It’s never been easier for Canadians to set up an e-commerce website and start making money. But while it's easy to set up a website, getting to a point where you are making money will require a lot of work. The world of e-commerce is highly competitive, and to make money you'll need to find a way to stand out.
E-Commerce means that you are taking orders online. But to sell, you'll need to get people to visit your site, which can be a real challenge. But if you prepare and put in the work, there's no reason you can build a profitable e-commerce site in Canada.
Crafting a Business Plan
To create an e-commerce business that is sustainable and makes money over the long haul, you should work through creating a business plan. A business plan helps you stay organized, map out the work required to get up and running, understand opportunities and challenges, and much more.
The following section will walk you through some of the most important issues you’ll have to deal with on your way to launching your e-commerce website.
Finding your niche
Your niche refers to the industry or category your website will deal with. When starting an online business, you’ll have a much better chance at success if you start with a tight, highly-specific target audience. A niche allows you to attract website visitors more effectively than if you tried to appeal to everyone.
Start with yourself - You’ll want to play to your strengths when you are thinking through what niche to pick. What are you passionate or knowledgeable about? To make your business a success you’ll want to become an expert in the industry, so you should pick something you like or know about.
Brainstorming subjects you are interested in. Don’t limit yourself at this stage, everything is on the table. As you work through market research and understand the playing field, what does and doesn’t exist, etc., you’ll be able to fine-tune your niche. But in the beginning, there’s nothing wrong with starting with bigger industries before refining them.
To find the right niche and the business you’ll launch with it, you should spend a lot of time on research. You’re trying to get a lay of the land, an idea of the big players out there. Bookmark websites and articles so you can find them later.
Here are some websites and services that will make your research a little easier.
Google Search - Google will help you throughout your planning process. Armed with some potential niche ideas, start doing some Google searches on keywords related to them. Bookmark interesting sites for later. We’ll talk more about Google and keywords in the marketing section.
Trends – Getting ahead of trends and capitalizing on them when they hit the mainstream has been a proven business strategy for a long time. These tools will help you spot trends before they happen.
Social Media - You should find out how different niches manifest themselves on social media. What social media sites are popular with your niche? Where do potential customers hang out online? What do they talk about? What are people concerned ore excited about? Different social media sites will resonate more or less with each niche.
Questions you’ll want to answer
Take into account your strengths, interests, and market research to answer the following questions about potential niches.
When creating and managing an e-commerce site, you must always keep your customers in mind, particularly when creating content and marketing material. Who is your audience? What do they want? What are their challenges? How will you reach them? Where do they spend their time online? Who are the influencers in the space?
You’ll need answers to these questions if you hope to convince them to purchase on your site.
A successful business is one that solves problems for customers, that makes their life better somehow. Why should anyone give you their hard-earned money? You’ll need to identify pain points and convince your audience that your offering is the best solution.
Identifying pain points - One tactic for identifying problems you can solve is to look at complaints or requests users are leaving.
For products, take a look at popular items on Amazon and read through the reviews to try and find common issues people have. That can help you identify what needs are out there. You can also use these problems when you are working on your content and marketing.
Another place to find problems customers are having is by seeing the reviews they leave related businesses. Research the big players in your niche and see what complaints customers are leaving about them online.
As you work through your research and look for a niche, find the big and established players in the space. They’ll give you an idea of what’s happening in the industry, how to reach customers, and more. What marketing are they doing? What campaigns are resonating with their audience? How can you set yourself apart from existing businesses?
One of the first decisions you’ll have to make if you want to set up an e-commerce business is the business model. If your goal is to sell products, every decision will stem from what you are selling. Are you selling one-off items or a subscription of some kind?
How you monetize your site will impact your website hosting and e-commerce technology, which we’ll talk about shortly.
With a niche in place and an idea of who your potential customers are, the next step is to figure out what you’ll be selling and how. Products or services? Will you sell digital or physical products? Will you source your products or use a drop-shipping service?
You e-commerce store will need to sell something. Digital or physical products are the most popular for e-commerce, but not your only option.
Digital goods have a lot of appeal for online sellers. Once they are finished, the cost of getting them to a customer is basically zero. You don’t have to deal with shipping, alleviating a big pain-point compared to physical goods.
E-books – E-books can be as simple as a PDF you send to someone after they purchase. You can create your own or sell someone else's.
Online classes – Online learning has grown tremendously in the past few years. An online class will usually be comprised of a combination of video and text. Many services will walk you through selling your course online including Gumroad, Sellfy, and Podia.
Physical goods require more planning, as you have to deal with sourcing, storing inventory, fulfilling orders, shipping and returns, and more.
You’ll need to decide if you are going to be selling your own products (or products you’ve purchased ahead of time) or on behalf of someone else.
Private vs White label
When you are deciding what products to sell online, you should understand the differences between white and private label. Both deal with buying a product from someone else (manufacturer or wholesaler) but with a private label, you pay to have the product branded as your own. You’ll usually have to purchase a minimum number of products to offer private-label goods. In contrast, with white label products, you are selling a product branded for someone else.
Drop-Shipping (aka selling someone else's products)
The alternative to creating or sourcing products, and the much simpler option when starting, is to use a drop-shipping service. Through a drop-shipping service, you can sell products on behalf of someone else and not have to deal with inventory or shipping. To the customer, it looks like they are buying directly from you, and you will bill them. But after the purchase, you’ll buy the item from the drop shipper (which can be automated) and they will ship the item to the customer.
Your profit will come from the difference between what you charge the customer and what the drop-shipper charges you.
To get started with drop-shipping, your best bet is to use an app provided by the two big players in the space, Shopify and BigCommerce. We’ll talk more about them when we talk about e-commerce software, but what’s important to understand is that they are more than drop-shippers. You not only need to have an account with them but also sign up with a drop-shipping provider within their platform.
For access to products on Shopify or BigCommerce, you’ll need to install an app within their platform, which comes with a monthly cost of about $20 and up.
Drop Shipping is perhaps the most popular way to quickly and easily set up an e-commerce website. You’ll find customers and make the sale, but a third-party will ship the order to the customer.
While an affiliate relationship isn’t strictly e-commerce for your site, as you set up your site you might want to keep in mind affiliates. With affiliate marketing, the sale doesn’t take place on your site. Instead, you’ll send traffic to another website through an ad or link on your site. If the traffic you sent converts, meaning the user purchases on that site, you’ll receive a commission.
There are a lot more products to feature in affiliate marketing, so if you can’t find the right products with a drop-shipper you can take a look at what’s available with affiliates. Affiliate ads could be a good supplement to what you offer for sale on your site. You can feature them in marketing or post-purchase emails.
Digital and physical goods are often the first things you think about when you start an e-commerce business, but you could also sell a service.
Coaching and mentoring is one of the ways people are making money from a service online. Other services that are popular to sell online include writing, marketing, graphic design, video editing, etc.
To get an idea of what services people are paying for, take a look at a site like Fiverr or Upwork, and browse the services they offer. If you are thinking about offering services on your site, you could create a profile and try to get some clients on those platforms to help get you started offering a service online.
Setting Up Your E-Commerce Business
To get a website up and running you’ll need three things, a domain, a hosting provider, and a Content Management System (CMS).
WordPress is by far the most popular CMS on the web, in large part because it is Opensource and free. It’s been around for more than a decade and is continually having new features added. Through plugins, you can easily integrate with e-commerce and drop-shipping providers. Most hosting providers let you install WordPress on your site with a few clicks.
Hosting with an e-commerce provider
Historically, the conventional wisdom was to get the three separately, but today Shopify and BigCommerce offer packages that will provide all three. If you are looking to get set up quickly, using them as your CMS might be a good option. But be warned that the ease and simplicity come at the cost of limited options.
You’ll want to use e-commerce technology to take orders on your site so that you can process credit card orders. There are several products to choose from when setting up your e-commerce site.
If you create your site with Shopify or BigCommerce, they’ll let you take orders right out of the box. If you choose to create your website with WordPress, you’ll have a few more options when finding software to accept orders on your site. Note you can use Shopify and BigCommerce with a WordPress site without having to use their website builders.
One of the big differences between them is that BigCommerce comes with tons of functionality right out of the box, while in Shopify you’ll have to add that functionality by adding apps, which might come at an additional cost. BigCommerce comes with the bells and whistles out of the box (which can be overwhelming for newbies) while in Shopify you'll need to add extended functionality via their app store.
Other options to accept payments with a WordPress site include.
Keep in mind that out of the box these providers won’t include products, you’ll have to add your own, source them, or integrate with a drop-shipper.
Regardless of the service you choose, you’ll have to complete a few steps before you are ready to accept orders, including adding billing information and set up shipping and tax info.
E-Commerce Market Opportunities
You have an almost unlimited choice when deciding what to sell. You can choose to sell products that have a track record of selling well, or you can take a risk and gamble on a trend you think will be popular in the near future.
When it comes to selling products online keep in mind that seasonality plays a big role. You don’t want to spend all summer working a site selling beach towels and launch in the fall when demand will be much less.
Here are some niches that always seem to be popular online.
Of course, the biggest opportunities are the ones that are still in the future. Some relatively new areas are
Getting ideas for products
You can leverage the biggest online marketplaces to find ideas and see what is selling. You should at least be familiar with what’s selling on the bigger online marketplaces.
Affiliate Networks and Drop-shipping suppliers are another great place to see what’s selling online.
Once you’ve found products to sell and how to sell them, the next step is to get customers.
Your Website Content
The success of your website will likely come down to the content on your site. If you are providing value to your readers you stand a much better chance of getting them to give you money. Spend the time to understand the challenges in your niche. Here are some tips to help get your content strategy on track.
Align your content with what you sell
Not every article you write needs to be a hard-sell, asking the reader to purchase. In fact many successful marketing strategies are all about educating the consumer first for free and parlaying that trust into a customer. But you need to make sure your content aligns with, and supports, what you are selling. Keep in mind your customer's pain points when crafting content, and when appropriate paint out how your solution will help them.
The biggest challenge to successful e-commerce business is acquiring customers at a profitable rate. You can get customers to find you without having to pay for advertising, but it takes a lot of time, hard work, and dedication. Paying for marketing is faster and in many ways simpler for acquiring customers, however, costs can make it difficult to pull of profitably. In the long run, you’ll likely end up using paid marketing to supplement and boost your “free” marketing.
Whether dealing with free or paid marketing, online Search Engine Marketing (SEM) and social media are the main channels for acquiring customers.
Build a community
The most successful e-commerce websites got that way by creating a community around them. It starts with being an expert in the field and providing value to users. As your authority grows, more and more people will share your site, propelling your popularity even further. A big challenge is to find ways to grab users attention, to make them love your site and want to tell others about it. It's no doubt a challenge, but having fans that love your product has proven to be the best way to sustainably grow a business.
Getting customer service right is a big challenges for e-commerce sites. Consumers have come to expect good customer service and a disgruntled customer can make your life difficult. They can leave comments on social media or review sites, so you want to have a solid plan for dealing with complaints. Chargebacks, which happen when a customer disputes a charge directly with their credit card company, can be a huge headache for e-commerce sites so you want to avoid those. Because you processed the payment, you are responsible for making sure customers are happy.
Customer Service and Dropshipping
Customer service becomes even more difficult when you are using a drop-shipper. If you are using a drop-shipping service, be sure to work out how customer service issues and returns will be processed. While you’ll have the drop-shipping company fulfill the order, because you took the order you’ll have to deal with customer service. If there is an issue with the order the customer will come to you. You’ll need to follow up with the drop-shipper to figure out how to solve the issue.
Return customers and referrals
To have a business that grows organically, so that you are less reliant on advertising spending, you’ll need to master two different but related challenges, getting past customers to buy from you again and getting others to market you for free. Both are challenging, but success means you are getting more sales for close to free.
The answer to both challenges lies in the customer. If a customer had a good experience, they are more likely to buy again or tell someone else.
And while it’s important to have good customer experience, that alone isn’t enough to fully maximize repeat purchases and referrals. How you get someone to purchase again will be heavily influenced by your niche. It’s easier to get someone to purchase a second set of lipstick than it is to buy another pool. Either way, the opportunities to getting more value from a past customer are there. The challenge is how to find them.
Once you have visitors, email marketing can be your biggest advantage. Email lets you speak directly with your customer, without having to pay Google or Facebook for the privilege. Email is a great way to increase the number of people who buy from you more than once. Ask visitors and purchasers to let you send them emails. Sending a weekly email newsletter to people who are interested in your niche is probably the most powerful way to sustainably grow your business. There are many inexpensive options for email marketing, same will even let you email for free based on the number of subscribers. Popular email providers include MailChimp, Aweber and Constant Contact.
Are You in It for the Long-Haul?
While it's relatively easy and inexpensive to set up an e-commerce website, getting to the point where it is profitable at a sustainable rate is a long-term challenge. But the most important thing you can do to ensure success is to get started. It's a long term commitment, and you'll face challenges along the way. But if you do your research, focus on meeting the needs of your customers, control costs and improve your profitability, you'll be have a profitable e-commerce site that gives you the flexibility to enjoy life on your terms.
Maurice (Moe) Muise learned the ins-and-outs of government while an employee of the Government of Canada in Ottawa for 10 years. His current focus is helping small businesses in Ontario to identify and maximize government grants to grow their business.
Click here to learn more about Moe’s background and how he can help your business.