He suggested I do a blog post on it. Well, okay…
Business licensing is something that varies country to country and, within the United States, from state to state and even county to county. Before starting your business, you’ll want to talk to an accounting professional, your county auditor or other business professional or government representative that can advise you with correct information specific to your locale.
This is also an important part because, with many wholesale merchants, you are going to need a business license number in order to establish that you’re an actually business and not an ordinary consumer looking to save some money.
Choosing a Type of Business
The first thing you have to do is choose the type of eCommerce business you want to be in. Are you just looking for something relatively easy and profitable? Are you looking for something hands-on, or something that will run itself while you vacation around the world? All these are factors that will go into deciding a type of business.
For example, if you are the hands-on type, and you want to be able to handle and inspect the products you send out, you’re going to want to be a direct seller of goods. That means you’re going to stock the products in-house (either literally in your house or you’ll need to rent a storage space or even office space for your products and business).
If you want something with a little less work and inventory, then you’ll want to look into dropshipping or affiliate programs, where you don’t stock anything.
You could also do a combination of the above. You could stock popular products, have less popular products dropshipped to your customers by a dropshipper and sign up for affiliate programs for products that are complimentary to your own.
In my case, I do a combination. Most products I carry in stock. There are other products that I order as needed from a wholesaler (though I don’t have them dropship; they just send direct to me). And, then I have affiliate programs for other related products. (You won’t see all this on the site you see above, but I do that with other sites and this is how it will be when I finish my major overhaul of my eCommerce site.)
Choosing a Niche
Again, this is something I’m not going to explain in detail in this post. The most common advice is to find something that matches your interests, though some people just look for something that’s highly profitable. Be sure to choose something you’re willing to stick with. Is it a niche you feel comfortable staying in if you don’t get rich overnight? In all likelihood, it’s going to take time to build your traffic and sales to the point where you’re making (hopefully!) money, but if you don’t see yourself sticking it out in the niche for at least 3 to 6 months, you’ve chosen the wrong market to be in! Now, I’m not saying that you’ll be successful in 3 to 6 months; only that it generally takes that long before you start seeing any type of results.
Once you’ve chosen your niche, you need to find products that you can sell.
Affiliates – If you’ve decided to be an affiliate, then you need to find some online merchants with affiliate programs you can join. Here’s how:
- Surf the Web: One way is to visit various merchants’ sites and see if they have an affiliate link on their home page. If they don’t, you can always eMail them and ask if they have an affiliate program. Some merchants may have affiliate programs but not advertise that they do!
- Join an Affiliate Network: You can join an affiliate network and browse their business members to see if any of them carry products that fit in your niche. Here are some of the bigger ones:
Be aware that some networks or individual merchants within a network may have minimum traffic requirements for your web site. In those cases, you’ll have to either concentrate on building traffic early on or use merchants without traffic requirements.
Reseller – If you’ve decided to be a reseller, then you will need to buy products wholesale. Alternatively (or additionally) you can work with merchants who will dropship to your customers.
Consider, too, that there are different levels of wholesalers. Some manufacturers will produce a product and sell it direct to resellers at wholesale prices. Other manufacturers will only sell products to distributors who then resell the products to retailers. Still other manufacturers will sell to anyone who meets their minimum purchase requirements.
For some manufacturers, you may have minimum orders of under $100. Others will require minimums in thousands of dollars. Alternatively, some manufacturers may sell in minimum quantities (rather than dollar value).
Likewise some distributors will have order minimums as well.
All these minimums are things to keep in mind when choosing products. In some cases, the minimums may be more than you want to start out stocking, especially if you don’t know how they might sell. And, bear in mind too that, when you go to reorder, you’re going to have to meet the minimums again. (Some merchants may have a higher initial minimum and lower subsequent minimums to make things a little easier.)
So, if some products move faster than others, are they selling fast enough that you can justify a reorder of just those items? Something might sell out because it was a passing fad, and if you order more, you risk being stuck with a number of them.
These are areas where experience can be a big benefit. You might want to start out using merchants who dropship and then only start stocking products yourself when you have a better idea of what sells and what doesn’t.
Another option, of course, is to try to unload your slow-moving merchandise on eBay to at least (hopefully!) recoup your costs so you can stock faster moving products.
So, how do you find those products?
- Search Google and Other Search Engines: Some wholesale merchants promote themselves better than others. Depending on your niche, you may be able to find many of them in the search engines. Be aware, however, that even in this day and age, some manufacturers don’t even have websites! (Some may not even have eMail!) And, also be aware that there will be many resellers and distributors fighting over “wholesale” searches, who aren’t really wholesalers but just deep discounters.
- Contact the Manufacturer Directly: If you can get a hold of the actual product(s) you want to sell or find it online, you can find out who manufactures that product and contact the manufacturer directly. Ask them if they sell wholesale or, if not, who their distributors are. Many manufacturers will be happy to provide you that information.
- Subscribe or Join a Wholesale Directory: Some people frown on the idea of paying for a list or directory of manufacturers, wholesalers, distributors and dropshippers, but the fact of the matter is that a good directory can save you a lot of time searching through Google and other search engines. Of course, don’t spend the money if you simply cannot afford it and do be careful as there are a lot of low-quality directories out there that oversell and under-deliver. Look for something with a money-back guarantee so you can get a refund if the directory doesn’t prove worthwhile for your needs.
Here are two that I recommend:
- Worldwide Brands: I’ve been a member of this directory for a number of years. Lots of different merchants in different categories for you to choose from. Whenever I start researching a new eCommerce site, this is one of the places I go to see what types of products are available in that niche.
- SaleHoo.com: I’m not a member of this one, but have been an affiliate for a couple years. They also have a large selection of merchants, and I’d join if I wasn’t already a member of Worldwide Brands. I’ve had a good number of referrals to this one, and no returns that I can recall.
Building Your Site
Here again you have many options. I’ll just cover a few.
- Through a Third-Party: You can set up a store and host it with a larger company, such as:
- Through a Webhost’s Tools on Your Own Website: You can add a shopping system to your own website, or integrate your current website with a shopping site that’s hosted separately:
- Using Third-Party Software Solutions: There are countless solutions out there. Many come with a basic template system that you can modify if you wish while others are more hands-on and customizable. Here are just a few:
I went with a “roll your own” type solution, and basically wrote my shopping cart system myself rather than using the templated or built-in version.
Finally, you’ll need a way to accept payments. You can allow your customers to mail in a check or money order and, while that is good to have as an option, you’re going to lose a lot of sales if that is your only method of payment.
You’re going to want to be able to accept credit cards in some way. And, with the latest PCI Data Security Standards, doing that online can be difficult and expensive, especially if you’re just starting out. Be sure that your shopping cart solution is compatible with your credit card processor and make sure that it meets the PCI DSS requirements.
If you want to look into getting your own merchant account right at the start and handling credit card transactions directly, rather than through a third party, here are some of the more well-known payment gateway services. Some of them also have resellers, so you might also want to look for those resellers, who may be more familiar with different shopping cart solutions and better aid you in integrating your shopping cart with the payment processing system and making sure it meets PCI DSS requirements:
You should be aware that there are some hefty fines and penalties if you get caught processing credit cards and not meeting PCI DSS requirements. Last I remember, the penalties were as much as $25,000 or $50,000 plus you could lose your merchant account.
If you don’t want to start out with a merchant account and worrying about PCI DSS requirements, you can use a third party processing service. Two of the most well-known are PayPal and Google Checkout:
- PayPal: PayPal offers Website Payments Standard and Website Payments Pro, which are both affordable options for accepting credit card payments on your eCommerce site. You can also accept PayPal and checks online. They also have a higher end option where they just do the backend processing and no one even knows you’re using PayPal, which is good if you have customers you think don’t trust PayPal. I think that you can either get a merchant account through PayPal or through whichever bank or service you use, and PayPal can function as the payment gateway in either case. It is, I believe, just like using any other payment gateway. In fact, PayPal bought VeriSign’s payment gateway system three years ago.
- Google Checkout: Google also has their own checkout system to compete with PayPal.
You can choose one or the other, but using both would be a good option, as it would give your customers the option to use the one they feel most comfortable with or have an account with.
Note that it is not necessary for your customer to have a PayPal account or to set one up in order to checkout through PayPal.
If you choose one or the other as your sole payment processor, both also have their own shopping cart systems that you can integrate into your website. Or, if you’re using a third party software solution, such as those mentioned above, check to make sure they can work with PayPal and/or Google Checkout before installing and setting up your store! Many of them are, though some may require rolling up your sleeves and getting into the code to do it!
Those are the basics of setting up your own eCommerce store. It’s really not as complicated as it might look, though the level of complication is going to depend upon how you decide to go about doing it!
Don’t let fear stop you from doing something you want to do. Just take things one step at a time and follow through. The most important part is taking that first step. If you just keep putting it off, you’ll never find out if your idea would have paid off or not.
Believe. Act. Achieve!