What you need to pay attention when opening a small online store

In Russia, the e-commerce market is growing very rapidly. For those who have no experience of opening an online store, but think about it, I describe the key features of the construction of this business and the main points that need to be paid attention to.
Most of the recommendations are for those who do not have the budget to create a large online store. The approximate amount of the cost of a small store from 50 000 to 1 million rubles.

1. Product selection

Before opening an online store, the first thing to do is to choose a product to be sold. Much depends on the type of goods.

Product selection criteria:

• Physical characteristics of the product (dimensions, weight, impact resistance)

It is more convenient and cheaper from the point of view of logistics to trade in small-sized and light goods. They can be delivered by foot courier or mail. It's risky to deal with fragile items and large items.
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• Returns percentage

It is not easy to work with clothes, since large players have accustomed the market to a very high level of service. It is necessary to ensure that people can try on a product, return it. The number of returns in this case will be large.
Also often returned technically complex products and products that require additional configuration from the client.

• Novelty

If the product has been on the market for a long time and there are many online stores that sell it, then for success it will be necessary to apply non-standard methods that have not been used by anyone yet. For example, in the case of IPhone's sale, Yes-credit offered a new way to sell on credit to the market. This gave the company an advantage over other sellers of such a popular product.
It is extremely difficult to sell laptops, home appliances, phones, because these markets are occupied by big players.
You need to follow trends, new products and their combinations, which, for example, are popular abroad. Many interesting products can be found in online stores in the USA (amazon.com) and China. Here are a few popular ones:
www.tinydeal.com
ru.focalprice.com
www.lightinthebox.com
www.miniinthebox.com/ru
www.wsdeal.com

• Availability of suppliers

I will describe further in more detail, but you need to understand in advance that some goods can be taken from the supplier from the warehouse on demand, some goods will have to wait 1-2 weeks, and some goods are sold only in lots from 10 thousand pieces.

• Price policy

For some groups of products, suppliers set tightly regulated minimum retail prices (MRC). Of course, it is illegal, but it allows players of this market, including online stores, to set an acceptable mark-up on the product and get a reasonable profit.
The advantage of such a market is that you can calculate in advance in the business plan for which product which mark to charge.
If there is no opportunity to attract a buyer with a low price, you will have to take it either by service or something else. It is necessary to understand that the organization of a decent service is one of the most complex and costly business items.
If no one controls the price of the goods, the possibility of dumping appears. Since the market is experiencing an extremely high dependence of the sales volume on the price, due to its decline it is possible to attract a huge number of buyers. However, it is rather difficult to find the possibility of providing the lowest price for a competitive product. In some markets, the net profit rate has fallen dramatically due to dumping. It makes no sense to start building an online store in such low-margin markets as the market for computer equipment, mobile phones, home appliances and many others.

Conclusion:
If there is a “trick”, thanks to which it is planned to attract users, it is known with which competitors it will be necessary to “fight”, the means to fight with competitors are clear, then it is more profitable to work in the market with tightly regulated MRCs.
If you decide to sell a rare product, or you have the understanding and skills to sell a complex product, the sale of which requires special training, then you can work on the market without controlling the MRC for the product.

2. Where to buy goods?

Once you have decided on the product, you must select one or more suppliers.

Types of suppliers and their conditions (roughly, because their subtleties in different markets):

• Purchase of a consignment of goods from China or America. It requires large investments and carries a lot of risks.
• Piece purchase of goods from online stores in China and America. If you find an interesting product to the market, you can order it from online stores in China.
• Purchase of goods from the manufacturer in Russia. The manufacturer always has a production plan calculated for specific and regular orders. They can be performed only by large companies - distributors, retail chains, and so on. big players.
• Purchase of goods from a distributor in Russia. Conditions depend on the specific market, the specific distributor and how you can reach an agreement with it. Some impose strict conditions on the minimum lot of the shipped goods, some ask to put a deposit on the account, etc. But there are those who provide acceptable conditions of cooperation for a small company.
• Purchase of goods from a reseller (dealer) in Russia. Most often, the conditions for the minimum lot are absent, there is the possibility of shipment for implementation after increasing the degree of trust. To obtain the best conditions, it would be advisable to personally meet with the dealer representative and not be shy to bargain with him. The downside is usually the relatively high purchase price.

Conclusion:
Options 3, 4 and 5 are better than others for a novice online store. (Distributors, resellers and dealers will continue to be called suppliers).

3. Characteristics of suppliers to pay attention

Unfortunately, it is impossible to check the quality of the work of the supplier before concluding an agreement with him and 2-3 weekly checks.

1. The supplier must always have current stock balance.
   Usually, information on balances is sent to all customers daily. Based on these data, the online store updates information about the availability of goods on the site. If the warehouse balance at the supplier changes unpredictably, the online store will not be able to provide the customer with the delivery of the required product, and therefore will lose the customer.
2. Reservation of goods by supplier on demand.
   The online store must either be sure that the product it sells is always available from its supplier, or it must be possible to reserve the goods. The supplier must in his ERP system (as a rule, it is 1C) note that the product is intended for a specific online store and cannot be shipped to others. It is desirable that the manager, reserving the goods, was always available. Advanced suppliers have an e-distribution system . This system provides online stores with an online product reservation service via the Internet, that is, without the need to contact the manager. Suppliers with such a system are the best choice for online stores.
3. Providing commodity content (photo, description).
   Excellent if the supplier has in electronic form photos and description of the goods. Unfortunately, this is rare. Usually the information is provided in paper catalogs or in PDF files that contain scanned copies of the paper catalog.
   If the supplier does not have marketable content in electronic form, you will have to create it yourself. The task is not easy and not cheap, as it seems at first glance. Large online stores spend millions and create for this whole departments of content of 10-20 people each. Very often the content is stolen, for this purpose even special programs are created. I will not dwell on this issue, it is better to find a supplier providing content.
4. Work with returns.
   It is desirable that the supplier could take back the goods that the online store did not sell, for example, because of the buyer's refusal. This moment must be specified in the contract with the supplier. If the supplier does not accept returns, you will have to sell this product at a discount.

Conclusion:
If there is no possibility to buy goods to the warehouse (as a rule, they are not), and there is no guarantee that the goods are always available, then information on the relevance of the balances is very important.
The characteristics described in p.2 and p.3 will help greatly simplify the work with the supplier.
The condition of clause 4 is not critical if the item sold has a small percentage of returns.

Characteristics of the ideal supplier:

1. No need to buy goods to your warehouse. You can trade directly from the supplier's warehouse. This allows the online store to work in a limited budget and reduce the risks associated with the lack of demand for goods purchased at the warehouse.
2. The ability to buy goods individually or in small batches.
3. No limit on the amount of goods purchased.
4. Opportunity to take goods for sale without payment, even if the online store reaches a certain turnover.
5. The ability to quickly reserve goods from the supplier at the time of receipt of the order from the client. This guarantees that the goods you have sold will be shipped to you from the supplier’s warehouse. As a rule, you have to call or write to the distributor’s manager a request for a reserve of goods. Some distributors offer to use Internet distribution systems, that is, they allow online stores to independently reserve goods on-line.

4. How to sell a product?

Any product on the Internet is sold using special marketing tools. I will briefly review the basic tools, since a huge amount of materials is devoted to this.

1. Contextual advertising (Yandex.Direct, Google AdWords). A tool that allows you to flexibly customize advertising campaigns for specific user requests in search engines. It is beneficial if the product is a relatively small number of proposals from competitors. It is necessary to use carefully. We can not allow the overspending on advertising due to the transition to the site of non-target users. Before starting, it is advisable to seek advice or to ask a specialist friend to help. If you need to get such dating, register in Facebook and join the group of SEO specialists.
2. SEO. In order for a search engine (Yandex, Google) to find a site on a specific request and display it on the first or even second page, the site must be very correct and good. And in the first six months on the first page of Yandex the site will not get under any circumstances.
3. Yandex Market. One of the most popular resources of the RuNet to search for goods at the lowest price. Allows you to compete with major online stores due to dumping prices (for goods with unregulated MRC). It also allows customers to rate the online store. Positive ratings increase the chances of selling. It should be noted a huge amount of falsifications of ratings and reviews.
4. Banner advertising. As a rule, it is used as a branding tool, that is, it is not intended to attract specific customers.
5. Social networks. An interesting and fast-paced tool. Very similar to contextual advertising. The main difference is in the possibility of even more fine-tuning the target audience, but often at a more expensive price per click. If it is possible to accurately identify the client, for example, by age, social category or status, then advertising in social. networks can be the most effective.
6. Use of MarketPlace sites. In Russian - the online market or online shopping center. Such sites allow you to place products in their catalog and product display. At the same time, MarketPlace ensures attraction of a large number of buyers to the site. Some MarketPlace provide an opportunity to sell goods without creating your own online store, providing both warehouse and logistics. Such functionality costs from one to eight percent of the value of each order.
   
   Most Popular MarketPlace:
   wikimart.ru
   tiu.ru
   price.ru
   

Conclusion:
Advertising tools a huge amount. Each tool is a separate science. It is necessary to try and find the most productive methods that work for the selected product category.

5. Create an online store.

When you have analyzed all the information on the first four points, you can create an online store site.

There are many tools, here are the main ones:

• Content Management System (CMS).
  The boxed solution is the so-called content management system. It is delivered in the form of a box and requires installation on a hosting. There are free and paid options. From the paid most popular: Bitrix, NetCat, UMI, HostCSM. Of the free most popular: Joomla, Drupal, Typo3, ModX, WordPress.
• Content Management System (CMS) SAAS.
  This type of CMS does not require installation on a hosting and is supplied on the principle “software as a service”. That is, it is enough to register for the service, choose a tariff (as a rule, monthly payment is implied) and get your online store, in which you will add the goods and start taking orders. The most popular resources: InSales, e-magazin.biz, www.shoptus.ru , www.webassist.com , sellbe.com gollos.com
• Widget online store ECWID.
  Suitable in those cases, if there is a ready-made site or just an Internet page, even a blog is enough. For $ 17, you can embed a ready-made online store on any page of your resource. To install, you just need to place a piece of code on the page of your site using the CMS administrator interface.

Conclusion:
For a novice entrepreneur any of the options will do. I want to note that it is often more profitable to use SaaS or a widget. Their functionality is supported by large companies interested in the most convenient functionality. Ordering a store on freelancing is much more risky.
All tools allow you to process incoming orders, so you can do without ERP for a long time.

Additional services for online stores:

There are various services that can simplify the creation and operation of an online store.

• Courier services.
  They allow you not to waste time and money on organizing the delivery of goods to the customer. It is only necessary to conclude an agreement and start working. The courier picks up the goods from your warehouse or supplier’s warehouse and carries them to the customer. The cost of the service is from 200 rubles and more for the delivery of one order. There are a lot of similar services, here is an example of some of them www.ru-courier.com , www.speedpost.ru
• Accounting Automation
  To automate accounting and billing, there are several low-cost services. One of the most common ELBA.

Conclusion

Opening even a small online store is quite a laborious task. You should not open an online store without understanding the market, its laws and regulations. But, as Bill Gates once said: “In the future, two types of companies will remain on the market: those on the Internet and those that have gone out of business.”
I wish you success!