When Jennifer Teschendorf had her son, she wanted to work from her Darien, Ga., home. After some research, she decided to launch eBabyConsignment.com, which specializes in reselling baby products, in part because it required only a few thousand dollars to start and could be managed around her family time.
For many like Jennifer, e-retailing is an attractive business option. But just like a brick and mortar store, it can become a money pit.
Here's how to get started without losing your shirt:
Looks Are Important
Secure a domain name that best captures your business plan but make it short and memorable, recommends Joel Elad, author of several books on Internet businesses, including Do-It-Yourself Web Stores For Dummies (Wiley). Once that's done, you can set up the Web site in a couple of different ways: hire a Web-development company or turn to a store-front provider like Yahoo! Small Business(YHOO) or eBay's(EBAY) ProStores. A Web designer will customize your site and make it stand out from the competition, but can cost about $5,000. And, as Teschendorf discovered, you should have a clear idea of how you want your site to function or the bill can be as high as $10,000, since these companies charge by the function.
Yahoo! Small Business, meanwhile, will get you up and running for as little as $39.95 a month, but your Web site may be cookie-cutter. Zachary Smith, president of Web hosting company Voxel.net, recommends starting out with a storefront provider and then keeping a Web designing company on retainer (about $100 a month) for some customization and updating. Just don't load up on a lot of Flash bells and whistles. A site that takes too long to open up or navigate will be a major turn off.
Customer Satisfaction Is Key
To maintain customer loyalty, make it easy for them to pay for, track and return items. While a credit card merchant account can run you several hundred dollars a month after fees, PayPal does not charge for set-up or registration. However, it takes about 2.9% plus 30 cents for each transaction.
When it comes to fulfillment, you can do it yourself or turn to a company like Amazon.com. If you want to keep control, then factor in storage costs if your home cannot hold your inventory. As for shipping and return expenses, build them into the price of the product.
Elad, who has experience running an eBay shop, has found that a good return policy allowed him to bump his prices up about 1%-2%. And he keeps shipping costs down by ordering his boxes and supplies from shop.usps.com, which ships them free to his door. He also recommends scouring friends, families and local businesses for boxes destined for the dump.
If you can't be bothered with fulfillment, partner with businesses like Amazon. Send them your inventory and they will handle ordering, packing, shipping and tracking for a fee.
If you don't want to deal with inventory at all, then partner with a drop-ship company like Doba.com, which connects you to 75 wholesalers, manufacturers and craftspeople in order to resell their products to your customers. The fee: $49.95 a month.
And since the items remain with them, they will pack and ship them to your customers. Or simply start a business that is inventory-less: Teschendorf's eBabyConsignment.com connects parents eager to sell their used baby items with parents on the hunt for bargains.
Talk Yourself Up
Perhaps the biggest expense of starting any business is marketing. Just because you have a killer Web site does not mean people will click on it. To quickly drive traffic to your e-retailing business, you can pay for ads, called Pay Per Click, on Google(GOOG), Yahoo! or MSN. It may be the fastest way to launch your e-retailing business, but it can get expensive.
Voxel.net's Zachary Smith recommends spending just $20 to $30 a month until you learn which keywords attract customers. Meanwhile, get listed on shopping comparison sites like BizRate, Shopzilla and Google. Smith likes Merchantadvantage.com because it hooks you up to more than 100 marketing and shopping channels for $145 to $345 a month.
For those who want to go the search engine optimization route, be aware that it can be time consuming and costly. "As Google and Yahoo! change the rules, you may have to update your methods and Web site almost continually," warns Elad. "You cannot do this once and then stop and rest. It's a constant battle, as competitors work to surpass your results."
Do It Because You Love It
Hoping to work from home may have spurred Teschendorf to start eBabyConsignment.com, but she also wanted to do something with children. So enjoy what you're selling or you won't do an effective job growing your business. After all, points out Elad, while the Internet makes it easy for customers to find you, "it also makes it easy to find a competitor one click away."