Did You Know?
According to a report on the Forbes website, U.S. online retail sales are estimated to reach USD 370 billion by the year 2017.
Starting a successful online retail business is a lucrative and interesting way to become an entrepreneur. However, you must be aware about certain things which are vital for the sustenance of your business idea. For example, you will require the necessary business licenses to start operations. So, check with your local, state, and federal authorities regarding the same. You will have to create a thorough business plan which will give a definite structure and flow to your idea. You should be completely aware about the costs of starting an online retail business before you kick-start your venture.
Firstly, starting an online business can be cost-effective as compared to starting a full-fledged retail store. However, it will require some serious investment in website development, marketing, advertising, product acquisition, logistics, manpower, etc. It is important that you choose and register a catchy business name and a URL of the same name so that customers will be able to identify your business easily. You must conduct a thorough market research to invest in a profitable product category. If you want to know more about how to start a successful online retail business, read the following points.
Decide the Product/s
» There are several products or services which you can choose from in order to start an online retail business. If you intend to sell products, you can offer clothes, accessories, shoes, digital devices, appliances, books, home decor items, etc.
» You can also offer music or e-books download in various formats which are compatible with specific devices. If you choose to go with the latter, you will require special legal sanctions so that you do not infringe any DRM laws and regulations. Conducting an in-depth market research will help you understand your target market and its preferences in a better manner.
» You can contact a wholesale supplier, high-end brands or handicraft makers for your products. You can also source your products from websites like Alibaba. Also, initially, it is essential that you choose one niche, and then keep adding various product lines as your business expands. This will help manage your business better in the early stages.
Use Inventory Management Software
» You will have to stock up on your inventory even before your online retail store goes live. For this, you will require a full-fledged inventory management software. Such software are usually cheap, and you can interlink them to your website, to keep a direct tab on the stock.
» You will have to hire a warehouse to store all your products. You will have to hire employees to prepare the products according to the order, and hand it over to the delivery personnel with accurate delivery addresses. You will have to ensure that you have stock of enough quantities of all products. If you are offering women’s or men’s clothing, you will have to stock a single item in varying sizes. Similarly, if you are offering footwear, you will have to store shoes of the same make in different sizes.
» Always anticipate the demand, and place an order accordingly. If you are overstocking your products, you run the risk of investing in products that may not sell or run out of fashion easily. Also, keeping an ‘out of stock’ tag on a popular item for too long will drive away your customers.
Open an Online Store
» You have the option of starting a web-store on Etsy or eBay, but it is always advisable that you start an independent website for your business sooner or later. Hire a professional for developing your e-commerce website. Study a few online retail websites to know about the elements that are user-friendly and popular. Most users should be able to find their desired product in not more than 3 clicks. Hence, you should have proper product filters and search options in place.
» The look and feel of the website, its font, color pallet, design, etc., should complement the products that it offers. Also, the products should be attractively displayed with at least 4 different photos. If you want to display the actual size of a piece of jewelry, you can have a photo with the model wearing it. You must mention the product information like materials, measurements, storage, cleaning, etc.
» Hire a copywriter to write down product descriptions that will fan the interest of the customers and help them make a decision. Also, you will have to guide the customer by offering helpful reviews. You will also have to mention the accurate price, modes of payment, days of delivery, provision for a wish list, etc.
Clearly Mention Rules and Policies
» It is important that your online retail store’s policies are mentioned on the website to avoid any kind of confusion. You will have to clearly mention the return, refund, payment, and delivery or exchange of damaged goods policies. Similarly, you can have a quick FAQ section for your customer queries.
» Many people allow a return policy of 30 days, provided the item has been sent back in the exact condition. You will also have the right to decide whether or not the item is in a condition to be accepted back against a refund.
» You must also mention the number of working days after which the order shall reach the customer. If you are levying additional charges for overnight couriers on your products during holiday or festive seasons, then you will have to mention it clearly in the policy section. All this will definitely help you when catering to customer queries and complaints. It will also act as a guideline in case of conflicts.
Prudent Customer Service
» As customers today are more aware, they research about a business or service before placing an order. They will search for reviews on websites, forums, social media pages, etc. If your business has a ‘not so good’ reputation, consider the repercussions.
» To avoid such issues, you will need to support your business with a prudent customer service. Initially, you can personally take calls as hiring a 24/7 service may not be affordable. However, as the business expands, you can outsource this activity to a reliable customer service agency.
» You will also require a toll-free number so that customers can call for product inquiries. You must ensure that emails are answered within 1-2 working days to maintain a reputation among the customers. Also, as the customer service personnel will represent your business; hence, you must lay down guidelines on how to respond to customer queries and complaints.
Ensure Easy Order Placing and Billing
» Remember, the easier it is for a customer to make the payment, more are the chances of him returning to your website. You can visit websites like Volusion and Shopify to get a good e-commerce software which will enable you to customize it as per your business requirement. This will help in deciding the order placing mechanism, shopping cart, and billing.
» You will have to ensure that you accept all modes of payment like debit card, credit card, cash-on-delivery, etc. It is important that you use ‘secure modes of payment’ as it will create a sense of reliability among customers.
» You can also enable payments by creating merchant accounts on PayPal and Google Wallet. Many people prefer to make payments through these websites. Ensure that your customers know that you will be storing their payment details for future references.
Ensure Effective Logistics Management
» You will have to partner with a courier company to deliver products to the customers. Ideally, it will be cost-effective to hire a single agency who can cater to your domestic as well as international logistics needs.
» You will have to negotiate rates with the courier company. It is advisable to call for price quotes from several vendors so that you can benefit from competitive prices. Also, you will have to ensure they pick up products from your warehouse, and deliver them to the customers. The agency should be reliable enough to return the cash-on-delivery money.
» While estimating the cost of the product, you must calculate the shipping and handling charges for the product, which may be higher for international destinations. You will have to add these charges to the total cost. Many people charge a certain amount if the price of the product is low, and allow free shipping if the cost is higher. However, they ensure that the shipping and handling charges are already covered in the total price.
Employ Effective Marketing and Promotion
» You will have to undertake every marketing and promotion strategy to reach-out to your target market. This will include advertising through billboards, online banners, TV and magazine ads, radio commercials, etc. You must ensure that you incorporate various themes like valentines day, children’s day, mothers day, holiday season, etc., in your website design to generate customer interest.
» Apart from this, you should invest in Facebook paid ads to reach out to the numerous Facebook users. You should create interactive pages for your store on Facebook, Twitter, Pinterest, Flickr, Tumblr, etc., and link it back to your website to route traffic.
» You must use SMS and e-mail marketing to inform your existing customers about new stock or offers. You can also offer discounts and freebies to shoppers. Many websites also offer coupon codes, redeemable reward points and discounts to people who shop for a certain amount. As this business is highly competitive, you will have to promote it aggressively to stand out from a plethora of other retail websites.
Keep Track of Business
» To know exactly how your business is faring, and for the effectiveness of your marketing campaigns, you will have to understand the analytics. You can use Google Analytics, which is absolutely free, in order to know about the traffic your website attracts and its demographic. You can also plug in to Google’s Ecommerce tracking for better understanding of your online business. You can obtain vital data regarding popular products, bounce rate, keywords that click, through these tools.
» Understanding all this will help you undertake necessary changes from time to time, which will work in your favor. Also, by tagging the right keywords, you will be able to increase traffic to your website. Try to have general as well as specific keywords which will help your website gain greater visibility.
» Apart from search engine optimization of your website, by studying the time spent by individuals on the site will help you ascertain which niche is becoming popular, and thereby, add more products to it. Similarly, you will also be able to determine new visitors, old visitors, and unique ones, and the peak time of visit. This can help you frame your promotional strategy.
Remember that you will have to plan special sales and discounts to do away with the remaining stock. Also, try to convince the bigger brands for joint branding exercises, this will help get publicity mileage as well as save you some cost. Test run your website and ensure that all the tabs are working. The last thing you would want is to go live with a website that has too many “coming soon” tabs. Also, try to create an app for your website so that people can access it easily through their phones. Do not forget to go through the tricks online stores use to make you shop in order to get an insight in some smart marketing tactics. Now that you know about the things to keep in mind while starting an online retail business, ensure that you take your venture to new heights by introducing new product lines from time to time based on customer understanding.