How to Start an eCommerce Business

Launch a successful eCommerce business with these easy steps

Start an eCommerce Business

The eCommerce industry is booming – every day, customers are choosing to shop online over shopping in a physical store due to the unmatched convenience. If you’ve been thinking about building your own eCommerce business and starting an online store, then there’s no better time than the present. Starting an online business may sound like a difficult task, but don’t fret – with the right eCommerce platform, your business will be making sales faster and easier than you ever thought possible.

Table of Contents

Starting with the Basics

Just like a brick-and-mortar venture, there’s a few basic steps that you need to take in order to raise your fledgling idea into a working business entity. Although you won’t need to scout out a location for your physical store, you’re still creating a real business from the ground up. Before you can start thinking about products, websites, or marketing, you need to cover these next four steps:

1

Choose Your Product Niche

It’s no secret that eCommerce is incredibly competitive and is getting harder to break into every day without the right approach. The key to building a successful eCommerce business is to choose a product niche that you can compete within that will also meet your business goals. Are you looking to start a business that relies solely on the newest and most trending products? Or, do you intend to stay in business for years to come by selling an evergreen product? Is your business vision to sell products to other businesses, or do you want to sell directly to consumers? These are questions you’ll need to answer during this phase.

You may already have a business idea in your mind based off a passion you have or unique knowledge you’ve gained throughout your life. Choosing a product niche that you’re already an expert in can give you a great advantage, making it easier for you to understand your audience and establish yourself as an authority in the industry. But, if you don’t already have a concrete business idea, you’ll need to start this process by doing market research.

2

Differentiate Your Business

Once you’ve established the industry you want to sell in, you’ll need to develop a plan to set yourself apart from the competition. Depending on the niche you chose, you may be competing with some big names in eCommerce. As a new business, the best approach in this case would be to find out what your competitors are doing and aren’t doing so you can improve on their strategies and bring something new to the table. This could take the form of more affordable products, higher quality customer service, or a unique approach to the entire niche itself. This will, again, require more market research to determine what you’re dealing with.

Your next step is to solidify and polish your business’s Unique Selling Proposition, or USP. This statement will express to customers how your business is unique among competition and what your business personality and philosophy is. Your UVP will also need to be crafted in a way that attracts your specific target audience. But, most important, your UVP needs to be present in everything that your business does and ensure that you’re going to stay consistent and reliable to customers.

3

Brand Your Business

Your business needs to be branded cohesively from every angle – from the name and logo to the product photography and marketing copy. Strong branding is even more essential for eCommerce than brick-and-mortar stores because competition is so high online, especially if your products are similar to other business’s inventories.

The first step is choosing a great business name, which should also happen at the same time you choose your website’s domain name so that they match. If you’re having trouble coming up with a list of possible names, you can use a business name generator to give you some ideas.

Next, you’ll need to design your business’s logo and overall aesthetic. The best way to approach the design of your business’s look is by following these steps:

  • 1. Establish your message.
  • 2. Determine your visual identity.
  • 3. Check out the competition.
  • 4. Use feedback before finalizing.

If graphic design isn’t your passion, don’t hesitate to get some third-party help in crafting your store’s logo. There’s a wide variety of free logo makers available that can help you to get started.

4

Legally Establish Your Business

Arguably the most important basic step in starting an eCommerce business is establishing it formally and legally. Get started by writing a strong business plan that establishes all of the details of your future business, including competition, products, marketing plans, financial plans, management and more. You may not have all the answers right now, but it’s still important to get as much down as you can so you have a clear roadmap of where you need to move forward.

Next, you’ll need to incorporate your business so you can make money legally. At this point, you’ll need to decide on whether you want to establish your business as a sole proprietorship, partnership, corporation or LLC. While there aren’t any specific permits required to run an eCommerce business, you’ll need to go through all the registration and permitting required as if you were running a brick-and-mortar store. Register your business name with the proper local and federal governments and obtain any necessary licenses and permits, depending on your industry and location. Take all of the necessary steps to ensure that your business is making money, reporting income and paying taxes legally. It’s better to get this done before you start so that you don’t have a logistical headache waiting for you down the road.

Sourcing Your Products

Now that you have all of the fine print ironed out and your business idea established, you’ll need to work on sourcing your products. This can depend on several factors, such as the product niche you’ve chosen, your starting capital, or the time you have available. Let’s go through three of the most common ways to source products for eCommerce:

Handmade Products

Are you an artist or crafter that creates unique, one-of-a-kind items? Then your main product source will be coming directly from your skilled hands. With this method, you’ll need to establish how you’re going to procure the raw materials necessary to create your products and how much they will cost. Think about buying raw materials in bulk, organizing the hours of labor needed, determining the amount of product you’ll need before you can open up shop, etc.

Wholesale Products

This method is the most popular form of sourcing products and is the type you’ll see in most brick-and-mortar stores. Your products will come from bulk stock purchased from wholesale suppliers, which you will then sell individually at a higher price to make a profit. With this method, you’ll need to think about how much stock you’ll need to start out with and how much initial capital you’ll need to initially invest in order to start selling.

Dropshipping

Are you looking to start your business with low risk and low capital? With dropshipping, you won’t have to worry about procuring your own stock and shipping your own products. You simply choose a supplier, import your selected products from their inventory onto your online store, and sell the products directly consumers. From there, orders go directly to your supplier, who fulfill and ship them in your place. While this method doesn’t garner the highest profits, it’s the easiest way to start an eCommerce business.

Sourcing Your Products

Choosing a Sales Channel

With product sourcing established, your next step is choosing how you want to sell online. This decision usually comes down to selling on online marketplaces (Amazon, Etsy, eBay) or on your own online store. There’s pros and cons to each method, so let’s go through them:

Online Marketplace vs Your Own Online Store

Online Marketplace:

  • Pro: Huge established audience of customers with high search intent.
  • Pro: Quick and easy start-up with no up-front costs.
  • Con: Lack of control over your storefront.
  • Con: Marketplace fees and limitations may lead to loss in profits.

Your Own Online Store:

  • Pro: Total freedom and control over your entire branded shopping experience.
  • Pro: No growth restrictions or fees that limit your profits.
  • Con: Longer set-up times with some up-front costs.
  • Con: More marketing necessary to get the word out about your business.
Sales Channel

Building Your Website

Even if you decide to start out on an online marketplace, it’s still important to have your own website for marketing and growth purposes. The way that you build your eCommerce website will ultimately come down to the eCommerce platform you decide to go with, which can vary widely in quality and features included. The two main types of eCommerce platform are self-hosted software and hosted SaaS; let’s go into what those mean.

Self-Hosted Software

Self-Hosted Software

Ecommerce software that is self-hosted is often free and/or open-source because it needs to be downloaded, installed, updated and hosted manually by store owners. Often, the main benefits of self-hosted eCommerce software come down to their customizability and affordable price tag. But, where you save money with an open-source platform, you’ll end up spending in development time, web hosting, technical troubleshooting, updates, and security risks. Some of the most popular open-source eCommerce platforms are:

Hosted SaaS Software

Hosted SaaS Software

Rather than handle every aspect of your online store separately and alone, a Software as a Service (SaaS) eCommerce platform includes everything a business owner needs in one package. No downloads or installations are required, and hosting is all done for you – the platform is hosted by the provider’s own servers and updates are carried out automatically. Tech support is always readily available, security is always a priority and accessing the platform is as easy as logging into a modern Internet browser. Here’s a few of the most popular SaaS eCommerce platforms:

Marketing Your Business

Your online store is finally open for business! But your job isn’t over yet – now, you need to get the word out and let the Internet know that you exist. Marketing your eCommerce business can be incredibly multi-faceted and take many forms, but you’ll want to focus your efforts on these key strategies:

Social Media Marketing

Create social media profiles for your business on every platform that you think your target audience visits regularly. Work on creating unique, shareable content that your audience would like to see. Capture desired attention with an organically branded, multimedia experience in a personalized way.

Search Engine Optimization

Dominate search engine result pages through keyword research and effective SEO strategies. Pinpoint the keywords that potential customers are using to find your products and optimize your website to organically reach the number one rank.

Content Marketing

Establish your brand as an authority in your industry through exceptional content. Write compelling and relevant blog posts designed to answer the questions your customers are asking. Use photography and video content to inform and delight customers that want to know more about your brand.

Marketing Your Business

Expanding to Other Markets

Once you’ve built up your eCommerce business into a success, you may be considering expansion. Do you want to open your store to international sales and serve overseas customers? Are you interested in selling your wares on online marketplaces alongside your eCommerce website to boost your customer base? Take advantage of multi-channel integrations and international shipping features to take your business above and beyond what you thought capable. With the right eCommerce platform, you’re not held back from growing your business.

Expanding Business

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Frequently Asked Questions

Do I need a business license for an online store?
There are no eCommerce-specific business licenses. Instead, you should treat your business like a brick-and-mortar store when it comes to the licenses and permits you need.
What are the requirements to start a business?
The requirements will depend on where your business will be located. Common requirements include business registration, federal taxes, state taxes, business permits, business licenses, etc.
What business is best to start?
If you're looking to start your business with little or no capital, a dropshipping business might be one of the best places to get started.
How do you register your business name?
You can register your business name by registering a trademark, creating a business structure like the ones described on this article, or filling a DBA.