How to Start an eCommerce Business

how to start e-commerce

Starting a profitable business is not an easy feat. You need to have a clear understanding of what you want to achieve and how you are going to get there. During that process, you come across many challenges and setbacks, some of which cannot be solved by simple tricks and tactics.

The eCommerce business industry is no different. Before you embark on your journey to becoming a successful online seller, you have to cover a lot of ground. You need to find a niche, decide on the legal name and business model, obtain required permits and build your eCommerce website.

As difficult as it may sound, the process can be made much easier with a proper business plan and execution. And with the global eCommerce market surpassing the $5 trillion mark in 2022, there’s no better time to sell products online than right now.

To help you with that, we are going to take a look at how to start an eCommerce business and make it a success.

Steps to Start an eCommerce Business

  1. Research the desired business model
  2. Select a niche market
  3. Register your online business
  4. Create the brand identity
  5. Set up your eCommerce website
  6. Finish up your business plan
  7. Market your eCommerce store

Research Business Models

Just as with a brick-and-mortar business or any other company, you need to first research the business model you want to venture into. There are many different ways to sell online, each with its own unique set of characteristics.

customers shopping on the phones

Retail Wholesaling

Probably the most common type of eCommerce business, retail wholesaling involves buying products from manufacturers or suppliers in bulk and selling them to customers at a higher price. The key to success in this type of online business is to find the right supplier who can provide you with quality products at competitive prices.

Drop-Shipping

Drop-shipping is an alternative to standard retail, where the online store owner does not keep any products in stock. Instead, they partner with a supplier who will ship the products directly to their customers on their behalf. Drop-shipping is a popular option for new businesses as it requires little upfront investment and is relatively easy to set up.

Digital Products

If you have a knack for creating digital content, such as e-books, audio files, or software, then selling digital products could be the right eCommerce business model for you. The great thing about this type of online business is that once the product is created, there are minimal additional costs involved in selling it.

On-Demand Services

The on-demand economy is booming, with businesses such as Uber and Airbnb leading the charge. If you have a service that you can offer on-demand, an online marketplace could be a great way to tap into this growing industry.

Less Common Business Models

There are many other, less common eCommerce business models, such as crowdfunding platforms or membership sites. While these types of businesses can be successful, they often require a higher level of expertise and investment to get off the ground.

Crowdfunding Platforms

This category falls somewhere between eCommerce and non-eCommerce businesses. If you want to offer a platform for people to raise money for their projects, you will need to find a way to monetize it for yourself, too. This can be done by charging a percentage of the funds raised, or by offering paid memberships with additional features.

Membership Sites

Similar to crowdfunding platforms, membership sites can be a great way to generate revenue from your eCommerce business. By charging a monthly or annual fee, you can offer members unique content, access to discounts, or even exclusive physical products.

Subscription Boxes

This type of eCommerce business sends customers a box of curated products on a regular basis, often monthly. The idea is to surprise and delight customers with each delivery, while also building loyalty and repeat business.

Select the Niche

Selecting the right niche may be a little overwhelming. On one side, you want to pick something that appeals to you, while on the other side, it has to have enough customers and be profitable.

Here are a few tips on how you can go about finding that perfect niche in the vast sea of eCommerce businesses:

brainstorming business ideas

Consider Your Interests

You don’t always have to reinvent the wheel when it comes to finding a niche. Sometimes, your existing interests can be a great starting point for identifying potential markets. If you already have a hobby or passion that you are knowledgeable about and can monetize, this can be a great way to get started.

Look at Current Trends

Keeping up with current trends is a good way to identify potential niches that are growing in popularity. This could be anything from a new type of product to a change in consumer behavior. Keeping an eye on trends can help you get ahead of the competition and sell products in emerging markets.

Analyze Your Competition

If you already have some ideas for potential niches, it’s important to do some research on your competition. This will help you determine whether there is enough room in the market for your business to be successful. Look at what other businesses are doing well and identify any gaps that you could fill.

Define Your Aims

Before you start looking for a niche, it’s important to have a clear idea of what you want to achieve with your business. Defining your goals for your own eCommerce store will help you narrow down the options and find a market that is aligned with your vision.

Consider Your Resources

When starting your own eCommerce business, it’s important to consider the resources you have available. This could be anything from your budget to the amount of time you have to dedicate to the business. Taking into account your limitations will help you find a more realistic niche that you can actually succeed in.

Register Your eCommerce Business

After you’ve done your research and selected your niche, it is time to start working towards making your eCommerce dream a reality. The first step in this process is to register your online business. This will give you a legal entity and help you avoid any potential problems down the road.

Pick a Business Name

If you haven’t already, this is the high time to come up with a name for your eCommerce business. The name you choose should be reflective of your brand identity and help you stand out from the competition. It’s also important to make sure the domain name is available so you can build a professional website.

Keep in mind that your brand name doesn’t have to be your full business name, just as Google LCC goes by just Google and Ford Motor Company goes by Ford. You can also try to be clever with your business name and use puns or other wordplays to make it more memorable – while it’s not that welcome for a serious hardware manufacturer, a light-hearted online store could benefit from it.

project teamwork

Select a Business Structure

The other important aspect of registering your business is to choose the right business structure. This will be relevant for tax and liability, so it’s important to consider every viable option and research possible implications before making a decision.

The most common business structures for small businesses are sole proprietorships, limited liability companies (LLCs), and S corporations:

  1. Sole Proprietorship – this is probably the simplest business structure. Your online store is registered under your personal name and you are the only owner. This structure offers flexibility but doesn’t offer any legal protection if your business is sued – that includes your personal assets, too.
  2. Doing-Business-As (DBA) – this business structure is also known as a fictitious name or trade name. It allows you to register your eCommerce store under a name that is different from your personal one. A DBA can be used by sole proprietorships and partnerships and offers some level of legal protection.
  3. Limited Liability Company (LLC) – a legal entity that offers its owners limited liability. This means that they are separated from the business and are not held liable for its debts or liabilities to the same extent as sole proprietorships or partnerships.Apart from that, LLCs come with a range of other benefits, such as pass-through taxation and flexibility in the management structure.
  4. S Corporation – a business structure that is similar to an LLC but with a few key differences. S corporations offer their shareholders limited liability and are taxed as pass-through entities. However, they also have restrictions on the number and type of shareholders, which can make them less attractive for a new business.

Apply for the Necessary Business Licenses and Permits

Depending on the type of eCommerce business you are running, you may need to obtain certain licenses and permits. These can vary depending on your location, so it’s important to check with your local authorities to see what is required.

Some of the most common licenses and permits for online businesses include:

  1. Business License – this is a general license that allows you to operate your successful eCommerce business within a specific jurisdiction. In most cases, you will need to apply for a business license from your city or county.
  2. Sales and Use Tax Permit – if you are selling physical products, you will need to obtain a sales tax permit. This allows you to collect sales tax from your customer purchases and remit it to the appropriate authorities.
  3. Employer Identification Number (EIN) – if you are going to have employees, you will need to obtain an EIN from the IRS. This is a unique nine-digit number that identifies your business for tax purposes – returns, deposits, and payments.

Establish Your Online Store Identity

The next step after taking care of legalities is to start working on your online store’s identity. This includes everything from the logo and color scheme to the overall tone and messaging of your website.

Once you have decided on the brand name, the next step is to design a logo that will represent your eCommerce store. The logo should be reflective of your brand identity and help you stand out from the competition.

There are many different ways to go about designing a logo. You can hire a professional graphic designer or use one of the many online logo makers – sometimes, simplicity is the key.

Remember that:

  1. Your logo should be scalable – putting too many small details will make it difficult to display in smaller sizes, for example, in the favicon of your eCommerce store;
  2. Your logo should be versatile – instead of sticking to only one predefined color palette, prepare at least three variants, black, white, and a brand-colored one. This will give you more flexibility when using the logo on different marketing materials;
  3. Your logo should be timeless – avoid using any trends or fads in your design as they will quickly become outdated. A retrowave logo would make your potential customers rave back in 2012, but in 2022, it’s merely a thing of the past.
website design

Develop the Brand Design

When designing your logo, you have to keep your overall brand design in mind, which refers to all the decoration you want to use in your online store and marketing materials.

Nowadays, most businesses resort to either of the three design philosophies: flat, material, and skeuomorphic.

  1. Flat design focuses on functionality and simplicity, omitting any unnecessary elements. This approach is most commonly used by tech companies as it creates a modern look and feel.It is also the easiest to implement – grid-like patterns, sharp edges, and solid colors are all welcome in the flat design world. It might look a bit sterile and emotionless, which may not fit all niches;
  2. Material design aims to deliver a more realistic and interactive user experience. It is a natural evolution of the flat style, which uses shadows and depth to give users a sense of how they can interact with the interface. And so, it is a safe option for an eCommerce business in any industry;
  3. Skeuomorphism stands in strong opposition to the flat style. It uses real-world objects and metaphors to make the interface more intuitive and familiar.If you want to create a more cozy, homey, and inviting look for your store, skeuomorphic design may be a good option for that form of marketing efforts. However, keep in mind that it can quickly become tacky and outdated if not done right.

Choose a Color Scheme

Color is one of the most important aspects of branding as it can have a profound effect on human emotions. The colors you use in your design should be reflective of your brand identity and help you communicate the right message to your target audience.

If you do it right, certain shades can become synonymous with your business idea – just think of Coca-Cola and its distinctive red color or Spotify and its green logo.

Having said that, it’s important to use colors that complement each other and create a cohesive look. The colors should also be reflective of your brand store identity – for example, if you are selling eco-friendly products, using green in your design would make sense.

Lastly, you may want to find a distinctive shade. The soft blue of Facebook may look appealing, but you don’t want people to mistake your store for a social network.

Set Up Your eCommerce Platform

Next, it is time to put your business plan and brand identity into practice by setting up your eCommerce platform. This is the software that will power your eCommerce business and enable you to start selling products or services to customers.

There are many different types of eCommerce platforms available on the market, each with its own set of features and pricing plans. To choose the right one for your business, you need to consider your needs and budget.

The most popular eCommerce platforms are:

  1. Shopify – one of the leading eCommerce platforms used by a wide range of users, from small businesses to worldwide enterprises like Tesla;
  2. BigCommerce – another widely used eCommerce platform, suitable for businesses of all sizes. Its main advantage is the evergrowing number of features and integrations;
  3. WooCommerce – a popular WordPress plugin that turns any WordPress website into a fully functioning online store;
  4. Adobe Commerce (formerly Magento)- an open-source eCommerce software with a wide range of features, suitable for businesses of all sizes.
coding the website

Find a Web Developer

It is highly unlikely that you want to tackle the task of setting up your eCommerce platform on your own. Unless you have experience in web development, it is best to leave it to the professionals.

The good news is that there are virtually limitless options when it comes to finding a web developer. You can use online platforms like Upwork or Fiverr, or reach out to local agencies in your area.

To find the right candidate, you need to clearly articulate your needs and expectations. Once you have found a few suitable candidates, it’s time to start the interview process.

You want to get quotes from each of the developers on how much they will charge for the project and what is included in that price. Furthermore, you should ask for examples of their previous work so you can get an idea of their skills and style.

The last step is to negotiate the price and project timeline. If you want to start an eCommerce business, the platform may cost you from a few hundred dollars to a much more significant sum. The same goes for the time of development.

Once you have come to an agreement, you can start working on your eCommerce site and move forward towards putting your eCommerce business online.

Choose the Payment Processor

As an eCommerce store owner, you want to make sure that your customers will enjoy doing business with you to the very end. Thus, it is highly important to offer a smooth and convenient checkout process.

One of the most important aspects of that is choosing the right payment processor. By doing so, you guarantee that your customers will be able to pay with their preferred payment methods and that the transactions will be safe.

Typically, small business owners resort to using payment gateways for their eCommerce platforms. For example, Shopify Payments is the built-in gateway for Shopify stores.

As your business grows, you may want to consider using a merchant account provider like PayPal or Stripe, which will enable you to accept credit card payments directly on your website.

Develop Your Online Store

Developing a complete online eCommerce site is a relatively complex task. You have to take care of the storefront – the website as your customers see it, but also the back-end or admin area where you manage your store.

The Front-End

When it comes to developing the front-end of your online store, you have to focus on two main aspects: design and user experience (UX). The goal is to create a website that is not only visually appealing but also easy for users to navigate.

There are many different ways to go about designing an eCommerce website. You can use one of the many pre-made themes or templates, or you can hire a professional web designer to create a custom design for your store.

When it comes to UX, the most important thing is to make sure that users can find what they are looking for easily and without any complications. The checkout process should be as straightforward as in a brick-and-mortar store so that users don’t abandon their shopping carts.

The Back-End

To develop the back-end of your eCommerce platform, you need to focus on two main aspects: functionality and scalability. The goal is to create a platform that can support your business as it grows and scale easily when needed.

Apart from that, you need to implement financial and inventory management features, as well as shipping and order management. All of these need to be integrated so that you can run your business smoothly and without any complications.

bloggers and influencers

Create Content for Your Online Store

Content is a very important part of every eCommerce website. Not only does it help with SEO, but it also allows you to connect with your customers on a more personal level and build trust.

When creating content for your online store, you have to focus on two main types: product pages and category descriptions, and blog posts.

  1. Product pages and category descriptions are self-explanatory – they need to provide users with all the information they need to choose and make a purchase. This includes things like size, color, materials, etc.;
  2. Blog posts are a little different as their main purpose is not to sell but rather to engage and inform your customers about everything relevant to your niche. For example, if you are selling eco-friendly products, you could write a blog post about the benefits of going green.

Such a form of content marketing helps you build trust with your customers and establish your brand as an authority in the industry, while at the same time increasing the organic traffic to your eCommerce store.

Finish Your Business Plan

Before you launch your online shop, you should revise your business plan and make sure that all the pieces fit together. This is a crucial document as it will help you track your progress, set objectives, and raise capital if needed.

A good eCommerce business plan should include:

  • The summary of the current situation – this will let you assess where your business stands and what needs to be done to take it to the next level;
  • The market analysis – who are your target customers and what do they want? This will help you determine the right product mix and price points;
  • The competitive analysis – research your competitors, their products, pricing models, marketing methods – every piece of intel that will help you develop a competitive edge;
  • The business model – how will your eCommerce store make money? What are the revenue streams?
  • The marketing strategy – this is where you determine the best marketing tools, channels, and methods to reach your target customers and promote your own products;
  • The financial projections – last but not least, you need to have a clear idea of your startup costs, operating expenses and expected revenues.
launching e-commerce store

Launch Your eCommerce Store

Now that you have everything in place – the products, the platform, the branding, and the business plan – it is time to launch your eCommerce store.

This is usually done in two stages. First, you make your website live without any products or categories and then gradually add them as you go. This way, you can avoid any potential problems that may occur and have everything ready before the grand opening of your eCommerce store.

Next, it is time to start promoting your eCommerce business. The most common methods include:

  1. Search engine optimization (SEO) – this will help you rank higher in search results and drive organic traffic to your website;
  2. Social media marketing – using social media platforms like Facebook, Twitter, and Instagram to promote your products and build a following;
  3. Email marketing – sending newsletters, special offers, and other types of email campaigns to your subscribers (provided you have any, buying email lists is never a good strategy);
  4. Pay-per-click (PPC) advertising – setting up ad campaigns on platforms like Google AdWords or Bing Ads to drive paid traffic to your website and boost sales.

Conclusion

There you have it. You’ve just learned how to start an eCommerce business and are ready to start selling products or services to customers.

Of course, this is just the beginning of your eCommerce business journey. To make your online store a success, you need to continuously work on improving your store, adding new products, and expanding your customer base.

But with a solid foundation, the right eCommerce platform, and a bit of hard work, you are well on your way to becoming a successful online seller.


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