Business models: online store and sale of physical products

Business models

The online store is probably one of the most widespread business models in the world for selling products online. We all know examples of internationally renowned eCommerce platforms (e.g. Amazon, Aliexpress, eBay, etc.). Such examples have brought new entrepreneurs to the list of the richest people in the world, which confirms that the online store can be a very successful business model.

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But in a world dominated by online advertising and popular brands that conquer the market and have huge budgets, how can we build a profitable business based on the online sale of physical products? Or even how to start a successful home business?

I invite you to find out, further, what are the steps to take to start your own business based on the online store business model.

Step 1: Choosing the niche of selling products online

If you read these tips, the business you will probably start is a small, niche one. Although you can’t compare yourself with the famous stores, I want to show you that you too can be successful with this business model, even if you have a small budget.

The first step is to start with a thorough market research. There are two possible scenarios you are in:

  • You already have a product/category of products for sale online;
  • You have not yet chosen the products you want to sell online.

If you are in the first situation, then what you need to do is study the market in your niche. For example, if you want to sell toys, you need to make a list of other online toy stores exclusively on the market in your country (or internationally, depending on how much you want to expand) and create the profile of your target audience (an avatar of potential consumer).

If you are in the second situation, then I simply suggest you study the market, using Google or the tools it provides (Google Trends or keyword planner) to see which are the most popular types of products on which you can trade. Be careful, however, because the most popular niches (fashion, cosmetics, food supplements, etc.) have the biggest competition, which means that you will need a large budget to invest in the first months (in the order of tens of thousands of dollars ).

Once you’ve chosen your niche and studied your target audience and figured out what budget you need to get started, it’s time to move on to the next step.

Step 2: Notices and Authorizations

This stage is perfectly normal for any business. In the case of an online product sales site, here’s what you need:

  • Choosing the name for the company and booking at the Trade Register;
  • Form of legal organization
  • Social headquarters;
  • Personal employment according to future needs (marketing, logistics, etc.).

I know there is a lot to consider. It is important to keep your enthusiasm high. Here are the most common mistakes in entrepreneurship to beware of.

Step 3: Offline logistics

One of the most important steps, without which an online store would not exist, is to set up everything that logistics means:

  • Establishing partnerships with the right suppliers;
  • Purchase of products for sale and their storage;
  • Establishing partnerships with the courier company/companies;
  • Making packaging and labels for deliveries;
  • Establishing the delivery method.

In other words, you need to set up an e-fulfillment system for your business. There are companies that specialize in providing these services for online stores. So, you can, for a fee, work with an e-fulfillment company so you don’t have to store, pack and ship orders from your future online store.

The costs for such services are usually charged per order and start from 1$. Additionally, you will need to cover the costs for packaging, labels and, of course, for the purchase of stocks of products that you want to sell.

Step 4: Online logistics

Although it seems a bit inappropriate to say, I wanted to include in this step everything that means your online system for selling physical products.

This step includes:

  • Choosing the brand name for your online store and choosing the domain;
  • Find the right platform for your site;
  • Choosing the right hosting depending on the platform and the size of the store;
  • Creating the online store from a creative and technical point of view (copy writing, web design, branding and visual identity, SEO);
  • Adding content to the online store (product categories, technical specifications, information pages, product descriptions, etc.);
  • Integration with an online payment system to offer the consumer more payment options (card, cash on delivery, Paypal, account deposit, etc.);
  • Creating an online promotion system for your business (social media presence, subscription and newsletter system integration, discount/customer loyalty system integration);
  • Development of privacy policy, cookie policy, terms and conditions page – you may need the help of a lawyer, this step is essential to comply with applicable law.

It may sound complicated and you probably feel like there are a lot of steps to follow. It is true that nowadays, starting any type of business must involve a well-thought-out system. In other words:

Your customers

  • They can find out about the products or services sold;
  • They can subscribe/register to receive personalized information;
  • Can buy/order/request an offer for the desired products/services;
  • They can benefit from offers/promotions that will convince them to buy again/to recommend the products to others as well.

By presenting the information in this way, you most likely realize that all the aspects I mentioned in the previous list are common sense and mandatory for an online store. Therefore, to follow these steps, you need to use one or more companies specialized in: hosting, IT and web design, advertising graphics, copywriting, SEO, online promotion (PPC Marketing), email marketing.

For this reason, we must also talk about:

The basic costs of setting up an online store

  • Set-up costs, paid only once at the beginning: they can exceed 5,000$, depending on the complexity of your store;
  • Maintenance costs, paid monthly or quarterly, for the technical administration of the online store, web hosting and content updating (product stocks, new information, optimization). These costs can vary, between 100$ and a few hundred dollars per month, depending, again, on the complexity of your business;
  • Promotion budget: it must be invested monthly, continuously, throughout the existence of your online store. Because it is a business that needs constant promotion and communication with potential customers, you must be present at least in social media (Facebook, Instagram, Youtube), in Google searches (organic and paid).

However, set-up costs also depend on the platform used for your online store. The most accessible platform in terms of costs and administration is WordPress, with the WooCommerce module. But, as we discussed in the article Why WordPress online store is suitable in 2021?, We can tell you that you have to be careful if you make this choice.

WordPress is also a platform designed for online stores and WooCommerce is a module (an extension) that allows you to sell products on the site. However, I would recommend this solution only if you have a small online store, restricted to a few products (maximum 100).

If you want to expand your business to sell products online in large numbers, you need to turn to another platform, such as Magento, OpenCart, Prestashop, Shopify or even a web design agency that will make your custom store from scratch , without a certain platform in the back.

Conclusion and final recommendations

Do you want to choose the business model that involves selling products online? Most likely, you need a starting budget of around 10,000$.

You should also not expect immediate results. As in any business, sales will come in time – possibly after the first 2-3 months – and profit in an even longer time. You have to have confidence, patience and allow the organic, natural growth of your store.

You don’t have to turn your promotion into spamming and you don’t have to create the impression that you’re running after sales. The first orders may appear after the first month or even later, which is perfectly normal for an online store at the beginning of the road – and for a brand new market.

The profit, on the other hand, can come even after a year from the first orders. This is perfectly normal. It will not be an easy way to have your own online store, but it is a beautiful business model that has proven to be successful.

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