Adding an E-Commerce Store to Your Portfolio: 6 Factors to Consider

Retail e-commerce has been on the rise since the first online marketplaces, such as Amazon, eBay and Alibaba, were first launched. Savvy shoppers appreciated the convenience of being able to purchase everything from boxes of nails to prom dresses without leaving the comfort of their homes. Since the e-commerce business model meant online sellers didn't have to pay for overhead, they could offer their products at lower prices than physical-only stores.

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E-Commerce Is Poised to Grow Further

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The widespread lockdown orders during the global COVID-19 pandemic further emphasized the importance of retail e-commerce. Today, online stores and marketplaces are indispensable and have woven themselves into the fabric of everyday life for the average consumer.

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It is an excellent time to add an e-commerce store to your portfolio. With consumers' increased reliance on online shopping solutions, e-commerce is poised to grow even further. According to Statista, global retail e-commerce sales are forecasted to grow by 56% in the coming years, from $5.2 trillion in 2021 to $8.1 trillion in 2026.

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However, running an online store requires time, resources and work involving marketing, accounting and IT. Online marketplaces also have fierce competition, and it is difficult to succeed without a robust e-commerce strategy.

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How can you make the most of e-commerce's earnings potential without running an online retail store yourself? The answer lies in buying into an e-commerce business and having experts run it on your behalf.

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How Can You Add an E-Commerce Store to Your Portfolio

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There are a few ways to enter the e-commerce space. For example, you can start and run your own business, buy into someone else's company or purchase an existing business. Another excellent option is to purchase an e-commerce business through an e-commerce management company.

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Each option has its own pros and cons. For instance, building your e-commerce business from the ground up entails as much work as starting a brick-and-mortar company. The same goes for buying an existing business, which likely also has existing problems that you would need to consider and resolve.

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Meanwhile, buying into someone else's company can be a good idea if, after you've done your due diligence, you find that it has a solid business plan, trustworthy founders and excellent ROI.

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On the other hand, buying into an e-commerce business through a e-commerce management company gives you the best of both worlds: Ownership of a business and assistance with daily operational and management tasks.

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With this e-commerce business model, you can be as hands-on, or -off as you want. For instance, you can keep doing the tasks you enjoy the most while leaving the rest to your chosen e-commerce management partners. Typically, your new partners will do all of the research as to which products will sell best, and assist with marketing to increase your sales month-to-month.  

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Buying into e-commerce also helps with diversifying your portfolio. This helps lower your portfolio's overall risk and can minimize your chances of experiencing losses.

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Factors to Consider When Adding an E-Commerce Business To Your Portfolio

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As with adding anything to your portfolio, it's essential to look at certain crucial factors to help ensure a profitable outcome. Before you take the plunge, consider the following:

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1. The Company's Business Model

Partnering with a e-commerce management company to start and grow your own business is a significant undertaking on their part. Part of your success in the e-commerce space depends on the e-commerce business model utilized by the company you're considering working with.

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Some questions to ask a potential partner are:

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• How much funding is necessary to kickstart my business?
• What are the startup and working capital costs?
• How will I earn revenue?
• Is there a refund policy if the performance is below par?
• Is there an onboarding process, and how long is it?
• How much say do I have in major business decisions?
• How much are your fees?

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2. Financing/Capital

E-commerce startup costs vary depending on various factors, such as the items you're planning to sell and the tools you need to get up and running. For instance, apart from inventory, you'll likely need to spend on the following:

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• Domain name registration
• Website hosting
• Website/storefront development and design
• Online marketplace fees
• Payment processing
• Warehousing and storage
• Marketing
• Tools and apps for managing your store

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Before you dive into an e-commerce business, make sure you have adequate funds for these expenses as well as unforeseen costs. If coming up with the capital is challenging, consider applying for financing via your e-commerce management company or a reputable lending institution.

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Many find that the best e-commerce business experience comes from signing up with an e-commerce management company like Wealth Assistants. The company can provide you with various packages and suggest ways to save to ensure the profitability of your business.

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3. The Online Marketplace or Platform

There are several online marketplaces and platforms, such as Amazon or Shopify, and choosing the right one is important. Doing so helps ensure you're able to reach the right audiences. Further, each online marketplace has specific policies, fees and restrictions. Research them thoroughly to see if they align with the products you plan to sell and the marketing strategies you aim to implement.

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4. Your Unique Selling Proposition (USP)

The platforms with the most potential for profitability are usually the most saturated. Take, for instance, Amazon, which has 1.9 million selling partners as of 2022.

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The key to ensuring the success of your e-commerce business is having a unique selling proposition (USP). This serves as your differentiator and tells your potential customers why they should buy from you.

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A USP could be anything that sets you apart from your competition and can positively influence buying behavior. It should be something your customers want and your business is good at providing.

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For instance, if you plan on selling PC parts, your USPs could be:

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• Low Prices
• Excellent After Sales Support
• Warranties
• High-quality Products
• Fast Shipping

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To find the USP that best suits your business and goals, brainstorm with your e-commerce management company. They should have marketing experts on staff who can provide data-backed suggestions, as well as a team that could research your target audiences and their preferences, so you could find the USP that is likely to appeal most to them.

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5. Product Type

Choosing a product to sell online can be difficult. To make the process easier, you can start researching the profit margins of various niches. For instance, electronics, home and kitchen goods, clothing and pet supplies tend to sell well on Amazon and other online marketplaces.

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Note that the best e-commerce business sells products that meet a need, provide good value and deliver better performance than products within the same niche or category. Newbie e-commerce sellers often make the mistake of selling things they're passionate about without considering what their target customers want. While going with your passion may be personally fulfilling, it's best to consider the preferences and needs of the people you're selling to.

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Generally, it’s helpful to consider the following:

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• Market Size: Are there enough potential buyers of this product? Or will you cater to a select few, thus limiting your profitability?
• Target Audience: Can your target customers afford your product?

Competition: Who are you up against, and how can you compete with them?

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6. Sourcing

There are several ways to source your products, but the most common ways are through:

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• Wholesalers
• Manufacturers
• Dropshipping suppliers

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Dropshipping is the simplest product-sourcing method. What's more, the dropshipping method also includes the fulfillment process. Simply put, your dropshipping source also arranges for products to be shipped to your customers. With dropshipping, you don't have to purchase products upfront. This makes it a good option for new e-commerce business owners who want to save on inventory costs.

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Sourcing from wholesalers involves purchasing products in bulk. You would also need to find storage for these products and see to order fulfillment. One benefit of sourcing directly from wholesalers is the lower cost of products per unit.

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Meanwhile, manufacturing is a more time- and resource-consuming method. It involves designing products, ordering test batches and testing for quality and safety before you can sell products in your store. This sourcing method is best for online stores with unique products and those financially capable of withstanding losses if the products do not sell as well as expected.

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Expert Guidance From E-Commerce Management Experts

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Wealth Assistants is an e-commerce management company dedicated to helping clients grow their wealth. We assist with all stages of the e-commerce process, from acquiring and building your business to scaling and maintaining sustainable growth.

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Clients who choose us as their partner in their e-commerce assets have peace of mind knowing our conditional 12 -18 month refund policy protects them. To learn how we can help you with your e-commerce business needs, book a call with Wealth Assistants today.

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