5 Steps to Starting an Online Business in 2020
What are the steps to start an online business?
How to start an online business in 2020?
Is it still a good time to start with dropshipping?
Let's begin by saying 2020 has been an eventful year, and one of the unexpected consequences of the pandemic has been a surge in interest in entrepreneurship.
In a survey conducted by JustBusiness on more than 400 entrepreneurs currently starting businesses, one in five respondents declared that they didn’t have plans to do so before the pandemic.
On top of that, when asked, “What helped convince you that this was a good time to start a business?”, nearly a third of respondents said they were inspired by changes in the market due to the COVID-19 crisis.
Hard times are known to breed creativity, and whether you want to generate a new income stream or become your own boss, ecommerce and managing an online store has many benefits, including:
Working from home, at your own pace
Taking advantage of low barriers to entry
Working on something you’re passionate about
Making some money, hopefully!
But with many moving parts, it can also seem daunting. Where do I start? What do I need? Should I purchase an inventory? Can I do it all by myself? These are valid, essential questions every entrepreneur asks before getting into a new venture.
Fret not, because we’re going to make it easier for you by breaking down exactly what you need to start an online store in 2020.
1. What to sell?
Before we get to the nitty-gritty, it is important to sit down and strategize. Putting in the extra work at this stage might save you a lot of effort down the line. Here are some of the things you want to consider before jumping the gun.
Finding your niche
The first step is also the most obvious: What do you want to sell?
While this is very important and deserves to be researched, it’s also not worth losing any sleep on it. Many aspiring entrepreneurs stay at this stage for a long time, waiting for the “perfect idea” to come. However, reality shows that:
Idea execution is likely to have a bigger impact on your success than the idea itself
Nothing is set in stone. If your business doesn’t work the first time around, you can pivot towards something else with your newly-acquired knowledge
“An idiot walking will always go further than a genius sitting down”. This French proverb - one of my mom’s favorites - condenses the importance of getting things done
That being said, finding a niche is important because it will allow you to offer something unique to your future customers.
If you’re selling a little bit of everything, there is no real incentive for anyone to go to your store rather than a bigger marketplace (heard of Amazon?). Moreover, it will be difficult for you to market it efficiently. You want your niche to be as precise as possible, in order to really capture what your audience wants.
There are multiple ways you can go about it; let’s take a look at each one of them.
You have a competitive advantage that you can leverage
Say you run a Youtube channel about juggling, or that you assemble juggling balls in your free time.
If that’s the case, it can make sense to start selling juggling balls online, targeting your existing audience, and going for something you’re already passionate about and familiar with.
You might have an opportunity or expertise that you don’t even know about. Make sure you ask yourself the following questions:
Are you active in a specific online community?
Are you involved in a hobby, even locally?
Do you have an existing network that you could reach out to?
Answers to these questions can make a big difference early on to get your store off the ground.
You don't have preferences as to what to sell and no advantage to leverage
If you don’t particularly care about what you sell, it makes sense to look for trends in order to find opportunities. Think of some of the businesses that have seen an increase in demand this year, such as:
Specialty delivery services
Face masks and protective gear
These are niches that businesses have exploited based on a timely move. A very useful tool to find such opportunities is Google Trends.
Jumping into a trendy niche does not go without risk, but this tool can also help you identify search terms that are steadily yielding results, and related queries to narrow down your niche. More tools for your niche research are Google Keyword Planner, SimilarWeb, and Moz Link Explorer to explore some of your competition strategies.
At the end of the day, what matters is having an edge. Whether it is from your expertise, a market opportunity, or your product offering, you need to set yourself apart to find your audience and stand out.
Now it’s time to decide what actual products you are going to sell.
2. Finding products to sell: 4 methods
When it comes to the actual products you want to sell, a variety of options are available depending on your budget and strategy.
Selling your own products
This is the traditional approach, similar to having a physical store of your own. Let’s take a quick look at the pros and cons here.
All the profits are yours
Saving money on a physical location
Easy to branch out if you already have a physical store and just want to add an extra channel
You have to take care of everything beyond making the product: Managing orders, packaging, shipping, customer service, you name it. This can quickly take a lot of your time!
People that already have a physical store and want to sell online as well
Specialty stores selling expensive, custom-made products.
Creative people with an appetence for high risk / high reward business models
In its simplest form, this implies purchasing in bulk from a wholesale supplier and then selling to customers.
For handling the products, you can choose between self, partial, and third-party fulfillment.
With self and partial fulfillment, you will be in charge of storing and shipping to the customers. By using third-party fulfillment, you can send the products to a company like Amazon for example, and have them stored and shipped for you.
Possibility to bypass the middleman by establishing a direct relationship with the supplier
Inventory management can be challenging
Requires negotiation skills to work out good deals with suppliers, wholesalers, and fulfillment centers
Costs for storing and sending packages or paying for third-party fulfillment services can build up fast
Hands-on entrepreneurs want to have control over their brand and products and are ready to invest time and money
According to Shopify’s ultimate guide to dropshipping,
“Dropshipping is a business model that allows entrepreneurs to start an online business and sell products to their buyers without ever actually stocking the items themselves. Instead, when a dropshipping store sells a product, it purchases the item from a third party and has it shipped directly to the customer.”
This model has become very popular over the last few years. Torchbankz reports that in 2017, dropshipping accounted for 23% of online sales, valued at $85 billion dollars among other fulfillment models. Bear in mind, that this was way before the ongoing ecommerce revolution we are experiencing.
The focus is on marketing, promotion, and distribution
Low-cost: Minimal investment needed
The easiest model to set up and get started with
Extremely competitive field: low barrier of entry makes it easy for anyone to come and compete with you
Lack of control on manufacturing, quality, and shipping, yet you are responsible for handling customer service queries and complaints
Tech-savvy entrepreneurs with an existing audience, solid networks, and good marketing skills
Alternative: digital products
This is a bit of an outlier because we are addressing the sale of physical products through an online store, but selling digital products can be a great strategy if you have a limited budget and skills to monetize.
From online courses to e-books, video content, or premium newsletters, the same rules - finding a niche, finding the right product, and creating a community - apply!
Requires minimum investment
One-and-done, once it’s created you don’t have to maintain it
Need actual expertise or skill
Hard to market without an existing audience
Content developers with an existing audience, experts in a specific field
3. Planning SMART goals
When launching an entrepreneurial venture, it’s important to set boundaries and objectives from the beginning.
You always want to measure actions and compare results to expectations in order to gauge your performance as objectively as possible.
Adding “Owner and CEO” to your LinkedIn is great, but your bottom line and performance is the number one priority, and setting goals early is a good way to keep your efforts accountable.
SMART is an anagram and framework to set goals that are:
This blog post from Atlassian breaks down each category and helps you set up your own SMARt goals using this template:
“Our goal is to [quantifiable objective] by [timeframe or deadline]. [Key players or teams] will accomplish this goal by [what steps you’ll take to achieve the goal]. Accomplishing this goal will [result or benefit].”
A little bit more actionable than writing “Making enough money by the end of the year to quit my day job” on your whiteboard, right?
Now that we’ve got our niche and the products, let’s keep moving.
4. Starting up: what do you actually need to do?
What are the concrete steps you need to take today once the preparation is done? How much will it cost? What are some of the best resources? Let’s go through each step you need to take.
Pick a domain name
Domain names are critical because they are central to the identity of your store, but also to ensure that you are ranked effectively on search engines. This will allow prospective customers to find you and your products.
Google provides best practices and guidelines to make sure that you pick the right domain, including:
Name length: Short domain names are recommended, typically between 3 to 4 terms
Keywords: Including keywords that are relevant to your store is critical and will improve the chances that your website comes up when users search for the products you’re selling
Location: If you’re planning on targeting a specific area, including that location in your domain name is recommended
Avoid numbers, dashes, misspellings, and similarities to existing brands or trademarks
While picking a cool name full of hidden symbolism for your brand is tempting (and could potentially pay dividends down the road if you’re successful), choosing a practical, one catered to your niche and the products you are selling is probably more effective.
Pick an ecommerce platform
Obviously enough, you will need a website, and an ecommerce platform to allow your customers to shop.
This can be achieved by adding a shopping option to your existing website or signing up for an ecommerce platform. We recommend the latter, as it will provide you with a sound technical structure and everything you need to run your store, packaged in one interface.
For more information on ecommerce platforms and which one to pick, I invite you to check our blog post The Best 5 Ecommerce Platforms to Start Your Online Business in 2020.
Set up the store
You’ve done the research, you’ve done the work, you’ve picked the platform, and now it’s time to set it all up! There are a number of ecommerce platforms that are user-friendly enough for anyone to set up, but if you are not sure we recommend consulting with an expert.
Now let’s take a quick look at the steps of setting up an online store.
Configure your website
What is your store going to look like? Have you thought about the color scheme, the theme, and the layout?
If you’ve decided to go with an ecommerce platform, you’ll be happy to know that most offer built-in online store builders.
Shopify’s online store builder, for example, allows you to pick from existing templates and personalize your store to fit your tastes and your products. Woocommerce, being a WordPress plugin, offers an extremely large choice of themes as well.
For a lot of entrepreneurs, this is the most entertaining part of the process, so enjoy it!
When setting up your store, it’s important to have a basic understanding of Search Engine Optimization (SEO) principles in order for search engines like Google to rank you as high as possible when people search for keywords relevant to the products you sell.
You don’t need to be a wizard to get started. This guide by Ahrefs gives a nice overview of what you need to know to have a solid SEO foundation for your store. To sum it up, it entails:
Keyword research: What are the best Keywords
On-Page SEO: Optimizing titles, URLs, and product descriptions
Realistically, going over the first two parts will already give you a fair understanding of how to structure your store and describe your products, and you can keep the rest for later.
When done correctly, SEO will make a world of difference for your store and give you a significant competitive advantage, so don’t neglect it.
Set Up Your Payment Gateway
Popular alternatives here include Stripe, Square, Paypal, or Braintree. Most ecommerce platforms include out-of-the-box alternatives, but if you wish for a more technical approach you might have to configure it yourself.
Registration, Taxes, and Other Administrative Obligations
An online store is a business and as a result, you’ll be liable to pay taxes on your product sales, and be required to register for a business license. Each country - and each state/province within countries - tends to have its own rules and regulations, and we advise you to dedicate some time to analyzing your options.
5. Store is up: now what?
Your store is up, your products are listed and you sent the link to your friends and family. Is it time to kick back, relax, and watch the checks come in? Nope!
There’s a lot of work to ensure that your store is successful! Here are some of the things you should look into to improve on a regular basis.
Promotion is a huge part of running an online store: To be successful, you have to use a variety of channels and campaigns to engage and capture your audience. Here are some avenues worth exploring.
Social media is a huge opportunity for anybody to create a community and rally people around similar interests, values, or causes.
By leveraging social media, you should aim at creating a like-minded tribe to which you can market your products. If you are consistent enough, your followers will become your de facto brand ambassadors.
If you do not have the time or energy to start building a community, influencer marketing is a way to promote your products. While it can be costly, results can be significant depending on your target demographic.
It’s also important to note that social media takes time. It is also a very automation-friendly medium, allowing you to schedule posts in advance, generate automated reports, and more.
For example, you can automatically queue up a social media post when a new product is added to your store using Make. If you are interested in maximizing your time and efforts, please refer to our social media use cases.
Content marketing is a great way to be recognized as an expert and a resource for people in your niche.
By providing value to potential customers in the form of engaging content, you’re not only establishing your brand and improving your SEO but also positioning yourself as a trustful resource, an opinion leader.
This will be hugely beneficial to your store and yield multiplying results as time goes on.
Paid search, paid social (Google, Facebook, Instagram, retargeting)
Online advertising is a very effective way to drive people to your store.
Through paid campaigns and careful targeting, you can accelerate the process of putting our products in front of your potential customers.
Nurturing customers and ensuring a great experience is paramount to every business. Including a custom card or samples in packages can go a long way in ensuring customers feel valued (and leave positive reviews online).
Moreover, there are lots of ways to deliver a stellar experience.
Automation can help, by automatically adding a new Shopify customer to an email list on Mailchimp for example, which allows you to send personalized pre and post-purchase emails. Being there for your customers can drive interesting results!
Customer service is also a huge topic, especially when online stores are so dependent on online reviews. As such, it’ll be important to dedicate time and stay on top of incoming reviews as soon as they come in - and to react accordingly to ensure great service.
SEO and store performance
Your online store is a work in progress, and it is vital that you always experiment to keep improving its conversion rates, as well as SEO performance.
Remember the SEO guide we linked earlier in the post? It might be good to revisit it once in a while and make sure everything is running smoothly.
Likewise, monitoring your website is very important and can be largely automated, by automatically sending a performance report from the day before to Slack for example.
Constantly tweaking and measuring the effects of your experiments will allow you to pinpoint what works and what doesn’t, and to understand your audience better.
Keeping track of your income and expenses - for business and tax reasons - can be challenging. Maybe hiring an accountant is a bit too ambitious, so you can start by using automation to manage tasks on Xero or Quickbooks.
Sell on marketplaces (Amazon)
You can always consider making your products available on larger marketplaces as well. Shopify for example, allows you to seamlessly make the products from your store available on Amazon as well, so you can benefit from the marketplace’s huge audience and generate extra revenue.
Thanks for sticking through! We hope that you’ve learned a lot from this guide and feel ready to tackle the world with your own online store.
This is only the beginning and a world of wonder awaits, so make sure to check out our ecommerce templates to automate as many tasks as possible, and make the most of your time and money.