It's cheaper and easier to get into the e-commerce business than ever before. But that doesn't mean it's easy to succeed in the e-commerce business.
To find out what it takes, I sat down with Erik Huberman, CEO and founder of Hawke Media, a company that's worked with dozens of large and small e-commerce brands to help them develop sales and marketing strategies. Here, Huberman shares the keys to launching your own e-commerce business:
1. DO test your product.
It's hard for most entrepreneurs to admit, but sometimes your product is just not that great. Don't wait until you have put months into an e-commerce site to find out whether there is a demand for your product--start with friends and friends of friends. The old idea of "starting a business out of your garage" worked because it showed proof of concept and demand before any time or effort was put into the business.
Conduct surveys or try selling samples of your product before spending blood, sweat, and tears to launch a company online. Even if your product has legs, you should always test and refine first.
2. DON'T assume that people will just find your site.
You may laugh, but this is one of the most common misconceptions about running an e-commerce site. Too many entrepreneurs think, "We'll just launch it and make millions!"
No one will end up on your site accidentally--the Web is just too big. Every person who visits your new site searched, saw an ad, or was somehow told to visit your site. You need to have a plan to get traffic to your site in a very direct way, so enlist the help of a PR or advertising firm to assist with SEO efforts and getting back links to your site.
3. DO set aside a budget to test marketing.
Free marketing is awesome but usually not scalable. You need to get your e-commerce site to a scale that makes it worth the time you put into it. Sometimes this will require testing different marketing channels and strategies to find what works best for your business.
Remember: This is going to cost money! Make sure you have a budget set aside just for testing. It needs to be enough to test several channels, but not so much that it will cripple your business if you don't see ROI. Create a separate budget to pour into the channels that are successful. The best e-commerce brands test and retest every aspect of their funnel on a continuous basis--from layout to colors to flow to channels. All of these can affect your conversion in a big way.
4. DON'T bank on raising more money.
While it's worked for some companies, it has caused many to fail. If you don't set out to start a sustainable, long-term business, you're just adding to the many things working against your start-up.
It is much easier to call a VC and say, "We are profitable and need money to scale," than to say, "We need money just to break even." You're less of a risk if you can be sustainable on your own. Asking for money when you don't need it puts you in a much more powerful position.
5. DO listen to your customers.
As an online business, you'll hear from your customers the very day you launch. This doesn't mean you should act on everything they say, but you should definitely listen.
Your customers will point out things about your business you may have never thought of. After evaluating their suggestions, react quickly to build something even better than you could have on your own. Plus, when customers see you're listening, you'll create much deeper ties and foster brand loyalty.
6. DON'T try to be everything at once.
This seems to be a very common killer of e-commerce start-ups. When you launch, stick to what you're good at. If your goal is to curate and sell great fashion pieces, be a great merchandiser--and that's it. Don't start designing or manufacturing your own clothes. Don't try to build brand new technology--there are existing technologies that already make your job easy.
Vertical integration is expensive, and there will be plenty of time to use your uber-successful fashion site to start selling your own designs. In the beginning, just iron out your main strength. Once it's successful, dig in to new features and endeavors.
7. DO build a solid foundation before launch.
"We will cross that bridge when we get to it." This is a very common response eager entrepreneurs have for foreseeable problems. You obviously can't launch with every feature you want from the start, but make sure you have a solid foundation built.
Get organized, track your customers, and automate as much as you can before launch. Operations mistakes are very expensive to fix later on, so don't think you are saving anything by rushing.
8. DON'T give up quickly.
While realism is important, Seth Godin said it best: "It takes about six years of hard work to become an overnight success."
There are those that get lucky, sure. But 99.9 percent of success stories worked day and night to get there. It's important to know that it won't be easy and it won't come quickly. But if signs show you have a great product or concept, it's worth giving it a real shot. Pursuing your passion and success should be the only option.
9. DO have a business model that makes money.
The Internet community loves to paraphrase Jesse Eisenberg in "The Social Network": "We are keeping our cool factor and we can figure out how to make money later."
For a handful of game-changing technologies, this has absolutely worked. But for every other site that has tried this, it has failed. It's fine if you have to gain market share with a free offering, but know how that can turn into a profitable business--or you'll be setting yourself up to fail.
10. DON'T spend 12 hours a day sustaining your company.
You are the owner, the founder, the leader. If it takes most of every day just to keep up with your business, you will never grow.
If you're working 12 hours per day just to fill orders and can't afford to hire someone to do it at that point, your business isn't scalable. Strive to have to do less of the day-to-day work so you can focus on growth and scaling your business.