Approach
E-commerce is a great business model for first-time entrepreneurs or established business owners looking to expand their market share. But, while e-commerce can be a low-risk, high-reward business model, the success of your store hinges on your approach. With these tips, you have the know-how to start an e-commerce store that keeps costs low and quality high.
About the Author
Dean Burgess started Excitepreneur to explore overlooked areas of entrepreneurship and share stories and lessons he’s learned with current and aspiring entrepreneurs.