Starting an e-commerce business is a relatively simple and inexpensive idea. The biggest downside of this idea is the fact that a lot of people tend to underestimate the need for proper business infrastructure. Just because you can start an e-commerce business from your basement and focus on the drop-shipping e-commerce model, this doesn’t mean that you should actually do so. In order to figure out all that you need to get going, you need to write a winning e-commerce business plan. Here are six tips that should come in handy.
Validate your idea
The first thing you need to do here is to validate your business idea in order to check if these concepts of yours are something that will truly work in practice. Start by making a sample group consisting of your target demographic and make a survey regarding the features of your product/service. Check how interested they are and, more importantly, check just how big of a priority this item is for your target audience. For instance, pinball machines are an item that everyone would like to have in their home, however, they’re probably not going to buy one. You should also consider the logistics that go into these ideas of yours.
Four key elements
The first thing you need to know about the e-commerce business plan is the fact that it needs to contain four different elements. First, it needs to consist of a list of all must-have information (regarding the market, the product and the target demographic). Second, it needs to contain the list of all resources (both material and immaterial assets) that you need for success. Third, it needs a clear roadmap that depicts the growth and progression of your business on a timeline. Finally, you need to list all keys to success that lie ahead (things that need to happen for you to make it). Once you have these four ideas, you’re ready to get started.
Find your niche
The next thing you need to do is carefully select your niche. You can either provide goods for the general public or deal with specialists. When the latter is the case, you’ll see a lot fewer impulse purchases and a scenario in which, far more often, reason will prevail. For instance, when dealing with the retail of oilfield equipment, you need to have an offer that’s truly superior. Why? Well, because you can rest assured that your target audience A) has experience and knowledge in the field and B) aren’t afraid to do research.
What is your value proposition?
The next thing you need to consider is the objective value of your proposition in the eyes of your clients. The way in which you can make this estimate is fairly simple. Every purchase is an exchange in which both parties stand to gain something of value. What you need to determine is not just how much you can charge an item in order to make a profit, you also need to determine how much your audience is willing to pay for it. Then, you need to add just a bit more to the offer in order to ensure success. All of this needs to be foreseen in your business plan.
The next thing you need to consider is the ownership structure of your enterprise. Depending on the ownership structure, you’ll determine the liability, tax scheme and the command structure of the team. While a sole proprietorship is the easiest way out, there are a lot of downsides to this structure. Therefore, it’s better to go with LLC. Also, if you can team up with someone, running as general partnership might be the best solution.
Finally, in order to drive your business forward, you need to know who your target demographic is. You see, one’s demographic determines so many of their behavior patterns. It reveals to you which social media platforms they use. Second, it reveals their purchasing power, their buying habits, as well as the way in which they interact with your platform. How likely are they to use a voice search feature? Which device will they use to browse your website? All of this depends on their demographics, so do your research.
The very last thing you need to take into consideration is the fact that your business plan may give you the outline of your aims and activities in the business world. Still, from time to time, the circumstances will make you deviate from the business plan. Nonetheless, you should try to stick to it as much as you can in order not to stray too far from the path.