Do you want to learn how to start an ecommerce business? Well, you have come to the right place.
The ecommerce industry is booming.
With the internet becoming increasingly accessible in different parts of the world, the popularity of online shopping is touching the sky. Even brick and mortar stores are incorporating ecommerce into their strategies.
If you are thinking about starting your own ecommerce business, this is the right time. There has been tremendous growth in global ecommerce sales, and the numbers are only going to increase in the coming years, as shown in the image below.
Image via Shopify
So, if you want a slice of this huge pie, you need to know how to start your business.
Like any other business, learning how to start an ecommerce business is not an easy task. It may seem overwhelming to begin with, but it does not have to be.
To help you figure out how to start your ecommerce business, we have created this easy guide.
If you have dreamt of being your own boss, learning how to start an ecommerce business could be exciting. Getting a business off the ground is hard work, but it need not be difficult, especially if you follow the right steps.
Here is a simple and easy step-by-step guide on how you can start your ecommerce business.
Research is an essential part of learning to start an ecommerce business.
Say, you were opening a restaurant or any other brick and mortar business, you would research locations, themes, or food options, right?
Similarly, when you start an ecommerce business, it is important to understand the ecommerce space and pick the niche you are interested in.
Picking your niche is a very important step in starting an ecommerce business. Doing so helps you run a profitable online store.
In the long run, you may want your online business to offer hundreds of products in dozens of categories. However, when you are just starting out that may not be a very good idea.
So, how do you pick a niche for your ecommerce business?
One word. Research.
Start by identifying other companies working successfully in the space. Make sure you pick an area that is competitive. You could even use a product research tool like Tradelle should you be considering venturing in dropshipping If there is no competition, chances are there is no demand for that niche.
However, picking an overly crowded niche is also not a good idea, especially if it’s dominated by big brands. You will struggle to handle the competition as a beginner.
The following tips can come in handy while picking a niche for your e-commerce business.
Brainstorming on your own or with some other people can help you jump start the process.
Ask yourself the following questions:
As you answer these questions, ensure to note down the products that suit the bill. This will help you narrow down on the niche.
Different people have varied wants and needs. Listening to them can help you generate new ideas for your ecommerce business and uncover new niche opportunities.
Start by talking to your friends, family, neighbors, and colleagues. But, don’t just stop there.
Check out forums and online communities such as Quora, Reddit, and Discord. The conversations on these platforms can help you figure out the right niche for your business.
Scour social media feeds to find popular trends, products, and niches. Use hashtags to look for specific topics as well.
When it comes to finding niche ideas, nothing is better than Google.
Use the Google Autocomplete feature to find niche ideas. Start by typing in a product category along with an adjective.
Let us explain with an example.
Say, you type in shoes. Google Autocomplete will show you the most searched options. This may help to find some great niche ideas.
Image via Google
“Related Searches” for Google is another great place to find niche ideas. These are the terms you see on the bottom of a search page when you are Googling something.
Image via Google
This is a Google feature that simply takes your search term and shows you related searches that other people have made.
Major ecommerce platforms like Amazon, eBay, or Etsy can also offer valuable niche ideas. Go through the homepage to find which products, categories or niches are trending.
Image via Amazon
Don’t forget to check out the product categories and subcategories. This is where you will find a lot of niche ideas.
Image via eBay
Take the time to dig deep. You will be able to identify gaps and opportunities that will help you pick the right niche when starting your ecommerce business.
Now that you know how to pick a niche for your ecommerce business, it is time to pick a great name. Ideally, you would want to pick a business name that is unique but at the same time, one that represents what your business does.
After all, it is the first brand element that your customers would encounter and is key to creating greater brand awareness.
Here’s what a great business name should and should not be.
Image via Foundr
So, how do you pick a great business name when learning to start an ecommerce business?
The following tips will help you.
When you have picked out a great name for your ecommerce business, it is worthwhile to check if the domain name is available too. You will need to start a website for your online store, after all.
If the exact domain name is not available, you may want to check for some wiggle room. Perhaps you may be able to tweak the brand name or the top-level domain (TLD), such as “brandname.co” instead of “brandname.com”.
Once you have chosen a business name, you should then shift your focus to figuring out the right business model for your online store. There is a lot of competition in the ecommerce space, so it is crucial that you carefully consider what your ecommerce business model will be.
There are four basic types of ecommerce business models.
Image via Virto Commerce
In the Business to Business model, ecommerce businesses sell goods and services to other businesses. Your audience are usually businesses that use your products or sell them to the end customer.
Alibaba is one of the better known B2B ecommerce businesses in the world. It has been selling products to millions of buyers and sellers worldwide, catering to over 40 industries.
Image via Alibaba
Instead of selling products to other businesses, B2C ecommerce businesses sell them directly to the end users. You could specialize in one category, like SHEIN, the online fashion store. Or, you could sell several different products under one roof, like Amazon or Walmart.
Image via SHEIN
Unlike a B2C business model, in a C2B model, consumers provide a product or service to businesses. Upwork and Fiverr are excellent examples. Freelancers can register on these platforms offering their services to other businesses.
Image via Fiverr
The C2C business model facilitates the selling or exchange of goods and services between consumers. In this model, customers purchase products and services from other consumers through a third-party platform.
Craigslist, the classified advertisements website, is one of the most popular C2C businesses out there.
Image via Craigslist
The business model you choose will also help you choose the right legal structure or business entity for your ecommerce business. The legal structure of a business determines the management, tax, and paperwork requirements. It also impacts your fundraising abilities.
You have sorted out the basics for your ecommerce store. Now, it is time to research product ideas. Product research, after all, is an essential part of learning how to start an ecommerce business.
But before you sell products online, you need to first figure out your target market. How will you sell online if you don’t even know who you are selling to?
Knowing your target audience helps you understand what products or services to offer. Your target audience also determines what kind of marketing and SEO strategy will work best for your ecommerce business, which advertising platforms to use, and what kind of content marketing will make your prospects take action.
So, how do you identify your target market?
If you want to identify and understand your target audience, you need data. You will need both demographic and psychographic data.
Demographic data such as gender, age, occupation, education level, and family situation will help you understand the needs of your customers and how much they are willing to spend.
Psychographic data provides information about a customer’s values, interests, attitudes, and personality traits. This will help you identify the things that interest them and triggers that motivate them to take action.
Here is an example of how to gather data for a customer.
Image via UpGuard
A customer profile depicts the person or business you want to sell products to. It helps you understand what your ideal customer looks like—their pain points, needs, interests, buying habits, and so on.
Creating customer profiles helps you make objective decisions about your target market because it helps you understand who your customers are, where they live, what they do, and how they spend their money. It also helps you better understand what your customers are interested in buying.
Here is a customer profile template.
Image via Monday
Market segmentation refers to aggregating your prospects into segments or groups based on certain common attributes. It is a very effective way to get granular with your target market.
Market segmentation helps you understand how your audience is different, helping you create the right products for the group. It also ensures your marketing efforts are targeted in the right direction, helping you maximize your ROI.
There are 4 types of market segmentation.
Image via QuestionPro
Identifying your top competitors is important when you are starting an ecommerce business to set it up for success. Research the sales and marketing strategies of your competitors, and evaluate the strengths and weaknesses of your online business.
Doing so can give you vital information about what target market to focus on and what products and services to offer.
For instance, say you sell skincare products made from natural ingredients. Your biggest competitor also sells similar skincare products but they primarily market them through social media. You could instead opt to leverage SEO to promote your products and drive sales along with social media to get an upper hand.
Additionally, you should also find out how to ensure that your product appears unique and provides better value than your competitors. This can help you get an edge over them.
If you want to develop a product that people want, pick one that solves customer pain points.
Case in point—HiccAway. HiccAway offers drinking straws that helps get rid of hiccups. Although hiccups are not a big issue for adults, they can be a pain point for children and the elderly. So, the product needs to be marketed to that audience.
Image via HiccAway
Being able to spot trends early on can be a big win for a new ecommerce business. You can carve out a place for yourself in the market and establish yourself as a leader in that space by getting a head start.
Don’t confuse fads with trends though. Cashing in on fads may be profitable, but the demand eventually fizzles out. On the contrary, trends are a way of fulfilling existing needs in a new way, so the demand tends to stay on a lot longer.
Knoxlabs is a good example of a company capitalizing on trends. It was one of the earliest manufacturers of VR headsets, and with VR becoming popular, it established itself as a market leader.
Image via Knoxlabs
Customer reviews can give you some excellent ideas for product development. By going through reviews and feedback you may be able to identify gaps and opportunities that you could capitalize on.
Even if you already run a successful ecommerce business, customer reviews can help you improve or upgrade your existing products. For instance, Everlane had been in the shoe business for years making heels and flats. It was only in 2019 that they launched their sneakers after listening to customer feedback.
Image via Everlane
If you know how to find keywords then it can serve well by helping you generate some great product ideas.
Look for search queries that people are using, the number of searches, and the competition for those searches. This will give you a very good idea of what kind of products people are looking for.
Ahrefs is a great tool to help you find keywords. However, you can use Ahrefs alternatives as well.
Image via Shopify
Pro Tip: Whether you sell commoditized or niche products is entirely up to you. However, when you are just starting your online ecommerce business, it is always a good idea to pick products that have a good demand.
Having a business plan can increase the chances of long-term success. With a solid business plan in place, you’ll know exactly what needs to be done to accomplish your ecommerce business goals.
With clear goals and plans in place, you’ll also be better placed to align all your efforts and channelize them toward accomplishing the goals.
Lastly, a detailed business plan helps keep your team on the same page, thus helping you drive better results.
You may follow the below steps to create your business plan when starting your ecommerce business.
Image via AppyPie
Let’s dig in deeper to understand why you should consider creating a business plan for your new ecommerce business.
A well-written business plan works as a guide for your day-to-day operational needs. Everyday tasks or emergencies could be overwhelming, especially when you are learning to start an ecommerce business. When you have a plan, you know what to prioritize and what can be done at a later date.
In short, a good business plan ensures that nothing falls through the cracks.
Launching a new business, whether it is a brick and mortar store or an online business, requires considerable investment. Creating a business plan minimizes the risk of making costly mistakes.
Market research is an essential part of making a good business plan. It gives you a clear idea of whether your business idea is feasible or not. Your business plan also answers vital questions, such as:
The answers to such questions and more will help you make informed decisions, helping you set up a successful ecommerce business.
Your business plan helps you determine short and long-term goals for your online business. This gives you a better understanding of how to get your business to a particular milestone and beyond.
You’ll also be better placed to understand the amount of time and monetary investment needed to take your business to those heights.
A strong business plan is an indicator that you know what you are doing. It also paves a clear path to being successful and profitable. This is what investors are looking for.
In fact, most investors, banks, and other financial institutions will not even consider investing in your business or giving you a loan if you don’t have a well-designed business plan.
Pro Tip: When creating a business plan, do a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. This will help you understand the position of your ecommerce business in the market better. You will also learn to effectively distribute resources, helping you become profitable faster.
If you are learning to start an ecommerce business, you should also know all about the business permits and licenses required to run it.
Here are some common business licenses and permits you should know of before you get started.
Image via QuickBooks
Based on the business structure you choose and the type of ecommerce business you start, one or more of these licenses may apply to you.
You must also get an EIN (Employer Identification Number) for your business. Although all business entities are not required to have an EIN, it can be instrumental in giving your business a separate identity for the IRS.
Check out your state requirements for ecommerce businesses, and ensure you obtain all the necessary business licenses. For example, states like New York, Texas and California have specific regulations regarding online businesses. If you're setting up an LLC in California for your ecommerce business, familiarize yourself with the state's unique procedures and guidelines to ensure legal compliance.
Ecommerce businesses tend to require fewer permits and licenses compared to brick and mortar stores. You should still obtain all the necessary licenses and permits required to operate your business legally.
Some business licenses and permits you may need are:
By this time, you may have figured out the basics of how you can start an ecommerce business. So, now it is time to get your online store up and running.
Start by building your website on an ecommerce platform like Shopify, BigCommerce, or Wix. You could also opt to create a website from scratch and use WooCommerce to start your ecommerce store.
Shopify has an easy to use online store builder along with a lot of templates that require no coding knowledge or experience.
After you have found your perfect website builder, follow the steps given below to create your online store.
We’re using Wix to show you the process for this post.
Different website builders offer a variety of plans which offer different features, as shown below for Wix.
Image via Wix
As expected, the costlier plans tend to have more features than free or low-priced plans.
The plan you pick for your online business depends on the size of your store and your growth ambitions.
Since you want to start an ecommerce business, we highly recommend going with a paid plan. The free plan offered by most website builders may not offer enough support for you to upload products and start selling online.
Upgrading to a better plan is also a great idea when your revenues start to increase to offer a more positive customer experience and, as a result, improve your sales conversion rate.
It goes without saying that all successful ecommerce stores have stunning websites. How do you make your online store look good, especially if you have no design experience?
Well, it’s easier than you think.
Platforms like Wix and Shopify offer hundreds of customizable templates that you can use to create amazing online stores.
Image via Wix
With so many options to choose from, how do you pick the right template for your store?
Here are a few tips:
Image via Contentsquare
Pro Tip: Pick and test a few templates before finalizing one. Some website builders may not allow you to change the template once your website has gone live. So, it is always a good idea to test first.
Once you've finalized the template, you need to start customizing it to create your ecommerce store. Most website builders come with built-in editing tools that make customizations easy.
You don’t really have to be a technical whiz to create your own ecommerce site when you leverage these website builders.
Usually these templates allow you to customize every element, including:
Image via Alphr
You may also embed apps to streamline the payment processing or checkout process. Platforms like Wix, WooCommerce, and Shopify also offer their own apps that you can download from the app store. Be sure to check these apps out to add extra functionality to your ecommerce store.
Pro Tip: Double check to ensure you have replaced all the default template content, such as texts and images, with your own before you publish your website.
You may have created a stylish ecommerce store by now. It is now time to add products to it.
Another advantage of using website builders for your online store is that you have more control over the product pages. You can design the product pages as you like. For instance, if you prefer minimalism, you can create a page like the one shown below.
Image via Wix
The number of products you can upload will depend on the limit offered by the ecommerce platform you’ve chosen and the plan you’ve opted for. Different plans may allow a varied number of products you can add. So, make sure that you check out the limit.
There may also be a limit on the number of options you can add for each product or product variants.
Whenever you add products, ensure that you add high quality product images and videos. Consider using an image compression tool to reduce its file size while keeping the image quality intact. This will enable the images to load faster on your website and even improve your SEO.
Pay attention to the product description too. Avoid using long sentences, complex jargon, or cliches.
Here is an example of a good product description as it communicates all the important elements of the product.
Image via Cloudways
Optimizing your product descriptions for SEO is also a good idea. Doing so helps you rank higher on Google when people search for products like yours. Getting your website to the first page of Google can do wonders for your sales by driving targeted traffic to your product page.
The goal of every ecommerce store is to convert visitors into buyers. Your payment processing options have a big role to play in that.
Simplifying the payment process and offering multiple payment options helps ecommerce business owners:
By offering multiple payment options, you not only make it more convenient for customers to pay but also position yourself as a forward-thinking business that has its customers’ best interests in mind.
So, what payment options can you offer when you start an ecommerce business?
Customers have several preferred payment options, as shown in the image below.
Image via ApexTech
Thankfully, popular ecommerce website builders like Shopify, Wix, and BigCommerce allow you to offer multiple payment options with ease.
How do you choose the best payment options for your ecommerce business?
That will depend on the number of sales you expect to make and who you would be selling to.
Shoppers in Texas will have different payment preferences than shoppers in Canada. If you plan to sell only in the US, you can make do with the most preferred payment options in the country. However, if you wish to sell internationally, you will have to provide payment options that are convenient for your international shoppers too.
Thoroughly research your online store’s needs and audience when creating a business plan. This will help you in making decisions, such as picking the right payment option for your online store.
Security is another very important factor when setting up a payment method for your store. Ensure that your ecommerce platform includes SSL (Secure Socket Layer) encryption in their plan. Else, make sure you get one for your website.
An SSL certificate means that the website encrypts the user’s data, thereby making the online shopping experience safe and secure.
What does a secure website look like? If the website has been encrypted, you will see a padlock on the top left corner, as shown below.
Image via Dick’s Sporting Goods
You have added the products and sorted out the payment options. The next step in starting an ecommerce business is ensuring that you can deliver those products.
When setting up your online store it is crucial that you understand your shipping options. After all, shipping can be a very powerful differentiator for your ecommerce business.
Offering the right shipping options and rates is extremely important for the long-term success of your ecommerce business. The right shipping options and rates can also drastically bring down cart abandonment rates and increase revenue.
There are three things to consider when offering shipping options:
Free shipping, one-day delivery, and same-day delivery are other shipping options you may consider as you scale your ecommerce business.
Other factors that may influence your shipping options are as follows:
Image via Comalytics
By now you must have got everything sorted, from adding products to payments and shipping.
It is now time to publish your online store.
But there is a very important step before that, and that is testing your ecommerce store. You should never publish your online store before testing. Testing ensures that your website satisfies your customers’ needs and is free from errors.
Check the following when testing your ecommerce website:
Double check all of the above before you hit the publish button.
Pro Tip: Ensure you check your store’s settings, such as language, currency, timezone, address, product settings, and order settings before you publish your website.
Now that you have published your online store, your focus should be on attracting customers. And to do that, you need a strong marketing strategy.
You may already have a successful brick and mortar store, and now want to expand online. However, the same marketing strategies may not work as well for your ecommerce store.
For a successful ecommerce business, you need a marketing strategy that drives targeted traffic to your online store.
Will you need to spend a lot of money? Not really.
Is it possible to develop a marketing strategy on a budget, perfect for a small ecommerce business?
Of course, investing in a few inexpensive marketing tools will make the work a lot easier.
Here are some techniques that work well, even for those on a tight budget.
A strong content marketing strategy is an easy way to drive more sales to your new online business.
Instead of trying out different content types at the same time, pick any one. Create a lot of high-quality content in that format and assess how well it works for you.
You could start a blog on your website, like Costco.
Image via Costco
You may also create video content like The Home Depot.
Image via YouTube
The idea is to use the content to showcase your products and educate your audience on their benefits and how they can solve their problems.
Email marketing is another powerful marketing technique that offers great returns with minimum investment.
Regardless of the kind of business you own, your customers will likely be interested in knowing how your products can benefit them. So, start by creating emails with promotions that cater to their specific needs.
A good idea is to offer a free gift on first-time purchases, like BirchBox.
Image via SellBrite
You may also send out automated emails based on customer behavior using email marketing tools to drive repeat sales.
Now that you’ve started an ecommerce business, why not spread the word on social media too?
Social media marketing is another very effective way to promote your ecommerce business on a budget. The key to success is consistency. You have to post regularly and frequently to reach and engage potential customers.
However, don’t make the mistake of trying to create a presence on all social media platforms. Instead, research your customer base to figure out which social media platforms they use.
Then, make sure you publish relevant content regularly on those platforms to attract and engage your audience.
The key is to ensure that your content is useful for your audience and also convinces them to buy from you.
For instance, note how Etsy created a short video about how to wrap a gift, keeping in line with the holiday season.
Image via Instagram
Take a look at these social media content ideas to inspire your social media marketing campaigns.
Affiliate marketing is one of the best marketing tactics for ecommerce businesses as it’s a very results-oriented strategy.
The best thing about affiliate marketing is there are usually no upfront costs. You pay the affiliates a commission in exchange for every sale that they drive. This ensures that they’re motivated to drive sales and helps boost your revenue too.
Here is popular YouTuber Doctor Mike promoting Amazon Fresh on his channel.
Image via YouTube
A happy customer can bring in another. Once you have created a sizable customer base, consider implementing a referral program for your ecommerce store. Like affiliate marketing, you can incentivize customers to refer their friends and family and get freebies in return like discounts.
Here’s how the referral program from Outdoor Voices looks like.
Image via Outdoor Voices
Q1. How much does it cost to start an ecommerce business?
A. Setting up an ecommerce business could cost anywhere between a few hundred dollars to even thousands or more, depending on the size, scale, and various other factors.
Some of the bare necessities that you will require regardless the size of your business are:
Other costs that you may incur include:
Q2. What are the different types of ecommerce businesses?
A. There are 4 main types of ecommerce businesses:
Q3. Is ecommerce a profitable business?
A. The ecommerce industry is growing steadily and an ecommerce business could definitely be a profitable venture. The growth of available marketplaces and advancements in technology have made it easier to buy and sell online, making it a very profitable business idea.
Q4. What is the best ecommerce business to start?
A. There are many profitable ecommerce business ideas worth pursuing, such as:
Q5. Can you start an ecommerce business with no money?
A. Yes, dropshipping is quite popular among small business owners who want to start an ecommerce business with little or no money. All you need to do is create an ecommerce site and sell products without keeping anything in stock.
When you get an order you send it to a third-party, which could be a manufacturer, wholesaler, or retailer. The third-party then ships the product directly to the customer. You will be required to pay the production and shipping costs, while keeping the rest of the profit.
Starting an ecommerce business takes effort and a whole lot of research. But it is not impossible.
Just follow the steps given in this guide, and you will have your ecommerce business up and running in no time at all.
Do you have any other tips on starting an ecommerce business? Please share them in the comments below.
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