How to Start a Successful E-Commerce Business

How to Start a Successful E-Commerce Business – 6 Tips from Seasoned Pros

According to U.S. Census data , e-commerce sales are increasing at a rate faster than traditional offline retail sales, raking in approximately $190 billion in sales in 2011. So it’s no surprise that budding entrepreneurs and existing “bricks and mortar” businesses are turning to e-commerce as a business opportunity.

You only need to browse the SBA.gov Community Discussion Boards to see how many topics focus on how to start an e-commerce business!

Given this interest, I thought it would be useful to draw on the advice of Community members, many of whom are business owners themselves. So, if you’ve got questions about starting an e-commerce business, consider the following tips and recommendations, along with some useful links and resources that can help.

1. Decide what you want to do and define your niche

Knowing what you are going to sell, how, and to whom is a critical part of your business plan. Community members offer the following advice:

“ehrs” has this to say about finding your niche: “You really want to be 'specific' enough to get the right kind of customers and the least possible competition.”

“Lee Belcher” expands on this: “What I would recommend is first finding a niche in something you enjoy reading about or taking part in… The next thing you want to do is decide whether or not you are going to sell the products or be an affiliate of them.”

Lastly, “Jenr” reminds us that: “…(selling products) means you have added logistical issues such as shipping, storage and initial purchase of product.”

If you need help finding your niche or deciding what to sell, these blog posts can help:

• 6 Tips for Finding a Business Idea and Turning it into an Entrepreneurial Reality
• 5 Ways to Find the Right Niche and Target Market for Your Small Business
• Affiliate Marketing Basics

2. Have a plan

Starting any kind of business requires a documented plan. Without one, you’ll lack focus, overspend, and struggle to deal with the curveballs that starting and running a business throws. Community member “solsoly” learned this lesson:

“I started an online business two years ago... without any plan whatsoever, and I regretted it, because sooner or later you will find yourself in deep problems… not knowing what to do next. So! What I have learned is, make a plan!”

This blog post offers tips on writing a business plan: How a Simple Business Plan can Get you from A to Z, and Navigate all Things In-Between.

3. Fund your business at a low cost

Starting an e-commerce site needn’t be costly, as these two Community members explain:

“The only reason I can think of where you would need a loan is if you are actually stocking product to sell. Otherwise an online business should cost you next to nothing,” writes “Zholley”. 

“Zoltan” adds this: “I would not suggest you [plow] any significant money into it until you have gained some practical experience and gained some revenue stream.”

4. Build a website

“…a major factor in your success will be the creation of a website. Not all sites are created equal. You can spend a lot of money on a website. It may look pretty and busy but may not help you sell your product,” states “Jenr”.

For low-cost tips, read How to Start a Website for Free or Low Cost - 21 Tools to Consider. You’ll also need to know how to set up a merchant account.

5. Drive traffic to your site

Driving traffic to your site and increasing search engine optimization (SEO) is essential and one of the trickiest aspects of doing business online. Here’s what Community members have to say:

“Wolverine63” offers this advice: “Technically, you have over 3 million potential customers (at any given time) that are going [past] your online store. They are not aware of you unless you start doing some form of promotion... Start reading up on the various ways to achieve a higher search engine result… If you have the cash for it, you can always hire one of the numerous SEO firms to help you.”

“MinEn” recommends using Google Keyword Tool to improve SEO:“This tool tells you the number of people searching for your product each month” (based on specific keywords or phrases).

For tips on driving traffic to your site, read:

• SEO: 10 Essential Things You Need to Know
• Starting and Growing an Online Business: An Entrepreneur's Checklist – How to use online and offline channels to market your site
• Google AdWords Explained: Growing Your Small Business with this Cost Effective Marketing Tool

6. Don’t forget to follow the rules of the road

Don’t forget, you’ll also need to follow the basic steps involved in legally starting a business. These 10 Steps to Starting a Business can help. For a complete soup-to-nuts overview of getting started in e-commerce, read: Getting Started with E-Commerce - An Entrepreneur's Checklist..

E Commerce Business Models

E Commerce Business Models

E-Commerce or Electronics Commerce business models can generally categorized in following categories.

• Business - to - Business (B2B)
• Business - to - Consumer (B2C)
• Consumer - to - Consumer (C2C)
• Consumer - to - Business (C2B)
• Business - to - Government (B2G)
• Government - to - Business (G2B)
• Government - to - Citizen (G2C)

Business - to - Business (B2B)

Website following B2B business model sells its product to an intermediate buyer who then sells the product to the final customer. As an example, a wholesaler places an order from a company's website and after receiving the consignment, sells the end product to final customer who comes to buy the product at wholesaler's retail outlet.

Business - to - Consumer(B2C)

Website following B2C business model sells its product directly to a customer. A customer can view products shown on the website of business organization. The customer can choose a product and order the same. Website will send a notification to the business organization via email and organization will dispatch the product/goods to the customer.

Consumer - to - Consumer (C2C)

Website following C2C business model helps consumer to sell their assets like residential property, cars, motorcycles etc. or rent a room by publishing their information on the website. Website may or may not charge the consumer for its services. Another consumer may opt to buy the product of the first customer by viewing the post/advertisement on the website.

Consumer - to - Business (C2B)

In this model, a consumer approaches website showing multiple business organizations for a particular service. Consumer places an estimate of amount he/she wants to spend for a particular service. For example, comparison of interest rates of personal loan/ car loan provided by various banks via website. Business organization who fulfills the consumer's requirement within specified budget approaches the customer and provides its services.

Business - to - Government (B2G)

B2G model is a variant of B2B model. Such websites are used by government to trade and exchange information with various business organizations. Such websites are accredited by the government and provide a medium to businesses to submit application forms to the government.

Government - to - Business (G2B)

Government uses B2G model website to approach business organizations. Such websites support auctions, tenders and application submission functionalities.

Government - to - Citizen (G2C)

Government uses G2C model website to approach citizen in general. Such websites support auctions of vehicles, machinery or any other material. Such website also provides services like registration for birth, marriage or death certificates. Main objectives of G2C website are to reduce average time for fulfilling people requests for various government services.

E Commerce

E- COMMERCE

E business is the application of information and communication technologies (ict) in support of all the activities of business. Commerce constitutes the exchange of products and services between businesses, groups and individuals and can be seen as one of the essential activities of any business. Electronic commerce focuses on the use of ICT to enable the external activities and relationships of the business with individuals, groups and other businesses.^[1] The term "e-business" was coined by IBM's marketing and Internet teams in 1996.^[2][3]

Electronic business methods enable companies to link their internal and external data processing systems more efficiently and flexibly, to work more closely with suppliers and partners, and to better satisfy the needs and expectations of their customers. The internet is a public through way. Firms use more private and hence more secure networks for more effective and efficient management of their internal functions. In practice, e-business is more than just e-commerce. While e-business refers to more strategic focus with an emphasis on the functions that occur using electronic capabilities, e-commerce is a subset of an overall e-business strategy. E-commerce seeks to add revenue streams using theWorld Wide Web or the Internet to build and enhance relationships with clients and partners and to improve efficiency using the Empty Vessel strategy. Often, e-commerce involves the application of knowledge management systems.

E-business involves business processes spanning the entire value chain: electronic purchasing and supply chain management, processing orders electronically, handling customer service, and cooperating with business partners. Special technical standards for e-business facilitate the exchange of data between companies. E-business software solutions allow the integration of intra and inter firm business processes. E-business can be conducted using the Web, the Internet, intranets, extra nets, or some combination of these.

Basically, electronic commerce (EC) is the process of buying, transferring, or exchanging products, services, and/or information via computer networks, including the internet. EC can also be beneficial from many perspectives including business process, service, learning, collaborative, community. EC is often confused with e-business