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A Complete Guide to Starting an E-Commerce Business

If you’re reading this, chances are you’re looking to start an e-commerce business. And why wouldn’t you want to?

Times are changing. More people are looking to be their own bosses and be in charge of their own futures. The internet makes this goal more accessible than ever, and e-commerce is one exciting avenue for success.

The e-commerce business industry is exploding. Brick and mortar stores that are temporarily closed may never open again. Shopping online used to be a convenience and a luxury, but now – it’s a necessity.

In a world dominated by giants like Amazon, the future of commerce lies in online sales.

US e-commerce sales are expected to cross $1 trillion for the first time in 2022. And it is projected that e-commerce will account for more than $6.5 trillion in sales by 2023, which is 22% of retail sales, globally.

These numbers are staggering. There’s a lot of money to be earned in this industry.

But much like starting any business, learning how to start an e-commerce business isn’t always easy. So how exactly do you start an online business? This guide is here to help.

I’ll break down how to start an e-commerce business in 7 simple steps — so that you have all the information you need to get your online business up and running in no time.

Let’s get started!

1. Choose Your Niche

To start a successful online business, you have to find the right niche. What’s your area of expertise? What marketable knowledge or skill do you possess? What type of products do you want to sell?

You should have a sense of what kind of business you’ll be running, so start by researching the market. Look at your competitors and see what they’re doing right or wrong.

When looking at an example of a particularly successful e-commerce business in your industry, ask yourself:

  • How are they reaching customers?
  • What appeals to you about their website?
  • What’s their business model?

Get as many business ideas as you can, because the competition is fierce in the e-commerce market. You’ll want to do some serious thinking before starting your e-commerce business from scratch.

2. Find E-Commerce Products

If you’re totally new to the world of e-commerce, you might be wondering just what exactly you should be selling. In fact, getting stuck on this is a big reason why people never take the plunge.

In actuality, you have to be strategic in identifying a set of products or a single item that’s trendy, or not so easy to find in stores or on popular e-commerce websites like Amazon.

Go with items that appeal to a particular audience. Think about things that you, your friends, coworkers, or family would be interested in. Explore social selling sites like Pinterest and Etsy for more input on what to sell.

There really is inspiration everywhere once you start looking, and you can always verify whether your product ideas are any good by searching for them on Google Trends.

3. Analyze Your Business Viability

Now that you’ve developed an idea for your product and you know who you want to sell it to, you need to figure out whether you can actually execute your idea. In other words, you need to see whether your business will be viable.

You can use several criteria to evaluate your product’s viability. Evaluation criteria can be split into two main categories: market-based and product-based criteria.

Market-Based Criteria

These are market factors that will influence your product and business model. You’ll want to look at:

  • Market size and demand for your product/service
  • Who your competitors are
  • Is this a trend, fad, growing market, or flat market
  • Whether customers will be able to get this product/service locally
  • Who your target customers are

Product-Based Criteria

Once you have an idea of where the market is going and who you’re marketing to, you can move on to the next set of criteria. Examine:

  • Your potential selling price
  • The potential markup for your product or service
  • How many types or styles of product you’ll stock
  • The size, weight, and durability of your product, if you’re selling something physical
  • Whether your product or service solves a pain point or serves a passion
  • Any regulations or restrictions around your product

Looking at the market and product-based criteria can give you an idea of how much it’ll cost you to get your online business up and running.

Digital products are cheaper to create and can be priced more according to the value they provide. That could make them a better option for a small business owner or a solo entrepreneur just starting out.

4. Decide on Your Business Model

If you’re selling a physical product, you’ll need to figure out a model for obtaining it and shipping orders to your customers. There are a few models you can explore here:

Make It

You make the product yourself, by hand, and get it to the customer. This is a highly favourable option if your product is something you can get the ingredients for and make cheaply, like homemade bags or soap.

Manufacture It

If your product is something you don’t have the expertise or tools to make yourself, you could partner with a manufacturer. This option only makes sense if you have a product you plan to sell in large numbers.

Purchase Wholesale and Resell

This option will mean buying commercial or independent versions of your desired product and selling them through your store at a markup.

You don’t have much control over pricing here, as the manufacturer sets the price of purchase and the market sets the markup. Margins for selling wholesale products are around 50%.

Dropship It

Dropshipping is a good option if you don’t want to deal with carrying inventory yourself. Dropshipping involves partnering with another company that would ship your product for you after someone orders it.

Since there’s no startup cost to make the product on your end, your margin is only about 20%. You’d list it on your site, and your dropshipping partner would fulfil the order.

Offer It Digitally

Blog posts, templates, online video classes, tips and resources—anything people can download has the potential to be a product. Digital products can also be a service like writing, therapy, or design.

Digital downloads or services are convenient for customers and, depending on what you’re selling, they usually have a low overhead cost too.

5. Write an E-Commerce Business Plan

Now you’ve got an idea about how your e-commerce business will look, it’s time to document it all in a formalised plan of attack.

This is called a business plan, but you can also see it as the blueprint for how you’re going to turn your idea into a fully-fledged enterprise. A business plan should lay out your mission and vision.

6. Setting Up Your Business

Ecommerce Business Set Up

Now that you know what to sell and how to sell it, it’s time to set up your business. But before you set up your store and get into the nitty-gritty of building a brand – there are some basic steps you’ll need to take.

Choose a Business Name

Aside from finding an actual product to sell online, another challenging decision is determining your business or brand name and choosing an appropriate and available domain name.

Create a Logo

Once you’ve selected a memorable name and registered a corresponding domain, it’s time to craft a simple logo.

Choose a Legal Structure

Next, choose your business’s legal structure. The business entity type you pick will have important legal and financial implications for your e-commerce operation. Generally, you’ll choose to create a sole proprietorship, general partnership, LLC, or corporation.

Apply for an EIN

You’ll want to apply for an EIN, or employer identification number, for your e-commerce business. Although not all business entity types are required to have an EIN, this number can be useful to help you separate your personal and business finances.

Understand Search Engine Optimization (SEO)

You’re almost ready to begin building your online store. However, before you jump into it, you should understand the basics of SEO so you can properly structure your site for Google and other search engines.

Choose an E-Commerce Platform and Create your Store

It’s now time to start creating your website and online store. Like a physical storefront, this website will be the face of your business.

Choose an e-commerce platform. Whether an all-in-one software, like Shopify, or an open-source platform, like Magento, your e-commerce platform will be the base you use to build and develop your online store.

Although there are hundreds of these platforms available on the market, you might consider any of the following popular solutions for starting your e-commerce business:

7. Market Your Business

There you have it — you’ve learned how to start an e-commerce business. Now that you have your products prepared and listed on your online store, you’re ready to start serving customers.

In order to do this, you’ll need to properly market your e-commerce business. The secret to e-commerce marketing is to find the right channel for your products, and then to perfect your marketing strategy.

Use multiple channels to market to your customer base. If you’ve got a blog, promote it on multiple social media outlets. Put out content relevant to your niche on Twitter, Instagram, or YouTube.

Try out different tactics in your marketing strategy, like Instagram marketing or partner up with affiliate marketers. Use shoppable landing pages that make it easy for people to buy your products.

Conclusion

Building your own e-commerce business is as exciting as it is challenging. A lot goes into starting it and the process can seem intimidating, but you can make it happen.

Work through it step by step, and don’t worry about making things perfect right out of the gate. Learn by doing, and adapt as you go along. With a little time and practice, you’ll be all set.

I hope this guide will help provide you with a clearer roadmap. As always, the best advice anyone can give is to just get started and to enjoy yourself along the way.

If I missed anything you’d like to see covered, let me know in the comments.

Good luck!

This Post Has 2 Comments

  1. I think what you published was actually very reasonable.
    However, what about this? suppose you added a little content?
    I am not saying your information is not solid, but what if you added a post title to possibly get a person’s attention? I mean A Complete Guide to Starting an E-Commerce
    Business – Saucerful of Ideas is kinda plain. You could glance at Yahoo’s front page and see
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    1. Aric Chakma

      Hi! Thanks for your input. I’ll definitely keep that in mind.

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