There are several reasons why eCommerce is attractive to small business owners. Unlike physical stores, eCommerce does not require capital investments for real estate. The operational expenses of hosting a website online are much lower compared to the money spent on leasing store space and employing staff to handle customers. In addition to this, the target market for eCommerce is much wider than a physical store that depends on customers from a restricted geography for business. This makes it possible to grow exponentially faster than you would by running a store in your neighborhood.
But the opportunities and market size also means that eCommerce is infinitely more competitive. Unlike a physical store, an eCommerce business does not have a captive market. Knowing the price of a product on your competitor’s website is just a click away. The intense competition in the online space is a trigger for price wars which can bring down margins quite significantly.
Despite these challenges, eCommerce can be attractive and can help businesses grow their revenue exponentially. Here are a few tips that will help offline small business owners achieve this.
Focus on niche sites
Initially, it may seem like a good idea to run one online store that can offer products from dozens of different categories. More SKUs mean a larger market size and that could mean higher revenue. But this strategy could put you in direct competition with eCommerce behemoths like Amazon who, without a doubt, will have a more diverse inventory of products on sale. One way to overcome the Amazon challenge is by building a site that focuses on a very small niche. This way, it is possible to establish authority among a smaller, yet highly lucrative, market. This helps you build a loyal following that is more profitable in the long run.
Buy successful sites in your industry
There are dozens of eCommerce tools in the market today that make it possible for anyone to setup a new store in minutes. The challenge lies with turning this store into a viable business, and this is where most small businesses fail. There are two ways to do this – one way is to hire marketing agencies that can help you grow your business through the online channel. This is a long term strategy and there is no guarantee of success.
A quicker, but relatively more expensive alternative is to acquire online stores that are already doing well in your industry. Popular eCommerce platforms like Shopify have their own marketplaces where you can find online stores from your industry that are on sale. Buying a site hastens the growth of your online channel and may thus be more profitable than building an eCommerce store from scratch.
Partner with existing online platforms
Despite the opportunities that eCommerce provides, the truth is that it requires a whole new set of skills that a regular small business owner may not possess. Your decision to build an online channel should not come at the cost of neglecting your traditional offline business. If online commerce is taking a toll on your resources, one way to counteract this would be by partnering with eCommerce businesses that may benefit from your partnership.
Online store owners are often marketers who do not have extensive supplier and distributor relationships like you do. By partnering with such a store owner, you may complement their skills with your own. You could work out an equity or a royalty deal that will enable you to earn money on every product sold. This can work to the advantage of both parties and could thus be an ideal option to those willing to bring on a new partner.
James Hawkins is a full-time user interface designer and owner of Pipeline. Pipeline provides freelancers and agencies with handpicked, high quality project leads every week.