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As you have seen, the COVID-19 pandemic has caused a demand in E-Commerce businesses worldwide. Many brick-and-mortar stores have taken their business online. In the current era, more people are looking to be an entrepreneur. With hopes of having more control over their future.
Today, with many aspiring entrepreneurs starting their businesses online, the E-commerce business is proven to be a fast-growing industry in Singapore.
Just like starting any business, learning how to start an E-commerce business is not always simple. However, with digital advancement, it is now easier to set up an E-commerce business.
This guide outlines the process of how you can start a new online business.
Note: The information provided is just a high-level checklist of the steps needed to start a new E-commerce business.
What is an E-Commerce business?
You have heard of the term E-Commerce but what does it mean exactly?
E-Commerce refers to the buying and selling of goods and services, or the transmitting of funds or data, through an electronic network, mainly the internet.
In Singapore, common examples of E-commerce businesses are business-to-business (B2B) and business-to-consumer (B2C).
Although starting an online business may be an attractive business choice, it needs more than just setting up a website and starting to make sales. Starting an E-commerce business involves careful preparation, a large time commitment, creativity, and of course start-up capital.
Step 1: Research, Analysis, and Planning
The first step in starting an E-Commerce business is to come up with a workable business concept that meets a demand in the market. Regardless of how broad or niche your target customers are, your product or service must meet their needs. However, you will need a lot of time to plan and brainstorm between having an idea and starting an actual online business. This will eventually determine your success or failure in the business.
Before you start investing your hard-earned money in starting the business, you need to evaluate if your idea is feasible. This is where proper market research, analysis, and planning come in. The information from your research and planning should give you the information if you should move forward with your idea, improve it, start over or abandon it.
Action Plan for E-Commerce business
After your research and analysis, you can then come up with a practical action plan for your E-commerce business. Your plan should consider the following questions:
- Decide what product or service you are selling: Outline the key features and benefits.
- Identify your target customers: Who you are selling to and how to reach out to them i.e. Sales & Marketing strategy.
- Select the best unique value proposition: Find the minimum features of your product or service that can attract your first customers. Set them as your first product or service.
- Analyze on cash-flow: Determine your start-up costs, operating costs, sales, and profits. Do not overestimate your business success. Instead, stay conservative. Identify and prepare a contingency plan in case of the worst scenario. Plan your cash flows wisely so you to cope if it happens.
- Research on your competitors: Consider how your product or service might compare to the competitors. Study your competitors on how to best price your product or service and how to find the target customers. Most importantly, how to stand out from your competitors, especially in competitive industries.
As you put together your business plan answering the above questions, you will find opportunities to improve your concept and avoid potential issues. Ultimately, increase your chances of success in your E-commerce business.
Step 2: Learn how to start your E-commerce business
Research if any regulating laws may apply to your online business that may increase your start-up or operating costs. You may also be able to get grants or incentives that will relieve your funding. The better you are informed, the better you can prepare for the future, reduce business risks, and increase your chances of success for your online business.
In Singapore, our government offers several schemes such as Productivity Solutions Grant (PSG) to help businesses. We recommend that you check out GoBusiness and Enterprise Singapore for more details.
Step 3: Register your business
After you have finalized the business plan for your E-commerce business, the next step is to choose a business name. Like any other business, you should pick a name that is unique and reflect your business offering. Though you may not have the time for your website yet, it is still worthwhile to see if your preferred domain name is available. If it has been used, consider an alternative business name or a different structure. For example, “yourbusinessname.co” rather than “yourbusinessname.com”.
Keep in mind that the business structure you choose will affect your liability, taxes, and ability to raise funds and operate the business.
In Singapore, many entrepreneurs prefer to register as a private limited company due to many advantages. These include legal entity status, limited liability, trusted image, perpetual succession, and tax incentives. Not to mention, it takes only 2 procedures to register as a private limited company. Furthermore, the registration process can usually be completed in less than 24 hours in most cases.
Step 4: Set up required infrastructure
Depending on the type of product or service you are offering, you may need to set up your supporting infrastructure. It includes everything you need for the sale and delivery of your product or service to your online customers. Namely, facilities, employees, IT systems, and business processes to support your company’s functional divisions. Your operations can function well by selecting the appropriate infrastructure that complements your business plan. Although the list below is not exhaustive, it might help you get started on considering the different components of your infrastructure.
◾ Website Design and Development
Register a unique domain name and find the best hosting provider. Pick a hosting company that offers reliable hosting, good customer assistance, generous disk space and bandwidth, high levels of internet security, support for numerous platforms, and affordable hosting costs. Most importantly, choose the right E-commerce platform to run your online business.
The method you use to drive traffic to your website is called website marketing. Usually, business owners choose online advertising to quickly attract potential customers. However, the benefits are usually short-term. It is best to adopt a permanent strategy to create valuable content to gain the trust of the visitors and build a network of followers. These followers can help promote your content and brand awareness. As a result, increasing your brand reputation and visibility. Furthermore, your content will get indexed by search engines such as Google over time, sending more visitors to your website.
◾ IT System
Besides having a great website, it is also important for your business to have an efficient IT system to support your operation teams such as order processing, logistics, and customer service. The type of system you required will depend on your predicted needs. You should invest in a system that allows you to scale up as you grow at a minimal cost. Some options include (a) developing and hosting your own system; (b) outsourcing the development and managing the system moving forward; or (c) utilizing a hosted, turnkey, software-as-a-service platform.
◾ Logistics & Operations
You will need to deliver the product or service to customers who have placed orders. Especially if you are selling products, you will need staff to process and ship out the orders, space to store your inventory, etc. If you are operating your online business at a very small scale, you have the option of applying for a home office. If you are the owner, tenant, or any authorized occupant living in private residential property, you can register your Home Office with URA. For Home Office in HDB flats, the owner, tenant, or any authorized occupant of the HDB flat needs to register with HDB.
◾ Financial Management
You should plan and manage your business’s finances carefully as starting an E-commerce website is more than setting up a website. It involves costs such as startup costs, inventory, staffing, production, technology, marketing, advertising, rental, etc. These Operational costs are ongoing. Thus, the success of your business depends heavily on your ability to plan and manage your cash flow. You can manage your financial activities internally or externally or a combination of both. It will be best if you can integrate your accounting system into your E-commerce platform. Otherwise, you may need additional manpower for data entry and management of the separate systems.
Starting and running a successful E-commerce business takes time, effort, skill, money, and compliance with the law. You need to be able to multitask to manage a successful online business.
Over at TechTIQ Solutions, we take the time to understand your business, your products or services, and your goals. We have been helping businesses to develop E-commerce websites that not only reflect your brand and showcase your products or services. Our customized design will also make it easier for you to manage your operations such as inventory management, accepting payment, and order tracking.
Contact us for a non-obligation discussion on how we can help take your business online!