The e-commerce industry has gone through significant growth in the past two years as most consumers opted to shop from home and have their purchases delivered directly to their doorsteps. This has given rise to plenty of opportunities for small businesses to expand their reach and for budding entrepreneurs to take a chance at new ventures.
If you have been thinking about taking advantage of this opportunity for yourself, you can rest assured that it’s still not too late to get started. Industry experts are predicting that the e-commerce growth trend will continue even after the pandemic, with the US market alone, expected to grow more than 16%, surpassing $1 trillion in value in 2022.
Globally, e-commerce is projected to reach $5 trillion in 2022 and $6 trillion in 2024. This continuous growth is mainly driven by a new consumer mindset that is attracted to convenient shopping experiences partnered with greater value in their purchases.
But like with any business, there are also risks involved in e-commerce start-ups. To help you decide if this is the right path for you, take a look at this checklist of top factors that you should consider when you are planning to start your own online business:
1. Your Business Purpose
There is no easy way to start and business, and you are bound to face many challenges and have to regularly deal with stress along the way. If you do not have a clear purpose from the beginning, it can be very tempting to give up midway.
Define your goals by listing down the goals that you want to achieve with this business. Your personal purpose can serve as your motivation to keep going when the times get tough, while your business purpose will help you differentiate yourself from the competition.
Ask yourself how your business idea can help other people or make their lives better. Competition is tough in any industry, and the way you can carve out a path for your new business is by identifying an unserved need in the market. To do this, you must have a clear idea of who your target customers are, as well as understand their behaviours, motivations, and desires. Compare these with what the competition is currently doing, then either find a space that nobody is able to fill currently, or find ways of doing things better.
2. Your Investment Value
Evaluate your finances and determine how much you can afford to invest in the long term without getting yourself trapped financially in case the business fails to take off. If necessary, you can secure additional funds from external sources such as business loans, grants, partnering with an investor, or crowdfunding.
Most businesses will not be able to make a profit in the first few months to a couple of years, and you should have enough funds set aside to cover both your personal and business expenses during this critical period.
Make a list of the mandatory expenses you would need to get started and avoid the temptation of getting fancy equipment when there are more cost-friendly options that can serve the same function.
Identify in advance the kind of tools that you would need to get your business running properly. Keep in mind that e-commerce consumers are mostly looking for convenience and better value in their purchases, and having efficient operations and excellent customer service are critical features that could open the door to your success.
3. Your Business Plan
Before actually launching your business, you need to set a clear strategy on how you plan to operate and enter the market. Prepare a business plan that would describe the scope of your business, forecast your sales and expenses, as well as list down potential pitfalls so you can visualize all possibilities and make preparations before they actually happen. This will help minimize your risks once you start your operations.
Make sure that your business plan properly defines your target market, your closest competitors, as well as potential partners and suppliers so that everyone involved in the business would have a clear understanding of the direction you want to take. If you are interested in retail e-commerce, you need to come up with a compelling merchandising strategy that would set your store apart from similar stores available online.
Aside from these, your plan must include a cost analysis to determine your fixed costs and operating expenses, as well as how much revenue you would need in order to break even versus how much is needed to make a profit. You also need to take these aspects into consideration when pricing your product or service.