How to Start an Online Business

Shopify ReviewThought I’d throw together a few pointers to help others wanting to start up their own online business. The information you’ll find below is based on my experience, over the last 6 months, using these simple strategies and online tools we were able to sell 1000’s of units all over the globe in a matter of months.  Both my business partner, Chris Peters,and I have now quit our day jobs and are currently launching other online stores.

UPDATE 1/03/2011 – With these strategies we were also able to win our category in the Shopify Build-a-Business Competition for 2011 with a $25,000 cash prize, all expenses trip paid to NY, power session with Seth Godin and $7,500.00 of Google AdWords credit. 

I don’t want to go into details about products or business ideas, but rather the mechanics of setting up an online business and the awesome tools available to entrepreneurs today. It’s never been easier to setup an online business and start making money straight away.

1. Decide what your online business will sell

This is an obvious one and as I said I don’t want to get too involved in this now but keep a few simple rules in mind before you start your online business.

  • You’ll need to ship your products, the larger the product the harder to ship.
  • Look for a niche that you think you’d be able to compete in by offering a better product, more convenient service, better price etc…  You don’t have to find a market with zero competition as most market with zero competition will have zero money in them.
  • Keep in mind a product doesn’t have to be a physical item it could also be a digital download such as an e-book or app.  You don’t even need to make these products yourself. Checkout ClickBank.com where you can sell products like this one that teaches you how to make money using ClickBank Click Here!
  • You could also source a physical product from websites such as Alibaba.com where you can buy and import products at close to manufacturing costs.

2. Build an online store

Shopify online businessTo sell online you’ll need a store. The best online e-commerce platform in my opinion is Shopify and the best part is it’s FREE to get started. Shopify delivers absolutely everything you need to start selling online straight away. Just pick a store name, choose a theme, upload your products, plugin your PayPal account and you’re selling online.  Of course you can get more involved with different credit cards gateways and customising themes, but just get something up and running then look into updating and optimising your store as you go. Examples of my online Shopify stores include Opena Case and Quad Lock Case.

Other huge advantages of using Shopify e-commerce platform include:

  • No programming knowledge necessary.
  • Free to start!!
  • Easy to plug in Google Analytics and Google Ecommerce tracking.
  • Totally scalable, you can sell 1 unit or 100,000 units a month.
  • Many awesome apps to expand usability.
  • Easy to plug in third party logistics, I recommend ShipWire.
  • Good support and many online resources available. (checkout the Shopify blog)

3. Track your stores performance

Google analytics for small business  When your store’s online and not a physical address, you often don’t get the feedback that you would if you stood behind the counter talking to each customer that walks through the door, but the thing is you don’t need too. Tracking your stores’ performance is extremely important as it lets you know what’s working, what’s not, where your traffic is coming from, what countries are visiting your store, who’s buying and much much more. With resources like Google Analytics you can now know exactly what’s happening in and around your online store.  I’ll give you a few simple tips on stats I like to keep an eye on.

Conversion Rate (%) – percentage of visitors that actually purchase. (higher better)

Traffic Sources – locations your sites visitors are coming from.

Unique Visitors – total number of uniques visitors to your sites. (higher better)

Bounce Rate (%) – percentage of visitors that leave from the page they enter (lower better).

Map Overlay – countries/states that are visiting your site.

Product Performance – most and least popular products.

4. Advertise your store

Once your online store is set up you’ll need to advertise to start driving traffic.  This can be done in many ways, it can be expensive or it can be free depending on how you go about it.  I’d suggest a combination of both free and paid advertising. You also need to decide what will work best for your specific store, for example when marketing the Opena Case (iPhone bottle opener) I knew this wasn’t the kind of product buyers would search for but rather a product that people need to be shown and made aware of before they will purchase. Keeping this in mind I decided that Facebook would be a better suited advertising platform. If I however had a product that I knew people were searching for, it would have meant that Google AdWords or SEO (search engine optimisation) maybe a better option or at least make up a larger part of the marketing strategy. Normally, there is not one golden solution but rather a combination that will work best.

Facebook page

Facebook page for online storeRunning a Facebook page to compliment your online business is a great way to start advertising. Just because it’s free doesn’t mean it’s any less important or effective than paid, it’s just FREE! An example of what I call free Facebook advertising would be setting up a Facebook page for your store and advertising it to your friends and family. See the following as a example of the power of social media.

Share your page with 300 friends.

20% of your friends share = 60 friends

60 friends X 300 of their own friends = 18,000 extended friends

18,000 extended friends = you’re more popular than you know.

Once you’ve shared your page with all of your Facebook friends, you might want to look at Facebook Ads. Facebook Ads allow you to n advertise either your store or Facebook page to your target market.  With Facebook Ads, you’re able to focus on your store’s exact target market by specifying geographical location, age, sex, gender preference, marital status, education level, interest and likes. When deciding where you want your Facebook Ad to click through to – your online store or your Facebook page – consider that the CPC (cost per click) of advertising a Facebook page is a lot cheaper than advertising an external online store. Also another huge advantage of advertising your Facebook page is that when visitors like your page as apposed to just visiting your site you are then able to market to them through their Facebook feed for free. If they were to just visit your online store once they may never come back and you have no way of marketing to them in the future.

Blog Reviews

Getting your products reviewed by blogger is one of the best ways of driving quality traffic to your website. This can be achieved by either sending out a press release or actually sending out ‘review units’ (i.e. products that can be tested) to websites that you know your target market would frequent.  I find this method of providing  ‘review units’ an extremely effective and economical form of marketing.  Do the maths for your product using the actual costs and number like this:

50 ‘reviews units’ at a cost of $5 each = $250 total cost

You may get a 30% hit rate = 15 reviews (could be higher)

15 reviews X 150 visitors to your store= 2,250 total unique visitors

2,250 visitors at 3% conversion rate = 67 purchases (often higher after a good review)

67 purchases of a $40 product = $2,680 revenue from a $250 investment

Keep in mind these numbers are very conservative as I’ve had individual reviews produce over 8,000 unique visitors.

Google Adwords

Google Adwords is a great way to be found by potential customers searching for your products online. See the video below for an easier to understand explanation than I can give you.

SEO your online store

SEO (Search Engine Optimisation) is the process of optimising your online store so that your website is displayed within Googles organic search results for FREE. SEO is a powerful tool and should definitely be worked on over time, it’s also worth mentioning that SEO takes time and a brand new online store won’t rank highly straight away.  For more information on how to SEO your own website see my previous post 11 Simple SEO tips for Small Business.

5. Create a community

social media for online businessRunning your own online business gives you a great chance to not just sell to customers but to create a community around what you’re doing. Using social media like Facebook and Twitter is one of the easiest ways to create a community but it relies on you to engage your customers.  I find one of the best ways to engage your social media community is with questions as these then produce answers and therefore activity on your page.  For example I recently realised a we were experiencing lower than normal amount of activity on our Opena Case Facebook page, so I asked a simple questing “what beers are still pop tops and not screw tops?”, the post the received 68 passionate answers from the community almost immediately.

It’s also important to advertise your social media channels on you website without being distracting.  Most Shopify themes that you’ll use for your online store have social media icons integrated so you’ll just have to ad the links to your feeds.

Social media accountability

Keep in mind that social media is a two way street where both you and your customers can have their say.  This is fine, it just means that now more than ever you have to supply a good product with good customer service. In the past customers would contact businesses privately through either a phone call or and email but social media is now becoming the preferred channel for many consumers to both give praise and raise issues. We find that a huge amount of the customer feedback we receive is through either Facebook or Twitter so it’s extremely important to manage these feeds closely and provide excellent support because everything is now public.

6. Get Online NOW – nothing is ever perfect

Get an Online Business NOWI’ve found that many people think that their stores need to be 100% perfect before they launch, but I definitely don’t agree. I truly believe that it’s more important to get a store up online and start trading straight away. The main reason I think this is so important is because making changes and optimising your store while it’s live is a huge advantage as every changes effect will be measurable.

A good example of this is when Chris and I first launched www.openacase.com we knew it wasn’t perfect but we did start taking orders straight away. For the first few week we were running at about 2% conversion rate so we decided to place two large [Buy Now] buttons on the homepage, straight away this simple change increased our 2% conversion rate to 3%.

 7. Importance of conversion rate

It’s important to constantly track your conversion rate as this small % figure has a massive effect on your bottom line .  As mentioned with one simple change we were able to increase our conversion rate by 1%. I’ll give an example of what this 1% could mean in real life terms.

Lets pretend we have an online store that’s enjoying 1000 visitors a day, at 2% conversion rate, selling a $40 product.

1000 visitors with a conversion rate of 2% = 20 purchases a day

20 purchases X $40 each = $800 a day

$800 a day X 365 days a year = $292,00 a year

Change store and increase conversion from 2% to 3% = [BUY NOW] button

1000 visitor with a conversion rate of 3% = 30 purchases a day

30 purchases X $40 each = $1,200 a day

$1,200 a day X 365 days a year = $438,000 a year

$438,000 a year – $292,000 = $146,000 increase

$146,000 extra a year = You’re glad you added that button

8. Third party logistics

ship wire third party logisticsBeing able to fulfil your orders is just as important as making the sales in the first place. For this reason it’s important to have a system set up, that allows you to concentrate on making new sales rather than fulfilling the old ones.  Being based in Australia, with a market of only 22 million people, it was important for us to have access to international markets.  Using the Shopify platform makes it easy to accept orders from all over the world, but you need to be able to fulfil these order and thats where ShipWire comes in. ShipWire is the third party logistics service that I’ve been using for the last 6 months and it’s a great system that integrates into Shopify with very little effort. ShipWire will store your stock and ship it out automatically as soon as a sale is made on your Shopify store. ShipWire also has competitive shipping rates and allows you to store your stock in multiple warehouses, automatically picking and packing from the closest warehouse to the shipping address.

9. Conclusion

With the combination of Shopify, ShipWire and other strategies mentioned above we were able to sell our products in over 30 countries in just a couple of months. I hope you’ve been able to find something here that will help you in your online endeavours and if you have any question feel free to leave a comment below.


12 thoughts on “How to Start an Online Business

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    certainly like your website but you have to test the spelling on quite a few of your posts. Many of them are rife with spelling problems and I to find it very bothersome to inform the reality however I will surely come again again.

    Reply
  7. Milena

    Randell: Thanks for the ideas! I haven’t thought about cusotm printing the boxes. This will add to expense I’m sure. Maybe doing a run of awesome stickers would be good for that on the outside (I love stickers, too). Will have to look into that. Doing inserts in the box too (the description) I think would be important too. It may be that I do all the fulfillment out of my house at first so I can make sure it all looks good.Lynn: I’m sure I’ll accept PayPal there’s no getting around it. The bad press I’ve heard about it revolve around awful cusotmer service and small charity organizations using it getting locked out of their own funds. They’re part of the eBay empire too, which is growing increasingly irritating because of the hucksters on the service creating an environment of us versus them in their form-letter driven cusotmer crap service, which seems to emphasize volume of form replies sent than volume of problems READ and resolved. I personally haven’t had problems with eBay, but have some friends that are going through hell just trying to straighten out their accounts. Grr.

    Reply
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  10. Shane

    Hey,
    What happens in the backend?
    So you start a shopify store, maybe get some sales. What do you do for accounting/reporting and such? Is it a case of duplicating shopify orders into something like quickbooks?
    I’m confused 🙂
    Cheers,
    Shane

    Reply
    1. Rob Ward Post author

      Hey Shane,

      We use XERO it’s an awesome new cloud based accounting systems and without it we’d be screwed. We don’t track every order as we have thousands of customers, we do however track total sales from all our stores and allocate this to account in the system as the payments come through from Stripe and PayPal.

      Cheers – Rob

      Reply
  11. Anu

    How to integrate clickbank and shopify? as you mention in your article that we can sale digital products on shopify? Help…

    Reply

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