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The Ultimate Guide to Starting a Successful Ecommerce Business

Starting an Ecommerce Business
Here's an in-depth guide on the steps you must take to start a successful ecommerce business and participate in a $6.5 Trillion (USD) market.

We live in an exciting time on planet earth. Humanity’s age-long desire for integrated cross-border ecommerce transactions is roaring. And starting an ecommerce business is much easier than you can imagine.

Here’s an interesting fact for you.  

Did you know that more than 2.14 billion people worldwide will buy goods and services online in 2021?

How do you feel about that?  

How are you positioning yourself (or your business) to participate in this global convergence of ecommerce estimated to grow to over $6.5 trillion U.S. dollars in 2023?

Ecommerce Statistics Annual Retail Sales Growth Worldwide 2017 to 2023

Right now, you’re reading this guide because you want to learn how to start an ecommerce business.

And that’s what I’m going to show you.  

After reading this guide, you’ll have all the information needed to start your successful ecommerce journey.

Are you ready? Sure, you are! So let’s dive in.

Starting an Ecommerce Business

You’ve heard the charter and read the stories of people achieving success with ecommerce. But you don’t know how, where or when to start your ecommerce venture.

The various terminologies elude you. And the numerous technologies and platforms for starting an ecommerce website are confusing.

Yes, the steps to starting an ecommerce business are daunting.  

However, they are not impossible.  

With patience, dedication, and the right frame of mind, I assure you that you’ll get there.

In this guide, I’m going to take you on a journey.  

A journey that will hopefully lead you to learn, discover, and take action.

I’m going to start with the basics, the rudimental aspects of every ecommerce journey.  

So please read every section of this guide and grasp the concepts within.

Table Of Contents
  1. Starting an Ecommerce Business
  2. What is an Ecommerce Business?
  3. Types of Ecommerce Business Classifications
  4. Ecommerce Business Revenue Models
  5. Steps to Starting an Ecommerce Business
  6. Final Thoughts

What is an Ecommerce Business?

When you sell goods and services online, you’re engaging in ecommerce.

Likewise, when you buy goods and services online – that, my friend, is also ecommerce.

What is ecommerce?

Let’s start with the “e” in ecommerce – it stands for electronic.

So what is commerce?  

In the simplest of terms, commerce is any activity that involves buying and selling goods and services – offline or online.

Therefore, as you can deduce, ecommerce is only the practice of conducting commerce over electronic channels – in this case, the Internet.

An ecommerce business is a business that sells its products and services online – over the Internet.

That’s all you need to know for now. Let’s keep it simple.

But we’re not done yet.

Let’s take a look at the different ecommerce business classifications and examples of ecommerce business revenue models.

Types of Ecommerce Business Classifications

Types of Ecommerce Business Classifications

An ecommerce business classification defines the target buyer (i.e., your customer).  

There are four standard ecommerce business classifications – business to business (B2B), business to consumer (B2C), consumer to consumer (C2C), and consumer to business (C2B).

Some ecommerce businesses participate in more than one business classifications.

So yes, you can start an ecommerce business that targets both businesses and consumers as your customers.

Let’s take a quick look at these ecommerce business classifications for more insight.

Business to Consumer (B2C)

B2C is an acronym for Business to Consumer. And naturally, we’re all familiar with this common ecommerce business classification.

Your ecommerce business classification is B2C if you sell directly to consumers.

B2C is the simplest and most straightforward type of ecommerce venture to start.  

You can start your ecommerce business selling products and services directly to the consumer in an instant.  

Selling directly to the consumer is what B2C is all about.

Companies like Amazon, Microsoft, Dropbox, Walmart, Wayfair, etc., are engaging in business-to-consumer transactions as part of their overall business model.

Business to Business (B2B)

You’ve most likely come across the acronym B2B. B2B stands for Business to Business.

An ecommerce business that sells its products and services to other companies is a B2B ecommerce business.

For example, if you bulk import your products (through private labeling or contract manufacturing) directly from a manufacturer and decide to sell wholesale to other businesses online, you’ll engage in B2B ecommerce.

It’s important to note that as an ecommerce entrepreneur, you can sell your products and services to other businesses and direct to consumers.

In such instances, your ecommerce business is both B2B and B2C.

Consumer to Consumer (C2C)

Most people are not familiar with the consumer to consumer (C2C) business classification.  

However, numerous ecommerce businesses are participating in C2C.

When was the last time you purchased something from eBay?  

How about Craigslist? Or even Amazon Marketplace. These ecommerce platforms facilitate C2C transactions.

So what is a C2C ecommerce business classification?  

If you start an ecommerce business that enables direct commerce between consumers, you’re engaging in C2C ecommerce.

For example, if you start a local classifieds marketplace to connect people within your locality to buy and sell goods and services – you’re engaging in C2C ecommerce.

Consumer to Business (C2B)

Another often overlooked ecommerce business classification is the consumer to business (C2B).

We already looked at the B2B model.  

Let’s pause and think about it for a second. Consumers can sell to businesses too.

Take a look at online marketplaces such as Fiverr or Upwork that allows businesses to buy services directly from individuals.

These online marketplaces are a prime example of C2B ecommerce in action.

You can start a C2B ecommerce business that facilitates direct commerce between individuals (with products and services businesses need) and businesses..

Ecommerce Business Revenue Models

Ecommerce Business Revenue Models

Now that we understand the different ecommerce business classifications let’s go over some examples of ecommerce business revenue models.

Let’ face it; starting an ecommerce business is all about creating value for your target customers and generating enough revenue in the process to be profitable.

As an ecommerce business entrepreneur, your profit is what you have left after you’ve taken out your cost of goods (or services) sold, operating expenditures, and taxes.

What you have left is what you can keep as profit (or more appropriately called net profit).

Choosing the right revenue model for your ecommerce business is essential to ensure you generate enough revenue that gives room for profits that you get to keep.

Let’s take a look at some of the business revenue models available for your consideration.

Retail

When we hear the word “retail,” what often comes to mind are brick-and-mortar stores littered around shopping malls and plazas.

However, there is retail in ecommerce, and business to consumer ecommerce activities conduct retailing.

Retail is a form of distribution of a product or service directly to the target consumer.  

So if you start an ecommerce business selling jewelry to consumers, that is a retail ecommerce revenue model.

In ecommerce lingo, retail (or retailing) is synonymous with e-tail (or e-tailing), which means selling products directly to consumers over the Internet.

Starting a traditional retail ecommerce business requires you to buy products directly from a wholesaler or brand owner and then sell them to the end consumer.

And as you can imagine, this means you need to stock inventory.

But what if you don’t have enough capital to buy inventory?

The lack or limitation of enough startup capital can deter a successful retail ecommerce business operation.

Fortunately, dropshipping addresses this by allowing you to sell products that you don’t have to stock in inventory.  

I’ll give you an overview of dropshipping shortly. Keep reading.

Wholesale

While retail involves selling products directly to the consumer, wholesale, on the other hand, is a model where goods (or services) are sold directly to retailers.

A retailer is involved in retailing direct to the consumer. In contrast, a wholesaler is a business engaged in wholesaling to retailers.

You now understand that you can purchase goods directly from manufacturers or brand owners at a negotiated price point.  

And then turn around and sell those goods to retailers who then sell directly to the consumers.

You can do this through your ecommerce website to sell directly to retailers (or those who buy intending to resell) in volume quantities instead of one piece at a time (as the case with retail).

The wholesale ecommerce business model is ideal if:

  • You don’t want to create a product or go through the struggles of building a product brand.
  • You want to build your ecommerce business selling other established brands for quick turnover.
  • You want to start your ecommerce business and get things going quickly.

Dropshipping

As I mentioned earlier, with traditional retail ecommerce business operations, you need to buy products, keep them in stock, sell, and ship when your customers make a purchase.

If you don’t have enough capital to buy products to keep in stock, you can consider the dropshipping option.  

Dropshipping is still another form of retail ecommerce revenue model with the benefit of not requiring you to keep products in stock.

With dropshipping, you sell the product, send the order details to your dropshipper (a third-party vendor), and the dropshipper, in turn, processes the order and ships directly to your customer.

Dropshipping is not as profitable as if you bought the products directly from the wholesale.  

But remember dropshipping is ideal if you lack enough capital.

So dropshipping is an excellent option to consider when starting an ecommerce business with limited startup capital.

As you grow your business, you’ll gain an eye for which products sell faster and then reinvest your income into keeping those products in stock.

Also, dropshipping can serve as a complementary revenue model to expand your traditional retail ecommerce business.

For example, suppose your ecommerce business is growing, and you’re interested in adding new products to your inventory. 

In that case, dropshipping allows you to test things out without the risk of investing your cash to stock up inventory.

Subscription

The subscription ecommerce revenue model allows you to start an ecommerce website offering your target customers the benefit of recurring purchases of a product or service at a regular interval (monthly, quarterly, etc.).

Dollar Shave Club is a notable example of a subscription ecommerce business revenue model built on delivering (regularly) men grooming products to its subscribers.

Subscription Ecommerce Statistics

Another popular subscription ecommerce business is Blue Apron, which provides a high-quality meal kit filled with food ingredients and recipe instructions on preparing gourmet food right in your kitchen.

McKinsey estimates that 15% of Americans subscribe to one or more subscription ecommerce services.

And UnivDatos Market Insights projects that the global subscription ecommerce business revenue model’s market will surpass $475 billion by 2025.

Physical Products

There are numerous opportunities to start an ecommerce business selling physical products online.  

With so many selling channels and easy to use online store builders rampant, the entrepreneurial-minded are jumping on the bandwagon, offering products for sale online.

Likewise, if you’re a service business (e.g., a spa), selling physical products online (e.g., essential oils, massage balms, etc.) expands your business prospects and grows the relationship with your existing customer base.

According to Statista, in the United States alone, physical goods retail sales via ecommerce channels are projected to surpass $475 billion in 2024. [2]

So if you ever wanted to sell physical goods, there’s no better time to do so than now. You need to take the first step and start your successful ecommerce website.

Digital Products

Have you ever purchased a book on Amazon’s Kindle or bought and downloaded software online?

How about that music you paid for and downloaded on iTunes?

Or that online course you took on Udemy, that eBook guide you paid $9.99 to download, etc.

I can go on and on about different digital products we find ourselves consuming daily, weekly, or monthly as the case may be.

Digital products are intangible goods that are available for sale and distribution online.  

Starting an ecommerce business selling digital products is profitable and rewarding.  

It is rewarding in the sense that you get to create value and change lives for your target audience.

Content creators are attracted to venturing into ecommerce selling digital products because of the low barrier to entry, low costs, high-profit margins, flexibility, and automation opportunities.

Services

Do you have a marketable skill? Are you a subject-matter expert?

Sometimes we often misconstrue ecommerce to mean selling products (physical or digital) online.  

You can sell services too!

For instance, if you’re a fitness trainer, you can sell your bookings online. You can also develop training programs and selling them as digital courses online.

That, my friends, is ecommerce is in action.

So if you have advanced knowledge in any niche (e.g., fitness, nutrition, web design, photographer, booking, legal, etc.), you can start and engage in an ecommerce business.

Steps to Starting an Ecommerce Business

Now, let’s get into the essential aspects and steps you can take to start an ecommerce business.

Remember, the purpose of this guide is to provide you with the information you need to start your ecommerce journey.

As with everything in life, starting an ecommerce business require focus, dedication, constant learning, and persistence.

Having read this far is a good indication that you’re serious about acquiring the necessary information you need to succeed in ecommerce.

In this section of this guide, we’re going to look at the research, brand discovery, business planning, business formation, product sourcing, ecommerce website, social media, and digital marketing aspects of the ecommerce business startup process.

So let’s dive in!

Step 1 – Do Your Research

Steps to Starting an Ecommerce Business - Step 1 – Do Your Research

The first step for any ecommerce startup is to do thorough research. 

Spending enough time researching the ecommerce landscape, competition, opportunities, etc., opens a plethora of ideas on how you can position your ecommerce business for success.

Benjamin Franklin once said, “If you fail to plan, you are planning to fail.” And this is the mentality here.  

If you spend enough time planning, that would make a big difference between success and failure.

Having said that, so what do you research?

Sit tight. We’re going to go through the different ecommerce business research parameters in the following sections.

Select an Ecommerce Business Model

Having read this far, you have an understanding of the different ecommerce business classifications and revenue models.  

If not, please go back and read those sections.

I have a simple question for you; what is your ecommerce business model?

I don’t expect you to have an answer right away.  

That’s the purpose of this section and why research is vital.

With your understanding of the fundamentals of ecommerce business classifications and revenue models, it’s time for you to take a time out and research which one is of interest to you.

Most ecommerce businesses are business-to-consumer (B2C) and sell physical products.

However, if you have a background in selling services to businesses, then maybe your interest might be to explore business-to-business (B2B) selling services to your already established business contacts.

The process of researching the appropriate business model for your ecommerce startup begins with your passion, knowledge, and skillset.

First of all, you need to determine what you’re passionate about, what knowledge and skills you have, and then take a deep dive into researching the different business classifications and revenue models to determine which one you will be successful.

Do not over-think this step.  

Start from a place of comfort and familiarity. Focus on things that interest you, things that move you – your passions.

Find an Ecommerce Niche

To be successful in ecommerce, you need to have a niche. The ecommerce journey is not an easy one, especially if you’re new to the landscape.

Finding an ecommerce niche is a crucial research step to increase your odds for success.  

But let’s first define what an ecommerce niche is and isn’t.

Finding your ecommerce niche is about segmenting your target market and discovering sectors or areas within that market that the competition is overlooking.

When researching your ecommerce niche, always look at it from the perspective of the low handing fruit.

For example, in 2002, when my partner and I ventured into the web hosting service space, we didn’t go head-to-head competing with Network Solutions or GoDaddy.

Doing so would have been suicide.  

Instead, we focused on a niche to provide a customized web hosting environment for web developers building web applications on the Java (J2EE) development environment.

That’s what an ecommerce niche is all about.  

How to Find an Ecommerce Niche

A well-defined niche market size is not as massive as the overall market, but it’s always sizeable enough to give you a sustainable ecommerce business.

If you want to start an ecommerce website selling phone cases online, you can choose to focus on phone cases for iPhones or Android phones (e.g., Samsung Galaxy).

That’s not a niche.

An ideal niche is to drill down further.  

Let’s assume you choose to focus on the iPhone. The niche research process requires you to segment that target market further.

You can decide to focus on iPhone cases with bling, Swarovski crystals, or colorful art. Another person might choose to focus solely on clear iPhone cases with bumper protection.

When you dive deep into a given market segment (in this case “phone cases”) – you dissect that market and drill down until you find a unit segment within that the competition is low – that’s your niche!

Product Research

So you’ve done your ecommerce niche research and discovered the low handing fruit opportunity within a well-defined target market segment with less (or none) competition.

Kudos!

Now, how do you find the winning product to sell that niche?  

It’s time to begin the discovery journey to find the right product for your target market.

Trying to figure out a winning product or service to sell can be rather challenging.  

Several factors such as size and portability, weight, shipping cost, sourcing, quality, durability, profitability, and many others impact a product’s market acceptability and profitability.

So it very important that you spend time to do comprehensive product research for your ecommerce business.  

There’s no point selling a product that is not profitable, and there’s no point selling a product your target audience dislikes due to bad quality.

Target Market Validation

You’ve found the right niche for your ecommerce venture and have a general idea of suitable products to sell to that niche after doing your product research.

One crucial step in your research journey is to validate the product with your target market.

You don’t want to spend too much money sourcing the product until you know its viability to your target market.

This what the target market validation step of the ecommerce research process is all about.  

Doing your target market validation ensures that you introduce the right product to a target market that wants it.

Please don’t let words like “target market validation” intimidate you.  

It’s a relatively simple and straightforward process, albeit sometimes you may need some paid tools, but you can do the research using free tools.

You can do target market validation through simple activities such as keyword and competitor research.  

Keyword and competitor research shows you the interest in a given product keyword and competitors in that space.

Also, listening to charter on social media, monitoring hashtag for that product niche and target market gives you an abundance of information on people’s interest in that type of product.

Another way to effectively do target market validation before starting your ecommerce business is to participate in online forums and read case studies.

Suppose you already have an existing ecommerce business and are looking to diversify your product offering. 

In that case, you can take things further by ordering samples from the manufacturer (or distributor/vendor), building a landing page, running test ads, selling, and accepting pre-orders.

Doing this gives you an idea of the target market’s interest in that product.

In my experience, I’ve seen creative entrepreneurs go as far as building an audience before introducing the product.  

Building an audience via social media or online blog is an excellent strategy to funnel your target market’s focus with relevant content, nurture the audience, test the product, and gauge their interest.

Certainly, target market research is all about increasing the odds of your ecommerce business being successful.  

It can range from simple to detailed research (as discussed above) but don’t skip it – the process is worth it.

Ecommerce Platforms

Building a successful ecommerce business begins with selecting the right ecommerce platform that supports your ecommerce business classification and revenue model’s requirements.

This section of the guide will look at what an ecommerce platform is, why you need one, and the various ecommerce platforms available to you.

Top Ecommerce Platforms
What is an Ecommerce Platform?

An ecommerce platform is a software ecosystem that equips you with the features and capabilities to build an online store which your startup ecommerce business needs.

Back in the days, you had to hire web programmers to build custom ecommerce software to run your ecommerce business.

And as you can imagine, it was not cheap hiring web programmers, paying them by the hours, and managing them to build such systems.  

Well, those days are gone!  

Numerous advanced ecommerce platforms provide you with a point-and-click user interface to design complex online stores without coding.

These ecommerce software platforms provide you with everything you need to set up your online store and get your ecommerce business up and running in little or no time.

Why You Need an Ecommerce Platform

As mentioned earlier, without an ecommerce platform, you will have to build your online store from the ground up.  

Unless you’re a Fortune 500 company, trust me, you don’t want to do that.

Even Fortune 500 companies nowadays leverage and extend the capabilities of ecommerce platforms to run their online ecommerce stores.

An ecommerce platform gets your startup ecommerce business up and running without the additional costs (in time and money) of building from the ground up.

Furthermore, they are easy to set up, packed with featured to streamline your operations and provide an ecosystem of plugins, apps, and support community.

So if you’re starting, I highly recommend leveraging an existing ecommerce platform instead of building one from scratch. It’s a wise thing to do.

Top Ecommerce Platforms

There are so many ecommerce platforms in the marketplace, and this section will save you the headache of trying to figure out which one is best for your ecommerce business.

So let’s take a quick look at the top 10 ecommerce shopping platform for your consideration.  

It would be best if you took the time to visit each platform and inquire about your specific needs to ensure the features you need are supported.

1. WooCommerce
WooCommerce

Say hello to Woo!  

According to BuiltWith, WooCommerce is the most widely used ecommerce platform for businesses and individuals alike, with about 30% of the market share.

Unlike several other ecommerce platforms, WooCommerce is a standalone, open-source software plugin that runs on the WordPress content management system (CMS).

What does this mean for your business?  

WooCommerce is FREE by default!  

However, it requires customization and, in some instances, plugins to extend the platform and get it to where you need it for your ecommerce business.

While this might be a non-starter for some people, others love it because it doesn’t lock them in, and being a standalone software; you get to install it on your servers and have access to your data.

2. Shopify
Shopify

Another top-rated ecommerce platform is Shopify, with about 18% of the market share.

It’s a subscription-based shopping cart system based on software as a service (SaaS) business model.  

All that means is that you pay a monthly subscription fee to Shopify.

The software makes it easy to set up an online store for your ecommerce business website with its easy-to-use drag and drop graphical user interface.

If you’re new to website development, you’ll discover that Shopify’s learning curve is not steep.  

You’ll also find a plethora of themes and apps to help make your ecommerce business more successful.

3. Wix
Wix eCommerce

Wix is another ecommerce platform that has proven over the years to be efficient and reliable.  

Startup small businesses and solopreneurs realize fantastic value on the Wix ecommerce platform through its multi-channel integration, print-on-demand capabilities, support for dropshipping, and abandoned cart recovery.

While you might find their storage space requirement limiting if your ecommerce website is heavy on digital media, the availability of free themes, simplicity, and responsive support team compensates.

4. BigCommerce
BigCommerce

With over a decade of experience in the ecommerce platform marketplace, BigCommerce promises to be an integral part of your business, not just your online store.

Their business strategy targets enterprise (larger) businesses, and they provide support via phone, helpdesk, and instant chat.

BigCommerce is similar to Shopify when it comes to design themes. You have access to free and paid options.

If you’re already in business, have funds, and looking for some hand-holding while you start your ecommerce website, then BigCommerce might be suitable for you.

5. SamCart
SamCart

SamCart takes a slightly different approach than other ecommerce platforms.  

It provides you with capabilities to set up customized shopping carts and online checkout processes with a focus on optimizing your conversion rate, increasing sales, and boosting your average order value (AOV).

As part of their conversion rate optimization processes, SamCart provides you with the ability to 1-click upsell to your customers, perform A/B testing, test different checkout flow template libraries, and integrate with various apps.

6. Weebly
Weebly

Weebly started as a simple website builder and is a leader with over 50 million websites running on its platform.

With the company’s acquisition by Square in 2018, Weebly ventured into the ecommerce platform space and is now a force in the marketplace.

When it comes to ease-of-use, Weebly is top-notch. The platform offers an intuitive drag and drop interface that is user-friendly to a novice.

Also, you’re able to extend your ecommerce website’s functionalities by taking advantage of Weebly’s app center, which gives you access to both Weebly’s and third-party’s apps.

7. Squarespace
Squarespace

Squarespace positions its software as an ecommerce platform and a website builder for portfolio websites, picture galleries, and online blogs.

You get access to hundreds of professionally designed mobile responsive themes for your ecommerce business. And their live chat feature makes it easy to access the support if you need assistance.

The availability of mobile apps on both iOS and Android allows you to take your ecommerce business operations within you on the go.

Furthermore, Squarespace’s blogging feature is essential if you intend to build ecommerce sales funnel with content marketing.

8. Shift4Shop (formerly 3dcart)
Shift4Shop (formerly 3dcart)

With its history dating back to 1997, Shift4Shop (formerly 3dcart) is another leading ecommerce platform packed with built-in features and options that makes starting an ecommerce business website effortless.

Over 11,000 websites are running on Shift4Shop according to available data from BuiltWith, definitely not as popular and successful as WooCommerce or Shopify.  

However, Shift4Shop got several things going for it, such as a free 15 days trial with no credit card details required, third-party software integrations, synchronization with eBay, QuickBooks, Amazon, and DOBA, no transactions, etc.

9. GoDaddy
GoDaddy

GoDaddy is known for its domain name registration and website hosting business.  

But if you need to build an online store for your ecommerce business in an instant, GoDaddy’s Online Store Builder is worth a look.

GoDaddy Ecommerce allows you to quickly set up an online store with easy navigation and advanced features.

The platform provides well-designed online store templates and supports cross channel sales on marketplaces such as Amazon, Etsy, eBay, Walmart, and charges no transaction fees.

While some ecommerce platforms charge you based on the number of products you have to sell, you can rest assured that with GoDaddy, you get the ability to sell unlimited products.

Need to set up email notifications to recover abandoned cart? GoDaddy makes this easy breezy and allows you to include coupon codes.

Overall, GoDaddy designed its ecommerce platform for ease, speed, security, and aesthetic.

10. PinnacleCart
PinnacleCart

If you’re looking for a robust online store builder that is all-inclusive for your ecommerce business, PinnacleCart is worth your consideration.

The platform’s all-inclusive features support custom store design, product catalog management, marketing campaigns, analytics and reporting, and much more.

PinnacleCart is suitable for businesses of all sizes. Its simplicity and ease-of-use have endeared to thousands of companies.

I’ve taken the time to give you a high-level overview of various ecommerce platforms.  

Ecommerce Platform Recommendation

In my professional experience, having worked on several ecommerce projects, nothing beats WooCommerce!

Of course, that’s my opinion.

At the very least, if not WooCommerce, then Shopify.  

But my philosophy in life is more aligned towards using platforms that are open and not restrictive.  

Hence why I use an Android phone and not iOS, and prefer WooCommerce over Shopify, Google Docs over Microsoft Word, you get the idea.

Nevertheless, WooCommerce and Shopify are the 500-pound gorillas in the marketplace.

So you consider both of them.

Inbound Logistics & Fulfillment

Inbound logistics and fulfillment are an integral part of any ecommerce business.

First, you need to have the products delivered to you, and then you need to deliver the products to your customer.

When not done correctly leads to disaster – missed opportunities, revenue leakages, loss, and the ultimate demise of any startup ecommerce business.

Inbound logistics is the aspect of your ecommerce startup that deals with sourcing and delivering your products to your doorsteps (or warehouse).

The fundamental rule is to get products into your warehouse as fast and cheap as possible.  

You don’t want to pay more than is required for inbound shipping, and you don’t want the transit time to take forever either.

If you’re sourcing your products from China, you have to decide if you’re going to go for ocean freight or air freight.  

Ocean freight is cheaper but takes much longer (30 to 60 days), whereas air freight is more expensive and takes a few days.

You’ll come to learn that if you’re buying your products in large quantities, ocean freight might be the way to go as long as you allow time for the long transit time in your planning.

However, when you are starting up and testing out a few quantities, air freight might be the best option.

Initially, the air freight cost might eat into your potential product (especially if you’re still in the target market validation stage) profits.

Ultimately, the goal is to scale and order large quantities to leverage ocean freight’s reduced costs, thus increasing your profit margins over time.

After you’ve received your goods, stocked the shelves, and the orders are starting to roll in – your next challenge is how to effectively deliver products to your customers on time and at the least possible cost.

Getting the products into the hands of your customers is what order fulfillment is all about.

Do you plan on offering free shipping? If so, how do you offset the cost of not charging for shipping?

Inbound Logistics & Fulfillment

I can confidently tell you that the shipping company isn’t on board with you here. They are going to charge you for shipping.

So it would be best if you weighed the cost and benefits of offering free shipping before doing so. Remember, you’re in the commerce business to be profitable.

If you’re not offering free shipping and plan on charging your customers for the cost of shipping – do you plan to offer flat rate shipping or real-time shipping?

Flat rate shipping is when you charge the customer (regardless of location) a flat fee for shipping. For example, if you charge $5.95 for regular shipping and $9.95 for expedited shipping, this is considered flat rate shipping.

Optionally, you can elect to charge real-time shipping whereby you get the carrier’s shipping rate directly during a customer’s checkout process. The customer pays the shipping fee quoted by the carrier.

UPS estimates that 43% of consumers take out time to research delivery costs when ordering products online. [3] So you can’t guess or estimate a carrier shipping rate. It must be accurate and retrieve in real-time.

UPS, FedEx, USPS, and DHL are examples of carriers that can provide you with real-time shipping rates.

If you elect this form of shipping, does your chosen ecommerce platform support the integration with the selected carrier to get the appropriate real-time shipping cost?

You now see why this guide is essential to give you the big picture of what matters.

Now, order fulfillment isn’t just about the cost paid to the carrier and transit time.  

Another component of the order fulfillment process is the time and cost of picking and packing the product.

When a customer buys your product, you need to pick the products from the shelf, pack them in a box, and affix a label on the package.

I’m sure you understand that the box you use in packing the products for shipping costs you money.  

Likewise, the time spent picking and packing the product costs money (even if you’re doing it yourself), and so does the cost of the shipping label you printed and the ink used in printing.

You get the idea.

These are cost variables that you must consider to get the whole picture of the actual cost of your inbound logistics and order fulfillment.

Furthermore, this helps you determine the real cost of goods sold for your products and enables you to price your products appropriately for profitability.

Payment Processing

There’s nothing more exciting than receiving your first order after you start an ecommerce website.  

What else could more thrilling?

You’ve launched your ecommerce business, you’ve done some marketing, and now you’re waiting in anticipation for the KACHING KACHING.

Ecommerce Payment Processing

However, before you can receive payment through your newly launched ecommerce website, you need to have electronic payment processing capabilities in place and integrated with your website.

You need to have a payment processing service set up to accept payments through your ecommerce website.

Unlike traditional brick-and-mortar retail businesses, payment processing is slightly different for ecommerce websites.

You’ll hear terms such as merchant account, payment processor, gateways, PCI compliance, application programming interface (API), and many more thrown around.

So I’m going to simplify things for you.

First of all, there are four parties involved in every online credit (or debit) card transaction, you (the merchant), your customer, your customer’s card issuer, and the bank collecting the money from your customer’s card issuer (your merchant account).

As an ecommerce business startup, you need a merchant account to accept direct payments online from your customers.  

A merchant account is a special bank that enables ecommerce websites and mobile apps to accept credit (or debit) card payments.

Funds from your customers’ credit (or debit) card go to your merchant account. Then the merchant account provider (i.e., the bank) settles (transfers) those funds to your business bank account after a few days (usually 2 to 3 days).

A payment processor handles credit (or debit) card transaction processing and acts as the middle layer between your customer’s card issuer and the bank collecting the money from your customer’s card issuer (i.e., your merchant account).

It does this by authorizing transactions and liaising with financial institutions to ensure you get paid on time.  

Some payment processors provide card processing equipment (if you’re a brick-and-mortar store), security, support, compliance, and other value-adds.

On their part, payment gateways facilitate online transactions for ecommerce through the application of a secure connection between your ecommerce website and your payment processor.

In order words, they are a secure gateway link between your ecommerce business website and your customer’s credit (or debit) card.  

Your ecommerce website connects to the payment gateway via an application programming interface (API).  

When your customer submits their payment information on your website, the payment gateway encrypts the data, verifies its authenticity, and validates the transaction.

PCI compliance is a set of standards that stipulates how ecommerce companies process, store, or transmit sensitive customer credit card data in a highly secure environment.  

The Payment Card Industry Data Security Standard is the governing body of the PCI compliance process.

API deals with communications between one or more software. Your ecommerce website is software. A payment gateway is software.  

The payment gateway to accept and send data from and to your website defines an API with rules and regulations on how your website can make application calls to it and what responses your website should expect to receive.

Now that you have some idea of the basics (which quite frankly is all anyone needs), you’re most likely wondering how you can start with online payment processing.

Well, the good news is that several companies are now offering bundled solutions over the years, which means you don’t need to look for a merchant account, payment processor, and payment gateway separately.  

That used to be a thing of the 1990s and 2000s.

We are in the 2020s, and in the 2020s, we got fintech companies such as Stripe, Paypal, Braintree, etc., that have streamlined the process.

Furthermore, with ecommerce software platforms like WooCommerce and Shopify, plug-n-play plugins handle the necessary integrations and API calls.

Step 2 – Brand Discovery

Steps to Starting an Ecommerce Business - Step 2 – Brand Discovery

You need to imagine and visualize your brand and all aspects of it.  

When some people think of branding, they limit themselves to logos, slogans, and colors.

I’m of the humble opinion that you have no business registering a business if you have no imagination of what your brand is and isn’t.

So before jumping to registering a business or deciding whether to go for LLC or INC, you need to discover your band.  

The brand discovery journey spans all aspects of your business identity, such as the business name (identity), the domain name (website address), social media handles (i.e., the @abcdef), brand story, brand colors, logo concept, and design.

Choosing Your Business Name

You’ll find out that deciding on a business name will be one of the crucial aspects of starting an ecommerce business.

The business name you choose for your new ecommerce venture is the focal point of your brand identity, so you need to give careful and prudent thought to the process.

Here are some things to take into consideration when deciding on a name for your ecommerce business:

  • Have a clear understanding of your mission and why our business matters
  • Take a look at your competitors’ business names and determine what you’ll do differently.
  • What sort of energy and vibe do you want to convey with your business?
  • Keep in mind the business structure and how the name will flow with abbreviations such as (Inc., LLC, Corp.)
  • As an ecommerce business, avoid long business names as you will need to register that business name as a domain name (i.e., your website address).

Once you’ve considered the above, make out time and go through a brainstorming session and come up with various business names.

Reach out to friends, families, and loved ones (if possible) to get their input and critique.  

While brainstorming for the right name for your ecommerce business, never forget your mission for being in business and why your business matters.

Don’t rush the process. Spend some quality time as this is a vital aspect of your brand discovery.

After you’ve come up with a comprehensive list of potential business names, go through each one, and ask the following questions:

  • How does it set me apart from my competition?
  • Is it easy or hard to remember?
  • Does it convey my mission in business?
  • Is the domain name available for registration?
  • Are handles available on social media platforms (e.g., Facebook, Instagram, Twitter, Pinterest, LinkedIn, etc.) for the business name?
  • Can voice assistants such as Siri, Alexa, and Google Assistant pronounce it easily?
  • Does it fit with the overall imagination I have for my brand?

Next is to check the availability of the business name for registration with your state government. Most states in the U.S. provide online business name availability check.

You also want to make sure there are no trademark registrations or applications for the business names under consideration. 

Take out time and check with the U.S. Patent and Trademark Office’s TESS (Trademark Electronic Search System).

Lastly, search the business names you’re considering on Google, Bing, or your favorite search engine and see what comes up. The goal here is to ensure that there is no other business using the name or its variation.

Selecting a Domain Name

The domain name for your business is just as important as the business.

The general rule of a domain is to strive to get a domain name that is the same as your business name.

For example, if your business name is ABC Custom Decals, then abccustomdecals.com will be a perfect domain name to register for your business.

And this is why checking for domain name availability is essential as part of the business name discovery brand. Your business name and domain name are part of your brand identity and must align.

You’ve most likely seen website addresses with hyphens in their domain name (e.g., abc-custom-decals.com) – avoid this.

You’re trying to build a premium brand of international standard, so you’ve got to think and present your brand as such.

Here are some of the crucial factors to keep in mind when registering a domain name:

  • Use .com if possible. The .com TLD is still the most preferred and projects professionalism.
  • Don’t be generic – your domain name and business name must align.
  • Avoid registering a domain name that is too long. Keep it short and straightforward.
  • Your domain name should be easy to pronounce (just as your business name).
  • If you’re having challenges, use domain name generators to get ideas.
  • Omit hyphens and numbers in your domain name.

Overall, your domain name and business should be the same. The process of your business name discovery discussed above should be in parallel with your domain name search.

There’s no need to register a business name only to find out that a domain name with the business name and variations of it are not available.

Social Media Handles Matter

Just as with your domain name, you need to take time to research the availability of your potential social media handles for your ecommerce business.

Your ecommerce business’s social media handles is your username on social media platforms such as Facebook, Instagram, Twitter, LinkedIn, Pinterest, etc.

A social media handle is formatted at @yourusername, for example, @abccustomdecals.  

It’s a convenient way for your customers and prospects to identify, communicate, and follow you on social media.

Remember the ABC Custom Decals business example discussed earlier?  

The ideal scenario is to have complete and total alignment across the business name, domain name, and social media handles.

And that means that the company will have an abccustomdecals.com domain name and @abccustomdecals handle across all social media platforms.

But you already know that this might not be entirely possible.

For example, at SpicyCommerce, LLC, we have spicycommerce.com as our domain name and @spicycommerce handle on all social media platforms, excerpt Twitter where @spicy_commerce was the only alternative available.

So the lesson is that there’s room for flexibility.  

Just put the effort to align this aspect on your brand discovery (business name, domain name, and social media handles) and be flexible and come up with variation when needed but never losing perspective of the brand.

When we noticed @spicycommerce wasn’t available on Twitter, we didn’t jump to @ecommerceblogsite – instead, we sent for @spicy_commerce because, in essence, @spicy_commerce still aligns with our brand.

Having the exact social media handles verbatim is not critical to success. It’s ideal but not necessary.  

However, make sure that what you end up aligns and projects the essence of your brand.

Select the Right Brand Colors

The brand discovery process involves coming up with the perfect colors that give birth to your brand personality.

What are your ecommerce brand’s colors?

First of all, you need to imagine your brand’s personality – what are you trying to project?  

Remember, you have to consider your brand’s personality when deciding on an appropriate business name.

Dive deeper and write down those adjectives that give meaning to your business. Identify the fundamental values and attributes that differentiate you from your competitors.

Is your brand elegant, sophisticated, and classy? Or is it bold, unconventional, and innovative?

These are the types of questions you need to be asking at this stage to help you determine your ecommerce business’s brand personality traits.

The next step is to choose brand colors based on your identified brand personality traits. Take a cue and study leading global brands that inspire you.

Your ecommerce business’s brand colors make your brand stand out in the marketplace.  

It’s important to define your brand colors at this brand discovery stage to encourage consistency across your communication messaging.

Design Your Logo for a Lasting Visual Impact

At this stage, you’re ready to start work on your ecommerce business logo, that visual mark that reckons your brand.

Your logo helps customers, prospects, and the marketplace to identify your ecommerce business.

Likewise, it’s your brand’s pillar and encompasses your business name, brand color, and personality traits.

Just as we did during the business name, domain name, and brand colors discovery, take some time out and study your competitors’ logos.

Doing so gives you an idea of what they are lacking, what you can do better, and how better to position your startup ecommerce business in the marketplace.

Remember, a logo is about building lasting brand recognition across the marketplace. So go for a logo design concept that leaves a lasting visual impact.

You can find professional logo designers on marketplaces such as Fiverr and Upwork.

Step 3 – Business Formation

Steps to Starting an Ecommerce Business - Step 3 - Business Formation

It’s time to legally your new ecommerce business. At this stage, you should not be second-guessing yourself.

You’ve put in the time and work to research your market and discover your brand.

It’s time for action!

Types of Business Structure

Before registering a business, you need to consider the different legal structures for your new ecommerce business.

Your chosen business structure is vital to all aspects of your business – from your daily operations, tax liabilities, personal liabilities, ability to raise capital, and amount of paperwork involved.

Given the importance of this decision, I strongly recommend that you research and consult with business attorneys, counselors, and accountants.

Common Business Structures

Here are the common legal business structures applicable to ecommerce startups:

1. Sole Proprietorship

A sole proprietorship is the most straightforward business structure to form, and you have complete control of your ecommerce business.

With a sole proprietorship, there’s no separation of the business and yourself as entities. Therefore, your business liabilities and assets one and not separate from your personal liabilities and assets.

This means that you can be personally liable for the debt obligations of your new ecommerce business venture.

As a sole proprietor, you can obtain a trade name to use for your business activities. The trade name is the business name you chose during the brand discovery stage.

2. Partnership

Partnerships are another simple legal business structure that requires two or more people. The two types of partnership business structure are the limited partnership (LP) and the limited liability partnerships (LLP).

In limited partnerships, there’s only one general partner that has unlimited liability. All other partners in the partnership have limited liability.

On the contrary, limited liability partnerships assign limited liability to all the business venture partners.

So if you and your family or friends are looking to starting your ecommerce business together, then a partnership legal business structure is worth considering.

3. Limited Liability Company (LLC)

A limited liability company (LLC) leverages the benefits offered by the partnership and corporation business structures.

An LLC gives you protection from being personally liable – so your personal assets are protected. Also, you can assign your business profits or losses to our personal income without corporation tax liability.

Members of an LLC are considered self-employed, which means that they are expected to pay self-employment taxes for Social Security and Medicare.

So if you want to protect your personal assets and pay a lower tax rate, LLC is worth the consideration.

Again, discuss these things with your tax advisor, business consultant, attorney, or accountant.

4. Corporation

A corporation is another form of legal business entity that can profit, incur a loss, be held legally liable, be taxed, and is separate from its owners.

There are two types of corporations – the C Corp and S Corp.

C Corporation gives you the most protection again your personal assets and liability, but it’s more expensive to form, operate, and in some cases taxed twice.

S Corporation, on the other hand, is easier to form and operate. It gives some of the benefits of an LLC and avoids double taxation by passing profits and losses through the owner’s personal income without subjecting you to corporate tax.

Register Your Business

So you’ve decided on a legal business structure for your ecommerce business. The next thing to do is register it with the appropriate agency in the state you plan to operate the business.

You’re operating a business in a state in a when you’re doing the following:

  • Your business operation is physically present in the state.
  • Interact with your customers in the state.
  • Generate a significant portion of your revenue from the state.
  • Have one or more employees in the state.

Some states make it easy to register your business online instead of doing in-person or mail-in filing. So check with the relevant authority in your state on how to register your business.

Alternatively, your business consultant, tax advisor, or attorney can help you properly register your ecommerce business with your state government.

You don’t necessarily have to register your business with the U.S. federal government to be recognized as a legal entity.

However, suppose you’re looking to trademark your ecommerce business name, slogan/tagline, or logo design. 

In that case, you’ll have to file the appropriate documents with the United States Patent and Trademark Office once you’ve completed your business formation.

Get an EIN

Your ecommerce business’s Employment Identification Number (EIN) is like your business’s social security number.

You need to set up an EIN to open a bank account, hire employees, file and pay taxes.

Once you’ve registered our business, you should immediately get an EIN for your ecommerce business.  

The IRS makes this very easy, and you can have your EIN ready in minutes online.

Visit the IRS assistance tool [4] to apply for your EIN.

Open a Business Bank Account

Once you’ve gotten your EIN, you need it to open a business bank account.  

You need a business bank account to start accepting payments and spending money as a business.

We covered payment processing earlier and merchant accounts. The payment processor sends the funds from purchases on your ecommerce website to our business bank account.

Having a business bank account is ideal for projecting professionalism for your ecommerce business brand and offers limited personal liability since your business funds are separate from your personal funds.

Research banks with low operational fees and commensurate benefits.  

It would be best if you considered the following when opening a business bank account for your ecommerce website:

  • How competitive is there interest rates for saving and checking accounts?
  • What are the minimum balance requirement and associated fees?
  • Do they have any introductory offers that can save you money?
  • Are there any termination fees if you choose to close the account?
  • Do they offer credit lines for future opportunities?

To open a business bank account, you’ll need all your business registration documents, EIN registration notice from the IRS (you’ll be able to download this once you register for EIN online), social security card, and state-issued identification card.

Step 4 – Write an Ecommerce Business Plan

Steps to Starting an Ecommerce Business - Step 4 - Write an Ecommerce Business Plan

Having an ecommerce business plan in place will surely give you new business direction and focus.  

The business plan will provide guidance and serve as a road map to keep you mindful of your mission, objectives, where you’re heading, and how to get there.

So in this section, let’s discuss the process of writing an ecommerce business plan and the essential aspects you need.

What is an Ecommerce Business Plan?

As alluded to earlier, an ecommerce business plan is a road map that provides guidance and keeps you on track as you executive the strategic objectives of your startup ecommerce business.

Imagine traveling to a different city or state without a GPS map. Now, imagine traveling to the same city or state, but this time with a GPS map. 

While you may get to your ultimate destination in both scenarios, you’ll agree with me that you’ll get there more efficiently with a GPS map than without one.

The same situation is the case with having an ecommerce business plan for your new ecommerce startup.

Why is an Ecommerce Business Plan Essential?

Having an ecommerce business plan is essential because it gives you, the founder, the opportunity to think through, research, analyze, plan and strategize, document, and track progress.

You’ve already done your research. There’s an opportunity for your idea to make a difference in the marketplace.

You’ve identified the niche you want to focus your ecommerce business. 

There are quality products to meet the demands of your ecommerce niche at competitive prices, and your target market validation yields positive results.

You’ve gone through the brand discovery stage, and everything looks good.  

While you’re in the process of officially registering your business, it time to put pen to paper and outline your business plan – your road map that outlines how you will execute your strategies and differentiate yourself from the competition.

Essential Sections of an Ecommerce Business Plan

If you take a look at the sections of a typical business plan, you’re looking at the following areas:

  • Executive Summary
  • Company Summary
  • Products & Services
  • Market Analysis
  • Operational Plan
  • Marketing Plan
  • Strategy & Implementation
  • Organization & Management Team
  • Personnel Plan
  • Financial Plan
  • Intellectual Property
  • Appendix/Tables

Within these sections with you several sub-sections, and within the sub-sections, you have more sub-sub-sections – you get the idea.

It can get confusing, and you don’t want to get caught up in spending that time and energy on planning at this stage.

Now let’s take a look at the essential sections of an ecommerce business plan.  

We’re going to keep things simple but yet effective.

I firmly believe that every startup ecommerce entrepreneur should focus on six essential sections when developing an effective ecommerce business plan.

These sections are the executive summary, company summary, market analysis, marketing plan, organization & management team, and financial plan.

Let’s take a quick look at each section.

1. Executive Summary

The executive summary is a short and sweet overview of your business plan.  

It should capture and summarize all aspects of the ecommerce business plan with key points in focus.

It’s best practice to write the executive summary after you’ve completed all other sections of your ecommerce website business plan.

When writing your executive summary, be sure to capture the name of your ecommerce business, its location, the products and services you’re bringing to market, your mission and vision for going into business, and the specific purpose of your ecommerce business plan.

2. Company Summary

The company summary section of your ecommerce website business plan should define your company, its operational procedures, and what you’re looking to achieve in the marketplace.

Ensure that you define the legal business structure of your ecommerce business (i.e., sole proprietorship, limited liability company, corporation, partnership, etc.).

This section should disclose the history and nature of your ecommerce business and the market needs that you intend to address with your products and services.

Also, provide details on your products and services, your target customers, and how you plan to source your products.  

If you’re buying directly from the manufacturer and have negotiated preferential pricing, be sure to mention so in this section.

Finally, break down your ecommerce company’s growth prospects, market and financial insights, short and long-term goals, and how you plan to make money and stay profitable.

3. Market Analysis

The market analysis is an essential aspect that shows you understand the market, competition, opportunities, and threats.

This section of your ecommerce business plan should define your target market segments, outline the industry prospects and outlook, and provide relevant statistics to support your assertions.

The competition is another piece of information that you should include in this section.  

Provide a detailed analysis of the competitive landscape with a SWOT (strength, weakness, opportunities, and threats) analysis.

4. Marketing Plan

How do you plan to find customers to buy your products and services?  

The marketing plan is the most important section for most ecommerce businesses.

In this section, you need to elaborate on the marketing action plan you will take to achieve your business objectives and financial projections.  

The section must answer how you will drive inbound traffic to your ecommerce website, convert that traffic into paying customers, and increase the average order value (AOV) of each customer.

Outline all the marketing steps you’ll be taking to achieve your sales objectives and note the cost implications to accomplish each step to get an understanding of your total marketing budget.

5. Organization & Management Team

If you’re a solopreneur, this section might not be necessary at this point. But feel free to write one if you want.

However, if you have partners or have a team working with you, then give a picture of your ecommerce business’s organizational structure in this section.

Take some time to provide information about the founders (owners) and their names, ownership stake, biography and professional background, and their level of involvement in the company’s operations.

If you have a management team, provide their profile – names, positions, roles and responsibilities, and past work and professional experience.

Lastly, if you’re working with any advisors, provide their information. Advisors are professionals such as accountants, attorneys, business consultants, or board members.

6. Financial Plan

The financial plan is usually the last section of any ecommerce business plan.  

It is essential, and you should formulate this section with the advice of a professional accountant or business consultant.

Your financial projection will include forecasted balance sheet, profit and loss statements, capital expenditures, and cash flow statements.

If you’re already in business, include your ecommerce business’s historical financial information.

However, if you’re a startup ecommerce business, this section will list your financial projections, business ratios, and trend analysis for all forecasted years.

Step 5 – Sourcing Products for Ecommerce Business

Step 5 - Sourcing Products for Ecommerce Business

You need products to sell on your ecommerce website.  

Without a product, you have no offer to present to the marketplace.

And without an offer, you cannot make money in ecommerce.

Properly sourcing products for an ecommerce business is one of the crucial aspects of running a successful online store.

This section will discuss the different product sourcing options available for ecommerce businesses and the financial considerations to make when sourcing products.

We’re also going to look at resources available to find the right products for your ecommerce business.

What is Product Sourcing?

Effective product sourcing is finding, locating, and procuring the right products for your ecommerce business at the right price and under favorable conditions that yield profits.

My definition of product sourcing is slightly different from what you’ll come across. It posits that you must first find the product, the price must be favorable, and you should profit.

If you find and buy products that do not have enough margin to yield consistent profit for your ecommerce business, then that product is not a viable proposition in my book.

The ultimate objective of the product sourcing process is finding products that yield consistent profits.

Financial Considerations for Product Sourcing

As we discussed earlier, when sourcing products, you need to consider the logistics of getting the products to your location (office, garage, warehouse, etc.).

Suppose the minimum order quantity (MOQ) of the product is too high, and your ecommerce business doesn’t have the exiting customer based to move the product quickly. 

In that case, you need to consider the associated costs of having the products sitting in your warehouse for a long duration.

Estimating the number of units you plan to sell per month, the lead-time for the product to arrive at your location, the number of units you plan to begin with, and capital availability for your initial order will clarify the viability of the product.

You need to find the sweet spot – the cost of getting the products to your location, MOQ, miscellaneous expenses, and market prices to determine a product’s profitability and fit for the market niche.

Options for Product Sourcing

Let’s take a look at the several options you have when sourcing products for your ecommerce business.

1. Do It Yourself (DIY)

A DIY product or service is one that you make yourself.

So if you’re skilled in making soap or jewelry, you are the direct manufacturer of your products.

You need to find and buy the necessary raw materials/ingredients (inputs) and get to work.

When done with your production batch, you make it available to your customers to buy on your ecommerce website.

DIY’ers are people with a passion for what they do.  

So if there’s a craft that you’re very passionate about and have the skills to deliver exceptional quality to the marketplace, then, by all means, DIY is your first port of call for product sourcing.

2. Direct from Manufacturer

If you have a product idea, you can reach out to manufacturers worldwide to make that product for you.

This practice is what is known as contract manufacturing. 

You don’t need to set up a factory to make the product. Instead, you can partner with a manufacturer to bring your custom product to market.

Another option is what is known as private labeling. Private labeling is working with a manufacturer who has ready-made products that they label with your brand name.

For example, you can reach out to a manufacturer that makes sunglasses, get a list of all their products, determine which ones you like and fits your market, and have the manufacturer manufacture them under your label (i.e., brand name).

One thing to keep in mind is that when dealing directly with a manufacturer, the minimum order quantities are usually high.

So this approach to product sourcing is more capital intensive when compared to the rest.

3. Direct from Wholesaler/Distributor

Buying directly from wholesalers and distributors is another age-old method for sourcing products for any business.

Doing so allows you to access fast-moving products with established brand names in the marketplace for sale on your ecommerce website.

As you can imagine, with the direct from manufacturer (custom product or private label) option, you’ll spend a considerable amount of money marketing and developing the brand name.

However, if you want to sell sneakers and source Nike products directly from an authorized Nike distributor, you’re selling a known brand with billions of dollars in yearly marketing spend.

So if you want to buy products that move fast due to their known brand affinity, sourcing direct from wholesalers and distributors is the way to go.

Another benefit of buying directly from wholesalers and distributors is that the minimum order requirement is not as high as buying directly from manufacturers.

4. Dropshipping

Earlier, we discuss the practice of dropshipping as an ecommerce business model. However, dropshipping in of itself is also a product sourcing process.

Dropshipping is the least capital intensive given that you’re not investing any capital into buying and stocking inventory for your ecommerce online store.

Your primary duty is to generate the orders through your ecommerce website, send the order to the vendor for fulfillment.

However, dropshipping’s profit margins are not as rewarding as buying direct from manufacturers, wholesalers, or distributors.

5. Print on Demand

Print on Demand (POD) is another product sourcing option whereby you’re working with a third-party vendor to deliver custom printed products to your customers.

With print on demand, you create the graphic designs for t-shirts, mugs, hats, etc., and whenever you receive an order, you send it to your POD vendor for fulfillment.

Before the advent of POD, if you create a design for t-shirts, you had to buy and print those shirts and hold inventory.

With advancements in print technologies, apparel and other products such as mugs, shoes, pillows, bed sheets, etc., can now be printed on demand.

So this means that you only have to buy your custom printed designs when you get an order from customers.

How to Find Trending Products for Ecommerce

You have to stay on top of market trends to be successful in ecommerce.

I know a few ecommerce entrepreneurs who made a ton of $$$ before many knew the popularity and profit potentials of fidget spinners.

So you have to stay tuned in and identify the latest trending products before your competition knows what’s happening.

Let’s look at some of the tools and resources that will enable you to monitor product trends and locate opportunities for profits.

1. Google Trends

Google Trends

Take advantage of Google Trend’s Featured Insights to identify trending opportunities. This tool allows you to filter results by product, audience location, and age.

2. Ecomhunt

Ecomhunt

Ecomhunt is one of the leading websites that curate trending products daily. The worst mistake you can make in your ecommerce journey is to guess what’s trending.  

Use Ecomhunt’s free resources to make informed decisions across dimensions such as profitability, analytics, engagement, retail video, and Facebook ads for a given product.

3. Trend Hunter

Trendhunter

Access cutting-edge trending ideas and product innovation to get insight into consumers’ interests by keeping up with Trend Hunter.

The platform is the largest trend community in the world. Take advantage of Trend Hunter’s content to help your ecommerce business grow.

4. Uncrate

Uncrate

If you’re in the men’s niche, check out Uncrate for their list of products curated for men to get an idea of what’s trending.

5. Springwise

Springwise

Keeping up with trends means knowing which innovations are currently taking place today around the world. Springwise curates and digests the latest innovations filled with data on new consumer trends.

6. JungleScout

JungleScout

If you’re looking to start your ecommerce business selling on Amazon Marketplace, then JungleSout is your go-to resource to find high-demand products to sell.

Step 6 – Build Your Ecommerce Website

Steps to Starting an Ecommerce Business - Step 6 - Build Your Ecommerce Website

Congratulations on getting this far! Let’s begin the fun part.

It’s time to starting building your ecommerce website.  

Your ecommerce website is the platform that will allow your customers to buy your products online.

This section will go over my recommended ecommerce platform, design themes, best practices, and security considerations.

Choosing Your Ecommerce Website Platform

Your ecommerce website platform is the core-engine for your ecommerce business, and as such, you need to give serious consideration to it.

We’ve already gone through the different ecommerce website platforms available, and the question now is which one to use?

As I already mentioned, I recommend WooCommerce or Shopify.

I recommend WooCommerce because it’s open-source, self-hosted, and highly extendable via Plugins.  

But the most valuable feature I admire is that with WooCommerce, I own my data and choose to do whatever I want with it.

On the other hand, Shopify is a proprietary solution hosted by Shopify as a SaaS (Software as a Service) product.

Shopify is an advanced platform and very popular. If you like more security, hand-holding, peace of mind (with their support), then definitely go for Shopify.

So for the right ecommerce platform for your online store, I will recommend WooCommerce or Shopify as your case may be.

Choose Design Theme That Compliments Your Brand

Whichever ecommerce website platform you decide to work with, you will need a design theme that compliments your brand.

Both WooCommerce and Shopify have many design themes available for you to leverage in building a beautiful ecommerce website.

Some themes are free, but you have to pay for the more sophisticated ones.  

You can equally choose to custom design your theme from scratch if you find nothing suitable for your brand.

Don’t do that.

You’ll come to realize that it costs much more to design a custom theme than to use an already designed one.

It’s important to note that the fact you’re buying a theme doesn’t mean you have to use it “as is” right off the box.

Design themes on both platforms are highly customizable.  

You and I can buy the same theme, and our ecommerce websites look entirely different based on our unique customization.

Best Practices for Ecommerce Websites

There is a universal best practice for any ecommerce website, and that is to keep things simple.

Simplicity is the new sophistication and class when it comes to ecommerce.

Work with a simple theme. Do not cluster your home page and other internal pages such as the product pages, shopping cart, and check out process.

Let’s take a look at other best practices you should embrace to run a successful ecommerce business:

1. Product Names

The product name should be clear and concise to avoid confusing the shopper.

If you have a lot of SEO experience, then product names with SEO in mind can be infused to rank the page and generate some organic free search engine traffic.

However, if you’re not knowledgeable yet on SEO – keep your product names simple and straight to the point.

2. Product Descriptions

Dedicate one to two paragraphs to describe and sell the product to the customer.  

The product description should list the unique selling points (USPs) for the product and identify the problems it solves.

Also, the shopper should have an idea of the outcome to expect due to using the product.

The product description should take the shopper on a journey, take them to their desired result (the best version of themself).

3. Product Photos

The product photos are the visual presentation of your product. Product photos are critical to success for any ecommerce website.

If you lack professional and high-quality photos – you can say bye-bye to sales.

If your budget permits, get a professional product photographer involved here.  

Endeavor to capture the product from different angles and include realistic lifestyle presentation of the product.

4. Search Functionality

While some of your ecommerce website visitors will browse your website to discover products, others who know what they want will search for it.

Having search functionality makes your ecommerce website more user-friendly.  

I recommend placing the search bar at the top of the page consistently across all pages.

5. Reviews & Testimonials

Online shoppers have consistently said they read product reviews and testimonials before making a purchase.

Encourage your past customers to leave reviews for products that matter most to them and display those reviews on the appropriate product pages.

Also, work with third-party websites to allow and display reviews.  

Doing so gives your buyers confidence that your reviews are not all internal from your website and not prone to bias.

6. Site Navigation

Your ecommerce website navigation should be seamless and well-defined.

Include breadcrumbs to show the website visitor where they are on the website at any given point.

Organize your products into categories by product types, problems they solve, gender, etc., so that even a five-year-old can quickly locate what they are looking for on your site.

7. Wish List

Having a wish list allows your customers to save products to a list of products that they ultimately want to buy in the future.

Your customers can also send their wish list to their family and friends during celebratory events that call for gift-giving.

Wish lists present opportunities to attract potential customers to your website who can, in turn, become buyers of your products.

8. Shopping Cart

An ecommerce shopping cart allows customers to buy more than one item during their shopping session.

Having a shopping cart gives customers the ability to add items to their cart as they browse through your website.

When the shopper is ready to pay, they initiate the checkout process to provide their billing and shipping information to complete the order process.

Ensure that the shopping cart icon is prominently displayed and accessible so that the shopper can always see what they’ve added to their cart.

9. Shipping & Returns Policy

Ensure that your shipping policy is clear on how long the shopper can expect to receive the products they’ve purchased.

Likewise, your return policy should also be clear on the procedures for returning items and your policy on processing and issuing the refund.

These two policies help boost shoppers’ confidence in your ecommerce business and help increase your conversions.

10. About Us, Contact Us & FAQ pages

Ensure that you have an about us page that tells your brand story and a contact page that provides information on how shoppers can reach you with questions.

The FAQ (frequently asked questions) is another page you need to display questions you often receive from shoppers.

If shoppers ask a question, you can rest assured that other shoppers have that same question.

When you have an FAQ page, it makes things easy for you and provides much-needed information to your website visitors.

Step 7 – Setup Your Ecommerce Business Social Media Profiles

Step 7 - Setup Your Ecommerce Business Social Media Profiles

Social media gives you the ability to build an audience for your startup ecommerce business.

Consequently, it’s imperative that you correctly set up your ecommerce business’s social media profile.

Each social media platform provides different requirements. This section will give you some guidance on the essential things to keep in mind when starting your ecommerce business’s social media build-out.

Facebook

You can promote your ecommerce business on Facebook by setting up a Facebook page.

A Facebook page is different from a personal Facebook profile.

Using our personal profile as a Facebook page is a violation of Facebook’s terms of use policy.

Over the years, I’ve seen many clients make this innocent mistake of using their Facebook profile for their business.

In 2020, Facebook did an all-out crackdown on personal profiles. These clients lost their access to Facebook to the detriment of their businesses.

To properly set up your Facebook page, you’ll need the following.

  • Profile Photo
  • Cover Photo
  • Page Name
  • Business Location
  • Business Hours
  • Type of Business
  • Business Summary

Facebook offers a short online course on how to build your online presence with its Page feature.

Click here to access the course. [5]

Instagram

Having a Facebook page set up and running is a prerequisite to setting up your ecommerce business’s Instagram page.

You’ll need to create a profile on Instagram and then convert that profile to a business account.

Having an Instagram business profile account allows you to enter your business’s phone number, email address, and location.

Another benefit of an Instagram business profile is that you’re able to add a contact button on your profile page and access your profile’s Instagram Insights.

It would be best if you had the following to set up your ecommerce business’s Instagram Profile properly:

  • Logo
  • Business Summary
  • Website Address
  • Social Media Accounts – connect your Instagram to your Facebook and Twitter.

Twitter

You can set up multiple Twitter accounts, so don’t worry if you already have one. Create another one dedicated to your ecommerce business.

Keep your Twitter business profile simple and straight to the point. Ensure you use SEO friendly keywords in your profile description to gain organic traction.

It would help if you had the following to set up your ecommerce business’s Twitter profile:

  • Profile Picture
  • Header Photo
  • Username
  • Description

LinkedIn

LinkedIn is the leading social media platform for B2B companies. B2C companies are also using the platform in increasing numbers.

Don’t confuse your personal LinkedIn profile with a LinkedIn company page.  

Just as with Facebook, you’ll need to create your personal profile first and then set up a company page for your ecommerce business.

To set up a LinkedIn company page, the personal profile you’re creating the company page from must be at least seven days old, and your company email address must be confirmed and listed on your LinkedIn account.

You’ll need the following to set up a LinkedIn company page:

  • Company Name
  • Page URL
  • Description
  • Logo
  • Cover Image

Click here for instructions and tutorials on how to set up a company page on LinkedIn. [6]

Pinterest

Pinterest is another social media platform that allows users to share and discover content through visuals – images and videos.

As of 2020, Pinterest had over 365 million users – now that’s a lot of prospects for any ecommerce business.

You’ll need the following to set up your Pinterest profile:

  • Profile Picture
  • Display Name
  • User Name
  • Profile Description
  • Business Name
  • Business Address
  • Contact Name
  • Website

When signing up, you can convert the profile you’re creating to a business profile. I suggest you do this.

Step 8 – Market Your Ecommerce Business

Steps to Starting an Ecommerce Business - Step 8 - Market Your Ecommerce Business

You need to build awareness and drive purchase action for your ecommerce business to thrive.

Recall that I identified the marketing plan as an essential aspect of any ecommerce business plan in this guide’s business planning section.

This section will give you a high-level overview of the different marketing techniques available for ecommerce businesses.

Marketing your ecommerce business can be done through different marketing channels such as social media, content, search engine, email, paid media, affiliates, and location targeting.

Let’s dive in and take a look at these channels and how you use them.

Social Media Marketing

Social media marketing for ecommerce businesses involves creating, curating, and sharing content that matters to your target audience on a social media platform.

Earlier, we discussed the different social media platforms and what you need to set up profiles on them.

Once you’ve created your social media profiles, you need to engage and build an audience on those platforms actively.

However, you don’t just want to create and post any content that comes to your mind randomly.

You need to formulate a social media strategy for your ecommerce business that will give you strategic and tactical guidance.

Your social media strategy is an aspect of your overall marketing plan that you should formulate when working on your ecommerce business plan.

It’s worth noting that not all platforms perform well for ecommerce businesses.  

For example, Instagram and Pinterest are highly visual platforms and are more suitable for B2C ecommerce businesses than LinkedIn.

Furthermore, there is no golden rule that stipulates you must be on all social media platforms.

Take time to experiment with which platform works best for you, and then stick to that platform.

Over the years, I’ve seen ecommerce businesses build their entire social media strategy around Instagram, while others stick to Facebook.

So focusing all your effort on one or two social media platforms and mastering them can be all you need to meet and exceed your ecommerce business goals.

Content Marketing

You can take advantage of content marketing to provide relevant information to your target audience that addresses their pain points.

You’re introducing a product to the marketplace to solve a given problem. The product’s target audience is continuously searching for solutions to their problems.

Content marketing is simply creating and publishing content that is relevant and valuable to your target audience.

With the right content marketing mix, your audience will discover your content as they embark on their buyer journey, searching for solutions to their problems.

For example, if you’re a nutritional supplement company targeting people with back pains, you can create content around back pains.

Your content can be text-based and published via your ecommerce website’s blog and video-based and published on video platforms such as YouTube.

The ultimate goal of content marketing is to continually publish useful content to your target audience, put effort into ensuring the content ranks on search engines, and let your target audience discover your brand organically.

Search Engine Marketing

Searching for information is ubiquitous in this day and age. Online shoppers begin their buying journey by searching for products or solutions to problems on search engines.

Your ecommerce business’s search engine marketing effort involves those paid and unpaid activities you take to ensure your target audience discovers your brand for searches that matter most to your business.

There are two aspects of search engine marketing.

Whenever you perform a search query on any search engine, there are two types of results: the first are paid results, and the other are organic results.

The search marketing aspect of building your website to rank organically on the search engine results page (SERP) is known as Search Engine Optimization (SEO).

With SEO, once your ecommerce websites’ product pages (or blog posts) start ranking organically, you earn free traffic from prospects looking for your product and service offerings.

However, it takes time to rank a new ecommerce site organically. If you’re in a very competitive market, it can take very long.

So if your marketing budget permits, you can use the Pay-Per-Click (PPC) model to bid and pay to rank for keywords that are relevant to your products and services.

The PPC model allows you to buy keywords and rank for searches on search engines. This ability can be very empowering (depending on your ecommerce niche) to ramp up interest in your startup ecommerce business.

Email Marketing

Email marketing is a powerful marketing tool that you should not ignore. It’s the most effective ecommerce marketing channel.

According to Campaign Monitor, your ecommerce business can derive a 4400% return on investment on email marketing because every $1 you spend on email marketing drives $44 revenue on average. [7]

One cool feature of email marketing that I love is the ability to automate everything. And nothing beats automating your marketing communications!

With email marketing automation, you segment your subscribers and set up email drip campaigns that the email marketing software sends out when a subscriber meets specific criteria.

While email marketing is beneficial, you must remember that you’re in the recipient’s private space – i.e., their inbox and must accord them respect for being in their space.

Here are some rules to follow when using email marketing to be most effective:

1. Get their opt-in

Don’t buy email lists and send out spam – it’s that simple. Build your email subscriber list organically for maximum results.

You can build your list organically by encouraging your ecommerce website visitors to subscribe with incentives such as free shipping, discount coupon, special offers, etc.

2. Nurture subscribers with great content

Once someone subscribes to your email list, they should automatically get a series of emails that nurtures and warms them to your product and services – this is known as email nurturing.

It’s most effective if you have great content that matters to your subscribers, the type of content that educates them, and profers solutions to their problems.

3. Follow up on purchases

Please keep the conversation going with your customers after they’ve purchased products on your ecommerce website by automatically sending them a follow-up email.

Doing so shows you care about them and are interested in ensuring their success with your products and services.

The post-purchase follow up email is also a good segway to solicit feedback from the customer and learn what you can do better to improve your product or service offerings.

You can also request the customer write a review, visit your blog for unique content or send them how-to videos on the product they’ve purchased.

4. Abandoned cart recovery

This type of email automation targets those shoppers who fail to complete their purchase for any reason.

Sometimes online shoppers get distracted and leave without completing the purchase.  

Having an abandoned cart email recovery automation in place allows you to reach out to them and encourage them to recover their cart and complete their purchase.

Paid Media

Unlike earned media, paid media is any form of online advertising that you pay for, such as social media ads, pay-per-click (PPC), display ads, and branded content.

Generally, I recommend using paid media specifically for retargeting ads to your ecommerce website visitors.

The only exception to this rule is when doing a PPC campaign, in which case you’ll be targeting people searching with intent to buy.

If someone visits a specific product page (or pages) and leaves, you can use paid media to retarget that person with particular marketing communication and call-to-action.

Doing this, in my view, is where paid media is most effective.

Influencer Marketing

Nowadays, the Internet is full of influencers. Influencers are people (or brands) with a huge following that can spread your brand’s message.

For influencer marketing to be effective, partner with influencers whose audience matches your target market niche.

If your ecommerce business sells baby clothes and accessories, for example, then you want to work with influencers whose audience base is mainly mothers (or expectant mothers).

Affiliate Marketing

The idea behind affiliate marketing is quite simple. Affiliates promote your products and services. In return, you pay them a percentage for the revenue they generate for your ecommerce business.

According to Mediakix, 81% of brands around the world use affiliate marketing to grow their brands.

Affiliate marketing is a performance-based advertising model that you should consider as part of your marketing mix.

Local Marketing

Local marketing is another form of paid media that allows you to target shoppers based on their location.

Just as you can use paid media for retargeting shoppers who visited specific product pages on your website but took no action (i.e., no purchase), you can target shoppers in a particular geographic mile-radius.

For example, you can target shoppers who are close to you business with free shipping offer or discount coupons since you know that the cost of fulfilling that order is less compared to the shopper who is far away from you.

Final Thoughts

Your ecommerce journey can be a rewarding experience.  

I wrote this guide as a framework (kind of) that addresses the various aspects of starting an ecommerce business.

I’m sure that you have more questions on how to execute the different sections within the guide.  

This exactly why I started SpicyCommerce to provide such guidance for ecommerce entrepreneurs, owners, and managers like yourself.

Your ecommerce journey doesn’t end with this guide. It begins with this guide.

Spend time and immerse yourself with the different content on this site to gain more insights and practical knowledge you can use to propel your commerce business.

Now that you’ve completed reading the guide go back to the top and START!  

Don’t get caught up in the practice of only reading and consuming information.  

Start executing. You’ll acquire the most knowledge when you start doing it.

Being in the ecommerce business is all about executing. You execute, take a sit back, and observe.

Next, you collect and measure your execution results, analyze the results, and listen to the message within them.

Then you adapt accordingly and re-execute.  

That, my friends, is how you succeed in ecommerce. It’s work, real work.   

But I can assure you; it’s gratifying delivering products and services that make a difference in people’s lives.

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