In recent times, owing to the onset of COVID-19, many of our traditional ways of running a business had been disrupted. Working from home, one option is to start an online sales business selling various products, but how to start one? Obviously you start by creating a front for customers to reach you. In the past, there are two common ways to do this:
1. Online Website Store
Using websites such as Wix or Weebly. This method gives you the most control in the content and visual style of your shop, showing your potential clients your style. However, you also have to pay for your domain name. In addition, because you are setting up a storefront, this means your shop have to ensure a secure supply of stock, which in turn requires the most capital upfront. Unless you decide on a one-person store, there will be further cost will come in the form of support staff that help you with the daily running of your site.
Therefore, unless you are selling proven products or branded products that can carry themselves, this method will be tough in the beginning.
2. E-commerce websites
Open your own store account on one of the major online platforms, such as amazon, e-bay, Etsy. Through these websites, you get access to customers who frequent those sites and that is usually a large number.
However, at the same time, these websites have a lot of terms and conditions that you must abide to. Also, you are one of many suppliers selling similar products in a large marketplace, so you are facing stuff competition. Then, being a supplier means one thing: stock.
Looking for ways to reduce cost, many who have an online store had been exploring the following methods to control their cost:
Dropshipping
This is where seller accepts customer orders but do not keep goods sold in stock. Instead, the seller transfers the orders and their shipment details to either the manufacturer, a wholesaler, another retailer, or a fulfillment house, which then ships the goods directly to the customer. As such, the retailer is responsible for marketing and selling a product, but has little or no control over product quality, storage, inventory management, or shipping. Several sites have set up their own supply chain methods, such as Aliexpress and Amazon. For example, Amazon has the FBA servicealso known as Fulfillment by Amazon, where they take care of all the warehousing, shipping and delivery methods for you. So all you need to do is to notify Amazon when there is an order and they will handle the rest.
The catch is, the cost involved in these fulfillment methods and these can eat quite a lot into your revenue. Also, depending on whch service you use and the country where your product is produced, there may be barriers that drive up cost for you.
ODM – Original Design Manufacturer
This is where you outsource your design to a manufacturing company who is willing to build the product to your specifications and you rebrand that product for yourself for sale. There are three key advantages to this:
- It saves you from having to produce it by yourself or to have a factory asset to produce them.
- It is also advantageous in international trade where you can take advantage of lower transaction cost such as transportation and labor;
- ODM manufacturers tend to have their own patent it technologies of products which gives you a unique advantage compared to competitors products in the market as long as you have made agreement with the ODM to utilize them
A similar aspect is OEM – original equipment manufacturer – Where instead of producing the actual product for direct selling they produce parts and equipment for companies to include into their products. A major example is Foxconn, who produces parts and equipment for brands such as Apple, Nintendo, Dell, Huawei.
POD – Print on Demand
Print on demand works in a similar fashion to drop shipping in that you only produce when you receive an order. You first create your design (can be a quote, picture, artwork), set it onto the designated item and you then place it online as your product. When a customer orders your product then You can produce it from one of the digital printing companies and then ship it to your client. This way you do not need to carry stock therefore keeping your costs low. However since print on demand is very design orientated you must take care in ensuring that your design is original and not just copy from other works.
Print-on-Demand tends to be used on projects that can be done via digital printing such as garments and on household kitchen items such as cups, table mats etc.
In the end, doing an online business is not that different to an offline business. Both require time, resources and effort to build up and prosper; both have their respective cost and pitfalls. Determine the niche you are trying to create for yourself, decide what range of products to sell, generate leads in notes to get seals do marketing in order to get your brand out. Also, know your limits – it is good if things go well, but even though you have to push the business to get results, also know where the event horizon is because you cross into an endless black hole of stress, frustration and loss.
So, if after all this, you decide to go for it, then I bid you all the best of luck~!