In the first of a series of posts on how to start an eCommerce business, we look at the first step you need to take – having, testing and developing new ideas – and walk you through a five-step process to help.
Over 3 million people hope to start their own business every year in the UK alone. Not all of them succeed, but the ones who do have something in common – a brilliant idea for a new product or brand.
If you’re among these aspiring entrepreneurs – or are simply looking to inject fresh thinking into your existing business – this is the post for you.
We’ll guide you through A Technique for Producing Ideas – a five-step process that’s been trusted by everyone from marketers to scientists since the 1940s. We’ll show you how to apply it to the world of online retail, so you can have brilliant eCommerce business ideas every time.
Step 1: do your research
The first step is gathering raw material. Your goal is to know everything there is to know about the customer or market you might target. There are three places you could start.
Start with yourself
Before you research new customers or markets, start with what what you know already. Make a list of:
- Your experience: have you worked in a particular industry before? Your expert knowledge could help you spot gaps in the market now and maintain your competitive advantage later.
- Your passions: while some entrepreneurs advise against turning a hobby into a day job, choosing an eCommerce business idea that you’re passionate about could give you the purpose and drive to make it succeed.
- Your problems: are there tasks in everyday life that you find difficult or annoying? Think about how you could make them easier. One man’s frustration with peanut butter jars became a Kickstarter success, for example.
Start with your customer
“The very first thing any new eCommerce entrepreneur should invest in is understanding their target audience and ideal customer,” says serial entrepreneur, Nick Eubanks. But how do you do this?
- In real life: think about your friends, colleagues or family members. What problems do they have in their lives? What do they enjoy doing? How do they spend their money?
- Online: think about the LinkedIn or Facebook groups, Twitter chats, subreddits or Quora topics you follow. What questions are commonly asked? Which communities have the most contributors or liveliest discussions?
Through this research, you’ll start to build up a picture of possible customers. You could simply note down their common characteristics and problems. Or you could create a detailed buyer persona for your ideal customer.
Your goal is to identify ways you could make your customer’s life easier, improve their happiness, or save them time or money. Every successful eCommerce business idea achieves at least one of these things.
Start with your product
If you already have a product or industry in mind, your challenge will be making sure your idea is sufficiently distinct from all the other products and competitors out there. To do this, you could:
- Spot unfulfilled wants and needs: based on the list of the problems you face or the questions your ideal customer asks, it should now be easy to spot ways in which new products could address them.
- Spot deficiencies in existing products: hip-hop jewelry entrepreneur, Brian Roberts, suggests studying three-star reviews on Amazon, to find “critical feedback you can actually apply to make a new or better product.”
- Spot new trends: reading sites like TrendWatching, following thought leaders in your industry on social media, or turning to Instagram and Pinterest for fresh inspiration could help you identify and jump on the next big craze.
Step 2: make new connections
Steve Jobs once proclaimed that “creativity is just connecting things” and this is the next step in the process.
Take all the research you gathered above, read through it and start making connections. Are there recurring themes? Is there a customer problem that a new trend could solve? Could you use your expert knowledge to make an existing product better?
As you do this, you should think about ways you can make your eCommerce business idea stand out from all the others. Remembering the three competitive strategies developed by Harvard economist, Michael E Porter, could help:
- Cost: can you find a way to offer an existing product cheaper than anyone else? eCommerce is ideal for cutting out middlemen, like distributors or bricks and mortar retailers, to offer lower prices. Think direct-to-consumer contact lenses.
- Differentiation: can you create a unique product that meets an unfulfilled want or need? Can you develop a unique brand focused on your ideal customer? Think marble iPhone cases.
- Focus: is there a segment or subset of your ideal customer group that’s underserved by existing products? Could it grow in size or profitability? Think socks for cyclists.
Step 3: forget about it
You’ve done your research. You’ve made new connections. Now it’s time to stop, forget about it. James Webb Young, the advertising pioneer who authored A Technique for Producing Ideas, says: “Drop the problem completely. Turn to whatever stimulates your imagination and emotions. Listen to music, go to the theater or movies, read poetry or a detective story.”
Step 4: wait for inspiration
If you’ve followed the advice so far, it’ll now be time for your Eureka moment. Like a Greek polymath stepping into a bath, you’ll be struck by inspiration when you least expect it. Write the idea down quick, before you forget it, then get ready for the hardest step.
Step 5: test the idea
The last part of the process is what Young calls “the cold, gray dawn of the morning after.” It’s time to introduce your eCommerce business idea to reality – to test its commercial viability and technical feasibility, as quickly and cheaply as possible.
Testing your idea’s commercial viability
Your goal here is to understand whether there’ll be the high demand and low competition that will make your eCommerce business idea a success. You can do this in a couple of ways:
- Talk to people: if your idea is aimed at the friends, family or colleagues you researched earlier, speak to them. Find out what they think of your idea. Would it make their life easier, improve their happiness, or save them time or money? If so, would they buy it? And how much would they pay?
- Conduct keyword and competitor research: there are a wealth of free tools out there, to help you understand how many people search for products, which companies already sell them and how much they sell them for. eCommerce entrepreneur, Adam Bastock, has a detailed guide. Look at the data and ask: will your new idea be in demand? Will you face stiff competition? Can you make a profit?
- Set up a landing page: if your keyword research suggests your idea might be viable, take the next step. “Invest a few hundred dollars to test campaigns in AdWords and Facebook. Send this traffic to a landing page with a sign-up form for more information and see what the interest level is,” recommends Larry Kim, founder of Wordstream and MobileMonkey.
- Try marketplaces or crowdfunding: another possible step is to test demand through sites like Etsy or Kickstarter. “Use [them] to get a feel for market readiness and build a loyal base that will follow you to your site when it’s ready,” says Tracey Wallace, managing editor at Bigcommerce.
Testing your idea’s technical feasibility
If your idea is a new product, the next thing you need to consider is the feasibility of making it. You’ll have three options:
- Make it yourself: many fashion, food and beauty entrepreneurs start by making their own products. It’s the best way to ensure great quality and build a brand, but you’ll need to invest time – something which may not be scalable if your new idea takes off.
- Find a manufacturer: another option could be to find a manufacturer, to help prototype, develop and make your product. This is ideal if your idea is complex and technologically driven, but make sure you’re confident in its commercial viability – this approach will require the most investment upfront.
- Buy wholesale or dropship: the final option is to buy an existing product from a wholesaler or dropshipper and sell it on. This approach will be OK if you’re selling an existing product to a new customer segment, but it won’t allow you to build a brand or innovate in the same way as the other two options.
Now you know how to have, develop and test an eCommerce business idea, the next step is to choose the best eCommerce platform to create your online store. That’s the subject of our next post. Read it now or browse more posts from our how to start an eCommerce business series.