Expert: Michael Michelini - 3/1/2010

Question
I am aware of what is required to create an E-Commerce business.The problem that I have is the order in which to install the required components,I would appreciate your help greatly.

Thank you very much,
Howard

Answer
Hi Howard,
thanks for your question - well your question is rather open ended, and books are written about this, but i think you want a simple step by step process, here is my best shot:

1) pick a product line
  normally, you want to do keyword research ( http://freekeywords.wordtracker.com) and competitive analysis on this industry.  But also keep in mind if its a product you want to deal with EVERY DAY,  so you should have an interest in it.  And even if its highly competitive, doesnt mean you can't find a niche.  Maybe you can take sneakers and target working class women who want to have a commuter style shoe.

2) wholesale / drop ship / affiliate - will you buy your products up front (wholesale)?  That may require a lot of upfront cash.

Drop ship is where a wholesalers allows you to resell their inventory on your own website / sales channel.  Only when you get a online order, then you buy it directly from the wholesaler and they ship direct to your customer, as if it were your own shipment.

affiliate - this isn't really ecommerce as the customers are sent to other peoples websites to buy, and you are paid a sales commission.

all of these are balanced by risk/reward in their margins.  if you are wholesaling, normally you see the max profit margin but the highest risk of upfront capital outlay.

3) choose your sales channels & choose website / brand
i assume you will sell it online, via your own webshop website.  But also consider multi sales channels, such as amazon and ebay.  For your own webshop, choose a website domain that is catchy, but also contains keywords in the industry you're targetting.

4) install / setup your webshop
This can be easy, or difficult.  Its like anything, you can by a stock car and not customize it, or you can build your own hot rod.  Depending on your budget, or your technical interest/ ability these are some choices:

prostores.com - connected to ebay, this is a scalable model as it allows you to start at $10usd/mo and work up as you grow.  But I have some friends who take this website to really high levels and then have issues with customizing it

yahoo stores - another big one, i know a lot of people using it, but haven't yet.

oscommerce / zen-cart - this is a bit on the "do it yourself" or "pay high price for technical people to do it" level.  I would recommend this only if you are very advanced in ecommerce or have a big budget to pay someone to do it for you.

5) how will you collect customers money? (merchant account)
probably to start, you will just want to use paypal.com - as there aren't any setup or monthly fees.  But if you want to process a credit card, you will need a merchant account.  Paypal does have one, but I would recommend a traditional one.  I personally use merchantsolutionsllc.com and they have good staff and help you with questions.

6) promoting your website
this is obviously KEY - and should be in mind from the beginning.  How will you tell people about your site?  Internet, offline?  How will you get people to buy?  Online , there is advertising

(paying for it) - google.com/adwords - pay per click (doesnt mean they will buy)  can be tricky, and can cost a lot of money quickly.  watch closely.

organic - hit the pavement, get links to your site.  get bloggers and other websites telling people to go to your site.  Normally its done by daily work and passion - that is why you should be interested in your product, as this requires you promoting it daily.

social media (friends) - not as established, but getting more popular, as people recommend products/services to others.

7) warehousing / shipping - if you are stocking your products (wholesale), will you put it in your garage?  rent your own warehouse?  There are also businesses called "ecommerce order fulfillment" or 3rd party shipping centers that will warehouse and ship your products on your behalf, so you can focus on sales / marketing.

I hope these help, like i said at the beginning of this post, books are written about each of these points!

good luck!
Mike