Hey guys! Let me give you a bit of an introduction to what an eCommerce store is and how the process of selling something online works.
So eCommerce is basically the process of selling and buying products or services online. At it’s core, it is not much different to retail in physical business, it is still people and other businesses buying stuff. However, it is vastly more flexible, because it offers you the ability to extend your reach, automate transactions, as well as track and understand your audience at levels previously unimaginable.
Through the power of the internet, software applications and website builders available to us, selling online is simple and fast to set up, and substantially more scaleable!
Let’s explore more of how it works!
The eCommerce Process
To get a better picture of eCommerce, let’s first understand a few basic categories of commerce in general:
- B2C = Business to Consumer – This is probably the one we are most familiar with, as we are typically on the ‘C’ side of the transaction. This is where businesses sell direct to the consumer and is often performed through a website. Amazon is one of the largest B2C eCommerce stores in the world.
- B2B = Business to Business – This is where businesses sell directly to other businesses. Alibaba is the largest B2B company and a great place to find suppliers and manufacturers for products to sell online.
- C2B = Consumer to Business – This is typically where consumers request a certain service to be completed and businesses compete to win the opportunity to provide that service. Freelancing type websites are the most common example of this like Upwork.
- C2C = Consumer to Consumer – This is where consumers sell directly to other consumers and Etsy is a great example of this.
Here at Inspire Entrepreneur we are looking to create online businesses, so we will fall into the categories of B2C or B2B. Either selling our products direct to consumers, to other businesses, or a combination of both.
I am going to focus on products, because services are much less scalable and do not typically lend themselves to separating your income from your time. This is unless you employ many people to perform the services for you and scale that way. Entirely possible, but something I currently have no experience in… maybe something for the future.
The next step is to understand the different types of eCommerce supply chain processes. The aim is to understand the process of how products get from the manufacturer to the end customer.
There are three main categories that will work best for us:
- Digital Delivery – This is by far the easiest form of product delivery, as your products are in a digital format (PDF, Excel, MP3 etc.) and be downloaded direct from the website after purchase. No shipping, no inventory/storage, no returns are required. It will probably allow you to have the least overhead, the highest margins and most scalability. Sounds great doesn’t it! It is, however the work comes in upfront in terms of creating something that people want to buy.
- Dropshipping – This is next level up in terms of supply chain complexity, where you offer products on your website and when purchased, the product is drop shipped direct from the manufacturer. This means you do not need to handle shipping, packing or inventory. You will still typically handle customer service and returns, and you are fully accountable for the products quality, functionality, service etc., as you are still the one selling it.
- Warehouse Fulfillment – Probably the most common, most complex, but with the most control. This method requires you to handle the entire process from manufacturer, to storage warehouse, to packing and shipping, to customer. There may be extra steps in there, such as importing from the manufacturer (if overseas), and possibly having your storage facility different to your packing and delivery facility. Typically, you would outsource most of this to fulfillment companies, that take care of the storage, inventory (stock tracking), packing and delivering all-in-one.
Here is an overview of the potential supply chain flow:
Manufacturer ⇒ Shipping to Warehouse ⇒ (Import to Country) ⇒ (Customs Clearance) ⇒
Storage Warehouse ⇒ Inventory (Stock Counting) ⇒ Order Received ⇒
Picking (from Stock) ⇒ Packing & Kitting (Multiple items) ⇒ Shipping to Customer ⇒ Customer ⇒ (Returns)
A lot to consider I know, but once you get into it there are may methods to outsource this work and reduce you worry and stress!
How to Get Started With an eCommerce Store
While the process of how you get a product to a customer looks overwhelmingly complicated, once you breakdown it all it’s straight-forward and executable! Starting at the very beginning you need a few key components:
- A Target Audience, also known as a Niche – it is important to define this before you go picking a product to sell online.
- A Product – there is a methodology to picking the best products to sell online that lend themselves to better profits, scalability and automation (less management).
- A Website – you need a domain name and somewhere to host the website.
- An eCommerce Platform – this is usually integrated within your website, or your website is the platform itself, but essentially you need a digital store to showcase products and perform transactions.
- Fulfillment – this is can be one 3rd party service or numerous, but you need everything in place to get the product from the manufacturer to your customers, in time. There are many things that add complexity here, like importing, but it is often unavoidable and this is where you need to understand all the costs and time involved to decide if it is viable.
- Customers – of course! This is where online marketing provides you will the ability to reach your target audience and bring in customers.
To help with understanding this all and to guide you through your journey of starting your first eCommerce store, I have created an in-depth guide for starting an online business. Follow the steps through and it will give you a solid start to creating something remarkable!
You can also learn more about selecting the best products for eCommerce which will give you a better understanding of the numerous things to consider.
One of the best eCommerce platforms available is Shopify, where you create your entire store and website through the online system. Definitely worth checking out, but know that you can also set up a store as simply as a creating a website and having a “buy now” PayPal button.
Let’s get into some pro’s and con’s of starting an eCommerce business.
- Can be Reasonably Cheap to Start – The cost of a domain (typically $15/yr), the cost of website hosting ($60 – $100/yr) and the cost of an eCommerce platform about ($100-500/yr depending on functionality).
- Cash Flow can Begin Early On – Once you have your online store up, you can begin to receive cash flow straight away. It is of course dependent on people reaching your site and purchasing, which comes down to your marketing and product offering.
- The Potential of Becoming a Passive Income with Automation – The power of eCommerce platforms and integration between platforms, such as your store and your warehouse, allows you to automate almost everything. This can greatly reduce you management hours, allowing you to focus on other endeavors.
- Potential to Earn a Full Time income and Much More – This doesn’t happen overnight and it definitely doesn’t happen without work and learning skills of online business. However, with time and the enormous scalability of eCommerce you can create a booming business with 6 or 7 figures not unheard-of!
- Sell What You are Passionate About – Often it is the products that we buy the most where we can really understand the customer’s wants, because we are a customer ourselves. As a result, if you have a passion for something, you can definitely find or create products to sell in this area.
- Many Avenues for Bringing in Traffic – There are many ways in which you can get your website and brand out there. Social media, paid search engine advertising and email marketing are just to name a few.
- You Don’t Need to Know How to “Code” Websites – There are website builders that do this all for you!
- You Can Do it as a Side Hustle – You can most definitely create a website outside of you normal working hours and build your way towards a bit of side money or even completely replacing your income! Many people have done it before us and many more will.
- Inventory and Shipping Potential Required – Unless you have a digital good or are drop shipping, you will need to consider inventory, shipping and fulfillment services. This provides additional costs and reduces your margins, however allows better control and sometimes you simply have no choice for a given product.
- You Need Some Understanding of the Internet and Computers – But I would argue you who doesn’t these days, and if you don’t then it is something that can be learnt! You just have to be willing to!
- Many More Considerations than Other Types of Online Businesses – The complexity of selling products online, apart from digital products, is sometimes considerably more complex than other online businesses like affiliate marketing for example. This is because there are typically more 3rd party services involved and you are responsible for a large part of the product supply chain.
Starting an eCommerce store is one of the most common types of online businesses, and is definitely a great way to get your start in the online world. A single product eCommerce site was my first online business, and what I learnt gave me a great understanding and appreciation of the entire supply chain process, as well as the power and availability of tools on the internet.
If you are inspired to start an online store for yourself, please check out the step-by-step guides I have created to help you through this and point you in the right direction.
Are you ready!? Yes! Then get pumped, get inspired and let’s create a remarkable business!
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Let’s Do This!
After you have a basic understanding of eCommerce, you can get started with my online business guide.
Check out Shopify as a potential platform to help build your store.
Ask me any questions you might have.
Continue your journey!
Is this for you? Please let me know your thoughts on eCommerce as an online business in the comments below!