Revenue from eCommerce has been growing for years, and the number of online shoppers is rising steadily. This development means that new online shops appear every year as many people and retailers venture into the medium of the internet. Despite the many advantages of a webshop - e. g. no costs for renting or equipping the premises - the question remains as to whether creating an online shop is worthwhile. After all, the eCommerce market is dominated by giants like Amazon or eBay.
However, with the right preparation and strategic orientation, entering the world of online business will definitely pay off. However, it is crucial for the future of your eCommerce project that you create the right conditions for the project before the launch.
- Define a product range that is suitable for online sales.
- Invest enough time analysing your target group, market, and potential competition.
- Do your due diligence and carefully evaluate suitable shop systems – and be sure to leave enough time for this process.
- Map out the core functionalities of your online shop (e.g. shipping, payment, navigation).
- Make sure that the design of your webshop is legally compliant from the very beginning.
Defining a strategy for your future online shop
Before thinking about the – quite important – aspects of an eCommerce project, such as design, usability and marketing, you should analyse your starting point and define a strategy for the initial planning phase of your online shop.
For any retailer, it would be ideal to provide customers with an exclusive range of products that is not available anywhere else. However, this idea is unrealistic because you can find any imaginable product online nowadays. Nevertheless, the following still applies: Try to find or identify products that are not yet strongly represented in online commerce or, – alternatively – for which demand is extremely high. That’s why it’s essential to define your product range in advance. Stepping into the eCommerce market is not advisable unless you have a definite idea of what to sell in the online shop.
Tip: Use the following questions as a guide to help determine your product range:
- Can you get the products quickly?
- Are the products suitable for online retail and shipping?
- Can the products be presented online properly?
Analyse your core target group
To perform a successful target audience analysis, you should first know exactly what the term “target audience” means. “Target audience” refers to a group of people to whom certain characteristics can be assigned. Based on these characteristics, it can be assumed that they are interested in the products offered in the shop.
Based on this analysis, you will not only find out if there is a market for your products with potential customers that use the internet (seniors, for example, rarely buy online), but also the best way to structure the shop. Teenagers prefer a modern look with many colours and casual language. Adults are more likely to visit a reputable shop where simply the structure of it makes them feel comfortable. A design that is too youthful is more likely to make this generation cautious.
Market and competitor analysis
When it comes to planning your own entrepreneurial strategy, the Ansoff Matrix is a valuable tool for orientation. The model considers the various risks and potential offered by four core product/market combinations:
The market analysis can be roughly divided into four segments:
- Market penetration: Considered the most low-risk strategy, the aim is to develop additional shares in an established market with an existing customer base.
- Product development: Once a certain level of market saturation has been achieved, the development of new products for the existing market will come to the foreground. This strategy is particularly attractive for niche markets or invigorating a saturated market.
- Market development: The retailer’s goal is to use the products from the existing product range to open up a new market, for example, new cities, countries or target audiences.
- Diversification: The development of a new product for a sales market that has not yet been developed - the riskiest of the four strategy stages listed.
At the very beginning of an eCommerce project, it is worth thinking through and roughly planning all the strategy phases listed. Depending on the product and its life cycle, different strategic concepts can be adopted.
Stand out among your competitors
No matter how well a product fits into a niche: There are probably already one or more shops with a similar product range. Therefore, it’s important to differentiate yourself from the competition. Ultimately, the procedure is the same as for other business ideas: You need to find a unique selling proposition. This can be fast shipping, such as promising to ship all orders received before 2 pm on the same day. Particularly, good customer support attracts customers as much as unusual, rare products.
Tip: Unique Selling Propositions (USPs) are essential for standing out from your existing competitors. Not only should you define these in advance, you should also communicate these consistently and continuously to the outside world. For example, here matierials4me, a B2B and B2C shop from thyssenkrupp Schulte, has incorporated the USPs directly in the footer of their webshop:
Tip: Leave enough time for market research and analysis. Take a close look at your potential competitors and try to answer the following questions:
- What are you competitor’s unique selling propositions?
- Which products do they have in their product range? Which products are missing from their assortment?
- What do the competing online shops look like?
Answering these questions will help you clarify and put your unique selling propositions to work.
Create a business plan
A detailed business plan is important in order to see in advance whether your own capital is sufficient for the creation of the webshop. Not only will you have to pay for the web space and the top-level domain, but you will also need to stock up on the products for sale. It’s very likely that you will need to rent a storage space for them. In addition, you should create high-quality product images and descriptive texts. If you don’t have the skills and need to hire an agency, you’ll spend even more money. Your capital will be further reduced by the marketing efforts to acquire customers. It is therefore important not to underestimate individual aspects. After all, the financial cushion must not only be sufficient for starting the online shop, it must also last until the marketing kicks in and the first customers place their orders.
Include the technical implementation in the concept
Once the strategic issues have been resolved, another key aspect is selecting a shop solution suitable for the business model.
Selecting the right shop system for your needs
Sometimes, finding the right shop system for the project is not easy. There are three ways in which a webshop can be realised on the internet:
A rented platform (SaaS)
Pros: The shop power is provided with an out-of-the-box solution that equips them with everything necessary to quickly run a professional online shop. These are typically hosted by the provider, who also take care of the initial setup, ongoing maintenance, and updates.
Cons: Rental fees are incurred, which are typically due on a monthly basis. Based on the subscription model, these costs can quickly increase and with the number of products/sales in the shop. Rental shops also tend to be closed source and limited in functionality (e.g. customisation options, category structure, internationalisation, filtering options, etc.).
Self-hosted shop solution (on-premise)
Pros: In comparison with a rented solution, these typically give the shop owner more customisation options on a code level.
There are many open source solutions available on the market, which can be used free of charge. There are no limitations to the number of products – but the shop owner is required to take care of a hosting provider.
Cons: You have to take care of the technical setup of the webshop yourself - or you can turn towards an experienced partner agency to help setup and/or build your online project.
Pros: Absolutely no limits in terms of design, functionality, number of products, etc. There are also no rental or license costs, since it’s a solution built from scratch.
Cons: An individually programmed online shop cannot be realised without advanced programming knowledge – and most likely a dedicated team of developers. Despite not having any license costs, this tends to be a very expensive solution and requires a great deal of resources.
No matter which you choose, this decision must be well considered and justified. In retrospect, it is extremely costly and time-consuming to migrate an online shop to a new shop system. We have summarised all the most important information on how to select the right shop system in our free whitepapers.
Plan your shop structure
Once the software has been selected, the structure must be designed. This works best on a sheet of paper. For the first draft, the following questions can be used as a guide:
- What should the customer see when entering the site?
- Where is the menu, and how is it structured?
- What and how many categories can be used to divide your product range?
Take your time to play with the presentation. The categories in the menu can either be listed on the website or displayed horizontally as a drop-down menu under the shop logo. It only makes sense to adapt the design to the shop after the structure has been more or less defined.
Tip: Make sure that the structure of your online shop is not too confusing. Easily found products and a comprehensible category structure help both the customers and the search engines quickly find their way around your webshop.
Acquire basic programming skills
If you want to get deeper into the subject and not just rely on standard features and templates, you should learn the basics of programming. Above all, this means that terms such as HTML, CSS and PHP should not sound foreign to you. You don’t have to have a shop that is completely self-programmed. However, it makes sense to test your shop offline on a virtual server to prevent any display errors from occurring and to prevent it from being taken offline by accident. The Apache web server is a great way to do this making it easy to handle, even for beginners.
Think about your shipping and payment options
Shipping and payment options are among the most important criteria when deciding for or against a purchase in the online shop. It’s important to think about the selection of the desired payment and shipping providers, and how to connect them to your shop in advance. There are various payment methods for online shops. Some customers like to pay upon receipt of an invoice, others only by PayPal, and there are those who like to use direct debit. The same applies to shipping options: Speedy delivery and reliable logistics partners are particularly important. The option of express shipping is an additional plus.
Here 31Dover highlights a countdown for next-day delivery directly on the header and following subpages of their online shop:
Tip: The more options you offer, the more customers you can serve theoretically. That’s why, if you have adaptability in your shop system, you can add a new payment or shipping method later on.
Important for the concept development: Observe the legal situation
Online commerce has many legal intricacies and pitfalls. Every online retailer must know this and must keep an eye on changes in the law. It’s best if you talk to a lawyer who is experienced in internet law and can clarify the legal aspects to ensure that everything runs smoothly before you start.
Tip: If you don’t know what to start with, we have compiled an overview of the most important legal issues.
Consider the risks involved in the concept development
In all your preparations and initial considerations, you should also consider the disadvantages or risks of an eCommerce project. Running an online shop on the side is extremely difficult. If you can’t quit your old job for financial reasons, then at least in the beginning you need to make sure that you spend enough time on your shop project in the evenings and you process received orders as quickly as possible. Something else that makes life for an online retailer difficult:
- Google updates make it harder and very time-consuming for new shops to get a good search engine ranking
- Time and cost of operation can quickly exceed what was originally planned
- There is a shop for almost every niche product
- New court cases mean that the applicable law is constantly being amended
Tip: Subscribe to a few industry-specific newsletters or read our blog regularly to keep up with the most important changes. Our blog will tell you all about the news that is relevant for online shop owners.
Bottom line: A successful concept for an online shop takes time
Generally, creating a shop for the internet – selecting a shop software solution, installing it on the virtual storage space and placing products – goes quickly. However, this doesn’t mean that success will come just as fast. But those who are aware of the work that an online shop takes and have enough financial reserves to survive until they start to see profits can definitely consider opening an online shop.