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

Guides & Advice
October 13, 2020
Guides & Advice
How To Start An Ecommerce Business: The Ultimate Step-by-Step Guide

Considering launching your own ecommerce business? There’s no better time than the present. The online business is developing by leaps. Physical stores that temporarily closed might never open again. Online presence used to be a luxury in the past, these days – it’s a necessity.

A business magnate Bill Gates once said:

If your business is not on the Internet, then your business will be out of business.

Let’s look at some statistics:

  • By 2021, It’s expected that there will be 2.14 billion global online shoppers.
  • By 2024, online sales in the U.S. estimated to grow to $600 billion.
  • By 2040, approximately 95% of all purchases are projected to be via ecommerce.
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. 

So, 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. 

To start an online business, you must:

Find the 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 

So now you aware of the types of products, but how to choose the right one for your business. There are a few factors you need to look at when making the decision about your product offerings. unique value proposition (UVP), high margins, and can be easily warehoused and shipped. 

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 Amazon
Best selling products on Amazon

Determine your type of ecommerce businesses 

Now that you’ve made the decision on which product or service to sell, you should determine types of ecommerce  businesses. 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. 

Example: Amazon

Business to  Businesses (B2B)

B2B model relates to providing goods or services from one business to another. B2B model generally requires more startup costs. 

Example: General Electric 

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. 

Example: eBay

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. 

Example: UpWork

Targeted to consumersTargeted to businesses
Initiated by businessB2C (business-to-consumer)B2B (business-to-business)
Initiated by consumerC2C (consumer-to-consumer)C2B (consumer-to-business)

The next step is to figure out how to manage inventory and source goods. Let’s talk about the types of ecommerce business revenue models.

Research ecommerce business revenue models

If you want to make a profit without handling inventory management or investing heavily, dropshipping is your model. You just set up a storefront and the rest is managed by your supplier. It is a cost-effective solution that fits perfectly for startups. 

If you’re interested in having your own warehouse to track all customer orders and have enough money to invest in-stock inventory, you should select a wholesaling (warehousing) business model. 

If you want to sell a unique product that only you can offer, you will have to opt for the manufacturing model. In this model, you will need to send the prototypes to a contracted manufacturer who will produce the product. The manufacturer will either ship goods to the shoppers directly or send the final version of the product to your warehouse.

If you plan to send a box of products (health and grooming, fashion, etc) on a regular basis to your customers, a subscription model is the best fit for your brand.

Learn more about each type of ecommerce business model to make the right decision for your retail business.

Choose the brand name and make a logo

Selecting a powerful brand name gives you an advantage over your competitors and has a great influence on your business’ positioning on the market. It is not as easy as it seems at first. If you have trouble coming up with a unique business name, we recommend you to apply automated AI-powered tools.

Go to business name generator and type the keywords that give the best description or at least a vague impression of your product. Based on that keyword, the generator will give you a list of possible business names and categorize them in different ways.

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 

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
Top brand logos
Top brand logos. Image credit: R-bloggers.

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 nice tool that combines your logo design preferences with AI (artificial intelligence) to assist you in creating a custom logo tailored to your business needs.

Build 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 how long it will take you to break even.  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. 

Business plan
Business plan. Image credit: Usatoday.

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 

Next, you should formally establish your ecommerce business, so you can earn money on legitimate grounds. At this stage, you’ll need to get through all the registrations, permits, and licenses required to manage an ecommerce business. Generally, online businesses do not require as many licenses and permits as physical stores.

Firstly, get your EIN (Employer Identification Number). 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 in different 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? These guides will help you choose the right solution for your beauty 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, you need to make sure you’re able to fulfill the orders that come in. You will need to figure out how to store, pack, and ship your products on time and weather to handle the fulfillment in-house or hire a third-party company. 

An effective shipping strategy is one of the crucial steps you can take to provide excellent customer experience. Which is why it’s crucial to 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)

Fulfillment costs can vary per order and depend on the type of product, order complexity, product size and weight, delivery speed, and sales volume. Learn more about ecommerce fulfillment costs in a separate guide.

Market your online business 

You have products to sell, have built your ecommerce store, and organized fulfillment. But it’s not enough. No matter how great your products 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 are a variety of digital marketing tactics you might decide to apply – social media ads, email marketing, SEO, content marketing, and more. 

Social media is the perfect way to expand your brand’s reach. Create social media profiles for your brand on Facebook, Instagram, and Pinterest and create engaging content that your target audience would like to check. We recommend you launch a Facebook and Instagram ads campaign to scale quickly. Don’t forget to set up your conversion pixels to track all sales. 

Email marketing is a game-changer marketing strategy that helps to inform, update, and remind your current and potential customers. The examples of email marketing are cart abandonment emails that are sent to notify customers to complete their purchases.

Make sure to invest in SEO to get your site rank high in Google search results. Accurately identify the keywords that customers are using to find your goods and optimize your website to organically reach top positions on search engines. 

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 through each of the steps involved in launching an online business, you are likely to be interested in one more essential aspect – cost. Of course, by building an online presence in comparison to a physical store, you’ll save a lot of money e.g. rent, furniture, consultants, and more.

However, just like any retail business, be ready to invest funds to create a strong online presence. It’s difficult to identify specifically how much it will cost to start your ecommerce business, as there are many aspects involved in the whole process. 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.

Taking this into the account, 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 thousands of 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 to the package. If you need to buy your own hosting, you can expect to pay anywhere from $1 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.

Ready to build an online business?

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 plan, 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 the mountain, but once you ascend to the mountain top, it’s rewarding at the same time. 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. 

So what are you waiting for? Starting an online business is accessible for anyone, so follow these steps provided throughout this blog post to launch a profitable online store. Elogic is ready to help you in every step of the journey to achieve top results in your online business. Contact us and we will help you to transform your brand into an ecommerce leader. 

Want to set up a custom online store?

We can help you build your ecommerce website in 3 weeks.

Learn more:

Related articles:

How To Start An Online Clothing Store: The Complete Guide For Boutique Owners

How To Start An Online Beauty Supply Store: Step-by-step Guide

How To Create An Online Marketplace Like eBay From Scratch

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Stuart Walker

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

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