Starting an online store seems like a no-brainer – purchase merchandise, snap a product shot, upload it on the website and watch the money flow in. After over ten years of full-time jobs and clients’ consulting, I start our conversation with these non-negotiable statements:
- The online fashion/accessories/beauty business is like a puzzle. Even if one piece is missing, the picture will never be complete. In turn, I can guarantee you results only if you follow my recommendations from A to Z.
- If you don’t have: a budget, resources, basic retail/online marketing knowledge or ample free time- maybe consider to start another kind of business. Or you could always marry rich.
Some clients call me “The Money Fairy.” But, before becoming one, mistakes were made, money was lost, some jobs failed and tears were shed.
Here is a list of things I wish I had known before I started my online business
- Don’t go into business without knowledge & experience.
- My friend who owns a wildly successful restaurant, told me once that he can do any job, except singing. I completely agree with this concept. If you run a small business you have to have knowledge regarding every aspect of it, otherwise someone will rip you off.
- Drop shipping vs. Inventory Stock
- Buying and keeping actual inventory is a risk. However, when you spend money on marketing, have a successful sale, but can’t fulfill the order because your vendor was “sold out” its bad. Now you are out not only money, but also a new customer. If you cannot fill a new customers’ order, you’ve lost them.
- Large retailers tend to have very strict drop shipping contracts so their vendors always have an extra stock for them. But, if you are a small guy, you won’t have that same luxury.
- Majority of time you won’t see the product beforehand, so you cannot guarantee quality. Flying blind is not good for consumer goods’ based business.
- When you have actual product on-hand, you have full control over photography and styling.
- Too much inventory
- A couple of years ago I was working with top Hollywood PR Company while putting together a campaign with YouTube talent. The campaign manager suggested overstocking product because she thought the YouTube diva would sell a lot, but she did not. Lesson learned.
- If you are not sure if the product will sell, start by buying couple of packs at first.
- Be honest on your site, tell that this item is the only one available.
- Make sure that your inventory management system (or your assistant) will remove the product from the site immediately after it is sold.
- Product selection- how well do you know your customer?
- Remember, what you like and what your customers want are two seperate things.
- Don’t pretend to serve everybody and go too broad. Pick a small niche segment.
- If you know who your customers are, but don’t know they think, like or want, hire a buyer with experience. Once, my marketing team spent two weeks tracking down our customers on social media and putting together a customer profile. After we understood who our customers were and what they wanted, sales increased overnight.
- On-demand production – avoid at any cost
- Nowadays large retailers deliver the same day. Production on-demand takes time and leads to customers’ loss.
- Production costs of single units are high – be aware of your profit margins and competitors’ pricing.
- Marketing efforts do not pay off for production on-demand
- Use production on-demand ONLY if you sell unique product that can’t be found elsewhere. Than specify exact production time.
- Influencers’ choice & collaboration
- Make sure that influencer’s audience and your customer niche are matches.
- Negotiate in advance down to the detail. You have the right to know what the content influencer is going to post. But, let them create content in accordance with their own personal brand because that’s what their audience wants to see.
- Each big influencer considers themselves a superstar, so be prepared to deal with a “star attitude.”
- Sign a contract in advance, and be prepared to pay in advance as well.
- Business Loan / Personal business card financing
- Start paying your Small Business Loan the next month after taking it. Unless you have a list of established customers who are waiting for your product or you presold something, stay as far as possible from a small business loan.
- Think several times before putting business expenses on your personal cards
- Don’t take money from friends and family unless you are 99% sure of what you are doing.
- Friends in the workplace
- Hiring friends or making friends with your hires is not a good idea.
- You have to hire fast, dedicated, willing to learn people who you can replace on the spot if they don’t perform to the level you expect them.
- Small budgets & limited resources
- Budgets can be small. But, you have to have up to six months of living expenses, marketing and inventory budgets.
- If you spreading yourself thin and are unable to sleep at night or feed your family, you will constantly be stressed and miserable. This usually leads to failure. Happiness, courage, and passion will lead to success.
- Online Retail is a profitable business and fashion is fun
- This is a major misconception. Yes, your business can be profitable if your margins are high and overheads are low. But, your product must be more or less unique. You will need a list of existing customers and to know what you are doing.
- Fashion is fun, but running online retail store has lots of tedious tasks that have to done on daily basis and chances are pretty high that you have to be doing them yourself.
To sum it up – calculate carefully all your pros and cons before jumping in “fun” business with “easy & fast” money.