E-commerce stores may on the surface seem like they require less planning than their brick-and-mortar alternatives, but this is a common and incorrect assumption. While you don’t need to organize the practicalities of a physical storefront, there is still a lot of business planning involved for an entrepreneur to create a successful e-commerce store. In fact, without a business plan, it is likely that your business won’t survive in the highly competitive world of e-commerce. This guide is here to help you understand more about e-commerce planning, to ensure that you have the best chance of making your business dreams become a reality.
What Is a Business Plan?
A business plan is a written document that outlines, in detail, a business’s core activities, objectives, and the methods they intend to use to achieve these goals. It is vital that you have created a business plan prior to begin operations. Your business plan is your blueprint; it will outline how your processes and operations run.
Why Is a Business Plan so Important?
It is essential that any business creates its own business plan before they begin operating. Taking the time to create a business plan has been found to provide high rewards, as it forces you to build up valuable knowledge, insights, and strategies:
- You gain a valuable and comprehensive understanding of your target audience
- You build up knowledge of your competition and their strategies
- You analyze your projected costs, revenues, and profits
- You clarify your business model
- You come up with a well-thought-out action plan
- You conduct an industry analysis including potential threats and growth opportunities
- You conclude with a mission statement
- You develop a brand identity and company values
Without a business plan, companies leave themselves open to a whole host of potential risks, such as:
- Running up debt
- Running out of capital
- Damaging sales from lack of target market understanding
- Frustrating customers with poor order fulfillment systems
- Stock issues
- Wasting resources due to a lack of clarity of goals
If that wasn’t bad enough, without a business plan you will not be able to obtain financing from investors.
What an E-commerce Business Plan Must Cover
A successful e-commerce business plan must include:
- Market and competitor research
- Niche identification
- A marketing plan
- Operations and processes
- A mission statement
The first step to starting any e-commerce business should be market research. Your intention with market research is to learn more about the industry in which you intend to operate. There are many aspects that you should consider with market research, such as industry trends, keyword analysis, and market size. There are many online tools that you can use to perform your market research. For example, Google Trends is a feature-rich tool that generates graphic data in real-time to inform you of the popularity particular keywords have gained over time. Tools like Google Trends will help you to identify which areas in your industry are gathering and sustaining the most popularity. This knowledge will enable you to create more effective marketing campaigns.
Whatever area you intend to operate in, you will have competition. It is important that you use the knowledge of your competitors to inform your business planning. Competitor research and analysis can help you learn from other businesses’ actions, enabling you to take inspiration from what others have done successfully and where they have failed. Areas to focus on while completing your competitor research include:
- Product price points
- Customer reactions
- Brand identity
- Website design
This research should inform your plan so that you are in the best position possible to use successful techniques to fill a market gap.
Once you have researched and analyzed your market and competitors you can start identifying your e-commerce niche. An e-commerce niche is a specific category in which your products and services fall. Your niche is the specific part of a broader market in which you intend to operate. The reason that an e-commerce niche is so important is that it enables you to define your brand and more effectively target a relevant and valuable audience in a crowded marketplace.
A Marketing Plan
With millions of e-commerce stores currently in operation, it is vital that you plan how you intend on connecting with your target audience. No matter how comprehensive your research, or how innovative your product, without a marketing plan you will not be able to find the customers your business needs to survive. Your marketing plan should be based on an in-depth understanding of your ideal target market, one who suits your e-commerce niche. Knowledge of your target market should be used to inform a range of marketing particles such as:
- Brand identity
- Website design
- Social media campaigns
- Keyword usage
- Influencer partnerships
- Email marketing campaigns
- Paid advertisements
Operations and Processes
The next step is to organize the practicalities of how you are going to actualize your intentions. You need to consider every part of how your operations will run, from securing the products to the final stretch of the delivery. When you are planning your business operations it is vital that you consider both your customer and your budget. For example, there is no use only using the cheapest suppliers, as low quality will disincentivize returning customers. It is vital that you perform a long-term cost/benefit analysis and find a happy medium between what you can afford and customer quality.
Create a Financial Plan
In order to ensure that you are able to actualize your intentions, you need to plan not only your business process but your funding. Your financial plan should cover a range of different areas such as running costs, projected earnings, recurring expenses, and fulfillment expenses. Your financial plan is there to ensure you are capable of continuing operations in the future.
Your mission statement should be a short and digestible outline of who you are as a business, what your goals are, and when you intend to achieve them. It is common for a mission statement to appear at the beginning of a written business plan. The reason that it is appearing so far down on this list is that it is useful to wait until you have completed research before outlining your statement.
A business plan will enable you to most effectively make your e-commerce dreams a reality. However, it is not only there to help you get started. Regularly reviewing your plan and comparing your expected progress with reality is a very useful way of keeping your business on track.