How to Plan for an eCommerce Business

When starting a new online business, the goal is to mitigate risk by conserving funds and stretching every dollar as far as it can go. Why spend $10,000 when you can spend a just $500 to determine if your eCommerce business is in fact profitable and sustainable? This is called the MVP (minimum value product) model

The key to success in eCommerce is to have a general, outlined plan and to start executing as quickly as possible. Don’t get caught up in micro-managing every little detail, just start and learn as you go. . You don’t need a unique product, a formal business plan, or a bank loan. Speed is the name of the game! Pick a business model- fast. Do some basic product research- fast. Register a web domain-fast, and launch your site- fast. If you’re going to succeed, then you’ll need to learn on the fly.

The ideal roll-out plan

how to start an ecommerce business

Minimum Viable Product (MVP)

In eCommerce, MVP means developing a product that has the highest return on investment with the least amount of risk.  Essentially, try to sell a product that’s just “good enough”.  Here’s an example to help illustrate MVP:

Suppose you want to sell luxury brand clothing on your website. Your plan may look something like this:

  1. Find suppliers
  2. Buy a bunch of shirts, jeans, sweaters and jackets
  3. Launch an amazing website
  4. Spend money to market the site

That plan looks good on paper, but it’s pretty risky. What if you buy all this stock, spend a ton of money to build your website, and no one ends up buying anything? Pretty demoralizing.

On the other hand, here’s how you can use the MVP model to mitigate risk and test the market before you go all out and invest your time and money:

  1. Find a couple of suppliers
  2. Order a few samples
  3. Build a website that looks acceptable
  4. Invest in just enough marketing to bring attention to your website
  5. Try to get a few sales and/or collect a few email addresses.

The goal is not necessarily to make a profit with MVP. Rather, it’s to gauge interest and identify your customer base, what they like and if they’re interested in buying your products. If you get a few sales and some positive feedback, then continue to expand and invest in your business. Otherwise, you go back to the drawing board.

Next: The Cost of Running an eCommerce Business