Gurus make it seem so easy. Sign up as an Amazon seller, and you too can live the laptop lifestyle from anywhere in the world. The truth is, you can do it, but it is far from easy. Online commerce is a field beset with challenges – 90% of these businesses fail within their first five years.
You will face hardship – how you respond will determine if you become part of the 10% who make it. Want to be in that club? In this article, we’ll share ten tips that will help you overcome the most common problems that online businesses face.
1 – Avoid selling commodities
Don’t try to sell mainstream goods like brand-name clothing or electronics online. You don’t have a prayer competing against the likes of Amazon, Walmart, or eBay. They get killer wholesale deals because of their ability to buy in bulk. Because of this, they can make considerable profits at razor-thin margins because of the sheer volume of goods they sell.
If you attempt the same, you won’t be able to pay your web hosting bills, let alone afford to live. Instead, focus on niche products. Think specialty hair-grooming brushes for Labradoodles, keto-friendly desserts – anything that focuses on the needs of a special interest group.
2 – Define a niche market
Everything marketing guru and their dog says to ‘niche down’. But, what does that even mean? It means moving beyond general demographic populations (e.g. men/women, kids, students, etc.) to focus on more specific subsets.
For example, instead of trying to find/sell a product to women, focus on women kayakers. This group is more likely to have needs the market isn’t adequately satisfying.
3 – Conduct market research regularly
Market conditions shift not just from year-to-year, but from month-to-month. Months after launching a niche product, competitors will come up with a cheaper imitation. Over time, this will hammer your margins, forcing you to adapt.
Don’t wait for other sellers to put you in a financially difficult position. Always be researching new niches and new products for ones you already serve. This way, when your margins begin to narrow on old items, new ones can pick up the slack.
4 – Embrace SEO
Many online store owners rely on PPC advertising to generate qualified traffic. This tactic is extremely effective, as those who click on text ads are generally prepared to buy. It can also get expensive – it’s not unheard of for small businesses to spend thousands of dollars per year on PPC.
For this reason, it pays to make your e-store SEO-friendly. SEO stands for search engine optimization – apply its principles, and you can improve how you rank for vital keywords/phrases. Starting a blog, writing keyword-rich product descriptions, and improving load times are ways you can move up the Google rankings.
5 – Establish a mailing list
Repeat customers are the lifeblood of a sustainable business. According to a study conducted by social media firm SumAll, 25%-40% of revenues come from recurring business. So many purchases people make are one-offs, though – how can you encourage them to shop with you again?
As experienced marketers say, it’s all in the list. Start by creating multiple sign-up fields for a newsletter on your site. Accompany them with compelling calls-to-action (e.g. special sales for newsletter subscribers) to drive conversions, and you’ll amass a list of dedicated fans.
Create content regularly (at least once per month), and you’ll keep people interested. Don’t sell incessantly, though – mix in useful content that informs to strike a balance.
6 – Shop around for payment processors
To make sales, you’ll need to have infrastructure in place to accept payments. Most opt for PayPal due to name recognition or opt for Amazon’s internal processor. However, this can be problematic, especially as your business scales.
Amazon, PayPal, and bank-based merchant accounts charge high transaction fees. It gets worse for international shippers, as their exchange rates differ dramatically with the interbank rate.
Fortunately, online merchants have an abundance of choice these days. Alternative financial currency service providers like OFX have margins of 0.5%-1.5% per transaction, and WorldFirst just announced they will be using 0.15% to 0.5% margins for their customers!
These numbers stand in stark contrast to the 4-5% that established payment processors charge. If you clear $100,000 in revenue, you’ll spend less than $1,000 in fees annually – 75% less than the big guys.
7 – Go global
Online business can be less complicated if you operate domestically. However, this can stunt the growth of your business, especially if you live outside the USA.
Even in America, consumers can only spend so much. Their wages are stagnant, student debt is high, and the cost of living continues to rise – for these reasons and others, look to international markets.
International shippers like UPS can help manage costs, while partners on the ground can assist with cultural issues. It is worth dealing with these obstacles, as global expansion affords many advantages.
For one, your selling hours will expand exponentially. While buyers in America sleep, your business will make sales during prime selling hours in Asia. Secondly, you can significantly mitigate seasonal reductions in revenue. If you sell custom snowboards, you can keep selling gear to Australians throughout the Northern summer.
8 – Make them an offer they can’t refuse
Even if you pick a profitable niche, you’ll still have to out-compete existing businesses. To rise above the noise, make an irresistible offer to your target customers. From bundling products to generous money-back guarantees, you can get people to buy without competing on price.
Pay particular attention to how you craft your PPC ad. Don’t just share how you add value – choose words that evoke an emotional response. According to experts, campaigns that rely on emotion convert at twice the rate of those with rational content.
9 – Provide as many communication channels as possible
Product descriptions don’t always contain all the answers a customer is looking for. If they don’t have the means to contact you, you’re leaving money on the table.
Most e-store owners offer support via e-mail, but this is a flawed approach for one crucial reason – time. Most successful entrepreneurs receive hundreds of e-mail messages per day. As a result, they might not get back to a customer inquiry for at least an hour or two.
In the meantime, the buyer may decide the wait isn’t worth it, choosing to buy on another site. That’s why providing other communication channels, like the phone or live chat, is so important. This way, a consumer can get answers in minutes, thereby securing a sale that you would have lost.
10 – Follow your passion
You don’t have to be head-over-heels in love with a niche to be profitable – but it helps. If you love skiing, selling gear associated with the sport will come naturally. If you’re selling rivets, but you don’t care about them, will you have the will to work late nights? If you have a love for business development, perhaps – but it’s less likely.