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There are hundreds of blogs full of online business ideas, but it’s not enough to just pick an idea off a list if you want to succeed in the intense world of ecommerce. 4.35 million new businesses launched in 2020 alone, and that number is only expected to increase in the future.
Great online business ideas should address the challenges faced by your ideal customers. They should also address the common pain points and challenges you might encounter when starting a new business.
This guide will help you transform your initial inspiration into a powerful online business idea with staying power.
Why Choosing the Right Ecommerce Idea Is So Important
With the right online business idea, you can live the life most people dream about. Fewer hours, more flexibility, and a six-figure income to support family, travel, and goals. An online business doesn’t have to be a far-fetched dream. That said, it will take work to refine your basic online business idea into the company that changes your life.
50% of businesses fail in their first five years. The most important part of choosing the right online business idea is product-market fit. Put simply, there should already be a need or demand for your online business ideas to succeed.
If the scale of your ambition exceeds the scale of demand, your business will fail. But if your idea grew organically from your life, community, or experience, there’s a good chance your new online product already has an audience. If you’re not sure how to develop the seed of your idea into a healthy business concept, keep reading.
Quick Tips To Improve Your Online Business Ideas
You might have an idea already, but you’re not sure if it will work. These quick tips can help you narrow the scope of your idea quickly.
Limiting your idea or audience sounds like the opposite of what a new business should do. But it is the smartest way to connect with a group of avid fans in today’s dense and competitive ecommerce landscape. These fans will be the key to launching an online business that excels.
Tip #1 – Narrow your online business idea with keyword research
Search engine optimization (SEO) is essential for online businesses that rely on website traffic. As you refine your best business ideas, you can use SEO techniques like keyword research to get a sense of what products people are already looking for online.
For example, while over 76,000 people are looking online for social media marketing, there is also intense competition for that keyword. This means that there are other businesses already selling these services online. To make this business idea work, take a look at the search suggestions for this keyword.
With a little research on Ahrefs, we found that a lot of people are looking for:
- Social media marketing books
- Social media marketing consultants
- Social media marketing for ebooks
There is less competition in these niches of social media marketing, so they could be great online business ideas.
Ahrefs is a fantastic SEO tool that can help you analyze your competitor’s websites, learn what people are searching for, track your rankings, audit your website, and learn from extensive resources.
Ahrefs pricing starts at $99 per month, but you can try the feature-rich toolset for $7 for seven days.
Tip #2 – Plan your idea around funding
43% of business owners use loans to cover operating expenses, and 62% use personal funds to deal with financial challenges. This means that, for many business ideas, cost initially exceeds profit.
If you’re not sure if you want to borrow money or if there are personal or professional reasons that borrowing isn’t an option, the online business idea you choose to execute must be inexpensive to run. You’ll also want to create a detailed business plan and budget. This will help ensure that you can cover unexpected costs during and after startup.
Tip #3 – Watch for trends
World events have an impact on what, when, and how much of a product people buy. While not every product is subject to trends, the demand for most business ideas will change with time. If a business is competing online, trends move even faster.
A quick example: When social distancing began in 2020, online demand for virtual events, loungewear, and at-home food services increased dramatically. Loungewear sales alone jumped 1303%!
To track trends online, bookmark or subscribe to news sites in your niche and subscribe to industry newsletters. Set aside ten minutes a day on your calendar to review the news.
Social CRMs like Sprout Social with social listening tools are also a great way to track trends that can help you expand or refine your digital business ideas.
Tip #4 – It’s all in the timing
Many early digital businesses flopped, not because they didn’t have a good idea, but because their audience wasn’t ready. Pets.com, eToys, and WebVan are all examples to learn from.
Technology often moves faster than most people are ready when it comes to life-changing ideas. One example of this is self-flying planes. This technology is almost ready for commercial flights and has assisted pilots for years. But this venture is on hold because estimates say that only one in six commercial fliers is ready to fly in a self-flying plane.
As you get excited about your online business idea, remember that savings and added convenience aren’t the only requirements for a great business idea.
Tip #5 – Don’t just launch any new business
Some people are ready to start a business and make money right now. When they can’t find the right idea, they become impatient and start working on the first idea that sounds good. This approach can be a great learning experience, but it’s also an expensive way to learn.
Avoid this trap by taking a few online personality tests. These quizzes can help you identify your strengths, weaknesses, and passions. Look at how you currently spend your time and figure out how those habits might translate to an online business.
Another thing to think about is that it usually takes three or more years to reach the full earning potential of a new online business. The right online business idea can last long-term, so think about what qualities your business idea will need to be profitable and enjoyable for you to operate in the long run.
Long-Term Strategies for Selecting an Online Business Idea
If you want to start a deep-rooted business that you’re passionate about, make time to develop the idea at its center. These strategies take more hours and resources but could mean the difference between failure and fortune once your business goes live.
Strategy #1 – Start thinking about common ecommerce challenges
On the internet, big international businesses are competing with every mom and pop shop in the world. Competition is the top challenge for ecommerce businesses.
97% of customers make their online buying decisions through online media like reviews or social media. Standing out online is difficult, so your business idea should have a unique selling point. Unique products and services allow you to focus on a smaller target audience and quickly grow your business reputation.
As you assess your online business idea, think about the frequency of use. Is this idea something customers will want just once, or is it a product that users will want to come back and purchase again? This impulse is important to understand when you’re developing an initial budget for your ideas.
For example, if you plan to sell a large ticket item like furniture or appliances, these products will require more investment in advertising. This is because it takes longer for customers to decide on one-time expensive purchases.
Ecommerce moves fast and requires a lot of attention to detail, especially when shipping enters the picture. Order fulfillment is another big ecommerce challenge. Supply chains were heavily disrupted in 2020. When combined with a surge in ecommerce shopping, this caused an increase in late orders. Refunds and returns can also be expensive and time-consuming for online businesses.
To avoid issues with fulfillment, consider business ideas selling services or digital products. If your business idea is a physical product, look at dropshipping or third-party fulfillment options and use that information to refine your business plan.
Strategy #2 – Put in the research
Online business founders need to understand the competition. They also need to come up with ideas that improve on what competitors are already doing. Early market research is an essential part of any ideation process. Start with a web search, but don’t forget these other useful sources that can help test and confirm your ideas:
- Industry associations
- Federal and state agencies
- Periodicals at the local library
As you dig in, write a list of questions and be sure that your research answers every one. Check out some of these sample questions to get started:
- How often would someone in your target age group use this product?
- Which features are most valuable to your target audience?
- What is the size of your target market?
- What are the key consumer trends in your industry?
Strategy #3 – Think digital, not local: Know your target audience
When assessing the value of a business idea, it’s vital to look at the product from every customer angle.
For many years brick-and-mortar businesses represented and connected local communities. But if you live in a small town, it can be tough to picture your customer in the city riding a crowded subway to work each day or your customer in Manila scanning Facebook from home. Online business ideas need to appeal to a diverse audience.
In addition to location, your business idea should consider the age of your target customers. While overall statistics indicate that 64% of Americans would rather shop in a brick-and-mortar store, these stats include responses from Baby Boomers and Gen Xers. Millennials make 60% of their purchases online, and Gen Z is mostly shopping online, too. This data says that ideas appealing to younger buyers may be a better fit for ecommerce businesses long term.
Sometimes a founder can get so excited about a new business idea that they forget to look at their concept from the customer’s perspective. Put yourself in your ideal buyer’s shoes. Customers aren’t just people who purchase your product. They’re also advocates who share the value of your product with friends and family. They’re influencers who set trends and spread the word about what your products can do to a large audience. Your customers also include the people using your product regularly.
For example, say you’re developing lip gloss for teenagers. You’ll want to think about the lip gloss from the perspective of the parents who are likely to be purchasing the product. They might look at this product only in terms of convenience and affordability.
Your users also think about how attractive the packaging is, the texture and color of the lip gloss, and the circumstances where they might wear it.
Advocates not only use your lip gloss but encourage other people to use it. What do your advocates need that the average user isn’t paying attention to?
Finally, influencers dedicate their energy to selling your product, and they’re also focused on how your product adds or distracts from their personal brand.
Try to focus on business ideas that appeal to buyers’ emotions. Logic is important when starting an online business, but an overdose of logic can shut down good ideas too soon. Most people buy emotionally and then rationalize those purchases with logic. Start with a general business idea, then look at the emotions that idea triggers.
Another effective way to test ideas is by talking to potential customers. Don’t wait for the perfect scenario, just head out into the world. Go to a community event or local shopping mall and start asking people whether they are interested in your business idea. Take notes on the exact reasons they share, both pros and cons.
This anecdotal evidence is useful information that can help you refine your business idea. It can also impact how you sell your products in the future. You can try using polls or surveys to get feedback on your product ideas. Another option is defining your target audience and testing your ideas by advertising for this specific audience.
These exercises aren’t about discarding or rejecting lousy business ideas. They’re about fine-tuning any business idea to make it more likely for your new business to succeed.
Now that you’ve polished your online business idea until it shines, it’s time to launch your online business. The first step toward selling online is building an ecommerce site.
This guide, How To Start an Online Store and Make Your First Sale has everything you need to know. Be sure to also check out our reviews of the best ecommerce platforms and software.