09 September 2021
5 Steps to Starting Your Own Direct-to-Consumer Ecommerce Business
Once upon a time, if you wanted to sell your custom products to consumers, there was a lot of legwork involved. It was common to go to trade shows, pitch retailers, send out brochures, pay to be featured in catalogs – anything you could do to catch the attention of brick-and-mortar store owners. How times have changed.
These days, direct-to-consumer brands account for 40% of the growth in the ecommerce sector, and that number only increases every year. It’s easier than ever to start a D2C business, but where to begin?
Step 1: Narrow In on a Niche
You need a product to sell, obviously, and it’s always easier to start with one or a limited set of products. You’ll want to do a lot of product research to figure out what’s already on the market, what your competitors are doing and what the price range is. Is there one major player in the game? Is the market segmented into low, mid-range and high price points with corresponding quality? The more specific you can be about what you want to sell, the better.
After deciding on a product or product line, it’s also beneficial to narrow in on a niche. That way you stand out from your competitors from the get-go. For example, will you prioritize being eco-friendly? Incredibly, 46% of shoppers are more likely to buy a product if it’s eco-friendly. Decide what niche your product can fit into and build everything around that.
This is also when you want to decide on drop shipping or owning the entire supply chain yourself. Dropshipping is worth it and really accessible and easy to get started, but you open yourself up to more competition and difficulty differentiating in the market. Owning the supply chain yourself helps you stand out, but it takes more time (and capital) to get off the ground.
Step 2: Pick Your Channels
This step is harder than it sounds because it doesn’t necessarily mean the channels you’re most comfortable with. It also might sound tempting to try them all and see what works, but that’s an easy way to stretch yourself too thin and ensure you don’t do well on any channels.
Manage efficient omnichannel marketing within one system
Start by researching social media demographics so that you can narrow in on your target demographic and what channels they frequent the most. If you’re gunning after Gen Z, their main social media channels are Instagram and TikTok. For female millennials, head to Instagram and Pinterest. Wherever you think your customers will be, follow them there.
Next, make sure you’re well-versed in social media best practices for ecommerce businesses. The norms are different on each channel, and how the users will perceive a business posting varies a lot by channel – successful marketing on Reddit, for example, is a lot trickier than on Instagram.
Step 3: Pick Your Platform
Whether you choose a single-vendor or a multivendor eCommerce platform, make sure to do research to find a platform that best suits your business needs. You can try picking multiple, but in the beginning, it’s best to stick to one and scale later if you feel like you need to. So when you face this decision, there are two main paths you can take: you can set up a profile on a 3rd-party selling app, like Amazon, or you can create a storefront on a platform like Shopify.
Creating a profile on a third-party application can feel like the path of least resistance. It’s often cheap or free to sign up with minimal effort on your part, the audience is built-in and the platform takes a smallish commission on each sale. Amazon is the most well-known of these platforms, but they include every marketplace of every size, from Etsy to eBay to the smallest niche marketplace you can find.
However, there are some cons to using a marketplace. Especially with a platform like Amazon, they want a sense of uniformity across brands, and while there are some ways to brand your Amazon store, they still stifle a lot of branding opportunities you would otherwise have on your own site. Also, depending on the platform, the fees can be steep and the advertising can be hit or miss in effectiveness.
Of course, there are also drawbacks to starting your own ecommerce website. It’s a lot of work upfront to create, to research and implement integrations, and to drive all your traffic. In return, you get the benefits that a third-party seller doesn’t provide: lower fees, more control over branding and less side-by-side competition with your competitors.
Step 4: Set Up Your Marketing and Sales Plan
Whether you’re selling on an existing marketplace or driving traffic to your website, you’ll need a plan to market your product and make sales. Depending on your product niche, there will be some methods that make sense and some that don’t.
- Social media. If you’re driving all your own traffic, social media is a must. The channels you’ve chosen should be a focus, creating promoting content.
- Influencer campaign. A subset of the social media plan, working with influencers can have huge ROIs when done well. Start putting together a list of influencers in your niche and reaching out to them for sponsored posts, features, or just sending them a free product in the hopes that they mention it to their followers.
- Social media selling. On top of marketing through social media, you can actually set up a storefront via the platforms that support it. Facebook shops have been around for a while, Instagram is really stepping up their shopping game, and even Pinterest is starting to carve out a piece of that pie.
- In-platform ads. For whichever platforms you end up on, they almost certainly have their own internal advertising system set up. Facebook Ads, Instagram Ads, even Etsy Ads are all options to boost your reach on the platforms you’ve chosen to be on.
- Email newsletter. There’s no better customer than a returning customer, and an email newsletter is a great way to keep in touch and reel them back in.
- In-person events. Going hyperlocal? Start looking into event opportunities in your local community to build up those relationships.
All tools to create and send engaging email newsletters
Step 5: Establish a Fulfillment Process
Oh yeah – and once you go to all that work to start getting orders rolling in, you’ll actually have to handle those orders! And returns, even though no one wants to think about it. As a startup, you’ll likely be fulfilling those orders from your own living room or garage, but once you’re able to scale, you can think about other options.
Your first option is to rent a space and hire staff to handle fulfillment. You’ll retain complete control over the fulfillment process, but that comes with its own drawbacks. Not only can renting a space be expensive, you likely aren’t a fulfillment expert and you may not be located in a convenient place for fast shipping across the U.S.
Third-party fulfillment companies (3PLs) are a great option for when you outgrow your garage and want to outsource fulfillment. They cost more up front and often require a monthly order minimum, but they offer better reach, faster order fulfillment times, lower shipping cost, and time saved for you to focus on other areas of your business.
Starting an ecommerce business can feel overwhelming, but by breaking it down into a step-by-step plan, you can choose the right options for you and spend your time wisely. It can also be more work than working with an intermediary that sells to the customers for you, but by selling directly to consumers, you can save money and build a stronger brand in the process.