Here are 7 tips that can really help you enter the ecommerce industry while minimizing your risk.
1. Find a partner
FOCUS, you are just creating an ecommerce site. You do not need to open a shipping facility, a manufacturer, a design group. Your focus is your website and marketing it, so find a partner for your product. Let's say you want to get into the coffee business. Find a great coffee grower and create a relationship.
Find that partner that does everything else:
- Growing
- Shipping
- Packaging
- Warehousing
- etc.
Offer them incentive to handle your product as well. Obviously, you will already be purchasing product from them, but also offer to pay a slight premium for shipping, warehousing etc. so that they can make a little extra money off their existing operation. You can always make a shift later if the costs get too high and it makes sense, but for now, it is a lot more beneficial to eliminate any extra overhead than to maximize your Gross Margin.
This allows you to cut costs such as:
- Staff
- Facilities
- Office Expenses
- and many other items that come with running a fulfillment operation
Your partner can also offer you a lot of knowledge as they most likely have much more experience in your products industry than you do
2. Use existing platforms
The world has become saturated with awesome ecommerce platforms that are ready to go out of the box. Shopify has been the easiest, out of the box, in my experience. Find a platform that suits you, and get the thing up and running. Choose existing templates, add simple addons and plugins, and get going.
You are not starting a technology company! So stop trying to create new technology.
3. Start Small
You are creating a side business to start, you are in no rush. Start with a small run of your product and test it. For example, if it is coffee, try selling 300 bags and see how it goes. Don't invest 10s of thousands of dollars and hope for the best.
Put your site up and sell a minimum. You can use scarcity to your advantage. See how your friends and family react to the product, then tweak it, then try marketing a little bigger, tweak again, nothing happens overnight and use the luxury of the fact you haven't jumped in full force to be calculated and grow organically.
4. Get Terms
You do not need to be putting much cash upfront, and since you haven't raised any, you probably don't have much. Get net terms and only extend yourself as far as you are confident you can make the money before the money is due.
If it is for your product, get net 30 terms (meaning you pay 30 days after you receive the product) and then only take on as much product as you can sell in those 30 days. This allows you to make your money, before spending any, and creates a self sustaining business without large capital requirements.
5. Don't quit your day job
This is a side job until the money is pouring in! Don't tell me you "have to give it your all" and "this is your passion." If you can maintain without the businesses cash-flow, this allows you do make decisions on for the benefit of the growth and prosperity of the business, not your personal bills.
Without you as an addition to overhead, you can run extremely lean, which means your business has a significant higher chance of success.
Also, if your day job pays well, it can provide growth funding for your business.
6. Get Interns
You have created an opportunity. You have a product, you have a platform, you are ready to go. If the growth starts to exceed the amount of time you have to put into it, start bringing in interns:
- They will work for cheap (even free)
- They will learn a ton because it is so hands on
- You can create a situation where they can make a career for themselves if they grow well
- You are running so lean, payroll shouldn't be an issue if you have a decent product
- Did I mention you are creating a huge opportunity for them as well?
7. Let it grow organically
This is a great way to decide where to put your money. Before you go out and market this, and pump money into growth, just let it grow. Tell your friends about it, see which ones actually buy, get feedback, really learn why your product is selling.
Then the next step is favors and connections. If you have friends, see if any have a way to help you gain some exposure, don't be afraid to ask for help.
Create a budget for marketing based on revenue, that way your business can self sustain.
If you have any more questions, please feel free to email erik@hawkemedia.com
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