How to Start a Retail Online Business on a Budget
lack of or little capital shouldn’t stop you. You can start a lean retail business in these 3 simple ways.
Whether you want to set up a big business or a small business, you need capital. You might need to find how to get funding to support what you already saved up as your business capital. Sometimes, what you have as capital isn’t enough to get you started.
Are there ways to start a business on a lean budget? The answer is a resounding YES. You can start a lean retail business on a budget. This article will share 3 ideas that can help you begin your retail business even with little or no capital.
Dropshipping
Dropshipping helps you sell third-party products. The product does not belong to you. You sheep goods directly from a third-party supplier or merchant. There are no intermediary steps that involve storing goods in a warehouse and inventorying them.
How it works
1. You market the product.
2. Customer orders for goods.
3. You share order information with your drop shipper.
4. The drop shipper gets the receipt of the order.
5. The drop shipper charges you a price for the order which includes a drop shipping fee.
6. The drop shipper packages goods and ships to the customer.
It’s important to note that the drop-shipper is the third-party vendor you are buying from and not you, the retailer.
Pros of drop shipping
- No cost of managing and organising or maintaining a warehouse.
2. Since drop shipper caters to the entire process of packaging, shipping and logistics. You don’t bear the risk of unsold products. Direct shipment reduces the risk of product damage.
3. Low startup cost and easy to start. Sometimes, you don’t need a website. You can take advantage of social commerce.
Cons of drop shipping
- The dropshipping market is saturated. This makes it difficult to differentiate your product from others.
2. Quality can be a hit or miss. You can’t always determine the quality of the product you sell.
3. Compared to wholesale prices it is expensive. Owing to additional charges for drop shippers time, and shipping
4. Requires customer service. You liaise directly with the customer. Which means you have the responsibility of addressing their complaints.
Affiliate marketing
Affiliate marketing is a passive way of being a retailer. All you need to do is make product reviews and recommendations to get a profit cut. To begin, you need a laptop, good Wi-Fi, a website, or any social media page.
You can do this from anywhere in the world. If someone purchases after clicking through your affiliate link, you get a percentage of the sale called an affiliate commission. The good thing is, people read reviews. Online review statistics tell us that 93% of buyers read online reviews before buying a product.
How it works
1. Choose a niche.
2. Build a site. You don’t need to if you have or can build social media following.
3. Find businesses you want to promote and sign up for their affiliate program and apply.
4. Begin to produce reviews and recommendations on your site or social media pages.
5. Always attach your affiliate link as you post content.
6. Customers click your link.
7. Affiliate links are tracked to tell businesses where the purchase originated from.
8. You get a commission afterward when the transaction is complete.
Some programs offer extended cookie programmes that give a window of 7–30 days. If someone clicks your link and doesn’t buy, you can still earn from that click if the person returns within that period to buy.
Pros of affiliate marketing
- It is easy to start.
2. It has a low startup cost. You don’t always need a website.
3. You do not need to offer customer support. It is the merchant’s job to do that.
4. It is a good source of passive income.
5. Cons of affiliate marketing
6.Low commission from some companies
7. Merchants may take a long time to pay.
8. No price control
9. Send customers away from your website
10. Commission can change without warning
Trade Credit
Trade credit enables you to take goods without offering an upfront payment. You can make payment on a later scheduled date. The vendor and supplier agree on a date.
In this kind of commercial financing, a retailer keeps her profit and pays the cost price for the goods purchased, usually after the retailer has made sales. While this is a disadvantage to the suppliers, it’s an effective way to put products in the hands of vendors.
As someone looking to start a retail business, you can take advantage of this provision instead of taking a loan. But you would need a good credit rating that verifies you as credit-worthy.
In some trade credit agreements, discounts are used to lure traders to turn in payments early. For instance, there could be a 3% discount if payment is received within ten days of issuing a 30-day credit.
How it works
- Trade credit has zero percent financing. You don’t need to have money.
2. Find a supplier and prove your creditworthiness.
3. Once you can prove that you are creditworthy, you can obtain materials to manufacture goods and sell them before repaying the supplier. Or…
4. You have the option to buy finished products on credit and pay after you have made sales. It all depends on the kind of retail business you choose.
5. If you consistently pay for your supplies before or on the due date, you can get long credit periods.
Pros of Trade Credit
- Simple and easy access to financing
2. Affordable type of financing that comes at no extra cost compared to other financing options.
3. Improves business cash flow and assets as payment is deferred.
4. It Improves your business profile and relationship with vendors if you are not a defaulter.
Cons of Trade Credit
- High cost of payment in some cases if you pay late. Certain payment penalty charges, or interests may be involved.
2. If one fails to pay, it impacts one’s credit profile and relationship with the vendor. You lose goodwill.
3. You might forgo a discount if you do not pay early.
What SpottR offers
SpottR supports retailers by giving them a platform to showcase what they sell. Even more, It helps you get found by buyers. You can look for drop shippers if you want to start a lean retail business. If you consider going into dropshipping, SpottR can help you connect with your buyers.
SpottR offers to help finance your retail business in a way that is similar to trade credit. It is an offer under its affiliate program that helps you get goods and services on credit.
To be creditworthy, you need to have Cliq Tokens, which serve as collateral to purchase goods on credit. You get these goods delivered to you. You can market and sell offline or online before paying at a scheduled date. You should find out more about our services here.
