Ecommerce is a booming industry, and it’s getting bigger. Ecommerce sales are expected to reach $7.4 trillion worldwide by 2025, up from $4.9 trillion in 2021. That means there’s a lot of money available online — and if you’re looking for a new way to make money or want to expand your current business to deliver products direct-to-consumer (DTC), an ecommerce business is an incredible opportunity for you.
But how do you start? What steps should you take to ensure your business is successful and sustainable? In this article, we’ll walk through all the steps of starting an ecommerce business — from creating a business plan to setting up your website and marketing plan. We’ll also share some tips for making sure your brand has staying power so that it can grow as quickly as possible.
Table of Contents
Make a Business Plan
When you’re starting a business or building a new business alongside your current one, it helps to have a solid business plan. A business plan serves as a framework for your company’s growth. It’s a document that records every aspect of your company, from what you’ll call it to how much money you need to make it work. Many of the aspects of the plan might be guesses, but they provide a map to get you started.
Some think a business plan is superfluous for a small business that might not succeed. But that’s not true. Ecommerce businesses are still businesses, and there are certain elements that go into every successful business. The same rules apply to both selling online and offline. That said, a good business plan doesn’t have to be long or complicated. A typical business plan should contain:
- An overview of the industry and your competition (with research)
- A detailed breakdown of market research, including sales goals, demographics, and psychographics.
- Your mission statement. What are you trying to achieve? Be specific!
- The value proposition – what makes you different from your competitors? Why should customers buy from you vs them? Why are you starting this venture?
- Financial analysis.
You should also define the scope of your business plan and make sure it fits into your schedule. You can consider hiring someone to do it for you, or you can try it yourself. We recommend LivePlan to help you plan, write and stick to your plan. While you might not be an expert researcher and know cursory information about the competition, a business plan is a great way to realize the opportunities your new line of business has.
Choose a Niche for Your Ecommerce Business
Choosing a niche for your business is a crucial step in starting an ecommerce business. It’s important to choose a niche that you’re passionate about. You also have to be knowledgeable about your niche, and it doesn’t hurt to have experience with it. Bottom line – there are going to be many stressful aspects to selling online, and you need to have the grit to follow through.
There are three main types of niches: product, affiliate, and service.
Product-based niches are easier to find because they already have existing demand and competition. For example, if you love photography and want to start an online store selling cameras and accessories, this would be a product-based niche. Product-based niche success depends on your ability to source products at a low enough cost or to create a uniquely marketable product that you can differentiate yourself from the competition.
Affiliate niches are content-based ecommerce plays that use helpful guides to direct customers to products. Blogs suggesting “10 Helpful Products To….” are likely affiliate sites that receive payments through links when readers buy the product. If you’re new to online selling, this is a low-risk way to start. Even if you are an established brand or company, affiliate marketing allows for additional revenue streams to complementary products while helping your website’s SEO.
Service niches make connecting businesses with professionals very easy. Fiverr, UpWork, and Mastermind sites provide marketplaces for connecting expert talent for gig work to businesses. Mastermind classes and training sites like Coursera host training resources via downloadable guides, training courses, or online presentations. These solutions can be hosted on your site and allow freelancers and large companies alike to share skills with others.
Research What Products or Services Are in Demand
Once you have selected your niche, it’s time to think about products and services that are in high demand. If there isn’t enough demand for the products you’re selling, then it won’t matter how good your site looks or how well-optimized your marketing campaigns are; you’ll still go out of business. If your product is a hit with customers, though, it will be easy for you to sell more of them. In our experience, no amount of marketing can overcome a poor product.
If you’re just getting started, we recommend choosing a niche that’s easy to break into and has low competition but still has plenty of potential customers. For example, if you have no experience with running an ecommerce store, it would be best to stick with something simple like t-shirts or books rather than diving headfirst into selling many SKU’s like office supplies or multi-part products. Once you’ve built up some experience, then you can move into more competitive industries with higher profit margins.
Your cost of goods is extremely important. Beyond your ability to manufacture or purchase a product cheaply, shipping can be prohibitive. Products under $20 MSRP must be sold at high volumes due to shipping costs and marketplace costs (Amazon, eBay, Walmart, etc). Competition and differentiation cannot be underestimated, either.
To start product research fresh, we recommend using Google Trends or Keyword Planner. These tools will help you find out which products people search for the most on Google and what keywords they use when searching for those products. You can use JungleScout to look at what people are searching for on Walmart and Amazon. Check out the top products in each category, and see if there’s anything you could sell that would be better than what’s already available on these sites.
The next step is testing the market viability before committing yourself fully – but don’t overcommit. You want to test product-market fit with a minimally viable product (MVP). Your goal at this stage is to ensure interest from potential customers before investing more time or money into developing/marketing/selling your idea. To achieve this, we recommend you buy a small quantity and sell them on eBay, make affiliate content and determine how much traffic you drive or drop ship your product first. It pays to be smart initially and unearth any difficulties and uncertainties that were not apparent when you made the business plan.
Build Your Brand Starting with the Name
Once everything is in order, the next step is to start a brand that represents you and your business. It’s best to choose something that will work as an umbrella brand — your site name should not just be a random string of keywords. You need to pick a name that you can use to create a brand around, which means it needs to reflect your products in some way.
You might be wondering where you should start on coming up with a name. Start by coming up with several different names and checking out their availability on social media sites such as Twitter, Facebook, Instagram, and LinkedIn. Social media has become an important aspect of branding, and it would be a shame if your name were already taken by someone else.
Next, make sure there aren’t any trademark issues with any of the names you’ve come up with. Take advantage of free legal resources like Google’s Trademark Search Tool and DomainTools’ free trademark search service for U.S.-based trademarks. If there are any potential issues with any of the names you’ve come up with, brainstorm some more until you find something original and catchy that you’re proud to call your own.
Or, for $79, you can try Frozen Lemons or other naming agencies to help.
Build a Catchy Logo
Once you’ve decided on a name and have made sure it’s available for use online, it’s time to design a logo. As for a logo, it should be able to stand on its own aesthetically — but it has to look professional and give a sense of what the company stands for. It’s better to have a simple logo that’s memorable than a complex logo that can be lost in translation. Additionally, make sure you have a logo that can work in a square AND in a rectangle. Many online services require them one way or the other.
An excellent example of a is Apple’s iconic, minimalist apple with a bite taken out of it. It’s simple, memorable, and very recognizable even when shrunk down in size.
When coming up with either a name or a logo, ask yourself three questions:
- Can this name/logo be easily associated with my store?
- Can I easily explain how my logo relates to my store in one sentence?
- Does this name/logo reflect my store and me positively?
It’s worth noting that the first thing we associate with any product or company is its logo, so you must get your branding right from the start.
How to Get a Great Logo Created
It’s likely that designing a logo is not your forte. We recommend using services such as Fiverr.com or 99Designs.com to find a suitable logo. You must convey your design and voice as highlighted above.
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Complete The Legal Requirements
As an ecommerce business owner, you want to be sure that you are complying with all legal requirements. This includes registering your business as a limited liability company (LLC) or corporation, getting any necessary permits and licenses, and paying taxes on your profits. You can start as a sole proprietor and record profits as income, but you will not have any legal protections this way. By going this route, it’s important that you make a plan to change to an LLC or corporation soon.
Register your business
The business entity you choose will have legal and financial implications for your ecommerce operations. You can register a sole proprietorship, partnership, corporation, or limited liability company. Or, there is also the option of having a DBA (doing business as) name. The process will vary based on what kind of entity you want to set up and where you live, but it generally involves filing some paperwork with the secretary of state or a similar government department.
You will likely need a reseller’s certificate for your store as well if you’re selling physical products. This means submitting tax receipts to your state monthly, quarterly, or yearly. This is time-consuming, and if you miss a deadline can result in fines.
Obtain a business permit and licenses
Most cities require a person or company to have a business permit or license to start a business within their jurisdiction. This can usually be obtained by going online or in person at the local city hall or city administration building and paying a small fee. Some important permits you might require are:
- Professional and trade licenses for certain industries
- Sales tax permit (Reseller certificate)
- Health, safety, and environmental permits
Apply for EIN
As you get ready to launch your business, one of the most important steps is applying for an Employer Identification Number (EIN). An EIN is basically a tax ID number. It’s unique to you and is used by the government to keep track of your business and its finances. You’ll need this if you want to apply for any business-related licenses or permits.
Choose Your Sales Channel
When it comes to choosing a sales channel for your new ecommerce business, you have a lot of options. You can either choose in-person sales or sales through other platforms.
In-person to online sales
Have a brick-and-mortar storefront? You can easily set up an ecommerce site to sell products online. You’ll want to either use your existing website as a place to sell your inventory or create a new site just for your online store.
Shopify is an all-in-one solution for anyone who wants to start an ecommerce store and doesn’t want to worry about getting technical or managing their website hosting. Shopify also offers a range of apps that let you add extra functionality such as blogs, newsletters, and sales pages for free (or for just $29 per month).
BigCommerce is the number platform two behind Shopify regarding features, functionality, and market size. This ecommerce has more functionality for a similar price as Shopify out of the box. Also, the apps that you get are usually less expensive than Shopify apps. But, although it sounds like it beats Shopify in many ways, it does not have as large of a developer network. This means the templates, add-ons, and plug-ins are lacking.
BigCommerce has a cool feature called headless ecommerce. It sounds evil, but it’s actually a great way to leverage the best of WordPress for SEO and blogging with the store functionality of BigCommerce.
Another popular option is Woocommerce, which WordPress developers created as a way for bloggers and website owners to add an ecommerce section to their site without having technical knowledge about coding websites and building online stores from scratch. It’s free and easy to use once set up correctly. You can customize your website to make it more intuitive and use different plug-ins to enhance the user experience.
In short, WooCommerce has a very robust app development culture, a large array of themes, and the cost is very low compared to the competitors. It just takes further development to get everything going and locked in properly. Check out this WooCommerce plugin and one of our suggested hosting platforms.
A lesser-known option, Magento is an open-source ecommerce platform that is specially designed for those who want flexibility in their business. It offers a wide range of features that can be integrated into your site to enhance the shopping experience for your customers.
Additionally, you can use it to create an online store or a website for your local business. You can also use it to build an integrated mobile app for your business and even link it with other software applications such as MailChimp and Salesforce for email marketing, content generation, and creating landing pages.
While you’re on your way to becoming a big mega-corporation, you’re still going to be small company for a while. Many people find inspiration in books by Seth Godin, and this is one that we recently listened to (or read) as well. All of us need a little bit of help and motivation, and this one provides plenty.
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Source Products To Sell From Suppliers Or Dropshippers
In the case of services, all you have to do is describe them and list them on your business website. But if you want to sell products on your ecommerce store and want as much flexibility as possible with your inventory selection, sourcing from suppliers or drop shipping is a great way to give yourself that freedom while keeping costs low.
The most common way to do this is by finding an existing company that makes the product and then contacting them to sell their items through your site. To find these companies, you can use different sources:
- Look at the product pages of Amazon sellers or Alibaba to see what they’re selling and who their suppliers are (although some of these might be counterfeit products, so be cautious).
- Contact wholesalers that focus on a target market (such as pet supplies or medical equipment) that fit with your products. These are concentrated suppliers who will be able to give you bulk discounts for large purchases.
When ordering from suppliers or drop shippers, ensure the items are shipped directly to your customers so you can avoid the additional cost of storing and shipping orders yourself. That will help you keep your costs low and allow you to focus on marketing.
Market Your Business To Attract Customers
Now that you’ve got an ecommerce website, it’s time to get the word out. The best way to do this is through marketing and promotion.
To build brand awareness and generate leads for your business, you can use several methods:
- Social media platforms like Facebook and Twitter are great ways to reach new audiences. Just make sure you’re posting regularly, so people don’t forget about your brand.
- Email marketing campaigns are another effective way of building up your customer base; these allow for more personal interactions between the business owner and customers than social media does. It might take a bit longer than other forms of marketing, but it can be worth it if done correctly.
- Online ads (via Google Adwords) help with targeted traffic towards specific keywords or topics related to what they sell, like “buy shoes online” or “baby cribs.” This way, they’ll only show up when someone searches those terms on search engines such as Google or Bing. They’ll also see what other products/services have been sold within their niche market so they know exactly what type of services/products might interest their target audience.
For email marketing, you need to sign up for an email service and start sending out emails. Start with Mailchimp (referral link). There are other services out there (Klaviyo is our choice for e-commerce) but for this stage in your development, get the easiest, the best, the fastest: get MailChimp.
You’ll send 1 to 2 emails per month to start. Your emails will announce the blogs you have written or the social media you’ve posted that your subscribers might find helpful. Do this even before you have products to sell. Later on, you can add some products to these emails as well. If there are some goings-on in your life that you want to share…share them. These emails should not be very long. People do not have time to read a ton of things. Instead just put in a picture, a short excerpt, and then a link to your content.
Most of all, give your audience what they want. Every audience is different but make sure that you’re doing whatever you can to provide value to those people that are
Added bonus: Spend a little extra time and make a “welcome journey” to engage people the just signed up.
The Big Question: How Much Does It Cost To Start an Ecommerce Business?
The cost to start an ecommerce business depends on many factors. To get started, you will need to consider the following:
Business registration and legal fees
Business registration costs vary from country to country. Legal fees depend on the type of business structure. Some business licenses and permits will only cost between $10-$50, but others will cost you a few hundred dollars. If you plan on using a third-party payment processor, then you will have to factor in a monthly fee in addition to other charges.
Website hosting and domain
Having an online platform for your business allows you to connect with customers in real-time, build trust and credibility, market your products or services, and sell goods and services 24/7. To operate your website, you need a hosting service provider and a domain name.
A domain name is the website address for your online store. The suffix “.com” is the most popular choice, but you can also choose other suffixes such as “.net” or “.org.” Be sure to check if the domain name is available before you register it.
Your hosting service provider will handle all of your website’s traffic. You can host your site with an external provider like GoDaddy or Bluehost or use a site builder tool like Wix or Shopify that includes hosting as part of their service package. For domain names, you can expect to pay anything from $1 per year to $15 to $30 per month for hosting services.
To accept online payments, you’ll need a merchant account provider. These companies allow you to accept credit card payments online via a third-party payment gateway such as Square or Stripe. These services typically charge 2.9% + 30 cents per transaction.
The best part about using these services is that not only do they process payments securely, but they also offer fraud protection policies that protect your customers’ details when they purchase products from your store, which is essential for building trust!
Marketing and advertising
To promote your new business, you will need to spend money on advertising, which should be around 6%-7% of your gross revenue. You can choose from several different types of marketing strategies, such as social media ads, search engine optimization (SEO), Google AdWords, and affiliate marketing.
Tips for Maintaining Your Ecommerce Store
After all the planning, stress, and excitement of launching your business, it can be easy to think that your ecommerce website will start making money as soon as you launch it. And while that may very well happen, there are a few things you should keep in mind to ensure your new business stays afloat.
- Your branding should be consistent across all platforms, including social media, email marketing campaigns, and product descriptions. This will help customers understand what they’re getting when they buy from you.
- Be sure to offer free shipping on all orders or at least offer free shipping for a certain amount of money spent.
- Set up multiple ways for customers to contact you, including phone numbers and email addresses on the “Contact Us” page of your site.
- Images are one of the most important aspects of any eCommerce store. Visuals draw people in and keep them coming back, so make sure they’re well optimized and load quickly.
- Don’t forget about SEO. It helps ensure that your site will show up when people search for similar products.
- Use a CDN (Content Delivery Network) to deliver static content from multiple locations worldwide. This improves load times and reduces bandwidth usage, which means more visitors can stay on your site longer.
- If you want to grow your business, set up an email list so that people can sign up to receive offers and discounts when they shop with you. This is a great way to make them feel special and keep them coming back for more!
You now know the basics of how to start an ecommerce business. But there is a lot more that goes into it than simply choosing a platform and adding products.
Having an ecommerce agency like Win, you can have an expert work with you on different operations, including content creation, email marketing, paid search management, and optimization for conversion and sales.
Contact us today for a consultation so that we can discuss what would be the best plan of action for you and your ecommerce business!
There you go. Have fun. Is your business already selling over $1 million a year in sales?
The team at Win at Ecommerce would love the opportunity to talk with you. We can give you a free evaluation of your technology and help your business win.