By the end of 2023, there will be about 2 million Amazon sellers. Is it worthwhile to join them and become an Amazon FBA seller?
Prior to anything else, you must ask yourself these questions.
Do you have the money for e-commerce ?
The prospect of making extra money from your side business in e-commerce may inspire you.
However, as our surveys revealed, you’ll require more funding than you probably realize to get started. It will also be your money, if you’re anything like most entrepreneurs.
When they first start out, three out of every four small business entrepreneurs draw from their savings.
In the e-commerce space, 77% of Amazon sellers start their businesses from scratch.
How much money are we talking about? Roughly 58% of Amazon sellers surveyed by JungleScout say they spent $5,000 or less to get up and running. Another 41% spent up to $10,000 or more to start their business.
To start. Keep those words in mind – upfront costs are only one part of the equation. You also have to account for actually running your business.
Let’s focus on one of the first steps you’ll take: setting up an e-commerce website.
Here are the main areas to budget for:
E-commerce software platform: Shopify and WooCommerce are two popular options. Read more about the pros, cons, and pricing of these platforms in our article on the 5 best e-commerce website tools.
Web hosting: A web host is like your landlord; you pay to have your site’s content live online. All-in-one platforms such as Shopify include hosting in their plans. If you have a self-hosted site, you’ll pay a provider such as Bluehost.
Domain name: This is your store’s web address. You pay to keep your domain name, either as part of your e-commerce software plan or separately if you buy your domain through a third-party provider. We like Google Domains.
(You’ll also pay for an SSL certificate, which keeps your site and your customer data secure and private. Most hosting providers will offer this for free, including Shopify).
Payment processing: This covers your site’s ability to take payments from customers and manage transactions.
Determining the precise cost of launching an online store is a challenging task. Your needs and the alternatives you select will determine this.
Shopify offers a basic shop setup for $39 per month. On the other hand, you might pay a developer thousands of dollars to design your internet store, depending on how customized you want it to be.
Aside from unforeseeable costs, you also need to budget for production, marketing, technology, legal fees, and even staffing.This equates to an average of $40,000 for the first year of company for most small business entrepreneurs.
Additionally, taxes are a complex beast.
You should either engage someone to handle your e-commerce sales tax duties or remain on top of them yourself. You may underestimate the total amount you will have to pay, though.
Here’s more of what our poll respondents had to say about taxes when starting their business:
- “I wish I would have known more about the tax consequences and tax issues that a small business owner has to deal with. For example, I would want to know how I can reduce my taxes and get more benefits for my business through a proper accounting of the tax law.”
- “I wish I had known how to do all of the taxes involved with being self-employed. I figured it out eventually, but it would have helped to have a resource or someone to answer my questions. The IRS website is so confusing!”
As you can see, there are many variables at play.
This is our best estimate of how much money you’ll need to start your e-commerce business: $2,500. That’s half as much as is the norm, and if that number makes you flinch, then e-commerce may not be right for you right now.
Timing can be everything. Speaking of, that leads us to the next question:
Do you have the time?
Perhaps you see yourself managing your online store while enjoying a tasty beverage beneath a palm tree in Costa Rica.
It’s time to get up!
It’s not that being an online merchant can’t lead you to your ideal life. However, the truth is that you won’t have much downtime.
54% of Amazon sellers report working on their businesses for four to twenty hours a week.
Considering that 85% of sellers work a side gig in addition to their day job or employment, that’s a sizable amount of time.
A quarter or more of side hustlers work 11–40 hours or more per week on their side project.
These hustlers reduce their leisure time, sleep, and exercise, as well as their time with friends and family.
To put it plainly, this respondent from our second survey said:
“You are never truly off when you operate your own firm. You don’t receive paid time off for holidays, illnesses, or personal use.
Money is, after all, just time. Your goods don’t just happen to sell.
Whether you’re selling your own products or dropshipping through a supplier, you’ll need to juggle:
- Manufacturing and inventory
- Fulfillment and shipping
- Customer service
- Digital marketing
- Social media
- Search engine optimization (SEO)
Writing product descriptions for Amazon is a crucial undertaking that requires testing, investigation, and time.
The process of optimization continues even after you’ve “made it.”
Consider our analysis of Thrasio, a leading Amazon aggregator. To redesign the bottle and label for one of its brands, Angry Orange, Thrasio conducted numerous rounds of split testing with hundreds of consumers.
When you first start, you most likely won’t have the resources of a Thrasio. You run the risk of burning out given the demands on your time.
Nearly half (47%) of small business owners feel drained, physically or emotionally, after two years of struggling through the pandemic, a Capital One survey found.
Many say they’re working longer hours and not taking vacations.
It’s important to know how much you’re willing to sacrifice and what to do to avoid burnout. Here are three steps you can take:
- Go on that vacation and unplug while you’re at it
- Designate work hours and stick to them
- Use automated tools for things like email marketing
In addition to saving you time and reducing your effort, marketing automation has the potential to raise conversion rates.
That is important to keep in mind when you organize your e-commerce marketing strategies, which leads us to our following query.
Do you have a business plan?
You are aware of the requirements for launching an online store.
But without a business plan to direct you, the time and money you invest won’t be worthwhile.
You are forced to conduct extensive market research and idea validation when you create a plan. Your company’s objectives, tactics, and business model are all framed by it.
Online templates are available to assist you in writing a business plan.
In general, here’s what to include in your e-commerce business plan:
Executive summary: A high-level overview of who you are and what you do or sell.
Business description: A full description of your company and mission, the problems your product or service will solve, and what makes your e-commerce business unique.
Market analysis: A look at your competitors and an explanation of your target market, with relevant industry data.
Products or services: More specifics about your product’s features and benefits. You might include information on your operations, suppliers, production, and shipping.
Marketing and sales: Strategies for finding and growing your customer base and the channels you plan to use, i.e., Facebook ads, content marketing, an affiliate program, etc.
Financials: A forecast or, if you’ve already launched, hard numbers showing your budget, revenue, and expenses. This is crucial for calculating the value of your e-commerce business if or when you want to exit.
The pandemic is proof that you cannot anticipate the future, but you can be ready by doing your homework and writing a business strategy.
Having a strategy will help you make sure your business ideas are headed in the proper direction.
After doing the math, you might conclude that e-commerce isn’t worthwhile. According to some analysts, changes in the global supply chain could now be expected every three to four years, impacting both small and major e-commerce companies.
However, your company plan could be the motivation you need to start.
Are you comfortable with change, risk, and failure?
Like my mother, I assume you’re already a self-starter.
Do you accept risks too? Are you receptive to novel concepts and encounters? Are learning and creativity important to you?
These are the main characteristics that define entrepreneurs, according to research.
Being open-minded and taking risks doesn’t guarantee your e-commerce business will be successful.
However, you may be more prepared to deal with the curveballs.
Another thing to consider is that research indicates that entrepreneurs tend to be happier and derive greater purpose from their work than typical wage workers. You have good cause to be excited about the future of online shopping. Eighty percent of small business owners who sell both online and offline also report feeling upbeat.
However, you may be more prepared to deal with the curveballs.
Another thing to consider is that research indicates that entrepreneurs tend to be happier and derive greater purpose from their work than typical wage workers. You have good cause to be excited about the future of online shopping. Eighty percent of small business owners who sell both online and offline also report feeling upbeat.
If you put in the effort up front, you could become one of the 68 percent of Amazon sellers that turn a profit in under a year.
But keep in mind, a lot of ventures fail.
Thus, estimate your startup costs, time, and effort appropriately, as well as your potential earnings as an online vendor.
And acknowledge that errors will be made.
Whether you ultimately conclude it’s not worth it to create an e-commerce firm, or not, what matters most is what you learn from your failures.
How PickFu can help your startup succeed
In the first five years of their existence, half of startups fail. One reason why about 42% of those firms fail is a lack of market demand.
To put it another way? These startups fall victim to failure as a result of their lack of due diligence before to going public. They don’t inquire as to whether customers genuinely wish to purchase what they are offering.
To determine whether there is a market for your product, all you need to do is create a quick PickFu idea validation poll.
The most crucial thing to accomplish is to closely monitor the feedback and outcomes that an idea validation poll provides. It may force you to revise your original product idea. However, that is far superior to investing thousands of dollars on a product that will never be purchased.
After your product or service has been verified and approved, PickFu may be used to evaluate anything from your e-commerce website to product photos. There are no limits.
You’ll also be shocked by the number of people that decide to try your brand-new company. We polled thirty customers on Etsy and Amazon to find out what would entice them to try a brand-new store without any ratings.
We learned three things:
- If the price is low enough, almost anyone will take a chance on a new store. You can always advertise introductory pricing and raise the cost of your products once you’ve got some buy-in.
- High-quality product images and descriptions matter. The more pictures, the better. Your customers want to see every inch of a product online before they spend money on an unknown brand or store.
- Money-back guarantees can help, too. The less risk on the customer’s end, the better.
Answer these 4 questions to figure out if e-commerce is worth it
Selling online isn’t for everyone. It’s definitely not something to rush into.
To figure out whether e-commerce is worth it, ask yourself these four questions:
- Do you have the money?
- Do you have the time?
- Do you have a business plan?
- Are you comfortable with change, risk, and failure?
- Are you willing to make changes based on market research?
If you answered “no” to any of these, starting an e-commerce business might not be the best move right now, and that’s okay.
You’ll have learned a thing or two about the industry — and yourself — in the process. I’d call that a win, and I know my mom would too.
Contact us today if you are seeking for new ecommerce ideas.
