Business

How to Start an Ecommerce Business in 8 steps (2022)

In this beginner’s guide, we’re going to cover how to set up and launch a thriving (and Covid-proof) ecommerce business.

Covid-19 has accelerated ecommerce by 5 years. At the same time, legacy brands with physical stores like Lord & Taylor and Century 21 are filing for bankruptcy.

The time to move your business online was yesterday.

In 2019, ecommerce had a 14.1% share in the global retail marketplace; by 2023, Statista projects that 22% of all retail transactions will take place online.

In hard money terms, sales in the U.S. could total more than $475 billion by 2024 — and that’s just D2C.

Considering that 1 out of 3 workers isn’t confident they’ll have enough money to be comfortable in retirement, having your own eCommerce business is definitely a good option.

By the time you’re done reading, you’ll know what it takes upfront to launch and run a successful online store.

We’ll touch on everything you need to start your own successful ecommerce business, including:

  • How to research products to sell online.
  • Choosing your ecommerce business model.
  • Validating your product idea.
  • Registering and your company.
  • How to source your products.
  • Creating a business plan.
  • Choosing your ecommerce platform and launching your store.

Let’s get started.

1. Research Products to Sell Online

To be successful, it is critical that you focus your efforts on a niche market and not make the common mistake of being too broad.

Niche Products

A niche market is a segment of a larger market that has its own demands and preferences. We focus on niche markets to better cater to a specific consumer than competitors who target a broad audience. This helps to build loyalty and revenue with a largely-overlooked audience.

A great example of a company that succeeded by focusing on an over-looked audience is Warby Parker.

Source: Warby Parker

When they first started, there was a lot of competition in the eyewear space, but Warby Parker differentiated themselves by focusing on a niche market: people who wanted stylish and affordable glasses, but didn’t want to go to the optometrist.

As a result, they were able to build a loyal customer base by offering a product that solved a specific problem for a specifi c group of people.

The key to establishing a niche market is research. By researching niche markets, you can determine what already exist, and explore new opportunities.

If you find a niche market with no competition, it could be that businesses have already found it not to be profitable or worth the effort. If there are a small number of similar products or services, that could be a sign that your idea is potentially profitable.

The trick to capitalizing on a niche market is to find a segment that has accessible customers, room for growth, and no dominant competition.

How to choose your niche

Maybe you already have a completely unique idea — maybe you’re an inventor or a designer with a working product prototype. If so, great. If not, don’t worry; you don’t have to come up with the next big thing to start a successful ecommerce store.

Instead of worrying about breakthrough innovation, think about what customers want and consider what you can offer them.

Source: Blogging Wizard

The following tips should help you come up with a solid niche idea:

  • Focus on a problem: Innovation often starts at home. Think about a problem your face everyday –– it's likely that you're not alone. Can you create a solution and find a way to market it?
  • Consider your passion: It's a lot easier to build a company that aligns with your interests. Business takes time so don't commit to building something you don't understand or enjoy.
  • Branding potential: Branding is more important than ever. Think about how your idea will translate on platforms like Instagram and Facebook. Ask questions like: Who is your target audience? Where can you find them? and how will you brand your product?
  • Look for opportunities: The most successful entrepreneurs constantly look for gaps in the market. Pay attention to societal shifts, and you’ll see trends coming before they happen.
  • Be early to trends: If you do notice a product trend, get on board early. The earlier you get into an emerging market, the more likely you are to be seen as an authentic original part of the industry.

Don't know how to find trends? Check out our latest trend report here

2. Choose your ecommerce business model.

Now that you know what you want to sell, you need to figure out where and how to sell it. There are a lot of creative ways to sell your products these days but most of eccomerce falls into four main business models: Direct to Consumer (DTC), Business to Business (B2B), Consumer to Business (C2B), and Consumer to Consumer (C2C). Let's breakdown popular business models to find the best one for you:

Direct to Consumer (DTC) 

This is when you sell your products directly to the consumer without any intermediaries. Ecommerce brands like Warby Parker, MVMT Watches and Glossier use this business model.

The pros of DTC are that you have complete control over the entire customer experience, from marketing to fulfillment. You also cut out the cost of middlemen, so you can charge a higher price for your products. 

The downside is that it's more challenging to scale and reach a larger audience.

Business to Business (B2B) 

This is when you sell your products to other businesses instead of consumers. B2B sales are typically higher-margin and less competitive than C2C sales. 

The downside is that you need to know how to sell to other businesses, which can be a difficult process if you're not familiar with it.

Consumer to Business (C2B)

This is when consumers buy products from businesses for their own use. For example, a business might buy office supplies from a supplier. 

The pros of C2B sales are that businesses are more likely to buy in bulk, so you can make more money per sale. 

The downside is that it can be difficult to get businesses to switch from their current supplier

Consumer to Consumer (C2C) 

This is when consumers sell products to other consumers. Ecommerce platforms like eBay and Etsy use this business model. 

The pros of C2C are that it's easy to start, there's low overhead costs, and you can reach a large audience. 

The downside is that it can be difficult to make money if you don't have a lot of traffic.

Dropshipping 

Another popular ecommerce business model is dropshipping. Dropshipping is when you sell products without actually keeping any inventory. When a customer orders a product, you simply order it from a supplier and have it shipped directly to the customer. 

The pros of dropshipping are that it's easy to start, there's low overhead costs, and you can reach a large audience. 

The downside is that it can be difficult to make money if you don't have a lot of traffic.

Subscription Service 

A subscription service is a newer ecommerce business model that's growing in popularity. With a subscription service, customers pay a recurring fee to receive regular deliveries of products. 


The New York-based startup Birchbox sells curated monthly boxes of beauty samples for $10 each, while offering full-sized versions of the products on its e-commerce site. In just 3.5 years, Birchbox has grown to 800,000 subscribers, which equates to $96 million in annual sales.

The pros of subscription services are that they're predictable, customers are more likely to be loyal, and it's easy to upsell products. 

The downside is that it can be difficult to get customers to sign up for your service.

Wholesaling 

Wholesaling is when you sell products to retailers who then resell them to consumers. 

The pros of wholesaling are that it's a low-risk way to get started in ecommerce, you can reach a large audience, and it's easy to scale.

The downside is that you need to have a good relationship with retailers, you likely need a lot of capital to get started, and it can be difficult to make money if you don't have a lot of traffic.

White Label Products

A white label product is a product that you sell with your own branding. Ecommerce brands like The Honest Company and BarkBox use this business model. 

The pros of white label products are that you can control the entire customer experience, you can charge a higher price, and it's easy to scale. 

The downside is that it's more challenging to find a supplier who will work with you.

Fulfillment by Amazon (FBA) 

Fulfillment by Amazon is a service that allows you to ship your products to Amazon's warehouses and have them handle the fulfillment and shipping. 

The pros of FBA are that Amazon has a large audience, it's easy to set up, and you can reach a larger audience. 

The downsides are that you would need to pay Amazon's fees, it can be difficult to get started without a truly unique product or lots of reviews, and it can be costly to get up and running.

Remember:

There is no one-size-fits-all answer when it comes to choosing an ecommerce business model. You need to choose the one that best aligns with your strengths and goals.

3. Validate your Idea

At this stage, it’s vital to perform market research to make sure you have a sound product idea. This research will help you determine whether there is a market for your product, how big that market is, and what the competition looks like.

There are a few different ways to validate your idea:

Google AdWords - You can use Google AdWords to see how many people are searching for your product. If there aren't many people searching for your product, it might be a sign that there isn't a market for it.

Social Media - You can also use social media to see if people are talking about your product. If people aren't talking about your product, it might not be something they're interested in.

Amazon - You can also look to Amazon to see if people are buying products like yours. If they're not, it might be a sign that there isn't a market for your product.

Surveys - You can also create surveys to get feedback from potential customers about your product. This feedback will help you determine whether people would be interested in buying your product.

Create buyer personas  - A buyer persona is a fictional representation of your ideal customer. This person can help you better understand your target market and what they're looking for in a product.


To get started building a buyer persona:

  1. Start by creating a list of your ideal customer's demographics (age, gender, location, etc.).
  2. Next, think about what this customer is looking for in a product. What needs does your product address?
  3. Finally, consider what type of person this customer is. Are they price sensitive? Do they care about the environment?

4. Make your company legal

The next step is registering and incorporating your company. You'll need to do this in order to start selling products. There are a few different ways to structure your company:

Sole proprietorship 

A sole proprietorship is the simplest way to structure your company. This is when you operate your business as an individual, and there is no legal separation between you and your business. 

The pros of a sole proprietorship are that it's cheap and easy to set up, and you have complete control over your business. 

The downside is that you're personally liable for any debts or legal judgments against your business.

Partnership 

A partnership is when two or more people operate a business together. This structure is similar to a sole proprietorship, but there are more legal protections in place for the partners. 

The downside is that partnerships can be difficult to manage and disagreements between partners can lead to the downfall of the business.

Limited Liability Corporation (LLC) 

An LLC is a more complex structure, but it offers some important protections for business owners. 

With an LLC, the owners are protected from personal liability for any debts or legal judgments against the company. This means that if your business fails, you won't be responsible for paying back any of the company's debts. 

The downside is that LLCs can be expensive to set up and they require more paperwork than other structures.

S Corporation 

An S Corporation is a similar structure to an LLC, but there are a few key differences. With an S Corporation, the business owners are not protected from personal liability.

This means that if the company fails, the owners could be responsible for paying back its debts. Another difference is that S Corporations are subject to special tax rules.

C Corporation 

A C Corporation is the most complex business structure, and it's best suited for larger businesses. With a C Corporation, the company is a separate legal entity from its owners. 

This means that the company can own property, enter into contracts, and sue or be sued in its own name. 

The downside of this structure is that C Corporations are subject to double taxation. This means that the company pays taxes on its profits, and then the owners pay taxes on their dividends or salary from the company.

Next Steps:

Once you've chosen a business structure, you'll need to file some paperwork with your state's Secretary of State. This process can be tricky, so it's best to consult with an attorney or accountant.

Once your company is registered, you'll need to get a Tax ID number from the IRS and set up a bank account for your business.

Now that your company is legal, it's time to start selling products! The next step is to take a moment to think about your Branding.

5. Branding

When you're starting a new business, it's important to create a strong brand that will help you stand out from the competition. Your brand is what consumers think of when they hear your company name. It's what sets you apart from other businesses in your industry.

Source: Aventive

There are a few things to keep in mind when branding your business:

  • Your brand should be consistent across all channels. This means that your logo, colors, and messaging should be the same on your website, social media profiles, and marketing materials.
  • Your brand should be unique and memorable. You want consumers to remember who you are and what you stand for.
  • Your brand should reflect your company values. When consumers buy from your company, they should feel like they're supporting something they believe in.
  • Your brand should be relevant to your target audience. Make sure that your branding is aligned with the interests and values of your target market.

Once you've created a strong brand, it's time to start building a website! In the next section, we'll discuss how to choose the right ecommerce platform for your business.

6. Choosing an ecommerce platform

Today there are more platforms for building an online store than ever before. It can be tricky to know which platform is best for your company but when it comes to choosing an ecommerce platform, there are a few things to keep in mind:

  • Your budget - Ecommerce platforms can be expensive, so you'll need to decide how much you're willing to spend.
  • The features you need - Make sure the platform has all the features you need, including shopping cart functionality, product management, and order tracking.
  • The design of your store - The platform should have a customizable template that will allow you to create a website that matches your brand identity.
  • The scalability of the platform - Make sure the platform can handle the growth of your business.

Keeping these in mind, let's take a look at the most popular platforms on the market today:

Shopify 

Shopify is a popular ecommerce platform that offers customizable templates and a wide range of features. It's affordable, scalable, and easy to use, making it a great choice for small businesses. The downsides of using Shopify are that it can be difficult to customize your store's design without coding knowledge and it doesn't offer as much flexibility as some of the other platforms.

WooCommerce

WooCommerce is a plugin for WordPress that allows you to create an online store using your existing website. It's free, easy to use, and scalable, making it a great option for businesses that are on a tight budget. The downside of using WooCommerce is that it is a plugin that sits on top of another platform. This means that you'll have to build a Wordpress website first and use WooCommerce to give it ecommerce functionality.

BigCommerce  

BigCommerce is another popular ecommerce platform that offers customizable templates and a wide range of features. It's affordable, scalable, and easy to use, making it a great choice for small businesses. The downside of BigCommerce is that it can be difficult to customize your store's design without coding knowledge.

For most businesses just starting out, I'd recommend Shopify. It is a great platform for beginners and has all of the features you need to be successful. However, if you have a working understanding of web design or any kind of coding background, I'd consider building your website with Wordpress and integrate it as needed. This will provide you with full customizability and access to thousands of plugins.

5. How to source your products

Now that you've chosen your ecommerce platform, it's time to figure out the logistics of your new company. The first order of business is to source your products. This can be done in a few different ways:

  1. Dropshipping - Dropshipping is a process where you partner with a supplier who will ship the products directly to your customers. You don't need to worry about inventory or shipping, making it an ideal option for businesses that are just starting out. The downside of dropshipping is that you'll have less control over the quality and branding of your products.
  2. Manufacturing - If you want to produce your own products, you'll need to find a manufacturer who can create them for you. This can be a difficult process and it's important to find a supplier who you can trust.

If you decide to work with a wholesaler or a manufacturer, consider the following:

  • The quality of the products - Make sure you inspect the products before agreeing to work with a supplier.
  • The shipping time - Ask how long it will take for the products to be shipped and make sure that it's within your timeframe.
  • The shipping costs - Make sure you know how much it will cost to ship the products and that the shipping costs are reasonable.
  • The return policy - Make sure the supplier has a good return policy in case any of the products are defective.
  • The Minimum Order Quantity (MOQ) - A suppliers MOQ is the minimum amount of products they require you to purchase at any given time. Some suppliers require a minimum order quantity, which may be too high for your business.

No matter which method you choose, make sure that you have a solid plan in place for how you'll market and sell your products.

6. Creating a business plan

Take some time to think about the future before you jump in at the deep end. Roughly 50% of new businesses fail within the first five years, often because they don’t plan ahead.

Writing a business plan can give you a deeper understanding of your unique offering and help you:

  • Clarify your business goals.
  • Identify your target market.
  • Assess the feasibility of your product/service.
  • Create a roadmap for growth.

Business plans usually have at least seven sections. You can use the following template to create your own strategy:

  1. Executive Summary - This is a brief summary of your business plan.
  2. Company Description - This section will include information about your company, such as its history, mission statement, and core values.
  3. Products and Services - This section will outline what products or services you offer.
  4. Marketing Plan - This section will describe how you plan to attract customers.
  5. Operations Plan - This section will outline how you plan to run your business, including information about staffing, facilities, and equipment.
  6. Financial Plan - This section includes detailed financial projections for the next three to five years.
  7. Market Analysis - This section includes an analysis of your industry, competitors, and target market.

7. Build and design your store

Now that you have created your business plan, validated your products, and found suppliers - it's finally time to begin building your online store.

As we said earlier, there are plenty of options to choose from. If you need help deciding which platform is best, check out this article:

Once you've chosen your platform, it is important to understand the fundamental elements of website design. While there is certainly a lot to cover, we will simply focus on the most pertinent aspects for the success of your online business: Conversion centered design, copywriting, product imagery, and SEO.

Conversion centered design

This means that your website is designed to encourage visitors to take a specific action, such as make a purchase.

Your homepage should have a clear and concise message that tells visitors what you are selling and why they should buy it from you. The design of your website should be clean and uncluttered, with easy to find calls-to-action (CTAs).

You don't want to lose your customers to the competition simply because they couldn't figure out how to checkout on your website. That's why its important to construct clear paths for customers on your website.

A great example of a company with conversion centered design is Amazon. As soon as you enter the website, you are greeted with a clear message about what Amazon is selling and why you should buy from them. The design is clean and easy to navigate, with CTAs that are hard to miss.

Copywriting

The words on your website are just as important as the design. They need to be persuasive and compel visitors to take action.

Your product descriptions should be clear and concise, highlighting the benefits of each product. Headlines and CTAs should also be catchy and encourage people to learn more about your products.

Good copywriting can be the difference between a customer making a purchase and leaving your website.

Product Imagery

When it comes to product photography, it is important to use high-quality images that accurately represent your products.

Your photos should be clear and well-lit, and showcase your products in the best possible light.

If you are not comfortable taking your own product photos, you can always enlist the help of a professional photographer.

SEO

Finally, you need to make sure that your website is optimized for search engines. This means using the right keywords in your titles, descriptions, and headings.

Having a Search Engine Optimized website will help Google direct customers to your website. The easier this is for Google, the more organic traffic your store will get. Think of it as a mutually beneficial arrangement - you help Google, Google helps you.

It is also important to have a mobile-friendly website as more and more people are shopping on their smartphones.

Conclusion

Now that we’ve covered the basics of setting up an ecommerce business, it’s time to put what you’ve learned into action.

Once you have your business up and running, focus on driving traffic to your store through SEO, social media marketing, and email marketing.

And finally, consider using paid ads to reach a larger audience quickly.

If you follow these tips, you’ll be well on your way to launching a successful ecommerce business. Thanks for reading and good luck!



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