How to start a lean eCom brand:
- Market research and niche selection
- Develop a minimum viable product (MVP)
- Lean and efficient operations
- Focus on customer feedback and agile adaptation
- Scale gradually and wisely
The lean eCommerce strategy places great emphasis on maximizing efficiency and minimizing costs in business operations. Customer feedback is taken seriously and is used as a guide in implementing product changes. Scaling is also done with caution. These principles are based on The Lean Startup, a book written by entrepreneur and blogger Eric Reis. According to him, the lean startup methodology “is not about being cheap” but rather “about being less wasteful and still doing things that are big.” Meanwhile, Alex Fedotoff shares in his Brand Builders Academy training program that lean eCom brand owners can earn $10,000 to $20,000 per month through this strategy.
In this feature, we dig further and tell you about the 5 steps of starting your own lean eCom brand. We also define what lean eCommerce is. We also discuss what sets it apart from other online business models and how it fares against them. Towards the end, I share my personal recommendation for those looking for a better online business idea that doesn’t involve running an eCommerce company and selling products to people. It’s also more profitable, less competitive, and only involves little to no work since you are dealing directly with business owners - not random buyers on an eCommerce platform. Best of all, it can help you generate passive income month after month.
How to Start a Lean eCom Brand
1) Market Research and Niche Selection
Market research and niche selection are both important steps for starting a lean eCommerce brand. As a lean business owner, you want to identify a potentially profitable yet unsaturated niche you can focus in. Doing extensive research is a must to learn about the latest market trends and common concerns of your potential customer base.
You can use research tools such as Google Analytics and Google Trends. You can also check out social media channels and market analysis reports available online to dig more relevant information. As you leverage the gathered data, you can determine the feasibility of the business concept before you start investing resources in developing your product ideas. It will also be much easier to market your ecommerce brand to your target audience. Plus you can position yourself better in the industry and against your competitors.
2) Develop a Minimum Viable Product (MVP)
Developing a minimum viable product (MVP) is a must for online entrepreneurs establishing a lean eCom brand. Launching a product in its most basic version can be an advantage for your business, production-wise and marketing-wise. Doing so will allow you to test the waters without breaking the bank during product development. Plus you get to spread brand awareness in no time.
This also means you can gather feedback from early customers soon after launching your MVP. As such, this approach can help you make necessary adjustments to improve your product and operations based on the response of your target market. You can immediately work on addressing your product’s potential flaws and your customer’s specific pain points.
3) Lean and Efficient Operations
Lean and efficient operations can contribute to the overall effectiveness of your ecom brand. As you run an online business, you’d want to take advantage of any tool or service that could simplify your process. “Lean operations is a business strategy driven by the principle of doing more with less,” explains Jessica Ruane in her BeeKeeper article. “It is a minimalist approach to running a business and improving day-to-day operations.”
Of course, the overall goal is to keep your overhead expenses low. For example, software such as Brevo, Drip, HubSpot, Mail Chimp, and Omni Send can be useful in automating certain aspects of your marketing campaigns. Meanwhile, print-on-demand services can be an excellent solution in cutting the supply chain and lowering inventory management costs.
These factors can result in maximizing the efficiency of your operations and boosting your potential revenue without increasing your investments.
4) Focus on Customer Feedback and Agile Adaptation
With streamlined production and operation, you can focus on serving your customers and adapting changes quickly. In any business, customer satisfaction is always a major factor that needs to be considered. Gathering consumer feedback early makes it possible for lean eCom business owners to know and understand customer expectations better. It gives you the agility to adapt and refine your products, which can eventually lead to better customer retention.
According to Salesforce, 73% of customers “expect companies to understand their unique needs and expectations.” Meanwhile, Redpoint also shares that 74% of consumers “feel brand loyalty is about feeling understood and valued, not discounts and loyalty perks.”
5) Scale Gradually and Wisely
You can start scaling your business as your lean eCom brand begins gaining traction in the market. Although businesses that observe lean practices do not rush growth, you also have to identify opportunities to scale according to your capability and capacity.
Some examples of gradual scaling include expanding your offerings by degrees. You can introduce new products in your catalog based on the needs of your customer base. Investing more in your marketing campaigns may also be an excellent idea to reach more people and grow your monthly revenue.
Scaling requires “elaborate planning on how you can achieve your set goals,” according to Outsource Accelerator writer Vilma Estrellado. So you’ll have to “carefully plan and strategize on scaling and act on it accordingly.”
In any case, scaling gradually and wisely lets you avoid losses and failure. You don’t want to overspend on operational costs or force greater growth than your infrastructure can handle.
What is Lean eCommerce?
Lean eCommerce is a new business strategy that emphasizes streamlining operations and automating repetitive processes. In a Miva blog, author Vanessa Loughty summarizes lean eCommerce focuses on “efficiency, productivity, and customer satisfaction in online sales operations.”
Online ecommerce store owners that practice lean principles are also attentive to comments from customers. They take feedback seriously and use it to adjust products and adapt new procedures. In any case, the overall goal is to do more with less by increasing efficiency while minimizing waste of resources and keeping expenses low at the same time.
Lean eCommerce vs Traditional eCommerce
Lean eCommerce
Traditional eCommerce
A lean eCommerce brand focuses on having a minimal viable product (MVP). Starting with a product’s simplest version allows entrepreneurs to gather instant feedback from buyers and make changes as needed.
Traditional eCommerce often starts with a full lineup of offerings. This means spending a bigger upfront investment in launching and maintaining the business.
Lean eCom brands use the just-in-time (JIT) strategy, an inventory management system that allows them to minimize stocks and costs.
A traditional eCommerce company often has large inventory stocks. They often prefer to buy items in bulk to ensure continuous availability of products.
Lean eCom businesses start with small, basic offerings and depend on market response in guiding their scaling decisions.
With diverse products, traditional eCommerce brands target a wider market. They also do not adapt as quickly as lean eCom companies.
This business approach places heavy emphasis on consumer feedback, incorporating adjustments and changes to develop products and ensure a satisfying customer experience.
A traditional eCommerce business also values customer feedback but does not change their offerings as often. They pay greater attention to overall market trends and conduct research before implementing any changes.
Resources and costs kept at a minimum in a lean eCommerce business. Investments are often conservative to avoid wastage and overspending.
A significant amount of investment is needed to launch startup operations and its marketing efforts. The goal is to gain a strong market presence from the get-go.
Lean eCommerce vs Dropshipping
Lean eCommerce
Dropshipping
The lean eCommerce model prefers minimalism in terms of inventory management. Entrepreneurs often use the JIT system, so they work closely with suppliers to receive raw materials in time for production.
In dropshipping, shop owners do not need to handle any inventory at all. Suppliers directly ship ordered items to buyers.
Lean eCom allows greater supply chain control, including product and packaging customization.
Dropshippers rarely have any product control since they heavily rely on third party providers. As such, quality control can be an issue.
Lean eCom brand principles require businesses to invest minimally in product development and marketing.
Dropshipping requires lower upfront investment and usually ranges only $500 to $5,000 to start.
Lean eCom entrepreneurs can potentially enjoy higher profit margins since they have greater control over their products and prices.
In general, a dropshipping business yields lesser profit margins. Tight competition online can dictate your pricing strategy and potential earnings.
Easier to establish customer loyalty plus the model allows you to build brand identity faster. Lean eCom businesses have the freedom to customize and tweak offerings, as needed.
Dropshippers usually sell generic products that are also being sold by thousands of other sellers online.
Lean eCommerce vs Amazon FBA
Lean eCommerce
Amazon FBA
Lean eCommerce businesses handle their own fulfillment process. They are more involved in managing their inventory and logistics needs.
The Fulfillment by Amazon (FBA) program handles order fulfillment tasks on behalf of sellers - from storage and packing to shipping and providing customer support.
Since lean Ecom brands maintain inventory, they use JIT techniques to streamline the process and costs.
Amazon FBA sellers tend to keep more product inventory than lean eCom models. The platform also charges $0.56 to $3.63 per cubic ft for inventory storage or $1.50 to $6.90 per cubic ft for long-term storage.
This business model offers greater flexibility in terms of establishing branding and providing personalized customer service experience.
FBA sellers are required to comply with Amazon’s existing procedures and policies.
Minimizing logistics costs is possible as eCom brand owners shop around for services that are within their budget.
Aside from storage fees, Amazon FBA also charges fulfillment fees (packing, shipping, handling, product returns, etc). This can range from $2.45 to $157.72, depending on the size and quantity of orders.
Lean eCom brands often rely on quality SEO campaigns to drum up traffic for their products.
Amazon’s massive marketplace and traffic volume can work as an advantage for sellers.
Conclusion: Should You Start a Lean eCom Brand in 2024?
Starting a lean eCom brand in 2024 can be an excellent idea for online entrepreneurs who want to increase business efficiency, streamline their process, and reduce costs. However, it should be noted that adapting lean practices can be a challenge, especially for those aiming to target a larger audience and are not comfortable about not having a full range of offerings. Moreover, it should be kept in mind that finding a minimum viable product (MVP) is not as easy as it sounds. Ecommerce entrepreneurs also have to work hard in marketing the said product while competing with thousands of other sellers online.
Why You Should Go For Local Lead Generation Instead
Local lead generation can be a better small business idea if you’re hoping to establish a company with lower work and time requirements but with higher revenue potential. Instead of selling a single product, marketing it to potential buyers, and competing with thousands of sellers, you will build a website, boost its search engine ranking, and then offer it to an interested client.
The lead gen business model is not as stressful and as saturated as ecommerce. With this, you are basically a landlord who owns and rents out your digital asset to local businesses in need of traffic and leads. For example, I earn $2,000 per month for a tree care website I built years ago. This site delivers leads to my Grand Rapids-based client and so they happily pay me for my services. With so many cities across the United States and countless industry-specific business models you can target, you can definitely earn much as a lead generation provider. In fact, I earn up to $52,000 each month since I own and rent out several lead gen sites to multiple customers.
For those interested in learning the art of lead generation, we have a coaching program where we’ve had over 7,000 students and counting. We’ll teach you our repeatable 3-step process so you can generate passive income per month without selling products, maintaining an online store, or competing directly with other sellers online.
