It's a Good Time to Invest in E-Commerce

Business.com / Starting a Business / Last Modified: April 9, 2018
Image credit: sdecoret/Shutterstock

E-commerce is taking the world by storm, and for good reason. The industry is well established but also willing to innovate. Here's how to catch the eye – and interest – of investors.

If you haven't noticed, e-commerce is taking the world by storm, and for good reason. The industry is well established but also willing to innovate. There are a handful of big players like Amazon and eBay, but there is also plenty of room for small business startups. The bottom line? It's a good time to invest in e-commerce.

Beefing up the basics

Before we dive into how to find investors for your e-commerce company, it's important to cover some of the basics, such as how to build a site and how to market yourself. Luckily, tackling both of these projects is easy, thanks to the internet.

For instance, it used to be that you had to build your e-store from scratch. This wasn't a simple process, so most folks hired a web developer or did it themselves. Today it's totally different. E-store entrepreneurs can build plug-and-play stores using cloud-based solutions. This allows vendors to build an attractive site for a small monthly fee, complete with the capability of processing payments and scaling their store with little to no effort.

Why is this so important? Well, most investors want to see that your store is already operational before putting their money in. Plus, it's good to have some background in the industry before asking people to commit money to your venture.

Marketing is a key ingredient

Once your store is built, you'll have to entice customers to spend money. Gone are the days when you'd have to spend bundles of cash to buy advertising space. Now, it's as simple as setting up Facebook, Instagram and Twitter pages.

Establishing your social media presence is imperative for any e-commerce brand. It allows you to promote sales and product launches, obviously, but it also does more than that.

A good online marketer understands social media should be a two-way conversation between the brand and consumers. So feel free to be fun and delightful. Share memes on your page, or ask shoppers to post videos of themselves using your products. Have them tag friends or family in posts in exchange for entry into various contests. Social media offers infinite possibilities.

Finding investors

Now that you have the skeleton of your e-commerce business, you can invite investors to pitch in. Start by explaining the value proposition of your online retail store. What is your brand identity? Who is your target audience? How likely are they to buy from you? What is the return on investment (ROI) for your marketing initiatives, product sales, etc.? These are questions every investor will ask. Rehearse your answers early to avoid being caught off guard.

The next step is finding folks with capital to invest. While you can start by reaching out to friends or former colleagues, you may want to move something more serious later down the line. AngelList connects startups with investors in an easy-to-manage online environment. Dozens of incubator programs do the same thing.

But that's not all. Some investors host pitch contests, in which they invite business people to share their ideas. This has become more and more popular, thanks to television programs like "Shark Tank"

If you aren’t much of a "shark," then enticing investors might not be for you. Still, you can ask people to fund your fledgling business through crowdsourcing. While critics might criticize this method as glorified cyberbegging, nothing could be further from the truth. Crowdsourcing shows the public is interested – even invested – in your brand.

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