Online business basics: The different business models

(This is the second article in my Online business basics series. You can find links to the other posts in the series on this page: Online business basics)

One of the big pitfalls when you’re in the early stages of your online business is trying to reinvent the wheel.

I know this one well because I’ve done it myself!

Online business looks easy – you set up a website, get Facebook and Twitter account and start blogging. You get a few followers and everything looks great. Until one day you realise you’re not making any money!

It’s much easier to follow a tried-and-tested online business model than it is to make it all up as you go along. Here’s a quick guide to the different types of online business: Continue reading “Online business basics: The different business models”

Setting up an online shop: Pros and cons of each type

If you’re thinking of starting an online shop you might be surprised at the number of options available to you. Working out whether to use eBay, Amazon or to get your own website is enough to make your head spin, so here’s a quick guide to the pros and cons of each different type of shop.

If you’re wondering how to tell which is best for you, think about what you’re going to be selling, the level of technical skill you have, your budget and how likely you are to want to grow the shop later on. You can run two different shops alongside one another (many business mums have both an eBay shop and their own website) or you could (say) start with eBay and build your own website later on.

There’s more about  actually starting up in my article how to start an online shop. Continue reading “Setting up an online shop: Pros and cons of each type”

How to start an online shop

online shop

Note: This post was updated in May 2014 to include recent changes to SEO and social media.

You can start an online shop on a really tiny budget. Seriously.

OK, let’s get on with the steps! Here’s how I’d start my own online shop…

1. Work out what to sell

I’d have a think about things I might like to sell and then look for niches. (Why is a niche so important? Check out my post Why you need a niche.) So let’s say I fancy selling t-shirts. A basic t-shirt shop is pretty boring and I doubt I’d be able to compete with the big stores out there anyway, so I need to find a specific type of t-shirt. When I type ‘t shirt’ the Google Adwords Keyword Tool I can see what different types of t-shirts people are searching for. This gives me niches like ‘retro t shirt’, ‘designer t shirt’, ‘star wars t shirt’. I’d aim for a niche/keywords that has quite a few people searching for it, but that doesn’t have high competition.

Let’s say I go for ‘goth t shirts’. I’d still do this if I’d already been selling on eBay and was planning to move over to my own shop.I’d even do it if I was planning to make my own craft items because I might be able to tweak what I make to match what people are searching for. I’d make a note of the words people use when looking for goth t-shirts. Do people search for ‘goth t-shirts’ or ‘gothic tshirts’? How about ‘gothic clothing’? Then I’d look at my competitors to see how I could do things differently. If most goth t-shirts are poor quality, I’d look at selling some really top quality ones, for example. Cost = £0 Continue reading “How to start an online shop”

Running an Online Shop: Pros and Cons

Today I’m introducing my first ever male guest blogger Trevor Ginn of HelloBabyDirect.co.uk!  Dadpreneur Trevor is going to give us the basics on running an online shop. It would be great to have a few more blokes around here, so if you’re a dad who started a business to spend more time with your baby or toddler and would like to be featured on Business Plus Baby then drop me a line! Anyway, over to Trevor…

The huge amount of money which parents spend on products for their newborns inspires many parents to think about setting up some sort of baby focused retail businesses.  The baby sector is an attractive option for would be entrepreneurs as it has been hardly been touched by the recent downturn.  Recession or no recession, people still have babies.

An increasingly popular option is to ignore the traditional brick and mortar shop in favour of selling online.  This strategy is in many ways sensible as, while the rest of the retail sector is in the doldrums, online sales are still experiencing double digit year on year growth.  Buying online has great advantages for parents in terms of convenience and increased product availability.    In addition, the barriers to entry online are much lower than traditional retail.  So how easy is it to set up an online baby shop?  This post looks at the pros and cons of this business opportunity.

Pros

Easy to start

Sites such as eBay and Amazon make it easy to start selling online.  These marketplaces have a huge, international user bases which allow sellers to get off to a flying start.  Very limited technical knowledge is required, although a basic understanding of HTML can help to make listings more visually attractive.  There are also no set up costs to sell on eBay or Amazon.

For people with more technical know-how, setting up a transactional website is also not as difficult as it used to be and there are lots of solutions available off the shelf at a very low cost or even for free.  OS commerce and Magento are popular open source solutions for creating an online shop.

Cheap

An online retailing business can be started on a very limited budget.  All that is required is some stock and an online presence on eBay or Amazon or your own website.  This is all easily achievable for around £2000-5000.

(Note from Helen:  If you want to know how to do it for less than £200, check out How to start an online shop on a budget)

Sales 24-7, worldwide

Unlike a high street shop, sales on the Internet can be made 24-7.  The Internet also opens up a business to an international audience.  Around 20% of eBay sales are international and the current strength of the Euro makes UK prices attractive to people in the Eurozone, even when additional postage is considered.

Not limited by geography

An online retailing business can be run from any location and an expensive high street location is not required.  Many sellers work from home, although this may become difficult as sales grow.

Cons

Admin intensive

Running an online shop is hard work.  Creating product listings are time consuming and maintaining the product catalogue is a never ending job.  The proposed VAT increase, for example, will mean the retailers must reprice all their products.  In addition all sales should be packed and dispatched on a daily basis.

Customer service

There is no getting away from it, customers can be a pain.  Being a retailer involves dealing with the general public and so it is important to be patient.

Solitary

Running an online retailing business involves very little face to face customer contact and so can be a little lonely.

High competition, low margins

Let’s face it, the web is where people go to get bargains and consequently competition is fierce.  Margins in online retail tend of be lower than on the high street and so retailers need to compensate by selling more.

About the author

Trevor Ginn set up and runs the online nursery shop HelloBabyDirect.co.uk and you can read his blog at www.trevorginn.com