Around 50% of all consumers in the US hoping to buy something online will end up on Amazon.com. This explains why the Amazon Marketplace has more than 6.3 million sellers. Out of these sellers, 1.5 million are active.
According to the Jungle Scout’s 2021 State of the Amazon Seller, 21% of Amazon sellers plan to “launch their own e-commerce store.” If you’re already an Amazon seller, you can join this 21%, diversify your business, and make more money. But how do you do that? This is the question we want to answer in this article.
Before we present the steps you can follow to launch your e-commerce store, let’s start by looking at some of the benefits of launching your own online store.
Why Is It Important for Existing Amazon Resellers to Have Their Own Stores?
If you are already successfully selling on Amazon Marketplace, you have certainly gained valuable e-commerce experience serving a large consumer base. Consequently, starting your own e-commerce store seems like a natural progression as you scale your business.
Gonzalo Gil wrote a comprehensive article published by the e-commerce software provider, Shift4Shop.com, providing reasons Amazon sellers should open their own online stores. A summary of these reasons is presented below:
Building your brand: When customers buy from you on the Amazon Marketplace, they believe they are buying from Amazon and are less likely to become loyal to you as a seller or your brand. Having your own e-commerce store could help you build a brand and loyal customer base.
Maintain a database of customers: Your customers on Amazon Marketplace are Amazon customers; hence you can’t build a relationship with them or use data collected from them for improving your offer. From your own site, you access your customers and engage with them.
Sell what you want: Amazon has restrictions on what you can sell, particularly services that compete with Amazon’s. With your own e-commerce store, you can sell whatever you want, as long as it is legal to do so in the area where you operate.
Operate your business the way you want: When you sell on Amazon, you have to agree to the company’s terms and conditions. Having your own e-commerce store allows you to decide what works and what doesn’t work for your own business.
Amazon May Be Using Your Data to Launch New Products
Another reason you may want to launch your own e-commerce store is that you want peace of mind that Amazon is not using your data to launch products that compete with yours.
Does Amazon really collect data from sellers to determine products that are selling well and then launch its own products of the same kind? According to Dana Mattioli, writing for the Wall Street Journal, the answer is yes.
Mattioli writes, “Amazon.com Inc. employees have used data about independent sellers on the company’s platform to develop competing products, a practice at odds with the company’s stated policies.”
This is an accusation that Amazon disputes. CNBC.com quotes a statement from the company: “While we don’t believe these claims are accurate, we take these allegations very seriously and have launched an internal investigation.”
Now that you know the benefits of having your own e-commerce store, let’s look at the steps you can follow to create one.
1. Do Your Homework
Starting a business involves making critical choices about several elements. However, to make the right choices, you will need to have sufficient information. That information can only be obtained by researching your business idea.
Amazon lists questions that should form part of your research:
- What problems or pain do you wish to solve in your own life?
- What flaws or complaints do you have about the products you are currently using? Visit online forums.
- What prevailing trends can you capitalize on? You can use software that identifies the main terms customers are searching for and then use the relevant keywords when creating content.
- What do your friends and family members say about products they use?
- Which products would help improve the services you like and use the most?
Using these questions, you can create a business plan that should include matters related to compliance and taxes in the area where you operate.
2. Identify the Potential Customer
For your e-commerce store to succeed, you will need to attract customers and get them to buy. However, it will not be possible to attract a customer you have not clearly defined.
When you have as much information about your target customer as possible, you will know what they can afford. You will also determine the methods to attract such customers because you know where to find them.
When it comes to determining the price point, the online digital marketing resource for digital marketers, QuickSprout.com, advises that you should “Avoid any product category with too low of a price.”
QuickSprout.com also suggests that when you select a product whose price and profit margin is too low, you will need to sell hundreds of thousands of products every year to be sustainable. As you may expect, this is not an easy task to accomplish.
3. Choose a Business Name and Register a Domain
With all your research done and the customer identified, it’s time to decide on the name that will appeal to that customer. Identify a business name that speaks to your potential customer base. Based on that name, you will also register a domain.
Selecting a business and domain name is something that you need to put substantial energy into. This is a view acknowledged by Mailchimp, the American email marketing company. Mailchimp says, “Your domain name is more than just the internet address where people can find your store—it’s the online identity of your business.”
4. Choose Your E-Commerce Type
You will also need to determine which type of e-commerce business you want to establish. BigCommerce.com identifies four business models you can consider:
Business to consumer (B2C): Involves selling products to the end-user. While this business requires less investment to attract a sale, recurring orders and profit margins are lower.
Business to business (B2B): In this model, a business sells its products and services to another business. While decision-making in the B2B model takes longer, purchases tend to be recurring and involve higher prices and profit margins.
Consumer to business (C2B): This makes it possible for individuals to supply services and goods to businesses. This is a model that’s primarily ideal for services like web design, marketing, or writing.
Consumer to consumer: Allows consumers to sell to each other. However, this model faces challenges regarding scams and product quality.
5. Identify a Platform for Your E-Commerce Store
When you select a hosting provider for your e-commerce store, you have two choices. You can create a website that will host your e-commerce store on your own domain. The other option is to find existing e-commerce sites, like Shopify, Amazon, and Big Commerce and use them to anchor your store.
6. Source Products for Your E-Commerce Store
Now we get to the more challenging stuff. With millions of companies supplying goods across the world, getting the right quality can be a considerable challenge. Your life will be easier if you find the best sourcing agent in your niche.
Amazon suggests that “Good products will help your new online business thrive.” Adding, “The key is not only choosing the right product but the right source for your products.”
When you add products to your online store, the most crucial element is ensuring that the customer can navigate the site easily. If customers need to click many times to get a product, they will be frustrated and leave.
7. Determine How You Will Process Payments
If not handled with care, payment processing could be your weakest link. When customers are asked to enter confidential information like card numbers, they will need assurance that your site is trustworthy and their information will not end up in the wrong hands.
When it comes to processing payments, the good news is that several third-party providers can manage the process securely for you. Specific companies you can work with include PayPal, Stripe, Square, and Amazon Pay.
8. Handle Order Fulfillment
Once the customer has trusted your e-commerce store enough to place an order, they don’t expect problems with order fulfillment. Reliable order fulfillment helps you build credibility, get good reviews, and garner respect from your customers. This will amplify your growth potential.
In terms of fulfillment, you can choose either dropshipping or third-party logistics (3PLs). When you choose dropshipping, you manage the sales process, and the supplier delivers the product to your customer. It’s important that you partner with the best dropshipping agents available to ensure the smooth flow of your products from a warehouse to your customer’s doorstep.
On the other hand, when you work with 3PL fulfillment services, they are the ones that make sure the products are delivered into the customer’s hand in a smooth manner. These services receive the products, package them, and store them before transmitting them to the customer. In this case, you need to find the best fulfillment services to manage the entire supply chain in the best way possible.
9. Manage Marketing, Social Media, and Reviews
Your product may be great, but it will not sell if those who need it don’t know about you. This is the reason you need to focus on marketing your products using different methods.
One of the least expensive methods of marketing your products is through social media. Amazon suggests that “Given the vast majority of consumers that frequent social media websites every day, adding one or two social media channels to your promotions and outreach can help drive brand and product awareness.”
Every customer that decides to write a review is an asset to your e-commerce store. Those who write great reviews show you what is working, while those who write bad ones are helping you improve.
If you don’t appreciate the importance of reviews, you probably haven’t seen the statistic by BigCommerce.com: “Customers are likely to spend 31% more on a business with ‘excellent’ reviews.”
10. Evaluate and Act
We may have listed these steps in a simple way, from one to ten, but in reality, the process is not always linear. It is vital to evaluate what is and what is not working at every step of the process. This will help you take the necessary actions that will allow your e-commerce business to scale up.