Starting An E-Commerce Business

The development and expansion of the Internet has made business opportunities, once only available to the wealthy, available to nearly everyone. In the past, opening a business was a huge commitment in terms of finances and risk. Traditional business owners had to quit the their current jobs, obtain bank financing, and sign leases before they even made a penny. It’s easy to see why 95% of them failed within five years. Today, business opportunities are available to anyone willing to put in the time and effort to learn about the world of e-commerce. Best of all, you can start an e-commerce business with minimal funds and very little risk. This guide will take you though the steps necessary to start your own e-commerce business.

Find Your Niche

The first step to creating your own e-commerce business is to find you niche. Examine your hobbies and interests for potential business ideas. If you love soccer, consider selling soccer supplies or team uniforms online. You may also consider opening a business that is similar to your current job. For example, as a nurse you may know a lot about medical supplies and how hospitals obtain them. You could start a medical supply business. Your contacts and industry knowledge could give you an advantage over a competitor who does not know the inner-workings of hospitals the way you do.

Research The Demand

Now that you have a few business ideas, it’s time to research the demand for your products or services. If you plan to sell to the general public, you’ll want to find out how many people are looking for your products or services. As a small business owner, you will not have the marketing funds to create a demand for a product. The products you sell, must already be in demand. A great way to determine product demand is to see how many people are searching for a specific product. Overture has a wonderful keyword tool (http://inventory.overture.com/d/searchinventory/suggestion/) that displays the number of searches for specific keywords. It will give you a good idea of which products are popular and the specific keywords you should target when building your website.

Scope Out Your Soon-To-Be Competitors

Before settling on a business idea, scope out your would-be competitors. Visit their websites and compare the following:

· Professional Look & Feel

· Products and Services

· Search Engine Ranking

· Page Rank (Available on the Google Tool Bar)

· Keywords

· Back Links (how many sites link to them).

You’ll need to know your competitor’s websites inside and out. Spend some time exploring each one. This will give you an idea of what you’re up against. Keep in mind, that your website will need to be equally as professional or better than theirs. Don’t worry if you don’t think you have the technical skills necessary to create a professional website. The use of professional website templates will be explained later.

While you’re researching your competitors, check to see if the products you intend to sell are sold at large department stores such as Wal-Mart, Target, and Amazon.com. It is very difficult for a small business to compete with these large companies because the profit margins are extremely low. You’ll need to sell products that are in demand, but aren’t sold by corporate giants.

Establish A Business Entity

In order to conduct business, you need to establish a business entity. Fortunately this can be as easy as filing a “Doing Business As” or “Fictitious Name” form with your local County Clerk’s office to become a sole proprietor. When you arrive at the County Clerk’s office, they will check their records to make sure your intended business name is not already in use. If it’s available, you will need to complete the appropriate forms and pay your filing fee. Each state has different requirements. Check with your state for requirements on becoming a sole proprietor.

You will also need a sales tax id. You will need to charge sales taxes in the state where your business resides. Contact your county office for details about sales tax ID’s and any other requirements they may have.

Open A Business Bank Account

Now that you are a legitimate business owner, it’s time to open a business bank account. Take your court documents to the bank and open a business checking account. Most banks offer a variety of business accounts. Choose the one the best meets your needs. It’s usually best to start with their least expensive account because it could be a while before you start earning revenue. You can always upgrade in the future.

Some banks require a business owner to wait specified amount of time, usually 90 days, after the court documents are filed before opening a business bank account. These rules are in place to help prevent fraud. Check with your bank to obtain waiting period information.

Choose A Domain Name

While you wait to open a bank account, you can start building your website. First, register a domain name. Names that end in “.com” are best. If possible your, domain name should include one or more of your target keywords. For example, if you are creating a yoga supply business, you’ll want to choose a name with the word yoga, such as yogacenter.com, yoga-supply.com, or yogastuff.com.

Create Your Website

One of the keys to successful e-commerce businesses is a professional website. Your website is the first and often the only impression your visitors will have of your business. A professional website can be the difference between your visitors viewing you as a home-based business operating out of your garage and a multi-million dollar business with hundreds of employees. Fortunately, you don’t need to be a web programmer to create a professional website. There are companies that sell professional website templates. You can get website templates for free, but it’s much better to pay for a highly professional template. To find these templates, simply search for “website templates”. You should expect to pay $50 – $150 for a good template with multiple pages and professional images.

Most website templates can be customized with common HTML editors and a simple graphics program. Templates can be edited without having to invest a lot of time and energy into learning how to code web pages.

You’ll want your website content to target specific keywords. This can be achieved by creating articles, product reviews, product comparisons and detailed description of your products. Avoid repeating the keywords so often that the text becomes difficult to read. There is a fine line between good copy text and spam text. Spam text is designed to increase your site’s listing in the search engines, but often backfires when penalties are issued and your website is dropped from the listing.

Host Your Website

Now that your website has been created, it’s time to find a company to host your website on their servers. You should be able to find a good hosting company for around $10 per month. This fee should include technical support and email accounts with your domain name. Domain name-specific email accounts are important for a professional image.

Your website files can be uploaded with a simple FTP program. The hosting company’s technical support personnel can walk you through the steps to upload your files and launch your website.

Implement A Shopping Cart

No e-commerce website is complete without a secure shopping cart. There are many shopping cart options. Many e-commerce business owners make the mistake of using Pay Pal to accept payments, which immediately tells visitors that their company is very small and not professional.

A good alternative to Pay Pal is a remotely hosted shopping cart. Remote shopping carts take the burden of maintaining security and credit card numbers off your shoulder and places the responsibility on another company. Remote shopping carts can usually be configured to look similar to your website. In fact, your customers may not realize that they have left your website to place an order. The remote shopping cart provider will give you the HTML to add to your website. When your potential customer clicks on the Buy Now button, he or she is taken to the remote shopping cart to enter the personal information and payment details.

Depending on your choice of a shopping cart, you may or may not need a merchant account to process transactions. Some shopping cart services allow you to use their merchant accounts for a slightly higher fee.

Stock Your Inventory

Now that your website has been created, it’s time to stock your inventory. The first step is to find the manufacturers of the products you wish to sell. You can find this information by reviewing your competitor’s websites. Some of them may list the manufacturer with the product name or description. Once you have the name, you can search for the manufacturer online.

Contact the manufacturer and tell them that you are interested in becoming a distributor. Ask for a wholesale price list and an application. The price list will help you determine if the profit margins are high enough to justify selling their product.

You’ll want to ask the manufacturer the following questions:

· What is the MSRP (Manufacturer Suggested Retail Price) for the item?

· Am I required to sell the item at MSRP?

· What is your minimum order quantity/amount?

Some manufacturers will not sell to e-commerce businesses that do not have a brick and mortar retail location. If this is the case, you’ll simply have to find a company that manufactures a similar product and is willing to sell to an e-commerce business.

Promote Your Business

Now that your website is live and you’re open for business, it’s time to promote your website. If no one knows that it exists, you will not receive any sales. Most website visitors originate from search engines. Before search engines can list your website, they have to know that it exists. You’ll need to submit your website to search engines and directories such as Yahoo!, DMOZ, Excite, and others. Search engine submission programs and services are available, but they not effective. Most good search engines require websites to be manually submitted. They enforce this by displaying an image with a series of letters or numbers that automated programs cannot read. The code embedded in the image is required to submit your website.

Search engine algorithms are extremely complex. The ranking of a website in their search results depends on a number of factors, including keywords, density, back links, page rank, and other factors. After submitting your website to the major directories and search engines, the next step is to establish back links. When search engines crawl the web and find a link to your site, they count the link as a vote for your site. The more votes you have, the higher your site will rank (assuming other criteria has also been met). You can acquire back links by sending emails to other website owners and offering to exchange links. It’s very difficult for new websites to acquire back links. Most people prefer to exchange links with established websites. In a way, it’s a catch-22, but it can be done and the results are worth it.

Starting your own e-commerce business is a lot of work. Making it successful is even more work, but the pay-offs can be rewarding. Thanks to the explosion of the Internet age, e-commerce business opportunities are now available to anyone with a computer, a few hundred dollars for start-up costs, some spare time and the desire to create a business.

Copyright 2004 Danna Henderson. All Rights Reserved.

About the Author
Danna Henderson started ZIP Baby in order to provide parents with comprehensive potty training information as well as a large selection of potty training products. For more information about potty training, or to browse the potty training store, visit potty chairs & more.

Written by: Danna Henderson