How to Know If Your eCommerce Idea Is a Good One: 6 Telltale Tips
- Written by Adam Jacobs
If you're worried that the $9.09 trillion eCommerce industry is going to slow down in future years, don't fret. Between 2020 and 2027, the global market is projected to increase by around 14.7%. Creating and maintaining an online shop is about to become even more lucrative than ever before.
All of this positivity surrounding the industry may just have given you the idea to open up an eCommerce startup of your own. In many situations, this is an awesome idea, but there are a few things that you should think about before taking the leap. Read on to learn whether or not your eCommerce shop idea is one that you want to invest in.
1. Is It a Fully-Formed Idea?
While a half-baked idea for an eCommerce shop isn't necessarily a bad idea, it absolutely shouldn't be executed until it's thought through more thoroughly. A good startup idea is one that's been considered from both practical and logistical angles. If you just came up with the idea for your shop, acting immediately is a rash decision that could result in a lot of lost time and money.
If you decide that your idea is still in the process of forming, sit down in front of your computer and make a list of considerations that you'll need to think about. These considerations can include a list of the products you're selling, how much obtaining/creating them will cost (and how you can turn a net profit), and the logistical factors in opening an online store such as shipping and payment methods.
Only when you answer all those questions can you truly figure out whether or not your business idea is a good one.
2. Are You Passionate About Your Products?
Most entrepreneurs decide to become their own bosses because they want to work on something that they're passionate about. If you're someone who loves fashion and accessories, you'll have a much more fun (and profitable) experience selling wholesale jewelry than you would selling computer hardware.
Passion for your products is important because operating a startup necessitates spending a lot of time with the material. Additionally, you will be able to connect with your target audience if you share interests. This will make them feel that your shop is a good choice over the less emotionally-invested competition.
For example, I am passionate about the entertainment industry, which led me to take over Bubblegum Casting and then branch out to open Hunter Talent. Both agencies are doing quite well, but I’m quite sure that this is mostly down to the fact that I’m so passionate about my work. The late nights, weekends of work, and endless list of tasks really don’t bother me much because I love what I’m doing.
So think carefully about your idea. Is it something that you could spend every waking moment working on? Because that’s what it’s going to take.
3. Is The Demand There?
However, the sad fact is that your being passionate about something doesn't mean that everyone in the world will be. You need to be realistic rather than idealistic about what you plan to sell. Research market trends in your prospective industry to discover whether or not it's lucrative.
Track how many people are visiting and making purchases from shops that are to be your direct competitors. You can gather this information from Google Analytics. You can also look into what items are getting the most sales in these shops using this tool in addition to looking at what people like most on your competitor's social media pages.
4. Do You Have the Funds for Your Startup?
The next thing you need to do is look into your budget and make sure that you have the money to start a business. You will need funds to invest in an eCommerce platform and develop a website that's appealing to consumers. You also will need the money to innovate and develop products that people actually will want to purchase.
Draw up a budget on paper. Look into the expenses that you have and how much your projected sales will be. This will give you a better idea of how much you will need for your startup.
5. Is Your Startup Sustainable?
Once you know that your startup is in demand and that you have the funds to set up shop, you still need to consider whether the business is actually sustainable. Calculate your projected sales and how much you will make from these transactions. From there, you can figure out how long it will take to turn a profit.
If it is going to take your business a long time to be profitable, it's critical that you have the money to tide you over until it does. Your business may only be sustainable if you take out a loan or find a big investor. If this is the case, go find this funding source before deciding whether or not to set up shop.
6. Is This the Right Time for This Business?
Finally, consider whether or not now is the correct time for your business. Will your products sell better seasonally? Are the items you're planning to sell en vogue right now?
The eCommerce industry is booming, which automatically means that opening an eCommerce shop is a better idea now than it was in the past. However, you still need to consider whether or not there will be an even better time in the future (and if you can hold off until then).
So, Is Your eCommerce Startup a Good Idea?
While the online shopping industry is currently enjoying a really profitable spell, that doesn't automatically mean that all internet stores are going to be successful. However, if you consider the fundamentals and logistics of your business before setting up shop, you'll start the path to success on the right foot.
Bio
Adam Jacobs is the incredibly busy Managing Director of Bubblegum Casting and Hunter Talent. He works with some of Australia’s biggest brands, media properties, and agencies to secure talented children to work in television, film and modelling roles. They’ve recently launched an office in LA, too.
