According to Insider Intelligence, the ecommerce industry is expected to be worth $1.06 trillion in 2022. Did you ever wonder how can you be part of this industry? Do you want to know how to start an eCommerce Business on a Tight Budget? Continue reading to learn how….
While the number $1.6 Trillion might have seemed outlandish a few decades ago, the likes of Amazon, Etsy, and eBay are world-class examples of how successful a well-run ecommerce company can be. But here’s the best part:
If you’ve ever thought about starting a business, ecommerce is one of the most effective yet low-cost business ideas out there. But before you fire up that brand new blog and start throwing up ads, there is still the reality that only 30 percent of new businesses are able to survive the ten-year mark.
As such, if you want to break into this trillion-dollar industry, you’ll want to make sure you understand what you’re getting into. Keep reading to find out how you can get your ecommerce company off the ground without spending much money.
The Planning Stage
You wouldn’t expect an army to go into battle without a plan. Why? Because the stakes are too high.
When you’re planning to launch and run an ecommerce brand, your livelihood and your professional future are on the line. Here are some steps that you’ll want to take before you do anything else:
1. Decide on a Product
There are some businesses that struggle to break even despite having incredible launches. Sometimes the reasons for these cashflow issues are related to spending too much in the wrong places. But in many cases, new ecommerce companies fail to gain traction because there’s a problem with the product they’re providing.
As a general rule of thumb, you’ll want to choose a product that:
- Solves a problem for people
- Is in demand
Market research can often answer these questions for you. And if you’re a member of your target demographic, you have an even better shot at developing a product that hits the bullseye on both points.
Once you’ve nailed down your flagship offering, you’re ready to go to the next stage of your business planning.
2. Figure out How You’ll Source Your Product
What do computers, lumber, and video game consoles have in common? They’ve all been impacted by post-COVID supply chain shortages.
In the future, your business might be faced with price increases on your raw materials. But even with all of that happening, your customers will still expect you to deliver the goods they’ve paid for.
There are multiple ways that you can deal with the sourcing issue.
Some entrepreneurs will make their items themselves before selling them. Others will purchase goods from abroad to sell at a markup.
Regardless of your exact approach, you’ll want to work closely with reliable manufacturers and suppliers. Because you’re operating on a tight budget, however, you may have to spend some time shopping around. You’ll want to find a reasonable balance between your sourcing costs and the need to put out a high-quality product.
3. Refine Your Business Model
Here’s where you can attach direct savings to your business model. And fortunately, there are multiple ways that your ecommerce business can do exactly that.
For future entrepreneurs who want to launch at the lowest price possible, dropshipping will allow you to pay for the product after the customer pays you. This allows you to put in less money upfront.
However, if you’re able to store inventory, you can often increase your margins on the strength of the cheaper per-unit costs.
Self-producing a product yourself may be your best option on a dollar-per-dollar basis. However, there comes a point where you have to factor in the cost of your time.
To that end, if you can find a sustainable, low-cost model for your ecommerce business, you’ll be well on your way to launching a budget-conscious brand.
4. Figure Out Your Unique Selling Proposition
Unless you’re the business equivalent of the person who invented the wheel, chances are that you’re selling a product that’s already been sold by another business before. However, just because Nike is already selling shoes and casual athletic clothing, that doesn’t mean that your running shoe startup doesn’t stand a chance — you just need to find your unique selling proposition.
In simple terms, your unique selling proposition refers to the qualities and characteristics that make your ecommerce business different from all the rest.
Are you manufacturing your products more cheaply and passing those savings on to consumers? Is there an origin story behind your product that would make potential buyers sit up and take notice?
If you can find a compelling USP, you’ll be well ahead of the curve.
Getting Your Business up and Running
Before you can learn how to run a digital business from home, you have to start by making sure that your company is ready for primetime. To that end, you’ll need to set up your online business the right way
1. Consult With the Right Professionals
What’s the difference between a sole proprietorship and an LLC? If you choose to set up an LLC, what are the tax implications?
In 2020, businesses paid almost $5 billion in civil penalties. And to make matters worse, many of these tax problems likely could have been avoided with the help of an experienced CPA.
When you’re selling a product to the public, there’s another concern that you’ll want to be aware of:
Lawyers are expensive to retain if your business is sued by an unhappy customer. In addition, if your customer or employee data is held for ransom by hackers, you can lose a lot of money if you’re forced to pay for everything out of pocket.
Having the right commercial insurance can help you protect your bottom line.
2. Look for Funding Sources
In the first half of 2021, venture capitalists invested $288 billion. If you happen to have friends in Silicon Valley, then you don’t have to worry too much about securing funding.
But the reality for many ecommerce startups is that aspiring entrepreneurs are often forced to bootstrap or secure supplementary funding from other sources.
Alongside the option of applying for a Small Business Administration loan, it’s also possible to find grants for small business owners and grants for ecommerce companies. Some of these options may be competitive to apply for, but when you’re operating on a shoestring budget, every dollar counts.
3. Set up Your Platform
Are you planning to sell on your own website? Are you planning to sell through the Amazon FBA program or on Etsy?
Regardless of how you intend to monetize your business, it’s important that you’re able to spend time making your online presence look polished.
Get a dot com website domain if you can. Use pictures and bullets to craft the most eye-catching Amazon product description that you can.
In copywriting and marketing at large, the experts are always talking about the importance of leading with benefits. This is where the work you’ve done with your USP will really pay off.
Maintaining the eCommerce Business
You’ve got your first few sales. Your website and your online stores are all looking good. What are some best practices that you can use to keep the momentum going?
Here are some budget-friendly best practices for ecommerce startups:
1. Stay Lean
In the business world, it’s not unusual for entrepreneurs to get a taste of success and then immediately start hiring. While having more employees around can do a lot of good for your work-life balance, you may be better off staying small for as long as possible.
When you have a smaller workforce, you don’t have to worry about bloat or keeping up with increasing overhead costs. By staying lean for as long as possible, you can do a lot to lower your expenses.
2. Focus on the Customers
Have you ever dropped a company after a bad customer experience or an under-the-radar product reformulation? Businesswire noted in 2022 that 86 percent of consumers will leave a business after a couple of bad experiences with the company’s customer service.
Although we’ve just talked about the importance of staying lean and keeping costs low, you don’t want to do those things at the expense of your buyers. It’s often been said that it’s easier to retain customers than it is to find new ones.
If your ecommerce brand is constantly rolling out new product lines and exciting accessories, you’ll want to make sure that you have your finger on the pulse of what your customer is looking for.
3. Start a Blog
Okay so technically your marketing method doesn’t have to be an SEO-oriented blog. But whether your advertising platform of choice is Facebook, Google, or Instagram, you should still have a low-cost marketing method that generates results for your business.
Are you solving problems for people? Is your content addressing people’s pain points?
Marketing is often the difference between successful startups and ones that struggle to find their footing.
Starting an eCommerce Company Doesn’t Have to Be Expensive
On paper, there’s a lot to like about running your own business. Even so, however, the phrase, “It takes money to make money.” has convinced many would-be entrepreneurs to avoid creating their own ecommerce brands.
While it’s true that the journey from new startup brand to established company often takes more than publishing a blog and hoping for the best, launching with a small budget is more than possible. But if you’d like to know if starting an online business is worth it, the answer is a resounding, “Yes!”.
Now that you read our article, How To Start an eCommerce Business on a Tight Budget, Did you enjoy this post? Check out the rest of our business articles to learn more about becoming an entrepreneur.