Are you an upcoming entrepreneur? E-commerce ventures are becoming more popular in recent times, especially with the launch of new technologies like Shopify and Wix. These platforms claim that online selling is for everyone and declare that they can get you started very quickly.
But is it really that simple? What are the challenges that a start-up faces in the Australian market? Sunny Agarwal, Head of Marketing and Operations at Gowning Street, a premium seller of quality University graduation gowns answers these questions and more by sharing his story. Here are six tips from one successful Australian Entrepreneur to help you succeed too!
Find a problem to solve
Don’t think of your online store as a list of products to sell. Instead, think of it as a solution to someone’s problems. Identify your ideal client and maximize the value proposition you offer. Your business is more likely to succeed if you can convince your customers about how your product can improve their life.
For example, Gowning Street was launched in 2015 as a solution to students’ graduation gown woes. Graduation gowns can be hired for ridiculously high price tags (over $100). Sunny and his team decided to source and sell high-quality graduation gowns for a price lower than the hire cost.
But affordability was not the only product value proposition. It was about the memory too. Who doesn’t want a memento that reminds them of their hard work and dedication in completing a course? Graduation gowns are the best keepsakes to treasuring your university days forever!
Find your niche market
Gowning street has a very well defined target audience – students in their final year of study. This has proven crucial for their success.
If you pick a broad domain to sell in, like women’s clothing or children’s toys, you will find that the cost of customer acquisition goes up. There are too many competitors out there, trying to grab audience attention. If you don’t want competition eating into your profits, you need to zoom in on a small niche. How about selling African coffee to middle-aged working professionals or selling shaving products to straight edge razor users? Narrowing down your target market increases your chances of making a sale. Would you prefer ten people who all buy your product or a hundred who don’t?
The trade off in niche markets though is the inability to scale. This is especially true in Australia where the population size is quite small. But remember; if your business takes off, you can always try to enter overseas markets with the same proposition.
Do a pre-launch as quickly as you can
The point is to get a minimum viable product out there and see if anyone is interested in purchasing it. Surveys, online pre-launch campaigns, and some initial social media marketing are a great way to build some buzz around your product. Reduce risk by growing your online mailing list before product launch. These initial subscribers could easily become your first actual customers. Build your mailing list to a point where a 10% conversion rate means you break even.
Don’t underestimate the value of good old grassroots marketing. At Gowning Street, the team used Google Adwords and Facebook Marketing. But they also had student partners on the ground, doing word of mouth marketing at student fairs and student societies. Group discounts to student communities helped them get those first few hundred crucial sales.
Get your finances right
It is challenging to get an Australian bank to approve small business loans without a proven track record. Entrepreneurs need to start small, with personal savings or help from friends. Have fall back options in place and try to get at least one batch of customers to pay in advance.
Gowning Street was completely self-funded. Initially, they identified a Chinese manufacturer with expertise in high-quality fabric workmanship. Unfortunately, the smallest shipment they could purchase was a batch of thousand gowns. They worked around this by building a strong customer base in a few local universities. Eventually, they were in a position to roll out across Australia.
Also, watch out for currency rate fluctuations if you are dealing with overseas suppliers. The Gowning Street team made a newbie mistake of negotiating the price for the first batch, months in advance, without locking it in AUD. When the time came to pay up, the AUD had fallen 10%, and their negotiated price increased 10% too!
The workaround to this is currency hedging. Lock in your price when the AUD is having a good day. Don’t wait for a better rate; avoid nasty surprises by playing it safe.
Make sensible technology decisions
It is easy to overspend on technology if you don’t make the right choices. Initially, it is best to select a ready platform that meets most of your needs. Don’t spend money re-inventing the wheel. Focus your energy on your product and use technology as a tool – there is no point spending hundreds of dollars on a beautiful website, made from scratch, that no one wants to visit.
Gowning Street started off with Big Commerce – an out-of-the-box solution for their requirements. Initially, the team focussed on their SEO strategy and their product branding. Over a year later, they invested in building their website from scratch. By then they were consistently ranking on Google’s first page and had sold literally thousands of gowns. The technology spend was justified, and they were also able to access the Australian Government’s Research and Development tax incentive.
Be ready to face unexpected challenges
No matter how cautiously you proceed, you are bound to face some challenges unique to your circumstances. Be prepared to think on your feet and negotiate solutions that push your business forward.
Gowning Street faced an unexpected resistance from some universities who refused to support their on-campus marketing efforts. These universities had partnerships with gown suppliers and got a cut off the rental costs. They even included the hire cost in the price of the Graduation ceremony ticket!
When these universities began prohibiting their students from using non-affiliated suppliers, Gowning Street had to push back hard. They raised awareness among students about anti-competitive legislation and illegal marketing tactics that restricted consumer choices. The students, in turn, raised the issue with university management to get policies changed.
Entrepreneurship is not for everyone. It takes months of hard work, patience and the ability to cushion initial failure and build up time. Are you ready to take the big leap?