How To Start An Ecommerce Business: The Ultimate Step-by-Step Guide

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June 7, 2021
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How To Start An Ecommerce Business: The Ultimate Step-by-Step Guide
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If your business is not on the Internet, then your business will be out of business.

Bill Gates

There’s no better time than now to start an ecommerce business. Ecommerce is growing by leaps and bounds. Physical stores that temporarily closed might never open again. Online presence that used to be a luxury in the past is a necessity these days.

Let’s look at some statistics:

Online sales in the U.S.
Online sales in the U.S. Image credit: Statista

Impressed? You should be! That’s a lot of money flow. To take advantage of this growing market and not to miss out on massive profits, you should start your own ecommerce business today. 

But how to start an ecommerce business? Our development company has 10+ years of experience in building ecommerce stores and working with online entrepreneurs at different stages of business growth. Let’s find out how to get into ecommerce and how to launch an online business that competes, drives sales, and generates profit. 

Find Products to Sell Online

The first thing to building a successful ecommerce business is to decide what products you want to sell. If you already know what you want to sell, then you’re one step closer to a good start. If not, prepare for one of the most difficult parts, as bearing in mind a product idea isn’t enough. You also need to make sure the product you opt for sells well enough to bring your business desired profit. 

There are four main types of products online businesses sell:

  • physical goods ( clothes, electronic devices, food)
  • digital goods (ebooks, software, apps )
  • services 
  • courses, webinars and more 

Some best ecommerce business ideas start with market research. To choose the right product to sell online, you need to look at the unique value proposition (UVP), high margins, and ease of warehousing and shipping. 

Here’s how to choose a product to sell in your ecommerce store:

  • Carry out market share research and identify the demand for the products you’re considering to sell
  • Conduct a competitive analysis to estimate potential competition. You can use SEO tools Semrush and Site profiler to get insights such as top keywords, audience demographics, social media metrics, top-selling products on your competitors’ ecommerce stores.
  • Find a product that has a unique value proposition (UVP)
  • Analyze relevant groups and pages on social networks (Facebook, Twitter, Instagram) to get insights on goods and services that are trending. 
  • Go over sections for best-selling products on sales channels such as Etsy, Amazon, eBay, AliExpress to check the check if there’s anything there that you can offer as well. 
Best selling products on Etsy
Best selling products on Amazon

Choose Your Type of Ecommerce Businesses 

Now that you’ve made the decision on which product or service to sell, you should determine the type of your future ecommerce business. Let’s take a look at the major ecommerce business classifications.

Business to Customer (B2C)

B2C is the most popular retail model in which business sells to individual users directly. This model offers considerable savings. 

B2C examples: Amazon, Zappos, Target.

Business to Businesses (B2B)

B2B model relates to providing goods or services from one business to another. This model generally requires more startup costs and presupposes complex supplier-vendor relationships. To find out how to get started in ecommerce, you may need to use B2B ecommerce consulting services.

B2B examples: General Electric, Benum, Quill.

Consumer to Consumer (C2C)

C2C is the model where consumers are selling products and services among themselves. These ecommerce sites enable customers to trade, purchase, and sell goods in exchange for a membership fee paid to the site. 

C2C examples: eBay, social media shops, freelancing websites.

Consumer to Business (C2B)

C2B is the model, where the consumer sells goods or services to businesses. This model is typically used when consumers provide services to an organization. 

C2B examples: UpWork, Shutterstock, Fiverr.

Targets consumersTargets businesses
Initiated by businessB2C (business-to-consumer)B2B (business-to-business)
Initiated by consumerC2C (consumer-to-consumer)C2B (consumer-to-business)

Research Ecommerce Business Revenue Models

The next step is to figure out how to manage inventory and source goods. Let’s see which type of ecommerce business revenue model will suit you best.

  • Dropshipping. The model works best for startups that want to make a profit without managing inventory or investing heavily. You just set up a storefront, and the rest is managed by your supplier.
  • Wholesaling. You’ll have your own warehouse and will be able to track all customer orders and have enough money to invest in-stock inventory.
  • Manufacturing. The model is the best fit for those who sell unique products closing a certain market gap. In this model, you will need to send the prototypes to a contracted manufacturer who will produce an item. The manufacturer will either ship goods to the shoppers directly or send the final version of the product to your warehouse.
  • Subscription-based model. You’ll have to send a box of products on a regular basis to your customers (as our Umovis Lab client, for example).
Learn more about each type of ecommerce business model to make the right decision for your retail business.
Guides & Advice
Types Of Ecommerce Businesses: What Model Is Right For Your Online Business?

Choose Your Brand Name

Selecting a powerful brand name gives you an advantage over your competitors and has a great influence on your business’ positioning in the market. It is not as easy as it seems at first. Come up with a brand name that:

  • Appeals to your target audience
  • Fits your brand persona
  • Short, simple, catchy, and original
  • Available in the form of a domain name 

Insider tip: Use automated AI-powered tools if you have trouble coming up with a unique business name. Go to a business name generator app and type in the keywords that best describe your product. Based on that keyword, the generator will give you a list of possible business names and categorize them in different ways.

Create a Logo

Once you’ve chosen a unique name and registered a corresponding domain, it’s high time to create a memorable logo. Make sure the design of your business’s logo:

  • Communicates your brand message.
  • Determines your visual identity.
  • Looks good in black and white
  • Sets your brand apart from the competition

If graphic design isn’t your cup of tea, hire a design agency to craft your business logo. There’s also a broad set of free logo tools available on the Internet that can help you to get started fast. Looka Logo Maker is a tool that combines your logo design preferences with AI to assist you in creating a custom logo tailored to your business needs.

Write a Business Plan

You have your product to sell, brand name, and logo design. At this point, you should have a pretty good idea of what your ecommerce business looks like. Now is just a time to step back and write your business plan.

A business plan is a roadmap that helps to describe a business, its products/services, target market, startup budget, product sourcing, logistics, monthly expenses, operating model, and time to market.  A perfectly written business plan can help you define potential hardships, determine what to prioritize, and map out your strategy before you launch a business. 

There are a few major considerations to bear in mind to help you write a business plan:

  • Keep it short and to the point
  • Set realistic goals
  • Know your audience
  • Conduct SWOT (strengths, weaknesses, opportunities, threats) analysis  
  • Invest time and efforts in business analysis
  • Consider various time frames
  • Keep the tone and style consistent
  • Periodically review your plan

Legally Establish Your Business 

How to set up an ecommerce business legally? You’ll need to get through all the registrations, permits, and licenses required to manage an ecommerce business. Generally, ecommerce businesses do not require as many licenses and permits as physical stores, unless you plan to sell alcohol online.

The US retailers should the EIN (Employer Identification Number) first. EIN is a unique nine-digit security number that identifies your business process and enables you to open a business bank account and file your paperwork. You have four options to apply for your EIN:

  • online (via IRS ( Internal Revenue Service) website
  • by fax
  • by mail
  • by phone
EIN registration
EIN registration. Image credit: Howtostartanllc.

After you’ve applied for your EIN, you’ll need to apply for business licenses and permits. It’s better to check with your country’s ecommerce law to obtain general operating licenses needed to start a business. Typically, you can find this information online via your state government website. 

Identify the Best-Suited Sales Channel

When you are done with all the legal matters, the next thing is to select the best-suited sales channels. Share your products across social media like Instagram and Facebook. These social networks are free and can be used to showcase your products and promote them among subscribers.

There are some sales channels where you can easily sell your products to a wide audience such as Amazon, AliExpress, Etsy, and eBay. These marketplaces also can deliver insights into their high-demand product across categories.

There are many advantages to selling products via Amazon such as: 

  • Increase sales from a high traffic channel (Amazon has nearly 184 million visitors per month)
  • No need to pack and ship your products if you use fulfillment by Amazon
  • Solid back-end support that provides inventory tracking and credit card processing
  • Built-in trust factor that often encourages shoppers to buy on the Amazon marketplace
Amazon marketplace
Amazon marketplace

Pick an Ecommerce Platform and Build Your Online Store 

Marketplaces give you a very limited possibility to showcase your brand presence and increase loyalty as customers are loyal to marketplaces and not your brand. It is also challenging to compete with other brands that sell similar products. And don’t forget that those marketplaces charge you business with substantial fees.

On the other hand, your own ecommerce website gives you full control over your business and the freedom to personalize and customize your store as you wish. Love the idea of your own ecommerce store? When launching an ecommerce site you need to take care of many aspects such as site performance, security, scalability, functionality, SEO, payment options, and a lot more. 

In this regard, your most important decision will be choosing an ecommerce solution that meets all your business requirements. The wrong choice of ecommerce platform can negatively affect the ongoing operations. 

Need help in deciding on an ecommerce platform? Check out our video guide and make the right decision for your business. 

When your website is ready to start taking orders, don’t forget to test the site performance to make sure the process is smooth and user-friendly for your customers.

Figure out Your Fulfillment and Shipping 

After you set up an online store, make sure you’re able to fulfill the orders that come in. Order fulfillment means storing, packing, and shipping your products on time, which you can do either in-house or with the help of a third-party company. 

To provide an excellent customer experience, you should have a reliable shipping system set in place. Here are some popular solutions to help you ship your products in an effective way:

  • FedEx (Federal Express)
  • DHL (Dalsey, Hillblom, and Lynn)
  • UPS (United Parcel Service)
  • USPS (The United States Postal Service)

Ecommerce fulfillment costs will vary per order and depend on the type of product, order complexity, product size and weight, delivery speed, and sales volume.

You might want to integrate third-party shipping software to automate tedious fulfillment tasks. See some best shipping solution providers in a related article.
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6 Best Ecommerce Shipping Solutions to Get Your Orders to the Clients Faster

Market Your Online Business 

You have products to sell, an ecommerce store to maintain, and order fulfillment to organize. But it’s not enough. No matter how great your products are or how user-friendly your store is, people will need to find it to shop there. That’s where marketing comes in to help drive traffic to your website. There’s a variety of digital marketing tactics you might decide to apply – social media ads, email marketing, SEO, content marketing, and more. 

Social Media

Social media is the perfect way to expand your brand’s reach. In fact, social media marketing is one of the top ecommerce trends to build a community around your brand, which will eventually drive more traffic for less cost.

Create social media profiles for your brand on Facebook, Instagram, and Pinterest and create engaging content that your target audience would like to check. Launch Facebook and Instagram ads campaigns to scale quickly. Don’t forget to set up your conversion pixels to track sales. 

Email Marketing

Email marketing is a game-changer in marketing. It helps to inform, update, and remind your current and potential customers of your brand-related news, be it a new product collection or a sales season. You’ll also find email marketing useful to reduce the cart abandonment rate. Our Finnish apparel & fashion client, Marimekko, sends personalized emails to notify customers about the products they added to their shopping cart but never purchased.

SEO

Investing in SEO is one of the cheapest marketing strategies yielding long-term results. To get your website to rank high in Google search results, you should accurately identify the keywords that customers are using to find your goods. You should also optimize the technical aspect of your website. For instance, compressing images, optimizing the store back-end processes, and adding a sitemap has made a Swiss glassware brand, Glassmania, organically reach top positions on search engines.

Content Marketing

Content marketing is a rising trend that can help you to establish your brand as an authority in your industry. Write engaging, informative, and relevant articles to answer the questions your customers are searching for. 

How Much Does It Cost to Start an Ecommerce Business?

Now that we’ve looked into how to start an ecommerce business from scratch, you must be interested in one more essential aspect – cost. Apparently, building an online presence can save you much money in comparison to a physical store, e.g. rent, furniture, shop assistants, and more. But if you ask how to start ecommerce without money, we’re here to disappoint you. 

Just like any retail business, you’ll need at least a few hundred bucks to invest in strong online presence. Your costs will depend significantly on the type of ecommerce business you’re launching, the platform you select, hosting provider, stores functionality, marketing expenses, how you’re going to manufacture your products, and more.

Given the aforementioned factors, we recommend considering the following costs:

  • Business licenses and permits: Depending on your business model, the country where you operate your business, and the products that you’re selling, you can face different licensing and permit fees. Some countries charge low fees, from $15 to $70, where other countries can charge $100+.
  • Ecommerce website development:  The ecommerce website quote estimation varies depending on multiple aspects, such as project scope, method of development, design complexity, setup, third-party integrations, custom modules, support,  maintenance, and functionalities. It may cost several hundred or several thousand dollars to develop a site that meets your business requirements.

Related article: Ecommerce Development Cost: Set the Right Budget for Your Project

  • The domain name and hosting: Some ecommerce platforms offer hosting within the cost of the platform and some do not include it in the package. If you need to buy your own hosting, you can expect to pay up to $1000 per month depending on how much traffic you expect to get. Fees for a domain name can range from $1 to $40 annually depending on the registrar you opt for. 
  • Manufacturing: Manufacturing is perhaps the most expensive part of starting an ecommerce business and can range from $1,000 to $100,000 and beyond depending on various factors. If you want to find out a rough estimate of the manufacturing costs in China, you can check the Alibaba marketplace. If you plan to produce your product from scratch, it’s better to contact the manufacturer directly to get a precise cost estimate.   
  • Marketing: As you’re starting out, marketing expenses can be difficult to evaluate, so you’ll definitely need to reap the benefits of any free marketing options you have available. Once you have a better idea of what works well for your business, you can start searching for paid options for advertising your store. On average, ecommerce owners spend between 5% and 15% of their total income on marketing. This money covers ads, social media, and email campaigns that are aimed to increase brand awareness and generate traffic to your store.

What the Future Holds: 4 Tips to Succeed in Ecommerce Business

As a final recap, we’d like to give you a few tips on how to start a successful ecommerce business and keep it growing. 

 Tip #1: Offer Excellent Customer Experience

Online shoppers aren’t interested in an item anymore. Customers want to experience the brand, to relate to it, to identify with it. Brands that meet this need and invest in customer experience (CX) can expect an 80% increase in revenue and a 5x higher customer retention rate. Outstanding CX starts with an easy-to-navigate website and ends with free shipping and a convenient ecommerce return policy

So don’t miss out on the possibility to earn more. Make your customer a king and sell more.

Tip #2: Focus on Conversion Optimization

The average ecommerce conversion rate is 2%. That means if at least 2% of your website visitors buy from your store, you should be more than happy. But conversion doesn’t happen alone: you need to optimize for it. Strategies to boost your conversion rates are similar to those of optimizing CX, plus using promotions: simplifying the checkout process, offer competitive pricing, provide promocodes and launch private sales, etc. And some best ecommerce tools, like Google Tag Manager and HotJar, will help you track the conversion progress.

Tip #3: Work on Optimizing Your Store

You’ve got about 0.05 seconds to get your website visitor on the hook. That’s how long it takes them to form an opinion about your website. So you’d better optimize your website speed. Improve your store search and filtering. Create appealing, functional product detail pages (PDPs). Add some essential ecommerce website features, including breadcrumbs and a user-friendly menu. 

Overall, optimize your store for an easy search and purchasing experience.

Tip #4: Use Multiple Sales Channels

You might have seen many guides on how to start your own ecommerce business. Some suggest selling on social media. Others offer their services to build a custom website. Others make you move to marketplaces. But the key to success is combining multiple sales channels and delivering a unified, consistent CX across platforms. In the end, you’ll benefit more from selling products on your own website, engaging with your audience on Facebook and Instagram, and sending personalized emails to drive sales, etc. 

Ready to Build an Online Store?

Starting an ecommerce business from scratch is as exciting as it is challenging. At the end of the day, you need to study a ton about finding a product,  researching business models and plans, deciding on the brand name, obtaining all the necessary permits, building an ecommerce store, and choosing the marketing strategies if you want your business to be successful. 

Going through all the steps to create an ecommerce business can feel like you’re climbing up the mountain, but there’s no bigger reward that ascending to the top. There are multiple benefits of starting your own online business instead of a brick-and-mortar one. The initial investment is much lower, your online store can operate 24/7 and has global exposure. 

If you feel like you’re set adrift, especially in the technical aspect of starting an ecommerce business, we’re here to help. Hire ecommerce developers with Elogic no matter your chosen platform and get your store built in no time.

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Stuart Walker
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That’s a very comprehensive article and includes a lot of good stuff.

One thing I would suggest though is making sure you focus your marketing on the most likely people to buy your stuff rather than doing a scattergun approach.

Focused marketing works much better and you’ll have a better ROI

Louisiana
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Very much appreciated. Thank you for this excellent article. Keep posting!

WonderPush
Guest

Great tips! Thanks for sharing this valuable content with us. All points that you have mentioned in this article are really helpful for growing up an e-commerce site and keep it alive.

Elena
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Starting any business consists of countless challenges. I was looking to start my own eCommerce business and for that, this article is definitely going to help me a lot. I have done my market research and competitor research part. I am also planning to create smart or digital business cards for my new business. What are your thoughts on this?

oporichitaroy11
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Great article! So detailed and considered. Thank you for pulling all this info together, it’s much appreciated.

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