The one thing that many entrepreneurs have learned over the years is that an online business is only as good as its digital storefront. Even assuming you had access to the best and most effective marketing campaigns available, there would still be a high probability of your customers failing to convert if your site cannot facilitate a smooth transaction process.
And while this article won’t go on to explain the process of launching an initial online store, it will attempt to provide answers to some of the questions you’ll most likely have in regards to whether or not now is the right time. Take this opportunity to ask (and answer) the following:
1. What are my barriers to entry?
Setting up an online store is first and foremost about analyzing your position within the marketplace.
Depending on what you’re selling, there may be certain restrictions in place or licensing and registration issues that prevent people from establishing businesses with relative ease. This can also work to your advantage, as the more difficult it is to organize a business legally, the fewer competitors you’ll have.
2. How do I define my target market?
When considering the best way to proceed with your online store, your primary concern should be given to how you will go about finding and attracting new customers. This can only be done if you know your niche market, as well as which consumers are most likely to buy into your business proposition.
And while this is a relatively straightforward process, it is time-consuming. Don’t rush yourself in these early stages, as defining your target market underpins the success of all your efforts online.
3. How do I estimate the size of my market?
Once you’ve identified your niche you’ll need to know how many people it contains. There should be enough people searching for what you offer but not so many that competition forces newcomers out—just keep in mind that your market can grow as your business expands and refines its focus over time.
4. Is my product trending or in decline?
Ask yourself honestly if your idea is commercial enough and whether you’re entering a market in decline. One example is the booming fitness tracker industry. With so many me-too products flooding the market, it would be easy to get lost in the commotion. That’s why Withings seems to have a hit on their hands with their upcoming Activité Pop; it doesn’t look like the rest of the gadgets on the market today, and offers a unique experience with an incredible fitness tracking dashboard. They’re still going to fight a tough battle for relevancy, but they’re off to a good start.
If your wares are personal or creative in nature you’ll need to spend a large amount of time building up a strong brand identity. In such instances you will be promoting yourself and your business, as opposed to advertising the features and benefits of your product, but that doesn’t mean they aren’t still important.
5. What are my mark-ups and price points?
You will need to figure out the base cost of producing your product and what your margins are before you commit to ordering large quantities of anything. Ultimately, this has a lot to do with how your target audience assigns value and more specifically, how much they would be willing to spend on your product before it becomes too expensive and they cancel their shopping carts.
6. How can I go about adding value?
Value can be added in many different ways, and once you do, you’ll find that new and more meaningful relationships will begin to appear. The more unique your product or service is, the more valuable it will be perceived in the eyes of a potential consumer.
For example: Don’t invest all of your time in your online storefront—think also about the rest of your site and what kinds of resources you can offer.
As an example, I’ll turn you to McElroy Metal. While their site is, understandably, designed around conversion, they’ve also spent a lot of time creating a University page, which is focused on educating potential customers about how their products can be used.
7. What is my annual turnover?
No business would be where it is today if they hadn’t made a profit at some point along the way. While you don’t have to be too concerned with turning over more than you spend initially (as this will take some time), you should always keep this in sight as an overarching objective.
Be sure to consider how long it takes for your product line to refresh and what your turnaround times are. Once again, good research is critical, as you’ll need to accurately predict the behavior of the market in order to operate at your most efficient over the long term.
8. What is my projected growth and scaling?
Remember that you’ll need to give your business room to grow and adapt over time, especially if you want to survive online. Establishing your own business and getting yourself set up is a big step forward and can be one of the most rewarding experiences of your career. Keep track of your goals and remember to celebrate the milestones as you reach them.
Finally, allow yourself some flexibility and realize that it’s perfectly acceptable for you not to have all the answers to these questions up front. In fact, you wouldn’t be an entrepreneur if you did.