Starting an eCommerce business from scratch Part Two: Ship it
Welcome back to part two in this series of blog posts on starting an eCommerce business from scratch. If you missed the last post check it out here. In this post I’ll be covering how to decide on pricing, identifying a unique selling point or at least some differentiation, and launching an eBay store.
At the end of the last post I covered sourcing a product and all that goes with it, in my case it was UV Nail Gels. With the product decided, and the order on its way I had to decide on the route to market, or in simpler terms, how I was going to actually sell it. The goal was to start selling a generic brand on eBay, gain enough customers to allow me to launch my own brand, and create a good stream of customers to my eCommerce site. So essentially use eBay as not just a shop front, but an actual revenue generating sales funnel.
Launching an eBay store
There are various options to start selling on eBay, a simple sell as you go, just list your wares, pay a listing fee and pay a percentage of the final sale price to eBay. I started with this, but very quickly launched an eBay shop. Having an eBay shop offers much more functionality, especially within the area of automation, which is one of the key goals for this venture, and as we will see later, having an eBay shop is required once we begin to integrate with stock management and fulfilment software. It’s safe to say, that setting up an eBay store is pretty intuitive, if you don’t need any type of integration at this point, then £5.00 per month will get you going.
There are various listing types and variations, as I have set costs “Buy it now” is the only option for this product. Multiple listing periods are also available, this is where the eBay shop comes in handy, as an eBay shop owner you can list you items as “Good till cancelled”, which means we don’t have to re-list every 30 days, which despite what eBay say, does seem to affect your listings in search results in a negative way when you re-list.
A template I think is a must for your store, it helps you stand out. They are freely available on the web. As I know HTML/CSS I was able to quickly adapt a free one in to exactly what I needed. Don’t let HTML knowledge be a barrier for you, you don’t need it as eBay offer them built-in. You can worry about bespoke templates later if you need to.
With our eBay store ready to go, we need to now think about how we are going to differentiate ourselves. Before we can do that however, we need to understand where we might be able to do this, so having a good handle on our costs and our pricing will help us.
To do this, we simply need to work out all our costs (Hopefully you do this before actually buying product, but we’ll cover it here anyway). I took the following costs in to account:
- Individual product cost per unit
- Total import shipping and fees divided by number of units to give us a per unit cost
- Cost of postage per unit
- Cost of packaging per unit (include envelopes and labels)
- eBay fees (both listing and final fee per unit)
- PayPal Fees (per unit sold)
There are various other costs of course, but here we are talking about a small-scale business, so we will assume no business premises at this point.
Now that we have our costs, we can start to look at what we might be charging. My strategy was simple, look at the best and biggest sellers on eBay and match their pricing. Note here that I’ve said, match and not beat. It’s important here to remember that we want to eventually create a stable brand of our own, so we need to avoid adding to the eventual commoditization of our chosen product while we are still on our way, (see http://www.liamwinder.com/become-your-own-commodity/). We’re also not upsetting other sellers on eBay, and essentially playing a different game then a price war. So if we have done everything right so far, we should have a product for sale on eBay at the same cost as the leading sellers.
So now we need to look at where we can differentiate. With my prices the same as my competitors I focused on three areas, postage cost, dispatch time, and customer service. None of the other sellers were offering same day dispatch, most were either charging for postage or offering free, but only at 2nd class. 2nd class does fulfil the criteria for eBay to highlight you as “free and fast”, however offering same day, free, 1st Class postage is a real way of adding value over and above the actual product. This leads in to great customer service. To be able to dispatch same day on 1st class, means you need to be on top of your game to get orders out the door quickly. It’s through delivering this extra value that we add our great customer service in to the mix. This also means dealing with enquiries within minutes, and taking care of any unhappy customers as quickly as possible. An easy way to ensure a customer will be happy is to give them the type of service you yourself would not only expect, but that you would tell others about.
In summary, this stage was the real foundation of getting the business going, a little gruelling when you don’t have set systems for order picking, dispatching and general management. But once you start actually shipping your first few sales, it’s really gratifying. And you learn as you go, creating your own systems, or adopting existing ones. eBay can really help you get a handle on this.
In part three of this series I’ll be covering how to launch your own eCommerce site. As well as some 3rd party plugins and apps that will help make things easier as you scale.