Mar 29, 2013

Starting an e-Commerce Business Starts with Research

There are several steps a motivated entrepreneur can take to minimize risk and maximize profits with an e-commerce business model. In general, these tasks consist of research, building a well-networked infrastructure and timely execution of marketing strategy. This blog will focus on the research aspect of opening an e-commerce business.

Operating your own e-commerce business (profitably) takes practice, patience, and the open-mindedness to accept that several million other people are trying to do the same thing. Fortunately, e-commerce presents a unique opportunity to learn and grow as an entrepreneur without taking on the same risk and investment that is required to open a franchise or your own brick and mortar location.

What is the cost of your research? That depends on how you define cost. If you subscribe to the age-old motto that time is money, then this step will cost you a fortune. However, if you are patient and diligent, then this step will be a great experience and free of charge.   


The primary objective of your research is to define customer segments as well as draft value propositions and identify channels that will allow you to develop both. Regardless of your current level of expertise, I can confidently say that you should allocate 6 months to a year for this step. Working e-commerce isn’t necessarily always about knowing everything there is to know about the products you are selling. It’s also about knowing everything there is to know about the logistics of digital marketing and the wide variety of available product listings.


To run an e-commerce site the very first thing you need to do is map out your value propositions and customer segments. Keep in mind that selling in a niche market may be hard to get going, but it is definitely easier in the long run in comparison to trying to compete with stores that sell a wide variety of branded items. The modern concept of the “long tail” outlines that the dynamics of the internet simply lend themselves perfectly to niche oriented business operations.


Simply put, value propositions can be anything you want them to be within e-commerce, IF, and this is a big if, there is a need for it. Think of the monetary value information has gained over the years, with media marketing budgets targeting high traffic sites for advertising. Putting ads on for example, is really, really expensive. But it works. Don’t know if there is a need for your potential niche products or service? Do some keyword research and see if there is sufficient traffic around the keywords that define your idea.


Tip: There are lots of keyword research tools out there, but Google, of course, has one of the best –


Know digital marketing, but more importantly, know resources where you can keep up with the latest trends in digital marketing.  Nailing this step will save you a significant amount of money. You may know what the acronym for SEO stands for, but can you tell me how many characters are in an optimized Google product title? Believe me when I say this, the true moneymakers online are inherently OCD-focused on making their store as optimized as possible with well funded content distribution methods, coding, PPC and social media to flow with current search engine algorithms. That’s just a fancy way of saying they are in tune with what’s going on and maintain a grip on the pulse of the industry, but this does not necessarily mean everyone that is in tune is also proficient. 

On the same note, don’t believe everything you read on the Internet. Why? It’s the Internet. Enough said.  These are valuable resources that I consider in good standing:

  • – digital media
  • – E-commerce industry analysis
  • – E-commerce news
  • – coding simplified

Lastly, know your verticals and your markets.  Currently, the top e-commerce verticals consist of consumer electronics, car part accessories, pet supplies, software and digital downloads. However, this varies across regions such as North America, India or Europe.

Tip: Australia and the UK are both independently high value marketplaces, but India and the United States are above all, highly sought after consumer markets.

All in all, simply jumping into an e-commerce business is not highly recommended. The more research you can pull into an actionable plan, the better. Totally lost? Get involved in online tech communities. There may be millions of people out there trying to compete with you, but there are many who are willing to help.

Tip: Consider a joint venture with someone you know/trust before you invest in services from e-commerce businesses. 

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