This is the ‘start-it-right-now-and-learn-more-as-you-go’ guide to a startup eCommerce business.
A lot of people have asked for this. The issue with the resources online is that there are SO many. It’s hard to know where to start.
If you follow along, you’ll be up and ready to sell something online by the end of this edition. It’s packed with short, sharp info snippets.
Let's get you started!
⚙️ Getting Started with your eCommerce Startup
For the duration of this guide, it is assumed we will be choosing a product that you want to manufacture (even if it’s only down the line), and sell yourself.
There is a fundamental difference in startup eCommerce business when compared to traditional retail business. The whole transaction happens online, without the customer or business owner interacting (IRL).
For your average D2C brand, here is your typical cost structure (including significant ones):
- Website hosting
- Domain renewal
- Email marketing
- Product cost of sales
- Advertising (I’ll explain why this is a variable cost later)
- Processing fee’s
eCommerce per-unit costs are higher (shipping + packaging), but their fixed costs are lower (much less rent and employee salaries).
Wholesale vs Drop-shipping
One of the latest trends in eCom is drop-shipping. If you’ve ever ordered something online and it says delivery in 7 to 10 working days - it’s likely that it’s being drop-shipped.
As the store owner, all you’re doing is facilitating the transaction. You build a brand, people buy from you, when they buy, you place an order with the manufacturer/wholesaler and they ship directly to the customer. You don’t ever see/touch the product.
We’re not going to be focusing on this model for now. We’re looking at starting your own eCom business and brand.
Wholesale is the process where you do one of three things:
- You buy in bulk from a wholesaler and sell for a higher price to customers, or
- You find a manufacturer and pay them to make the product from you, or
- You make the product yourself.
One of the most lucrative ways to keep your online store valuable is to use a subscription model. That is when they get charged a recurring fee (weekly, monthly, quarterly etc.) and you send them a product on that same schedule.
Subscription models are powerful because they unlock recurring revenue. That means your average customer lifetime value is much higher, and your cost of advertising and marketing is lower.
🎁 Find Something to Sell
// This section is interlinked with the Product section below. Before deciding on what you want, read that first.
Finding things to sell is easy. Thanks to the internet, it’s easier than ever to spot trends and jump on them.
Here are 3 ways you can do that:
Have you ever been scrolling through Instagram or Facebook and noticed a product being advertised over and over? It likely means there’s a market for it, and you’re in the target market.
There’s absolutely nothing wrong with copying. As long as you’re not infringing on any trademarks or patents, you’re just taking advantage of a free market. Here’s the catch: taking on an already established brand might be difficult. Here’s how you can do it better:
Copying a product is easy if you can find a way to differentiate your product from the competitors you’re copying.
Want to sell hammocks? Make them ultra-portable, or made for over-nighting.
Selling t-shirts? Offer an ultra-tailored option. Make them customizable.
Selling men’s health products? Make them super easy: Take this packet on Monday, this packet on Tuesday. Print “Monday” and “Tuesday” on the packaging.
Set yourself apart from the competition. Own your differences.
Whatever you do, don’t try and compete only on price. It’s a battle you’ll lose. Someone can always make something cheaper. Have more than one value proposition.
#2 What’s Trending
Take a look around you and look what people are buying.
- What products are people moving away from/towards? (Organic vs regular)
- What new things are people doing? (Hiking)
- What are products trending on Amazon, Etsy, eBay and other sites?
My favourite tool for finding and spotting growing trends is Google Trends.
Here’s the graph for “CBD gummies” in the US. An interesting growth pattern over the past 5 years.
And here’s the sharp upward trend we took advantage of in one of our very first Signal Special Editions (Home made bread):
#3 Offline Disruption
In the days of brick-and-mortar stores being the only way to sell, there was demand for shelf-space. That means a lot of products got left off the shelves of big retailers.
That’s where eCom can fill a void.
There’s no shelf-space on a website. You can fill it with anything you want.
Look for industries in your country that are ripe to be disrupted using the eCom model. Casper did this for the bed industry. They changed what was a “terrible consumer experience” (buying a bed in store) into a simple and easy one - buying it online, and getting fast and free shipping and returns.
For an efficient store (i.e minimum amount of returns/exchanges), find products that don’t require any elements of brick and mortar. Example: People like trying on clothes in stores = lots of returns for eCom. People don’t test out tooth brushes = good for eCom.
Here’s one I’d look at: Women’s hygiene products. (I’d need a woman co-founder and/or advisor though).
Once you have found something to sell, the next step is validating that people will buy it.
✔️ Customer Validation
Before looking at how to get the thing made that you want to, you need to make sure people actually want it. Here are 3 ways you can do that:
#1 Check Search Volumes
That’ll give you a good indication of your total addressable market.
When you’re doing this, search for intent-specific queries. If you’re selling beds, it’s not enough to type in the search term “beds” and think that’s your total addressable market.
Take some time to outline key phrases that people with buying intent would search like “most comfortable mattresses” and look at the combined search volume for those terms.
Example, here’s some Mangools search volume data for “Organic tampons”. Promising!
#2 Existing Products
Some competitors is good. No competitors is terrible. It likely means there’s something wrong with the model.
There should already be people selling products in that niche, even if the products are different from yours. If there are none, you should be hearing alarm bells.
Google Ads are a good indicator. If people are buying advertising, it means there’s a market.
Check out the average cost-per-click (CPC) for organic tampons.
#3 Go to Your Potential Customers
One of the most under-rated and under-utilized methods of validating.
Message boards/community forums like Quora and Reddit have made it possible to speak directly to a segmented piece of your target market with almost no effort.
By engaging with a community or reading the thread history, you can get a good feeling for the overall buying sentiment/market movement.
Find out where your customers hang out (online or in the real world) and go to them. Talk to them. Seriously.
Finding a manufacturer can be tricky, depending on what you are wanting to sell.
Your choice in section 1 here will play a big part in the difficulty of your task. My advice is this: For your first eCom business, don’t try and be revolutionary. Pick an easy product and learn about the system. Once you’ve got that, you can venture into more exciting things.
Here is my experience with product design/manufacturing:
This is the best prize. If you can come up with a prototype/MVP by yourself then do it. Being able to take something to a manufacturer and say “I want you to make this” saves months of development time and costs.
Picking a product within your realm of skills goes a long way here. With YouTube and the internet, you’ll surprise yourself with how much you can achieve from home. Don’t be afraid to muck in. I learnt first hand how to sew when designing our clothing prototypes. That meant I was able to properly explain to the manufacturers errors and/or changes.
Getting your hands dirty is highly recommended.
If you can’t then the next best is finding a local company to help you.
Most people’s first intuition is to look to China. It’s the cheapest - in the long run.
However, my experience (especially with more technical products) is to start as close to home as possible.
During the design/prototype phase (if you’re coming up with a relatively new/novel product) you will go through plenty of back and forth. By bringing that process closer to home you’re doing three things:
- Speeding it up. No long international transit times.
- Making it cheaper. No import/export costs and language barrier to overcome.
- Making a better product. You can be hands on, and make changes on the go. That’s not true for China. Eventually you will get fed up and settle for something that’s not quite what you imagined so you can get a product out the door.
Local manufacturers have got a bad rep as they’ve been out-priced by Chinese competitors who have cheaper labour.
The truth is, that model is shifting. 2020 has helped that shift become more rapid. US companies in particular realized how fragile their supply chain is, because of their reliance on China.
Do some googling
If you’re looking for the best price, it’s likely you’ll find it in Asia.
I’d suggest only going this route when you’ve got a proven concept and you have reached a demand level that can warrant orders of 1000+ units.
Alibaba is the best place to look for manufacturers for your product. Most can speak some English, but you’ll want to do your research before committing to any orders. Look for a history of dealing with companies like yours.
You’ll also be expected to have a relatively high MOQ, so make sure your product is 100% right, and you’ve had samples made before committing to anything.
Most manufacturers will reimburse sample costs as a rebate on signing of the contract for a bigger order.
Make sure you have contracts in place which mean your manufacturer can’t copy your product. The last thing you want is to develop a product that people love, only to have it popping up on Alibaba and Aliexpress for people to resell willy-nilly.
Note: Alibaba is for B2B transactions (finding a manufacturer), Aliexpress is mostly B2C.
Oberlo is another option, owned by Shopify, which shop owners use (majority for drop-shipping) to find ready-to-sell products. I’ve had no experience using them.
Manufacturing is about finding the right partners. My general rule of thumb is that, if something feels off, it probably is. You want to be dealing with reputable people.
I’ve also learnt that competing on price is a futile effort. For that reason, the majority of my eCom ventures have used local suppliers. They’re people you know, can trust, want to support, and you’re contributing to your local economy.
Consumers are also mostly happy (depending on the product, and industry) to pay a ‘local’ premium (local products cost more to produce, but the consumer absorbs it).
The problem a lot of first-time eCommerce startup owners make is doing this step first.
Make sure you have all the above ducks in a row, and then get to this. Don’t start with making a pretty website.
On making a pretty website, it matters way less than you think. Getting your website, email, logo, brand and hosting setup should not take you longer than a day. If it does, you’re getting too in depth for now.
Let’s get into that…
There are so many options, so for the sake of brevity and not overwhelming you, here are two choose from (my favourites):
For quick setup and ease of use, Shopify is the winner hands down.
Pick a theme (free ones are great), load your products, mobile friend out the box - easy-peazy. They’ve also got a ton of great education on how to use the platform.
There’s a reason so many eCom operators choose them.
They’ll sort out your hosting too.
Downsides: They’re quite expensive (transaction fee’s). Not very customizable (design-wise) if you don’t want to learn their Liquid language.
#2 Woocommerce on Wordpress
An old favourite. If you’re familiar with Wordpress, this is a good option.
Tons of plugins and options. Functionally, Woocommerce caters for more fringe eCommerce startups than Shopify does. If you want to sell something online, you can do it through Woocommerce.
When picking a theme for your Wordpress site, make sure it’s Woocommerce-compatible.
Downsides: Not very customizable without Wordpress dev experience. Can get expensive quickly if you need multiple paid plugins. Most run on subscription basis.
A non-negotiable, you must setup an email account for marketing.
My choice is Mailchimp. It plays nicely with almost all platforms (sign up form embeds, transactional emails), except for Shopify.
Shopify are busy rolling out their own email platform. I haven’t had experience using it, but it may be worth a go if you’re going to go the Shopify route.
Here are some things you should be doing when setting up email:
- Transactional emails. Sign ups, order updates, the usual.
- Re-marketing emails. You know those “You left this in your cart” emails? Yup, those ones. Thing is - they work. And they’re (almost) free. Make them interesting. No one likes a creepy “We see you like these Men’s underwear size 32”. Here’s an example of mine (super cheesy - but it worked well. This had a conversion rate of over 19% for all abandoned carts.) :
Uh oh. It's bad.
Was it us? It was, wasn't it?
It looks like we need to chat.
You were almost there. Literally a click or two away. And then something happened.
I know, I know. This email is super creepy. How did we know you were oh-so-close to clicking that juicy "Complete Checkout" button?
It's the interweb dark-arts. They're also called cookies. But not the delicious kind. The creepy kind.
I digress. The entire fulfillment center is waiting with baited breath. We had just reached into the shelves to hand select your order. And then we got the bad news.
Fret not - we'll wait all day if we have to. We're that excited about these things. They're super cool
Cummmannn. Finish your order. There'll be a small celebration that happens in the sewing room.
Someone at a small business smiles when a new order comes through :)
If not today - visit us again soon. We'll be waiting in anticipation.
We’ll get to email marketing at a later stage, but make sure you’ve got a way to collect potential customers’ email addresses.
Quick trick: Use a lead magnet.
Pixels & Tracking
As soon as you have a website, get your pixels and tracking setup. That means that Google and Facebook can start learning about the people visiting your website as soon as possible.
The more info you can collect the better.
Getting setup with Google Analytics and Facebook Pixels is super easy with both Shopify and Wordpress. They’ve both got guides you can follow.
All you've have to do is make sure you sign up a Facebook Page for your business as well as an Instagram page too. If you have a moment, ad it to Google My Business as well.
Your brand is how your customers view your company. That's all. Are they my 'friend from down the road' or are they 'the professional I know I can rely on'.
Your brand will be largely shaped around the type of product you're selling, and who you're selling to.
Brand components include:
- Written copy
- Media - Pictures & video
- Colour scheme
The trick here is finding the right balance between making something that looks good, and has appeal, versus going overboard and spending hours and hours refining your brand.
Use the 80/20 rule to guide you here. 80% of the results are going to come from 20% of the effort. Make the 20% effort count. Here are the basics I'd cover to bring your brand to life.
Make it short.
Make it easy to say.
Extra points for a domain name being available. Try a .co domain if .com isn't available.
Look & Feel
Remember who you're appealing to here. Design your brand around your ideal customer. Creating an extensive customer persona is one way of really nailing down who you're trying to reach. Here's an example.
Your look and feel will consider elements like:
A good trick is to create a brand story-board. Make a big file on Canva and copy in images, colour palates and logos you like. Add and delete as you build out the look and feel.
Then go ahead and create some templates for Emails, Instagram, Facebook etc. posts so they all look uniform.
Have a look at Huckberry for a great example of a D2C eCom store that has nailed it's brand.
The most important element of a brand by far.
Human's love a story. It's in our nature.
Your brand needs to have a story. Make that story prominent in your narrative and marketing.
People don’t buy your product, they buy your story.
Here are some things you can use as a pillars to build your story on top of:
- Why you started the business,
- Who you are,
- What you're trying to achieve,
- Why your products matter,
- What gets you up and excited to make this happen in the morning.
🚚 Packaging & Shipping
Packaging is part of your brand.
Want your product to look cheap and from a small company that doesn't care? Wrap it in clear plastic and stick it in the courier bag.
For most people, online shopping is exciting. They get a little dopamine hit from opening up a package they've been waiting for. Take advantage of that and make the experience memorable.
To this day, the clothing startup eCommerce company I started writes hand-written notes for every single order. I used to do those myself, and include a personal message to each customer based on where they ordered from.
The clothes were neatly folded and packaged like a present. The packaging was cheap, but looked great. It fitted our brand narrative.
Note: Be aware of your packaging to item cost ratio. It is essentially an added cost-of-sales.
This is largely dependent on where/how you run your store. Plenty of courier companies out there allow you to sign up online and create an account and start booking.
When you get to the stage where you're shipping 10+ orders a day, you may want to start looking at a fulfillment center or a dedicated employee to handle logistics for you. Keep your head above the clouds so you can focus on moving the company forward.
💥 Your First Customers
The number one rule for getting your first customers through the door is: Do things that don't scale.
Go the extra mile, do what no one else is willing to do. Wow your customers.
Some other things you can do:
- Leverage family and friends. It's a great way to get the ball rolling. Don't underestimate the power of this.
- Crowdfunding. We did this. It gave us the capital we needed to get our first production run through, and we bootstrapped from there. (There's also so much to be learnt from successful crowdfunding campaigns around launch-marketing)
- Launch on ProductHunt.
- Build in public. Don't do a launch. But document the whole process from the very first day you start working on the company. Take your customers through that journey so they're invested in it.
- Paid ads. If you're confident in your abilities here.
- Write something controversial. Check out hey.com's launch marketing tactics here. Learn from them.
🚀 From 5 Orders a Week to 50
Once you've found market traction, you can start looking at expanding and acquiring new customers. Here are some marketing strategies to put in place to get your business growing.
The best place to start. Remember those pixels we setup? Those are going to become really important now.
What they allow you to do, is target Facebook and Instagram users who have visited your site, but not bought anything. You can also use them to create lookalike audiences based on the customers who have been interacting with your website and buying your products.
Depending on your type of product, you're going to want to either start with Google or Facebook/Instagram. Let's go with Facebook. It's easier to get going, and in most cases, more applicable than Google Ads.
The number one rule when starting out with paid ads is: Start narrow.
Define an extremely narrow audience, find what's working, and then use that to expand. Don't try and cast your net too wide too early. You won't learn anything about what's working, and you will burn through your ads budget in no time.
You're going to go through a bit of money getting your Facebook ads going well. It's worth it, because when you do get them right, you can scale your business quickly! Be prepared for this, and make sure you have the budget for it.
Here are some steps to get you started (We're going to assume your Pixel hasn't yet collected enough data to use successfully):
- Make one Facebook Ad Campaign from your Facebook page.
- In that Campaign make 10 Ad Sets. (People you choose through targeting)
- For each ad set, have only one interest being targeted (that is related to your target audience). Keep your targeting locations mostly consistent. If you're targeting multiple countries or very diverse regions within countries, you might want to vary your location targeting too. What we're trying to do here is find your ideal customer who will buy from you online. To do that, you have to be able to tell different ad sets from one another. Changing too many variables can confuse that. Keep your ad sets well defined.
- You shuold have an audience size of at least 500k. If not, you'll likely pay a lot per customer, or won't be able to get any good insights.
- For the ads, the same rules apply as in 3. Outsource to someone on Fiverr or Upwork if you aren't confident doing them yourself. A tip here: COPY! Google good examples of high converting ads and copy them!
- After a day of your ad-sets running have a look at the following metrics:
Click through rate (CTR) - Should be greater than 1%
Low Cost Per Click (CPC) - Less than $2 USD (this can vary depending on how high-ticket your product is. Higher value = higher CPC)
Low Cost per 1000 impressions (CPM) - Less than $20 USD. (Same note as above)
- As you go, look through your conversions for each ad set. Here are some guidelines to narrow down your ad sets which are working:
After 1 Day: No ViewContent actions = STOP
After 2 Days: No AddtoCart actions = STOP
After 3 Days: No Purchase actions = STOP
- You might have to go through this process more than once and create more ad-sets. Trust the process!
- Once you have 2 or 3 ad-sets that are converting well, duplicate them 3 to 5 times and publish.
- If they continue performing well, you've got a well-defined audience.
- Make sure your unit economics are right (You're not going over-budget acquiring a customer) and then scale your budget on the ad-sets which are working.
- Scale the ad-set budgets incrementally. Start at $20 USD per day, and increase slowly. Keep an eye on the metrics above and kill ad-sets which aren't converting.
- Once you're spending about $200 USD per day, you need to start optimizing your budget. We'll get into that in a later post!
There are tons of resources out there on how to setup winning ad campaigns. This is a process I taught myself and worked for our company.
Collect emails. It's the best way to own your audience.
There is no better guide to email marketing than this analysis of Huckberry's email marketing.
There is no D2C brand I know of that does it better.
Here are some quick tips:
- Email frequently, when you have something valuable to say. Once or twice a week is suitable.
- When someone signs up, give them some value immediately through an automation. Send them a link to a cool video, a discount code, or something that rewards them for their trust in your brand.
- Include something non-salesy in every email you send. The idea is that, if the person doesn't want to buy at that stage, they still get some value from the email. They can still click on something an interact with your brand. That creates good brand-connection and affiliations for you.
- Clean your list. It's tempting to try and build a massive list of subscribers but if your open rate is abysmal, it's not actually of value. Your sending domain reputation relies on a good open rate.
- Encouraging clicks and replies also helps domain reputation.
Affiliates are people who refer new customers to your store. In return for this, you pay them commission.
Affiliate marketing is a great way to build viral growth into your store. Using your customers as affiliates requires a great product. There is a great deal of inertia involved with trying to get your customers to share your product with their friends. This can be achieved through your brand story.
Shopify has affiliate tools/plugins you can use. I used Referral Candy. It's expensive, but it works.
Other affiliate marketing channels to consider are content creators. This will come down the line when you get a bit of PR presence and start getting approached by brands and companies wanting to collaborate.
A relatively new marketing technique that can be extremely powerful.
The trick I've found is to find smaller influencers in your space. Look for people in the 5k to 20k follower range. Instagram was the best converting channel here.
- Make sure your audience is very well aligned with the influencer you choose.
- Try negotiate a profit share remuneration structure rather than once-off marketing cost. This aligns your goals nicely and is better cash-flow wise.
- Craft the ad to appear as natural as possible for that particular person. Study their posting, language and what resonates with their audience. Let that guide you.