Running your own E-commerce brand for the first time comes with a steep learning curve. Here’s my most valuable learnings after running my own for 2 years.
1. Know your numbers
You do not want to spend all the time and effort running the business only to find that you’re making a loss. Knowing your numbers is key to a profitable business.
1.1 Price of product
There are many ways to price your product. The simplest option is the Cost Plus model. You take all the costs associated with the product and apply a percentage markup to it. This is the option I went with.
Another way is to use Value-based Pricing. In this case, you price your product based on the customer’s perceived value of your product. This works best if you have a very differentiated product compared to competitors. Branding is especially important if you want to use this pricing method.
You can also look at the general market price for your product and price it similarly. This assumes that your product is not differentiated.
How you price your product will affect your profit (or loss).
1.2 Maximum costs of customer acquisition
Once you know your product price and profit, you’ll know the maximum amount you can spend to get each customer. This will guide your marketing, such as running ads to generate sales. If you spend more than the maximum costs, your business will be making a loss.
1.3 Customer Lifetime Value
When you run your business for a period of time, you can identify how much revenue each customer generates on average. Knowing this allows you to potentially spend more upfront to get a new customer.
2. Launch with the Minimum Viable Product
Most platforms such as WooCommerce, or Shopify gives you the ability to customise the look and feel of the website.
Naturally you want to optimise your store based on best practices. You may start researching the best theme and design to use. You may end up at one corner of the internet reading a research paper on how green-coloured call-to-action buttons outperforms red-coloured ones. (At this point, you may also start to suspect that I went down this road. Trust your instinct.)
It is important not to spend too much time on these. Any optimisation efforts spent at this stage does not give a good return on investment of your time and energy. You can always come back to optimise your store when you’ve gotten enough traction. Choose something that is good enough, and launch your store as soon as possible.
3. Have a clear niche and target audience
It is tempting to build a general store like Amazon. The reality is that it is really hard. You need to have a clear focus on a niche and the target audience first.
For example, in the beauty industry, you can focus on skin care. Within skin care, you can focus your products on anti-aging, pro-aging, or any others. The point is to choose a sub-segment of the market first. You can expand horizontally or vertically in the future if desired. Even Amazon started with selling books.
4. Set up a system to run your operations
When I first started, the daily operations were a mess. I was trying to do product research while replying to customer enquiries at the same time. I would process new orders while creating a Facebook ad. There was no system and I was all over the place.
I set up a system where I dedicated days for deep work such as product research. And others for order processing, customer returns, etc. I became more focused and productive.
While this list is not collectively exhaustive, I find them my most valuable learnings.