How to Start an Ecommerce Business?

The digital revolution is continuously changing how businesses work. We have seen a lot of advancement in work and work pipelines after the boom of computers and the internet. Technology has also changed retail businesses too. Ecommerce business is a new type of business that allows you to open an online store instead of an onsite store and sell your products. You can now sell your products to global customers on the internet. You are not bound by your locality anymore. E-commerce business has witnessed supreme growth potential due to the advancement of technology and easy access to the internet. Customer buying behavior is also changing. They prefer buying stuff online as they can choose from lots of options available to them from any part of the world, being in ease of their home. 

According to research, retail ecommerce sale in 2024 is estimated to be more than 6.3 trillion U.S. dollars. In 2025, the number of online shoppers is expected to be more than 285 million. By the year 2028, global ecommerce business sales are anticipated to exceed $58.74 Trillion. People are selling their products through their websites as well as through digital marketplaces including but not limited to the Facebook marketplace, Amazon ecommerce, eBay, Walmart, Etsy, NewEgg, Rakuten, Alibaba and Wayfair. One can choose best ecommerce platform for small business according to his business type and potential.

Opening an online store is a piece of cake. But to grow it successfully, you need proper skills and guidance. This article focuses on how to start an e-commerce business for beginners. In this article, we will guide you through each step of starting and sustaining a successful ecommerce business. By following these steps, you will be able to overcome the complexities of starting ecommerce business and learn to make it successful.

Steps to Start a Successful Ecommerce Business

Here is a step by step detail of starting a sustainable ecommerce business.

Choose a Business Model

Before delving into the oceans of e commerce business, you need to understand all business models available for ecommerce. Different models have different merits and demerits. Some ecommerce business models are as follows:

Dropshipping

Dropshipping is a highly popular model for ecommerce businesses. It is ideal if you have limited initial capital. In this model, you rely on third-party suppliers for inventory and shipping. In dropshipping, a person finds suitable products and their dropshipping suppliers and launches those products on his online store. He then markets those products, leads the connects to the suppliers and keeps his commission from the sale.

Manufacturing

Manufacturing is a cash-intensive business process. In this model, you are responsible for arranging the manufacturing process of the product. In this model, you have complete control on product quality and branding. The manufacturing model provides you with better revenue than other models, too. But it is a long road to success and you must be resilient to start this business.

Wholesale

In wholesale model, you buy a product in bulk from manufacturer and resell it at markup. For managing a wholesale products business, you need to have strong inventry management, warehousing and logistics. It requires less capital than manufacturing model but more than dropshipping model.

Digital Products

You can sell digital products online, too. If you are an expert in any field, you can sell eBooks and online courses related to that field. You can sell software if you are from a technical background. This model is comparatively cheaper than other models. But your digital products need to be spot on, and you need to have robust digital marketing strategies to succeed in this model.

Identify Market Needs

“Do not find customers for your product. Find the product for your customers.”

Seth Goddin

The first and foremost requirement for ecommerce business is to identify the market demands. You can not start selling ice in Antarctica. Essentially, you need to come up with a product or service that ideally sells like water in the Sahara. You need to understand people’s choices and come up with a product that aligns with their needs and meets their expectations.

Decide what you want to sell. Identify your niche. Start by listing the products you like. Include the industry you have experience with. At the very beginning, you can target 2 to 3 industries and then narrow your search to one based on market research. Market research is the key factor in a business sector. It helps you to learn about your target market and allows you to explore gaps in it. You can launch a successful product that fills the market gap after thorough market research.

Some methods to identify market needs are:

Use Online Tools

A lot of online market research tools are available that help you analyze the market and come up with business ideas. One such tool is Google Trends. Google Trends allows you to explore trending search terms. It helps you analyze their popularity over time to identify consumer interests. Along with that, You can monitor social media platforms like Twitter, Facebook, and Instagram to identify trends among your target audience. Get involved in groups, conversate with people, and try to understand their pain points and come up with a solution. Keyword research tools like Ahrefs and SEMrush also identify keywords that people are searching for related to your industry. By analyzing keywords, you can understand trends in your target market.

Gather Direct Feedback

If applicable, conduct online surveys. Surveys can provide you with insights into customer’s preferences. Big names like Amazon, Procter and Gamble (P&G), Coca-Cola, etc, conduct surveys to identify the potential for a new product before launching it. A lot of free survey platforms are available online. You can use Google Forms for surveys. SurveyMonkey is also a good application for designing surveys. In surveys, you can ask people about their needs, preferences and challenges. Based on the insight, you can design your product. On different platforms like Facebook communities or other social platforms like Quora or Reddit, you can ask people about their struggles and pain points related to products and design yours accordingly.

Study Industry Reports

You can find research reports and articles about the industry you are targeting to find for product ideas. Market Research Firms like Nielsen and Forrester etc publish reports based on market conditions and future forecasts. You can purchase those reports and assess your target market. Government agencies also publish yearly reports related to industries. You can even read them online for comprehensive insights for free.

Analyze Competitors

Once you have decided on your target niche and products, it’s time to prep your spy gear and spy on competitors’ tactics and strategies. Use online tools like SEMrush, Ahrefs etc, to find direct and indirect competitors within your niche. You can find the list of keywords they are targeting. Online ranking is very much dependent on keywords. Right keywords help you rank in your target niche. Competitor analysis provides you with a list of keywords that you can target in your business.

You can visit competitors’ websites and social media to understand how they interact with customers, and what is their branding and messaging. How much market share do they have.  Additionally, you need to assess what are their offerings, selling prices and unique features. Analyzing competitors helps you identify gaps in the market. You should also purchase their product and compare it to your product to understand quality differences and explore ideas of what you can do better. You can also check their customers’s feedback online at platforms such as Yelp, Trustpilot etc and understand the strengths and weaknesses of their products.

E-commerce business runs online. You need to analyze how your competitor is ranking his online store. Carefully observe their paid marketing campaigns and Ecommerce SEO tactics. Review how they interact with the audience. Later, you need to implement these strategies for your online store to rank better.

Understand Your Target Audience

The next step is to understand your target audience. You can not sell your product to anyone without understanding their needs and preferences. Create detailed customer personas. Include demographics, pain points and purchasing power of the target audience in personas. Conduct surveys to refine the persona. Use tools like Google Analytics to understand demographic information about your website visitors and target them.

Each product has a different buying motivation. You can not sell each product in the same way. Evaluate in which class your product lies and why people buy it. Necessities have different selling points, and luxuries have different points to consider. Make sure to understand in which class your product lies and what can be the motivation of the customers to buy your product. Try to understand the user journey, how users interact with your online store and how to convert leads to customers. Find details about customer preferences and buying patterns.

Creating a Business Plan

Now, you need to craft a business plan. A business plan is crucial for ecommerce business. It outlines your business visions and goals to provide a roadmap for your ecommerce business growth. Important sections of business plans are as follows:

• Executive Summary: A precise summary of the complete business plan.
• Market Analysis: Detailed analysis of the market, competitor analysis and SWOT analysis.
• Marketing and Sales Strategy: Sales and marketing strategies that you intend to use for selling products.
• Financial Planning: Everything related to financial projection to manage cash flow budget effectively 
• Operational Efficiency: Outline of all operations like product sourcing, inventory management and order fulfillment.
• Funding and Investment: Details of any funding from investors and loan details from banks and debt etc.
• Risk Management: Details of potential risks and challenges and how to tackle them.
• Measuring Progress: All KPIs and ratios like customer acquisition cost and conversion rates to measure business health.to analyze the progress of business at different stages.

Business plan is an important tool that helps ecommerce business owners to plan for success and make informed decisions.

Legal Structure and Registration

You need to select a legal structure for your business. Along with that, you need to register your business according to its specific needs.

Legal structure

The next step is to choose a legal structure for your business. You may need to acquire a business license. There are 3 types of legal registrations available:

• Sole Proprietorship: It is the simplest and most used structure. In this model, the owner is responsible for all liabilities and taxes.
• Limited Liability Company (LLC): LLC offers liability protection and tax flexibility. It can be taxed as a corporation or a pass-through entity.
• Corporation: Corporation is a separate legal entity providing liability protection for shareholders. Subtypes include C-corporations (subject to double taxation) and S-corporations (pass-through taxation).

Pick the legal structure based on your business requirements. You should consult a law practitioner to understand these structures and their merits and demerits in details.

Business Registration

Register your business name. Choose an interesting name for your business that aligns with your product and is easy to pronounce and remember. Choose a name that is unique. Do not copy anyone’s name to avoid any conflict. You also need to apply for licenses and permits to sell a product. For example, to sell any product that has any health benefits or that is used to cure any disease, you need to get relevant licenses. Similarly, for different products, you need different permits to sell your product. Do not forget to apply for an EIN through the IRS for tax purposes if hiring employees or forming an LLC/corporation.

Selecting an Ecommerce Platform

Once you are done with business planning, it is time to decide how to create an online store. Starting an online store has never been so easy before. There are a number of E-commerce platforms that offer services to launch an online store.

Options for ecommerce store

Some popular options are as follows:

• Shopify: It is a user friendly setup that provides extensive support through an app ecosystem. Shopify is suitable for businesses of all sizes . It has strong features of secure hosting, customizable templates, and integrated payment processing.
• WooCommerce: Woocommerce is opensource plugin designed for wordpress website. It is also widly used for ecommerce related activities. It provides flexibility and customization for WordPress users. It comes with many plugins for added functionality.
• Magento: It is also a robust, open-source platform Nonetheless, it is suitable for large-scale e-commerce businesses that require high customization as compared to small setups. It can be scaled very easily. The scaling option makes it ideal for high-traffic stores. But it is a bit difficult to maintain and requires a proper development team to maintain it.
• BigCommerce: It is an emerging platform that comes with amazing scalablility features and flexible integrations. It is ideal for rapidly growing businesses. It provides built-in features such as SEO tools, advanced analytics, and a variety of payment gateways.
• Squarespace: It is known for its attractive visual appeal. Additionally, it is very easy to setup due to its drag and drop functionalities. It is suitable for small scale e commerce businesses.
• Wix eCommerce: Wix eCommerce is also very easy to set up due to its drag-and-drop editor. Additionally, it is visually very appealing. It is suitable for beginners and comes with built-in marketing tools and an app market for extended functionality.

Criteria for Selection

There are certain factors that you need to consider to select the platform for your online business.

• Cost: Carefully assess the costs of each platform and your needs. If you are just starting and you are working on the dropshipping model, then Magento may not be a suitable model for you as it is very costly. Shopify will be better in this scenario as it is efficient and cost-effective. Consider setup costs, monthly fees, transaction fees, and additional costs like plugins, themes, and development when selecting a platform.
• Scalability: Based on your business plan and product type, evaluate the ability of the platform to scale. It should be able to handle increased traffic, product listings, and transaction volumes as your business grows. For example, for business with large growth potential, select Magento, as it has better scalability features.
• Customization and Features: Determine how much control you have over design and functionality of your site. Assess built-in and available features like SEO tools and payment gateways. Pick a platform that can be tailored to your needs.

Website Design and Development

Once you have selected a platform for an online ecommerce store, it is time to design it. Design ecommerce storefront to be appealing and program it in such a way that it allows users to easily checkout. It must have fast page load times and intuitive navigation. Your website should be mobile-friendly, and the design must be responsive. Define a brand identity for your website. Use your logo, colors and typography wisely on the website and on social media. Design the site to reflect brand values. It must resonate with the target audience, reinforcing brand recognition.

Product Listings and Descriptions

When the digital storefront is up and running, it is time to upload product pictures and descriptions. Use high resolution images with rotating and zooming features for product showcase. Users can only assess the product based on its images. Blurry or low-quality images reduce the chances of selling. Description of the products is very important for an ecommerce website to rank on SERP. It must be SEO-optimized. Use relevant keywords and product specifications and benefits clearly. You also need to add a blog section around your product to rank better on search engines.

Pricing Strategies and Inventory Management

Set prices for your products based on market conditions. Check the prices for competitors’ products and adjust your prices accordingly. You need to keep track of your inventory. Use inventory management tools to track stock levels in real-time. You can also set reorder alerts, and manage inventory across multiple sales channels.

Marketing and Customer Acquisition

Marketing and customer acquisition are the key requirements for an ecommerce store to succeed. Your target customers can only find you through their intentional search for products that you are selling. Or they can witness you on social media platforms. They can not find you on roads as they do for brick-and-mortar stores. Rather, you need to have a strong digital storefront and outclass marketing techniques to get noticed. For this reason, you need to have a strong online presence and customer engagement program.

Building an Online Presence

Make accounts on all social media platforms related to your business, like Instagram for visual products, LinkedIn for B2B services, TikTok for makeup-related brands etc. You need to experiment a lot with your market strategy to attract the target audience. Develop a social media content calendar. Post content online at the time when your target audience is most likely to be using social media. Ask customers for feedback and post that feedback online. Post industry-related news to get your customers in touch. Offering some discounts and promotional offers now and then is also a good strategy to increase the online community. Your engagement with the audience must be very strong. Try to answer every query and comment. Start live hosting events and polls to interact with your audience. Be polite with the critics online, too and handle them with great care.

Search Engine Optimization and Content Marketing

Ecommerce sites need to be optimized to rank on SERP. Write informative blogs that align with the interests of your customer base. Make sure to target the right words in your content. Optimize page titles, descriptions, and headings with target keywords to get ranked for organic search. Include internal links. Design eye-catching, relevant images for blogs and optimize them for fast loading times. Make sure your website is crawlable, has SSL certification and is working perfectly on mobile devices. You also need to get backlinks from reputable sources through guest blogs.

You can also make videos related to your industry and products and upload them on platforms like YouTube, Daily Motion twitch etc to attract your target audience.

Paid Advertising or Social Media Marketing

Eventually, you may also need to run paid advertising campaigns to get online sales. You can run ads on different marketing channels, consisting of but not limited to Google Ads, Meta Ads or LinkedIn Ads campaigns. Again, it depends on your target audience and product. Use advertising tools very carefully to reach specific audience segments based on their attributes like age, location, interest etc. Use very attractive ad designs and also run A/B testing to assess better advertising strategies. Install tracking pixels on your website to understand customer behavior. Assess at which point potential customers are leaving the website. Try to fix those issues.

Email Marketing and Newsletters

Use sign-up forms and landing pages to collect email addresses by offering discounts or free resources. Organize your customer details into segments based on their specific features like demographis, interests etc, and offer them customized offers. Send promotional emails, discount emails or sale events emails. Send value-added content that is useful to your customers regularly to keep them engaged.

Customer Support and Engagement

“The more advocates you have, the fewer ads you have to buy.”

Dharmesh Shah

Engage your customers in the most fun way. Remember, try to make your customers your ambassadors. When a customer buys a product, if possible, reach out to them later and ask for customer reviews. It will help improve your customer service as well as it provides you with feedback to improve your product. Now, you have contact details and other info about customers. If possible, send a birthday note to your customers. You can also offer some discount with that. Launch loyalty programs for loyal customers and offer exclusive access to members. Make a proper knowledge base, including FAQs and tutorials on your website so that customers can find answers to their queries.

Logistics and Fulfillment

Logistics is an essential part of a e-commerce business. You need to make sure that your logistics is strong. Order delivery must be on time. For logistics, either you can do it on your own or higher Third-Party Logistics (3PL). In-house logistics depends on you. You have more flexibility in this and can parcel products to customers according to your needs. In 3PL, you may not have control as compared to in-house logistics. But it will definitely reduce overhead and enhance flexibility. Utilize data analytics to understand the demand for your product based on seasonality and trends. Insights from this analysis will save you from stockouts and overstock situations. 

When delivering an order, make sure the packaging is safe and visually appealing. Evaluate potential shipping partners based on their reliability, costs, geographical coverage, and the shipping methods they offer. According to research, late delivery is one of the biggest reasons that customers cancel their orders. Do not promise a delivery time that you can not fulfill. It will cause more harm than benefit. Use modern tracking solutions like RFID or GPS. Allow customers to track their orders in real-time. 

Financial Management and Scaling

You NEED to be good at MONEY to succeed in any business. Manage your revenue and expenses thoroughly. Choose accounting software that goes with your business. Develop a budget that includes all expenses and revenue. Use financial planning and analysis software to analyze and plan finances and make the most of the financial forecast insights provided by FP&A software. Stay compliant with tax obligations by understanding the tax regulations that apply to e-commerce operations, possibly consulting a tax expert.

Scaling the Business

Once your business is up and running, you may need to scale your business. Once you are in the business, you can access the needs and requirements for new products. Ask customers for their suggestions and feedback. You can add new products related to your business. The process to add a new product will be the same as already described in “Identify Market Section”.Or you can launch the same products in new markets by adding a local touch in them. You can list your products on digital marketplaces. To scale your business, you must include modern tech solutions in it.

Automate the process as much as you can. Use AI tools for inventory management and improved shipping experience. Delegate less important tasks to experienced individuals. You do not need to be the jack of all trades. Be a Master of one. You can delegate logistics to 3PLs, hire digital marketing experts for marketing and accounts and finance experts for managing all cash flow. Continuously evaluate your business to understand what is working and what is not. Cut the products and procedures that do not work and move towards better alternatives. 

Frequently Asked Questions

How much does it cost to start an e-commerce business?

The cost of launching an e-commerce business can vary widely based on the scale and type of your venture. For a basic setup, you might spend between $500 to $5,000 on essentials like a domain, website hosting, and e-commerce platform fees. Larger e commerce businesses with more advanced features and marketing budgets may need upwards of $10,000 or more.

What are the 4 types of e-commerce businesses?

The four primary types of e-commerce businesses are:

B2C (Business-to-Consumer): Businesses sell directly to individual consumers, like Amazon.

B2B (Business-to-Business): Businesses sell products or services to other businesses, like Alibaba.

C2C (Consumer-to-Consumer): Individuals sell to each other via platforms like eBay or Etsy.

C2B (Consumer-to-Business): Individuals sell goods or services to businesses, like influencers promoting brands.

Is e-commerce a profitable online business?

E-commerce can be highly profitable, but it depends on factors like the business model, product selection, marketing strategies, and customer experience. Success requires careful planning, efficient operations, and adapting to market trends to stand out in a competitive landscape.

Conclusion

Starting an ecommerce business offers a gateway to a global market. But to be successful in ecommerce business, you require careful selection of a business model, understanding of market needs, and strategic planning. The success of your venture depends on effective marketing, robust logistics, and sound financial management. With a commitment to adapt and innovate, you can establish and scale a successful ecommerce business in the dynamic digital marketplace. Start planning for your business‘s future with help from Oak Business Consultant. Our team offers personalized business plan services tailored to your specific needs. With our deep industry knowledge and practical solutions, we’re ready to support your business’s journey. Get in touch with Oak Business Consultants today to improve your business planning and pave the way for lasting prosperity.