We’ve all had that great idea for a product that we wanted to see become the next it-thing. But not everyone can make that idea church a profit. Ninety percent of e-commerce startups fail within their first 120 days of operation …
That’s a shocking statistic.
When asked why, 29 percent of these startups explained price and costing issues had caused them to fold, while another 23 percent said that they had been outcompeted. Another 19 percent said they had been overcome by major corporations like Amazon. Sixteen percent explained they did not have sufficient customer service, while 14 percent did not feel they had built a team adequate for success.
These are daunting statistics, but they’re not random. The best e-commerce brands plan for success well in advance by taking a series of key steps. This helps them ensure they think through and sustain every step of the process, from “brainchild” to lucrative success story.
- Idea Validation
Before you begin planning how, where and when to manufacture a product, it is important to consider the viability of your product concept. Many e-commerce ideas are innovative and interesting. But how do you know if there’s a market for this idea, at this moment in time? This is where idea validation comes in.
Idea validation is the process of evaluating the viability of your product idea based on market need and your target customers’ interest. It’s a way of taking a thorough look at how your product might fare in the real world.
Idea validation often includes internal brainstorming as well as external consultation. You and your team will need to brainstorm, thinking through your buyers’ personalities and preferences, buying trends and current interests. To flesh out some of these considerations, consider consulting market researchers, whether formally or by finding research and data online.
Overall, try to base your decision to invest in this product on data about the current viability of the product rather than your enthusiasm or the innovativeness of the product.
- Product Specifications
Product specifications are a way of outlining the roadmap your team will use to take your idea from a good idea to a successful product. Using the information that you gather from validating your idea, you and your team should develop a document listing the requirements, parameters and plans for moving forward.
These specifications might include a product summary, buyer personas, product design, budget or needed resources. You might also consider including potential manufacturers, shipping specifications, testing and inspection requirements and how you will measure costs.
A document of product specifications lists out not only what you are building and why, but how exactly you will move forward. It also takes into account your budget, costs and market factors. The more detailed you can be in your outline, the more foresight you will have as you move forward.
- Building a Community
The next step in making your e-commerce idea into a reality is to build a community with interest in the success of your idea. Many brands use email lists, webinars, discounts and pre-ordering to get connected with their buyers. However, building community around your brand is about much more than coming up with snazzy marketing or offering discounts.
Jacob Andra, co-founder of the online social marketplace SOMA, explains why truly innovative e-commerce brands ought to provide a more human experience.
“We’re social animals,” says Andra. “E-commerce has connected us to the entire world transactionally, but not socially, which has left an unfulfilled need. Brands that stand out tap into the communal dynamic.”
Think of building community around your brand as a way of making meaningful connections with the people who want to see your idea change something about their lives. This community does not just have to consist of buyers. It can also include other companies that share your values and ambitions.
Tapping into this communal dynamic can include creating Facebook groups, developing a value-based marketing presence, putting out meaningful content or information, or using storytelling to provide a more human experience for the people learning about your product.
The next step in launching your product is to give your buyers firsthand experience via samples. Sampling is a highly effective way of showing buyers how, when, where and why they might use your product. It is also an invaluable source of buyer feedback.
In a Sampling Effectiveness Advisors survey, 73 percent of consumers reported a sample would convince them to purchase a product. Consider that conversion level against eight percent for a TV commercial and just five percent for online advertising.
But more than just drawing in new buyers, sampling is also a way of soliciting ratings, reviews and feedback about how your product is being received. Companies like Amazon have discovered that sampling rapidly generates both brand visibility and feedback, with much higher conversion rates than regular advertising.
The next step in your journey is to decide how and from where to source your product. This could mean attending trade shows, getting connected with international wholesalers, contacting sourcing agents or looking into online commerce companies such as Alibaba.
However, there are a lot of scams out there, as well as misinformation. Many e-commerce brands put their faith in a wholesalers that they found online only to be disappointed or taken advantage of. Furthermore, American brands looking for manufacturers internationally (in China, for example) may feel confused or lost when it comes to the many ways to go about sourcing.
The vast array of decisions required in the sourcing process can be mitigated by getting training through a product sourcing school. Learning from the experts can save you time and money as you avoid many of the hiccups that come with searching for the right manufacturer.
Once you find a way to manufacture your product, it’s time to create it. A central feature of cost-efficient e-commerce production is cutting out the middleman. The fewer steps there are in the process, the less costly things will be for you in the long run.
Once production begins, maintain constant communication with your manufacturer. Be clear about product deadlines and expectations. Don’t hesitate to ask for regular updates and even photos from your manufacturer to help you understand how things are going.
The more involved you are in the process, the quicker you can respond to problems and delays and the less chance there is of something slipping away from your oversight.
It’s also important to consider product compliance throughout production, including product standards, substance regulations, documentation requirements and lab testing requirements.
Make sure your manufacturer is familiar with your country or product’s specific requirements before proceeding. Follow-up with them on these details throughout production.
In addition to these considerations, it’s also nice to have a backup plan in case something goes differently than expected. Having a list of other manufacturers or production methods can help you avoid detrimental setbacks in production.
- Quality Control
Measuring and monitoring quality control throughout manufacturing needs to happen early in the process and needs to be conducted thoroughly. Especially when dealing with remote manufacturers, you will want to sift out counterfeits, hazardous substances and faulty parts.
Quality control can eliminate factors that get in the way of a smooth-running supply chain.
Rather than putting all your trust in your manufacturers, expect problems and plan for rebooting when they arise. Planning for quality control may include assessing product requirements, making a product test plan, conducting testing and/or evaluating the results.
Implementing thorough quality control measures and testing early in the game will clarify what you are producing and how that can lead to customer satisfaction.
One of the central features of e-commerce success is its innovation in shipping.
Rather than making products to send on to a retailer, you can arrange to ship directly from the manufacturer once an order is placed. This means you don’t have to stock (or find storage for) products, and there are no up-front inventory costs.
However, if you are selling in bulk or want to avoid drop-shipper commission, there are ways to ship smartly on your own. It’s important to know your potential shipment providers and compare rates. Additionally, it’s important to know the packaging requirements of your shipment provider and adhere to their guidelines.
Finally, you might consider branding your packaging or designing it to provide its own experience. Environmentally friendly companies like Allbirds use eco-friendly packaging that appeals to their consumers’ values. Other companies like Dollar Shave Club and Glossier try to create an “unboxing experience,” through which products are personalized or packaged in an exciting way.
From Idea to Success Story …
A lot of people have great ideas that they want to see made into products. But a lot of these ideas plummet when they hit the market, or they hit major difficulties beforehand.
Turning a good idea into a success story requires careful planning and consideration of each step of the process, from the birth of the product idea to the moment the finished product reaches a buyer’s hands. Considering the steps above and learning innovative techniques in product sourcing can help your great idea become an e-commerce victory.