Choose the best eCommerce niche in the market because it’s vital to succeed in the coming year, that is, the year 2022 onwards.
Starting an Ecommerce business is the best idea. Since Ecommerce is ruling the world in the current trend; you can be successful for sure. Yet, some steps needed to be followed while starting an Ecommerce business. One of the very first things you need to do is write a Business Plan small ecommerce business.
So, let us now see the importance of writing a business plan and some of the other steps that need to follow while starting an eCommerce to get your niche in the market.
Importance of Business Plan In Picking the Ecommerce Niche
We are aware that starting an Ecommerce niche in the market is exciting as well as it will give an irresistible urge to jump right in without making a business plan.
At this point, I would like to say you one thing, PLEASE NEVER DO THIS.
If you haven’t planned your ideas, concerns, and questions, it means that you haven’t given your business model enough though.
Though it might look like it is taking your time and lots of work, it will really help you to save your valuable time and money. Writing a business plan will help you to understand the potential challenges and opportunities that you need to face as a first-time entrepreneur.
Writing a business plan will help you to think about your audience and you will sketch your business according to the customer’s perspective. The point of a business plan is to help you get your ideas down on paper – so don’t worry about making it fancy or excessively long.
Advantages of having clear business plans in the ecommerce niche in the market
- Understanding: A clear business plan will help you to find out what you know and more importantly it will help you to understand what you don’t know.
- Resources: You can figure out the partners, Investment money, employees to make your business successful.
- Destination Point: It helps you to set clear goals for the business from the outset.
- Ability: One of the important advantages of having a business plan is that you can have a better sense of the viability of the opportunity.
So, now you might have got some idea about why you need a business plan for your Ecommerce niche in the market. Here are some of the other things that you need to think about while starting a business:
Create a Value Proposition
Creating a short yet detailed value proposition is a good measure to know how clear your idea is. It should be written in a way that you have only a minute to explain your business to your potential investors or customer.
Practicing it over, again and again, will give you the confidence to explain your ideas to someone. Once you are satisfied with your approach, use it on your website as your company’s description
Say, for example, you are looking to start a sportswear company, say Strak Sportswear & Co., which sells premium sportswear for all types of sports like swimming, football, etc. The company description can be given as:
Stark Sportswear & Co. is a sportswear company, which produces premium sportswear for both indoor as wells outdoor sports. Our materials for sportswear are one of the best and lightest materials on the market.
It gives the sportsmen/women comfortability while wearing it. Our product is made in India and a portion of our profits are donated to preserve the wildlife around the country.
Find Out Your Ecommerce niche in the market for your business
Let us now move on to the next process. It is always a good habit to develop a framework at first for your business model. Because, once you go through the different stages of your business plan and extensive research, you will be in a need to make some adjustments to your business model. So, you don’t need to make it perfect.
There are numerous ways to sell a product online and you could employ several different business models too. Depending on what you intend to sell, it’s important to think through which business model makes the most sense for your product.
What are you selling?
- Digital products: eBooks, eCourses, Software as Service products
- Physical products: Clothing, footwear, home goods
- Services: Home cleaning, Consulting services
To whom you are selling?
- Business to Business (B2B): You can sell your products to corporations, organizations, and non-profits rather than individual customers
- Business to Consumer (B2C): It means you can sell the products to individual consumers rather than businesses organizations
- Marketplace: Here, you will act as a middleman by bringing businesses and customers to one website.
How can you source your product?
- Manufacture In-house: You can produce your service or product in-house
- Third-party manufacturer: You can outsource the manufacturing of your product or service to a third party manufacturer
- Dropship: This means that your dropship manufacturing partner will make your product, pack it, and ship it directly to your customer. Yet your company will handle the entire customer relationship
- Wholesale: You can get the products or service from other companies in a bulk amount and resell those items on your website
Analyzing the Ecommerce Market
Let me tell you a fact, “There has never been a successful Ecommerce entrepreneur who didn’t understand their market” Period. So, now you can understand the importance of this section from the entire business plan.
It will let you know the industry in which you operate, the outlook of the overall industry, the existing competitors, and your target customer demographic. Prior to getting started in the writing section, try to spend several hours researching the market.
Here are some of the effective ways to research a particular market:
Monitor the Small Business Industry Report
You can seek the help of Google to look for any recent industry report on your market of choice. This will give you an idea of how much growth the industry is experiencing, why it is happening, and the largest customer segments.
In our example of Stark Sportswear & Co., we should research the outdoor apparel market.
Say that, with the help of the outdoor apparel industry we found that there was a huge hike in swimming outfit. Possibly parents were more concerned about their kid’s health while playing in the water, so they started to spend money on shower caps, Goggles for their kids. We can use this valuable information to guide our business strategy.
There are so many things that you can read online. Visit a nearby shop in your area that sells products similar to yours and interview the store representative.
The store manager definitely would have interacted with hundreds of interested customers which can lead to thousands of valuable insights. It is amazing how these insights can translate into a meaningful business opportunity.
Here’s an example:
If I am going into some outdoor Store, let’s say Shoppers Stop, to research the outdoor apparel market, I would probably ask the manager the following:
- What are your best selling products?
- What are your worst selling products?
- Find products similar to yours and ask the representative about their favorite features on products similar to yours.
- How much do customers are willing to spend on products similar to these types?
- Do customers make repeat orders of any of these products?
Create an excel spreadsheet of all of your competitors. In your excel spreadsheet, you should have the following columns:
Generate an Excel Spreadsheet with the details of all your competitors. Make sure that you add these columns to your spreadsheet:
- Competitor Name
- Price point
- Product Description
- Key Features (e.g. fabric, waterproof, slim fit, etc.)
This will help you to know is there any gap in the offering? What is the competition missing? Where you can add some additional value?
After managing the competitor analysis, Stark Sportswear & Co. can find that the competitor’s swimsuit often offers only a few accessories at low price points, but there are no offers for luxury suits with additional features like Goggles at higher price points.
These are only some of the examples of types of insights that anyone can gain from market research to make some changes to the business model.
You can make use of Google’s keyword planner and trends pages to get a good sense of how in-demand your product is and know whether it’s trending upward or downward. Google is great for a general idea, just don’t bank on it.
Let me put this question to you: Is there any nearby trade shows that you can go to? Once again, creating connections with people from your industry is surely going to help you to know more about the industry.
Trade shows are also a great opportunity to talk to competitors and meet manufacturers. As well as it also helps to understand where things are heading in your industry.
Once after finishing the research relevant to the industry, you should summarize your analysis by answering these questions:
- How big is the overall industry?
- How big is the specific sub-industry in which you intend to operate?
- Where have most of the historic growth in the market come from?
- Why is this the right time to enter this market?
- What are the sub-segments that are poised for future growth (e.g. youth apparel)?
- How crowded is the product category with the competition?
- How is your competition distributing their product (online, retail, wholesale, etc.)?
- What’s missing from the competition’s product offering?
- Who is your target customer (population size, age, geography, education, ethnicity, income level)?
- Are consumers comfortable with buying your product category online?
Reference Blog: How To Build Your Own Ecommerce Website
Getting Traffic and Sales to The Ecommerce Website
So, now you might have come to the conclusion that you have a great business idea and it is in a growing market. Right conclusion- but have you wondered how to drive traffic to your website and get customers to buy it? And how much amount you can afford to spend on your products?
If you don’t know your customer, your business will fail
So, in order to come with the best business strategy, you need to know your customer very well at first. You should be able to answer such questions as:
- How old is your customer?
- What is the population of your customer base?
- What is their income level?
- Where does your customer live
- What is their education level
- What are your customers’ pain points?
Which is the right channel to take your niche in the market to reach your customer?
Once after figuring out everything about our target customer you need to know which channel you should use to grab the attention of your customer demographic. Some of the key marketing channels include:
- PPC (Pay-per-click) – This typically involves using Google Shopping campaigns and managing a product data feed
- Affiliate sale networks – Allows other blogs and websites to sell your product for a cut of the revenue. List the different affiliate sale networks that you plan to promote through
- Social media: Which is your strategy for social media and where will you dedicate your attention?
- Search Engine Optimization – Create and promote awesome content so people find your product organically through search
- What is your content marketing strategy? Come up with a content roadmap that lists the next 10-15 articles you want to create as well as your strategy for creating such content (in-house vs. outsource). How will you persuade people to buy your product once they get to your site?
- Blogger networks – could be organic or paid through affiliate sale programs
- Develop a list of key bloggers in your product category. For Stark Sportswear & Co., this might be an influencer that blogs about the best sportswear in India
Finding the optimal mix of these advertising tools ultimately depends on your customer segment and product type. Say for e.g, a Software as a Service (SaaS) Product targeting millennial will require a completely different marketing strategy than any other physical product targeting methods.
How much should you spend to acquire a customer?
To understand this, we need to discuss a concept called Lifetime Value of Customer or LTV. Basically, this a formula that helps you to understand how much an average customer will spend over time.
Here’s a good read on how to calculate LTV.
For new businesses, it is important to remember that you will not be having a lot of data on customer purchase habits. So, it is a good idea to be more conservative with your assumptions in calculating LTV.
Say for example, for Stark Sportswear & Co., I figured out that the average LTV per customer is 1000INR. This means that the average customer will spend Rs1000 overtime. Say for example, if I receive 1000INR in revenue, 300Rs of what will translate to gross profit before O factor in my marketing costs.
Knowing that my gross profit is 300Rs per shirt is a critical piece of information because it tells me that I can spend up to 300Rs in marketing to acquire a customer and still be profitable.
Select the right technology that fits your Ecommerce niche in the market
With more advanced technology and Software as a Service Products, it is predominant to recognize the various moving parts and diagrams of how they are integrated with each other.
Some of the different elements include:
- Shopping Cart
- Payment Processor
- Fulfillment Center
- Social Media Planning Tools
- Customer Loyalty Programs
Come up with the list of different products and services that you need to run your business as well as the monthly and per-transaction cost of each of them. This will help you to understand the impact of these services on your margins.
Products and Services
We know that we need to sell sportswear, that’s great!
Yet, some of us will not be able to figure out what we should sell. To be successful in online retail, you need a product that is trending upwards in a growing niche.
Provide the detailed product specification for each service or product that you intend to sell. If the product we are selling is sportswear, then we need to have:
- Detailed sketches of the shirt
- Fabric weight, materials, type
- Key features
Future product pipeline
What are the other products that you have in the queue? Once if you have successfully sold sportswear, then you can be able to hold your manufacturing relationship to sell some of your other products like shorts and socks.
The financial section is used to figure out sales, net income, and expenses of the business. Moreover, you need to create a monthly excel schedule with these following columns:
- Projected revenue: First come up with your projected number of units sold and then come up with your projected revenue.
- Fixed expenses: These are expenses that are fixed no matter how much you sell. Typically, these relate to monthly Software as Service subscriptions, employee salaries, or rent.
- Variable expenses: these expenses change in direct proportion to how much you sell. Common examples include the cost of goods sold and payment processing fees.
This strategy will help the business owners to understand what they need to achieve to meet their profit goals in a better way. In reality, projections are always of the market, yet it is good to give yourself some measurable goals to work for.
Ask yourself these questions and try to figure out the answers:
- How much product do you need to sell per year to meet your income goals for the business?
- What are the margins on your product?
- What is the lifetime value of a customer (see marketing section)?
- How much can you spend to acquire customers? If you conservatively project that the average customer will spend $300 overtime on your shirts, then you can afford to spend an amount less than $300 to acquire that customer using the paid marketing channels described previously
- Do you have any big capital expenditures early on that would require you to need to bring in investors?
- Can you improve gross margins by making bigger orders from your suppliers?
Finally, You are Set Now
Careful planning is critical to get your business from the planning phase to launch the business and to ensure its successful future.
Practicing the exercise of writing a business plan will let you connect your own understanding of your small eCommerce business and your market. It will also help you to take advantage of profitable opportunities while transferring harmful threats to your business down the line.
Reference Blog: Worried Thinking About The Right Time To Start A Business?
Final Words on ecommerce niche in the market
That is all about the market eCommerce niche to succeed despite the odd demand that prevails. Now it is your turn to start an Ecommerce business! Have you prepared a business plan for your Ecommerce small business?
Also, you can create an Online Marketplace that would suit medium to large businesses to make revenue.
Have you left anything by mistake? Do you need anything to add to the Ecommerce shopping website? Please let us know about this in the comments.