How to start an eCommerce business - part 2
As with any business, something that's key to giving your new eCommerce idea the best chance of success is making sure it's as viable as you think it is. This is an important step, and the basis of formulating your business plan, which will determine where you direct your efforts to provide an end product that really appeals to your target audience. In today's post, we look at the steps needed to validate your idea before you commit to the significant amount of time, effort and money required to make your store a reality.
Nobody likes wasted time or money, and validating your business idea is a hugely important step to making sure the belief you have in your idea is actually based on the reality of what the needs of your ideal customer really are. Without taking steps to make sure your eCommerce store idea is actually a sound one, you're really not going to find out if it's likely to succeed or fail until you've already made a huge time and money investment, and your store is probably live.
Clearly this isn't the point at which you want to discover your store idea wasn't a great one in the first place. This would be a huge gamble with the very real potential of ending up with massive losses in both time and money, with absolutely nothing to show for it. So going ahead with your store idea without first validating it would clearly be a pretty bad idea.
So in today's post, we'll be looking at how you can ensure your store idea has the greatest chance of success by validating it with market research, and by looking at your closest competitors.
Validating your store idea
There's really two primary ways you can validate that your eCommerce store idea is a solid one. The first, and most direct way is to actually talk to a selection of your ideal customers about your idea and get their thoughts and reactions to it. The second is to look at your closest competition to see what's working for them and help you gather ideas on how you might be able to put your own unique take on approaches that seem to be working for them.
Market research, where you actually talk to some of your ideal customers is a great way to help you find out how customers interpret and understand what you're offering. But of course before you do this, you need to have a pretty solid idea of what you're offering yourself so firstly you can clearly explain it, and secondly you can answer questions from the people you're talking to.
While at this stage you should have thought about most aspects of your business, but you should also be open to feedback on ways in which your business idea might be changed and improved to better meet the needs of the customer.
Hopefully, you have significant expertise and knowledge in the area of business you're starting your store in. So bearing in mind the people you're presenting your idea to have only just heard it for the first time, you should take a balanced view on how much change you introduce based on your market research. Also remember that everyone of course is different, and the selection of people you talk to only presents very a small percentage of your target audience.
Generally speaking, if points are bought up which seem to be important only to a small percentage of the people you talk to, then those might be ideas you can put on the back burner for consideration further down the line, once you've catered for the majority. On the other hand, if a point is brought up which is important to the majority of those you talk to, and it's not something that you've already considered as part of your business idea, you'll almost definitely want to incorporate it as a must-have before launch.
Ultimately the public will vote on how much they like your store by what percentage of people actually purchase, and if there's elements missing that are essential to them, they're much less likely to actually buy.
Market research is typically done in 2 different ways, both with advantages and disadvantages, but it's probably helpful for you to do both if you can. The first method is a focus group. Here you're likely to get a wider, more diverse range of thoughts and opinions on your idea, and it can be a great way to confirm points you already thought were important. The downside could be that you're unlikely to hear as much from each individual as you might in a one-to-one setting, and it might not always be straightforward to get everyone together for a focus group.
The other method is one-to-one interviews where you're likely to get more focused, in-depth information. The range of thoughts each person presents is likely to be less diverse than in a group setting, but it's a great way to get more specific, relevant information from each individual potential customer. The downside here is that the data you collect could be less easy to interpret and potentially apply to your store idea as it's that much more applicable to just individuals.
If you can do both types of market research, then you should end up with a good amount of hugely valuable input directly from your ideal customer, which you can use to refine and update your business idea to fit customer needs and expectations even better.
Look at your competitors
Whatever area of business you're looking to venture into, there's always going to be competition. The days of finding a product you can sell, where there's actually customers to buy, and no competition are unfortunately long gone. There's always going to be at least a couple of established stores that you'll be directly competing with. In part one of this series, I also noted this, but from the perspective that you shouldn't expect the competition to do anything to make your life easy.
However, there is one massive plus side to the fact that your competitors have already made a success of their store. This is the fact that they've already spent the time and money looking at their ideal customer and their needs, and have refined the approach they take in reaching those customers to fit the needs they've identified.
Because they're your close competitors, their ideal customer is also almost always, your ideal customer. So by looking at the approach they take when reaching out to people, you can get some solid, tried and tested ideas on the kinds of things you can start doing to reach that same ideal customer base in a really targetted way.
So look at their social media, note any paid ads, search relevant forums, and find out where they seem to be most active. You can even create an account with them and make a purchase to see what kind of communication they're sending out.
Obviously the USP's of your store are going to differ from your competitors, but doing this exercise should give you no end of inspiration on the kinds of things that are likely to appeal to your ideal customer. It's not good practice to just exactly copy what your competitors are doing, but looking at their approach can give you ideas you haven't thought about yet.
The end goal of this whole exercise is to help you understand the scope and requirements of your ideal customer base, as well as help you refine your business idea to more closely meet, and hopefully even exceed, customer expectations.
Business ventures never come with a 100% success guarantee. If you can get through this validation stage, feeling positive about your business idea and confident it meets your ideal customer's needs, then you've given yourself the best start you can realistically expect.
We continue this series next week in part 3 where we look at the importance of a solid business plan, establishing your sales pipelines, and consider the logistics of managing your store from handling orders to getting the product to the customer.
I hope you're enjoying learing about how to start an eCommerce business. My name is Jon Hussey and I've been operating my own business, and been heavily involved in the day to day ruinning of many other eCommerce business for well over a decade. A common difficulty I've heard from clients is that finding a high-quality, but cost-effective developer is often a real challenge - and that's actually a key reason why I created Developer Connection. It's a service that gives store owners like you a highly cost-effective, easy-to-use method of connecting with high-quality eCommerce developers and teams across the UK. So if you need a developer for your store, then give us a try today!