The ecommerce business industry is exploding. Brick and mortar stores that temporarily closed may never open again.
Shopping online used to be a convenience and a luxury, now – its a necessity. The ecommerce businesses that I work with can’t keep enough products stocked. Ecommerce has been growing for a while, and the numbers below don’t account for the recent events leading to an increase in ecommerce sales.
I’ve been in retail since 2005, I’ve opened physical stores, I’ve launched profitable websites and I’ve marketed small and large brands online. The amount of interest in ecommerce right now is unprecedented. A lot of folks want to know how to start an ecommerce business. If your goal is to make a quick buck – that’s all you’ll do, the goal should be a scalable, profitable business that lasts. You have to have a long term vision for building an asset that brings true value to the market.
How to Start An Ecommerce Business (Step-By-Step)
- Research Ecommerce Business Models
- Start Ecommerce Niche Research
- Validate Target Market and Product Ideas
- Register Your Ecommerce Business & Brand Name
- Finalize Your Ecommerce Business Plan
- Create Your Online Store
- Attract Customers To Your Ecommerce Website
Online retail is a booming business. But I’ve seen too many ecommerce businesses struggle to get traction. It’s taken me years to learn everything included in this page. Use the information here to set up your ecommerce store, protect yourself legally, get your finances in order, market and sell your product, and start building your store.
There’s nothing more rewarding starting a business from nothing and watching it grow. You build it up and no one can take it from you.
Building an ecommerce business takes more than choosing a brand name, writing product listings, and starting to sell products online. Even the best business ideas can flop if you aren’t driving enough traffic to your site. Prefer a step-by-step video course? Check out Ecommerce Business Blueprint. Not sure how the ecommerce business works? Check out our ecommerce 101 article.
Step 1: Research Ecommerce Business Models
Beginning your research is the first critical step. Don’t operate off of a hunch. Growing any online business is an investment. Treat it as such.
There isn’t a single business structure that works for everyone. Service-based business, software, digital product sales, and physical products are just the tip of the iceberg.
Before you can decide on what to sell online, you need to understand the different business models available.
It’s not rocket science, but it does impact your business structure.
This is something I’ll help you figure out in my Ecommerce Business Blueprint course.
If you want to turn a profit without touching your product or investing heavily at the start, drop shipping or print on demand is a smart choice.
If you like the idea of having your own warehouse full of goodies, you’re investing more up front and working with a wholesaling or warehousing (retail) model. Have a business idea for the perfect product idea or a favorite product you wish you could sell under your brand? Look into white labeling and manufacturing.
And then there are subscriptions, where you carefully curate a set of products or a single product to be delivered at regular intervals to your customers.
The ecommerce business model that attracts me the most is a single product category that you supplement with affiliate marketing. You can control the content marketing and branding on a focused product and focus the rest of your energy on driving sales by monetizing traffic.
Resources On Ecommerce Business Models
I highly recommend that you take your time and learn the different business models and compare them mentally. Then decide which one best lines up with your resources and marketing strengths. Also, think about where do you want to sell. Do you want to start your own online store on Shopify or do you want to sell on Amazon? Of course, you can do both, but marketing will be different.
- 5 Types of Ecommerce Business Models That Work Right Now
- 149 Legit Ways to Make Money Online
- The Best 20 Online Marketplace Options for Selling Products
- Pros and Cons of Selling on Amazon, Etsy Vs Your Own Site
Additional Startup Resources
- How to Create a Non-Sketchy Amazon Affiliate Store To Launch A Private Brand
- How To Start a Clothing Line (Tips From 13 Fashion Pros)
Step 2: Start Ecommerce Niche Research
It pains me when people email me their ecommerce site and it’s filled with hundreds of products, dozens of categories, and no real focus.
Unless you have a massive budget, you can’t be the next Best Buy or Amazon. You have to niche down to run a profitable ecommerce store.
Choosing your niche is the most important step in opening your online business. Start this process by identifying successful companies already working in this space.
Make sure that the area is competitive – an absence of competition usually indicates that there’s no market, either.
Don’t pick an overly crowded niche, however, and skip anything dominated by major brands. If you’re having trouble with this, drill down further on what you want to do – the more specific you are, the less competition you are likely to face.
Niche-ing down also gives you the benefit of having a lot of “shoulder” niches, related to what you do, but not identical. You can work together with business owners in those niches to cross-promote, become (or acquire) an affiliate, and grow your customer base.
Pick a product category with a minimum of 1000 keywords and focus on a niche that does well in social media, where publishers in the area are affiliates on Amazon. If you can nab a few affiliate marketing opportunities, you won’t have to worry about shipping as much product, but you can still make a profit.
Resources On Niche Research
- How To Find Your Niche Online Without Costly Newbie Mistakes
- What To Sell Online: 21 Product Ideas That Drive Ecommerce Sales
- 10 Ways To Figure Out What To Sell On Amazon and Profit
- 125+ Print on Demand Products To Drop Ship
- 12 Best Options for Your Amazon Research
- 100+ Simple Things To Make And Sell Online
- How to Start a Content-First eCommerce Site
Step 3: Validate Target Market and Product Ideas
Now that you’ve identified a niche and business model, you might be tempted to start hunting for products to sell.
Don’t. Before you think about product ideas, think about personas. You can’t expect people to buy your product if you don’t know who you’re selling to.
Who are you? What does the store represent? Who are your ideal customers? You need to project a consistent brand image (a journey that starts with your brand name). An organic seed company that started selling conventional fertilizer wouldn’t last very long.
Fortunately, Facebook makes it relatively easy for us to find your target audience online. Specifically, know exactly how many people you can target. You can drill down to get very focused numbers and detailed demographics.
I call it a “targetable target audience” – its a bit of a funny term, but you’d be surprised to know that most entrepreneurs have no idea how many people are in their target audience online. If you want a brand targeting hardcore triathletes that also enjoy mountain biking, you may have to go a little broader. You can’t build a business if your target audience is only 100K people.Your store persona has to match the expectation of your customers & the products you sell.Click To Tweet
Once you’ve identified the image you want to project and the customer you are catering to, it’s time to come up with product ideas. I suggest starting with one – you’ll invest less at the start, and if you want to offer more you can test the waters with affiliate marketing.
In the example of an organic seed company, you could find popular organic products on Amazon and create content to send traffic to those affiliate products. If something catches fire, you can consider making your own brand of that product. If you’re not 100% sure what to sell, you can use affiliate marketing to validate your idea.
Before you invest in the product, though, evaluate it carefully. Even if you choose a dropshipping model, you want to test it carefully and get a feel for the product yourself so you can identify any potential problems and prepare customer service scripts to answer common questions.
Part of validating your idea is to determine the viability of it. Can you suppliers that meet your pricing? What happens if your supplier falls through is there a backup option?
Resources On Validating Product/Market Fit
- 21 Product Research Tips To Uncover Legit Ecommerce Market Opportunities
- The Complete Guide To Finding The Best Private Label Manufacturers
- 3 Keys To Analyze The Profitability Of Your Product
Step 4: Register Your Ecommerce Business & Brand Name
If you want to start a successful business, you need a brand that connects with your persona. Identifying your persona makes building an ecommerce brand easier. You might avoid girlie colors and images if you are selling products to corporate businesswomen interested in living a sustainable life.
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.
Register Your Business.
Choose a business name and register your company. There are legal protections and tax benefits for incorporating, so don’t skip it.
Pick Your Store’s Name
The name of your site and the legal name of your business don’t need to be identical, but keeping them consistent has its benefits. Make sure whatever you choose fits your niche – you don’t want to pick a brand name at the last minute.
Get Your Business Licenses
If you’re not familiar with this process, the Small Business Association has plenty of resources to help you get started, including a mentor-protege network and courses on small business basics. Look actively for mentors – their advice can be priceless, even for little things like acquiring business licenses. One of the smartest decisions I ever made was finding someone who could show me the ropes.
Get Your Employer Identification Number
You’ll need an Employer Identification Number (EIN) to open a business bank account and file your business taxes next April, even if you don’t plan on having any employees. Your EIN is a bit like your business’ social security number: it’s a unique number that identifies your business and helps you file important paperwork.
Apply for Business Licenses and Permits
Operating an online store does not exclude you from needing certain business licenses and permits. Check with your city, county, and state to see what sorts of sales tax licenses or home business licenses you need, and get those approved before you start operating.
Find the Right Vendors
You’ll have a lot of competition selling products online, so it’s in your best interest to find the best quality and best prices for the products you sell or materials you use to create your products. Shop around until you find a vendor you want to do business with long-term – this includes your ecommerce software (your “shopping cart”). Think scalable from the start.
Consider the colors of your brand, the imagery you’ll use, and the typeface or fonts you’ll employ carefully. If you’ve got the budget, you might want to hire a marketing firm to create a design brief for your company. If not, you can create your own. Just keep it consistent and read marketing tips designed to help boost your brand.
Ecommerce Business Must Read
- Register Your Business
- Do I Need a Business License to Sell Online
- Ecommerce Branding: 11 examples and 27 expert tips to help you build your brand online
- Branding for Niche Marketers: Step-by Step Guide To Building a Powerful Online Brand Image
- The Simplest Way to Choose Your Brand Colors
- Creating a Brand for Your Ecommerce Store
Step 5: Finalize Your Ecommerce Business Plan
By now you should have a great idea of what your business will look like. You have your target market, your product niche and your brand name.
Now is a good time to step back and put your business plan on paper and determine your startup budget and monthly expenses.
The most important aspect of a business is the financial one. Figure out your break-even point, both in unit sales and duration (in months). Any real business is an investment of resources. In fact that was one of the first things I learned in MBA school. A CEO’s role is to take resources and turn it into a return.
Yet, I am sad to see that many entrepreneurs don’t take the time to project their revenue and expenses. If you can’t figure out your profit margin, you will fail.
The business planning phase is also when you want to iron out details like your staff, product sourcing, logistics and marketing budget. Make sure you understand all the available financial resources available to you.
Business Planning Resources
- How to Make an Ecommerce Business Plan for Your Startup
- How To Calculate Your Break-Even Point For Selling Products Online
- Top Fintech Companies for Ecommerce Businesses
- Finding small business loans
- Top Ecommerce Fulfillment Service Centers Compared
- Best Accounting Software Picks For Ecommerce Businesses
- Online Sales Tax Guide By State for Ecommerce Sellers
Step 6: Create Your Online Store
Once you’re officially an ecommerce business owner, you need to register your domain name and any redirect URLs that might be relevant. You’re going to need the design info you settled on in the last step now, when you finally build your store.
Whatever design you chose needs to be compatible with your ecommerce software, too.
There are literally hundreds of ecommerce shopping cart platforms. Choosing the right ecommerce software is not easy. You need to carefully evaluate things like loading speed, features, compatibility with different payment gateways, compatibility with your business structure, your web developer skills, SEO-friendly features, and more. I’m putting together reviews and comparisons to help you pick the right one. We’ve done a ton of research and the best options are below.
Once you decide on your ecommerce solution, don’t hire a “CRO Expert” or expensive development company. Just use a theme. You might need to pay a small fee of $100 or so to get a good template, depending on the shopping cart you choose and what they offer.
Theres lots of themes for BigCommerce, Shopify and WooCommerce.
If you don’t want to worry about taking credit card payments, you can sell products online on a marketplace like Amazon.
Love the idea of your own digital real estate? Make sure your ecommerce platform can scale with you and integrate with popular ecommerce marketplaces to increase your exposure.
Setting up your online store is much more than adding your products and content. You need to get your email marketing and automation set up as well.
This is important to set up BEFORE you get traffic. Email marketing is essential for driving conversions. Make sure you set up coupons, thank you emails, and upsells so you can turn visitors into shoppers. You also have to think about customer support.
Ecommerce Website Resources
- 10 Best Ecommerce Platforms Compared & Rated
- Complete List of Online Store Builders
- The 56-Point Ecommerce Website Checklist For Launch Success
- How to Set Up a Shopify Store For Success
- How to Start an Online Store and Get Sales on Day 1
- How The Best Ecommerce Sites Win at Web Design [23 Examples]
Step 7: Attracting Customers to Your Ecommerce Store
Apologies to any Field of Dreams fans, but if you build it there’s no guarantee they’ll come. You need to market your store.
When you chose your cart, I told you to think about search engine friendly features. They are NOT all the same.
The keyword-stuffing days of the early 2000s are long gone, but SEO is alive and well. You need to keep keywords and search terms in mind on each page of your site, in your URLS, and in your ad campaigns. You also need to think about driving traffic to your site.
The best ecommerce sites invest heavily in online marketing. If you don’t have the funds, you better have the elbow grease. Subscribe to marketing newsletters or listen to digital marketing podcasts to keep a pulse on the digital marketing industry and get your fill of marketing tips.
Will you use sponsored content, social media, pay-per-click ads, or a combination of strategies? How will you monitor what campaigns are driving traffic to your store? If marketing your site seems overwhelming, will you hire help?
Your site isn’t the only thing you need to drive traffic to. The product(s) you choose also need to be included in your marketing budget.
Your mission is to sell products, not drive traffic. To sell products, you have to think beyond your site and look for expansion areas.
No matter what and how you decide to sell, the first step is to create an email list. Place an opt-in freebie on your website, launch a social media campaign to gain subscribers, or host a giveaway where the entry ‘fee’ is your customer’s email address.
Running a giveaway is my go-to marketing tactic to get traffic and subscribers quickly. Giveaways have the added benefit of increasing your brand presence and product visibility. Building an email list gives you a group of warm leads to work with, making the sales process much easier.
Providing consumers with coupons and content via email helps to keep your brand on their mind, boost sales, and establish credibility. Keep your emails interesting – ask for your customers’ input often, including reviews. Respond quickly to customer service and product quality issues, and work on building relationships. No sales interaction is about the first sale; focus on the next one always.
On your site, look at how and where traffic flows. Are your product pages targeted to your persona? Are you losing potential customers in the same place? If you’re driving traffic to your store but nothing is selling, fix the leaks in your sales funnel by carefully optimizing each page and taking a close look at your product listings. Use analytics to help with this task. There are tools that can help you monitor and optimize every step of the sales process. Make use of them.
Look into partner and affiliate marketing to boost your brand presence by offering affiliate marketing options and partnering with retailers in your shoulder niches.
You can also offer bloggers in your niche a free sample of your product in exchange for reviews. If you’re selling products on Amazon, one easy way to gain consumer respect and confidence (and reviews) is to ask for feedback. Include a card with each product that asks for an honest review and provides contact information for your company (email is enough, unless you have a dedicated customer service phone line).
Ecommerce Marketing Resources
- Shopify SEO Case Study: How I Ranked a Shopify Store #1 in 30 Minutes
- 10 Proven Ecommerce Marketing Strategies to Surge Growth
- How to Create an Effective Ecommerce Marketing Strategy
- 15 Instagram Marketing Tips to Spread Your Ecommerce Brand Like Wildfire [INFOGRAPHIC]
- How to Promote Your Products Through Advertising and Online Communities
- Ecommerce Customer Marketing: Launching a New Product
- Marketing Books and Resources
Ready To Start Your Online Business?
Did this post answer your questions about starting an ecommerce store? If so, please give it a share. I’ve spent years helping business owners like you. Running a successful ecommerce website doesn’t have to be a struggle or pricey.
If you’ve got the elbow grease and time, you could launch a profitable online store for a few hundred dollars per month.
Your success is important to me. If you take the time to read through the resources above, you’ll save hundreds of hours of work and you’ll know where you’re more likely to get your money’s worth in ecommerce. I really hope you enjoyed the insights I’ve shared on starting an ecommerce business. If I missed anything you’d like to see covered, let me know in the comments. Good luck with your ecommerce startup!