Even with the dot com bust of the late 90s, the number of entrepreneurs
who have successfully leveraged this powerful medium to sell products,
services or information and become millionaires in the process is
phenomenal.
Setting
up an Internet business is easy. Running it successfully is slightly
more challenging. Which is why countless new Internet businesses emerge
every day, only to fold up immediately or wind up slowly in a few
months time.
The truth is that most of these failures are due to
inadequate planning and preparation; the Internet still provides one of
the easiest means to realize ones dream of running a successful,
low-cost and highly profitable business.
Based on my own
experience with running several online businesses, mainly niche
Internet retail stores, I am confident that some due diligence before
embarking on the Internet retail business will go a long way in
ensuring its success.
At a very broad level, an aspiring online retailer needs to follow three key steps to get the business running successfully:
Market research and planning
Setting up the online store and streamlining the operations
Marketing: Attracting visitors to the store and converting them to buyers.
In this article, I will briefly cover the first aspect, ie. research and planning.
Research & Planning: Laying a strong foundation to your online business
This
is one of the most neglected aspects, simply because aspiring
entrepreneurs often get carried away by the overall simplicity of
getting their online business up and running.
However, identifying the right niche is absolutely critical. Get this wrong and your Internet business will flounder.
Heres how I recommend going about identifying a niche market (http://www.internet-retailer.com/product_map.htm
) (weve used this process quite effectively). Consider the factors
below, address some of the questions listed and you are well on your
way towards e-commerce riches:
Market and market size:
Determine if there a market for the product you are trying to sell
online. It is important to know whether the targeted buyers of your
product purchase online! Once you have estimated the size of a market,
it will be prudent to see if the market can be further broken down into
more narrow niches with lower competition and potentially better
returns.
Search potential and competition: Analyze the volume
of search traffic (both free and paid, preferably the former) that you
will be able to generate, as search traffic is among the lowest-cost
means of getting visitors to your website. There are several tools
available to do this, the most common being the Overture (Yahoo! Search
Marketing) search term suggestion tool.
Competition: Are there
big players in the market you are targeting that you need to be wary
of? There is certainly no shame in locking horns with the big players
but you need to be aware of them and find out means to be better than
them. In fact, being a small company/ business might even work to your
benefit!
Profit margins: Does the product offer sufficient
margins to make it a viable, sustainable business? Take into account
all the costs that you can readily identify and add a certain
percentage to it to estimate your profit margin. Remember you can only
be better off when youve planned and prepared for a worst case scenario.
Product supply: Can you ensure regular supply of the product? Which suppliers would you like to source your products from?
Logistics and fulfillment: Does the product you intend to supply
involve high shipping and handling costs? Does it require significant
level of customer support and other specialist resources? What is the
likelihood of product returns and how much should you factor in your
estimations?
Once you have addressed all these questions to base
your decision on the choice of the product(s) to sell, you would have
laid a reasonably strong foundation for your online store. Moreover,
this research will enable you to formulate strategies in building your
website and its marketing. The next step is to build on that strong
foundation and begin executing on the strategies youve drawn up, which
I will cover in a subsequent article.
By Chris Packer.
Chris Packer is a
successful Internet entrepreneur having built and run several online
retail and e-commerce businesses. He shares his accumulated knowledge
on Internet-Retailer.com (www.internet-retailer.com), a treasure trove
of tips and useful resources for the aspiring Internet businessman.
Everything you need to successfully set up and run an Internet retail
store can be found on the site, absolutely FREE! For those preferring
to read a printed-out book, the comprehensive guide is also available
for purchase on the site.
