How to Jumpstart a Successful Online Business During the COVID Pandemic
The COVID pandemic has created considerable uncertainty in the lives of so many people who may have lost their jobs or had their hours cut back. At the same time, their family situations may have been disrupted by suddenly needing more flexibility, as they adjust to figuring out how to get their work done while helping their children, who may have shifted to remote learning at home and miss their classmates.
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With these changes in mind, and concerns about whether it’s possible to expect steady employment in the future, many people are looking for ways to get more control over their careers. They may begin an online business in an attempt to supplement their current job or provide a cushion in case that position goes away. They may also want to develop an online business efficiently without making a big investment.
Online Business Grows While Retail Sales Shrink
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Based on estimates from the US Census Bureau, ecommerce sales in the third quarter of 2020, adjusted for seasonal variation but not price changes, rose nearly 37% higher than the same period in 2019, while retail sales rose 7% that quarter. Online shopping is becoming much more prevalent as an increasing number of retailers close, and people who had rarely shopped online become even more likely to embrace the convenience of having the items they select delivered to their door. “Although transitioning to becoming your own boss and building an online business can be challenging, now is a good time to take the leap if you’re prepared to make the effort,” says Darren Lunt, managing partner of ResponseCRM, a leading CRM direct marketing automation and e-commerce solution provider.
Strategies for Success
Fortunately, it’s a lot easier to build an online business today than it was five or ten years ago. There are templates available that can dramatically reduce the cost of building a website that are inexpensive and easy to use and update. It’s important to have the right business model, technology, and visibility into what resonates with your customers to maximize profits, while minimizing costs and risks, and to choose your partners carefully.
“Don’t just sell something only because you think it will make money,” says Lunt. “Where we see businesses fail is when someone tries to sell the same product that did well for a friend and assumed it would be easy for them to sell without much effort. When you lack the passion for your product, you’re less likely to put the time into the business to learn what’s working and what’s not.”
Consider Private Label Products
According to a McKinsey Report, customers are adapting to private labels, and 80 percent of customers who used a private brand during the pandemic plan to continue using it once the COVID-19 crisis slows down.
Lunt says that at ReponseCRM people do very well when they research a product they believe in and one that yields a high return on investment. “These people put their private label on a quality product and don’t have to purchase it upfront,” he says. “When you sell that type of product, a fulfillment company would send it to your customer with your own label and packaging. Then, for example, you don’t have to buy and store $20,000 to $40,000 worth of the product upfront.”
Focus on business models, partners, and traffic sources
Never underestimate the billing model you use, because it makes a difference in whether you succeed or fail. ResponseCRM provides advanced payment processing and support and offers a low-cost, transaction and performance-based billing model. “We think it’s important that you only pay for what you use when you sell your products, which can help you to grow the business,” says Lunt. “That’s why our model doesn’t have upfront or monthly fees.”
A performance-based approach also extends to getting the right type of traffic to your website. It involves having effective fulfillment partners and processing services to make sure you’re not overspending in areas where you could get a better rate, and you’re making a 20% profit margin, for example, versus a 10 or 12% margin.
Determining the right traffic sources involves trial and error. In the ecommerce space, you have to continuously watch the metrics to know what’s working and what isn’t, especially when it comes to traffic. It’s easy to pop up an online store, but it’s hard to find the people to purchase your product or service. So, when you get the right traffic sources and you’re willing to test them, such as with split-URL testing, you’ll find the ones that work, and your business will flourish and continue to grow. For example, campaigns with images generally do significantly better than those without them.
A traffic source could be Instagram influencers, affiliate marketing, Google Ads, and others depending upon the product and how you’re planning on growing the business – whether you do this organically and/or pay for customers through a cost-per-acquisition model. “Most of our successful customers have an online campaign management person who basically micromanages the business,” says Lunt. “The campaign manager looks at how well the merchant account is working out and manages all levels of the business.”
A positive exit from the corporate world
One of the ResponseCRM clients was running an ecommerce store successfully while working a full-time job. Then COVID hit, and his corporate job was very uncertain, so he shifted gears and started his own business in ecommerce. “Now, he has no interest in going back to the 9-to-5 corporate world,” says Lunt. “He hired a team, built his own internal fulfillment house, and is making much more money than he’s made in his entire life.”