How To Start an E-Commerce Business: The Complete Guide

How To Start an E-Commerce Business: The complete guide
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Your Complete Guide to Launching & Growing a Successful Online Business

Before e-Commerce, entrepreneurship was predominately based on innovation. The 1970s saw many innovative inventions grow into their full disruptive force as we know them today — Microsoft, FedEx, and Apple to name a few. 

Now, as we become more connected globally, the ease of selling online and building a successful e-Commerce business is within reach for people of all backgrounds. 

But which path will you take? You could choose to buy an existing e-Commerce store and take this store to the next level. We’ve discussed how you can do exactly this in our handy guide to buying an e-Commerce store. Or, you can start your e-Commerce business from scratch, creating your very own store and taking your first steps into the marketplace.

Starting an e-Commerce business can seem really intimidating, but once you have the game plan laid out in front of you — the question becomes “how bad do you really want it?”

Read on to discover a guide brimming with the answers you need to get your e-Commerce business set up, launched, and well on its way to becoming a success.

How to Start an E-Commerce Business

Is Starting an Online Store Profitable?

The short answer is yes, an online store can be significantly profitable — especially when you consider this in the context of how well the e-Commerce industry is doing. By 2023, US e-Commerce revenue will hit $740B, which is over 70% of revenue growth from 2019.

What this tells us is that more people are spending online, and that doesn’t seem to show any signs of slowing down. In fact, it’s easier to be profitable with an online store than with a traditional brick-and-mortar store.

Just think of all the overheads of operating a bricks-and-mortar outlet — building rental and management, upkeep and maintenance, and all the other costs that come with a physical store — then compare this to an online store. While there will be some fees and charges in the process, your e-Commerce profit margins are likely to be much healthier.

While there’s no guarantee how much you will make in your first, second, even third year of running an online store — there’s also no limit to how much you are able to make. Of course, this only applies if your business is successful. 

And it will depend on a number of factors, including the industry you operate in and the strategies you’re using. This is why we created this guide — to help you tread the path to e-Commerce success.

What Are the Benefits of Starting an E-Commerce Business?

Before going into greater detail on how to start your e-Commerce business, let’s take a look at what you stand to gain. Here are some of the benefits to building your e-Commerce store:

Affordable Compared to Physical Stores

We’ve already touched on this, but it’s worth mentioning again here — you won’t have to worry about the overheads and additional expenses of opening a physical brick-and-mortar store.

A Surging Market

The e-Commerce market has grown in recent years, and it’s still growing. Globally, the market is projected to hit a compound annual growth rate (CAGR) of 6.29% between 2020 to 2025.

The Chance to Grow and Flip Your Business

Many entrepreneurs create businesses because they want to sell their products or services in the long term. Other entrepreneurs have a different aim — they plan to build a business of value and then sell it at a profit. This option is open to you when you start your e-Commerce store. Check out Flippa’s online business valuation tool and discover how much your e-Commerce business might be worth to a buyer.

The Lifestyle You Crave

With the right approach, you can live the life you want with your e-Commerce store. You can work the hours you want to work, make the business your full-time job, or your side hustle — whatever suits you. This can give you the work-life balance you’ve always dreamed of.

Costs to Start an E-Commerce Store

How Much Does It Cost to Start an e-Commerce Store?

As we’ve mentioned, starting an e-Commerce store is relatively inexpensive. But this “relatively” is important here. Setting up your store is not free — there are costs and charges associated with getting started. The exact cost will vary considerably, depending on the type of business you want to run, how you will source your products, the platform you will use to sell, and other factors. Here are some of the bare necessity upfront costs you need to be aware of.

Business Licenses and Permits for Running Your Store

While the licenses and permits you will need for an e-Commerce business are very different from those required for a traditional store, you’ll still need to be fully up to date with documentation. Costs for this can vary across different state and territory boundaries.

E-Commerce Platform

Unless you are an expert when it comes to coding and development, you’ll need to use an existing e-Commerce platform to support your store. Again, this will not be free and you’ll need to pay some kind of subscription or fee to use the platform. To help you weigh up the costs and choose the best e-Commerce platform for your business, check out this helpful comparison of five popular e-Commerce platforms.

Web Hosting and Domain Names

Even after your e-Commerce platform is set up, you’ll still need some way to host your business on the internet. Basically, you will need a domain name and somewhere your customers can reach you online. To achieve this, you’ll have to pay an annual hosting fee as well as a fee for the use of the domain name.

Tip: Domain names are an important part of your business and can develop the identity of your website and brand if developed properly. Find out about the 5 characteristics of valuable domain dames here.

Payment Facilities

To make a profit from your e-Commerce business, you’ll need to take payments from your customers. To do this in a safe and reliable fashion, you’ll need a payment gateway. You may have to pay an upfront and ongoing fee to use this payment gateway. 

Tip: Make sure you consider your payment gateway and e-Commerce platform in tandem to make sure both can work seamlessly together.

Product Inventory and Deliveries

Stores need products, and your e-Commerce store is no different. Factor in the cost of building your inventory, whether from sourcing merchandise or developing your own products for sale. You’ll also need to consider how much it will cost to send items to your customers after they have placed an order. 

Tip: Dropshipping and drop servicing can be excellent ways of running a business with minimal capital. 

Promotion and Marketing Budget

A general rule of thumb suggests that e-Commerce stores starting out should expect to invest between 5-10% of total revenue in marketing.

How much budget you set aside for marketing and advertising can depend on the type of product or services you sell. The more competitive the industry is, the more expensive it can be. 

It also depends on what acquisition channels you plan to use. Organic social media promotion is not going to get you very far without any investment into Facebook or Instagram Ads. Even producing high-quality content for your content marketing strategy will cost you money. You might want to start off with Google Display Ads first, which is a cheaper option compared to social media advertising.

Remember, the point here is just to keep these costs in mind. And don’t be afraid to get help from some experts who know what they are doing. Your time is also money, and if you aren’t into creating content or setting up Ads — it could be worth hiring a contractor to do it for you. 

As long as you keep all of these costs and factors in mind, starting your e-Commerce store will certainly be much cheaper and more straightforward than starting a physical retail business. So, let’s take a look at how this is done.

Guide to Start Your E-Commerce Business

Launching a Successful e-Commerce Business from Scratch

By following our simple, step-by-step process, you’ll be well on your way to launching your e-Commerce business. You’ll be able to build your business from scratch, customizing your store according to your specifications.

Step 1: Developing Your Business Idea 

All businesses start with an idea. So, what’s yours?

Start by early-phase planning service offerings or product ideas. Jot these ideas down on paper until you start to hit upon some really good ones. 

Next, start evaluating:

  • What competitors exist in your space?
  • What do you do differently?
  • What is your niche?
  • Is there a demand for your products and services?
  • Can you enhance this demand through marketing?
  • What problems are you solving for your audience?
  • What is the business model — will your customer need to purchase add-ons for their product or a long-term support subscription, etc.?

Once you have some promising ideas for products and services, you’ll need to step up your market research. Gain as much data as you can about competitor products and gaps in the market, and use this to fuel the development of your brand. Take a look at your competitor’s stores, their social media profiles, and their online reviews — find out what they are doing well and what you can do better.

Finalize Your Product Idea or Service Offering

With your product idea or service offering now in development, you need to finalize it. Reexamine the logistics of the product or service — is it feasible to market and deliver this to your audience, and is the audience big enough? And how about sourcing — how will you set up your supply chain, including supplier, production, shipping, warehousing, and inventory management?

You may want to think about other aspects, too, such as the software tools you will need to support your product and your business — customer support platforms or inventory management tools, for example. Dropshipping is another option if you do not have room for a large-scale inventory, as you will not have to stock the products you sell to customers.

If you are offering a service, consider scalability. How can you increase the scope of your business as your list of customers begins to grow? This scalability will help you future-proof your business, ensuring that you have the resources to meet demand as it increases.

Step 2: Developing a Business Plan

With your products or services now well on their way to development, you need to craft your business plan. This business plan will help guide the growth of your brand in the future.

  • Start your business plan by describing your business. What is the identity of your company? What do you provide to your customers? In this description, include the structure and business model of your organization, the market you operate in, the unique value proposition you offer, the history of your business, and your short- and long-term objectives. Cover the permits and licenses you need here, too.
  • Next, you’ll need to conduct market research. This will include developing an ideal customer profile and researching the trends and growth projections that are relevant to your industry. 
  • Put your Strengths, Weaknesses, Opportunities, and Threats under the microscope. Conducting a SWOT analysis will give you significant insights you can use to guide your business forward.
  • In the next section, you’ll need to cover information about your team. Perhaps it is just you working individually, which means you can skip this in your business plan. However, if you have other members in your team, you’ll need to define their roles and responsibilities.
  • Next, include details of all the products and services you’ll be selling in your store. Note down the logistics of sourcing and delivering these products. Add details about the software and platforms you will use to sell and accept payments.
  • Cover your marketing and promotional strategies. How are you going to bring your business and your brand name to the attention of your audience? 
  • Complete a cash flow statement. This will outline how your e-Commerce business model will financially support your organization.
  • Finally, complete your business plan by writing your executive summary. This is an overall representation of what your business is all about, but it is best to write this section after all of the other parts of the template have been completed.

Step 3: Deciding on an E-Commerce Platform

You are well on your way now, and your new business is taking shape. For the next step, you need to get started with your e-Commerce platform of choice. This is an important decision as it will have a significant impact on the development of your business’s identity.

Let’s take a look at a few options:

Amazon

When we think of e-Commerce, Amazon is one of the first things we consider. You can set up an Amazon account quickly and easily and start selling via the Marketplace. However, while you will have your own area of the Amazon platform, you won’t have your own branded e-Commerce website to reinforce your identity. Amazon is definitely more suited to small-scale sellers, but you have far greater opportunity to scale when you consider other e-Commerce solutions.

Shopify

Shopify is another popular choice, thanks to high levels of security and reliability. Shopify is a great e-Commerce platform for those who are less tech savvy, but this does mean there is less functionality readily available unless you work with a web developer. You will have access to a whole suite of apps that can make running your e-Commerce store a lot easier — but most will cost you extra.

Woocommerce

As well as being secure and reliable, Woocommerce features a range of different tools such as product ratings and reviews and built-in blogging functionality. It’s also easier for customers to find your store through organic search than it would be if you were just selling on Amazon.

Etsy

When you sell online with Etsy, you again experience the security and reliability of using an established platform. Etsy may also be more suitable for selling in niche markets, such as craft items and unique clothing or ornaments. If this matches your identity, Etsy is one to consider.

WordPress

WordPress provides plugins that you can use to build e-Commerce pages into your website. These plugins integrate with the WordPress platform, so you can be assured of their security and reliability. Meanwhile, you’ll also be able to offer your own branded website to your customers, with a built-in e-Commerce area.

eBay

eBay is one of the elder statesmen of e-Commerce, and so it provides all the trust and security that you would expect. There’s also the opportunity to connect with a huge market of customers. However, like Amazon, one downside is that you won’t be able to promote your brand with your own dedicated store.

An Integrated Platform

Of course, you want to put your brand first. This can be difficult on platforms such as Amazon, eBay, and Etsy, where you won’t be able to use a dedicated domain or a storefront that really shows off your brand. With this in mind, you might prefer to use a platform that integrates with your existing hosting and is built into your own website. WordPress offers this advantage, as do other content management systems. However, this may require a more complex set-up than simply selling on a mainstream provider. Many startups may decide to start off selling products on Amazon or Shopify, and then shift to their own dedicated domain once they have built up enough experience or momentum.

Step 4: Building Your E-Commerce Website

Now you need to build and launch your website. But how are you going to do this?

DIY Development or Web Development Service?

If you are selling on Amazon or eBay — or similar — you won’t have to worry about this. You can simply add products to your shop and start selling. But if you are building something a little more personalized, you need the relevant technical expertise. Be realistic — can you create a personalized shop yourself, or do you need a web developer to assist you?

Decide on a Live Date

You need both a projected date for the shop to go live and a checklist to tick off along the way. What components does your site need? Product descriptions and checkout, for example. Decide on what your shop needs to go live and then set a timeframe for achieving this.

Get the Whole Supply and Delivery Chain in Order

How are you going to fulfill the inventory and update this on your product pages? How are you going to ship deliveries and process returns? Refer to your business plan here and make sure you have software such as inventory and supply chain management solutions in place to make this process easier and more efficient.

Add Content to Your Website

Don’t leave this one to the last minute! Every e-Commerce store needs high-quality written content across your entire site. Just because someone lands on your site, doesn’t mean they will convert. 

Your website needs to be filled with helpful content that explains who you are, what problem your product or service solves, and the benefits of it. 

Tip: Create actionable content that’s easy to implement and easy for readers to act upon. Consider what problem you’re solving for a reader and how the content is valuable for the reader.

Some key areas to focus on include your home page, about us, product descriptions, and FAQs. You may want to consider a content marketing strategy to help improve your SEO too. Start planning blog articles and evergreen content pieces that talk about topics related to the product or service you sell. Think how-to’s, debunking misconceptions, and explaining benefits. 

Congratulations! You Have Launched Your Own e-Commerce Business — Now What? 

Guide to Growing Your E-Commerce Business

Well done, you’ve launched your e-Commerce business! Hate to burst the party bubble, but there’s still more to be done. Check-in on your business plan, assess your objectives, make sure everything is on track, and let’s continue.

Step 5: Acquiring Customers

You need to find and attract potential customers to your e-Commerce site, so here’s how to find them with advertising and marketing campaigns.

A Multi-Channel Approach

You need to be leveraging multiple sales and marketing efforts to help potential customers find your online store and sell products. Refer to your target audience and find out which social media platforms your customers use — and meet them where they are.

Leverage the Best from Free Digital Marketing Options

Paid advertising is important, but you want to make your marketing budget stretches further by using free marketing tools and strategies. 

  • Join the conversation on social media platforms
  • Reach out for customer reviews and testimonials, either directly or by searching for them on review aggregator websites
  • Form content partnerships with other brands
  • Livestream your product launches and releases

Understanding Your Customers

Every interaction you have with your customers is an opportunity to learn more about them. Discover more about your target market’s behaviors and motivations when they shop, and then develop a customer journey that maximizes your revenue. For example, a customer demographic that buys Product A might benefit from Service B, so be sure to let customers know where they can find this.

Move Customers Through the Sales Funnel

Unfortunately, some of your customers will churn. This means they make a one-off purchase and then don’t come back for more. Other customers may browse your products and then head elsewhere. Encourage email sign-ups so you can reinvigorate their interest with offers and deals — check out the Flippa guide on how to do this — or send reminders to prospects who may need further encouragement. 

Tip: Stop the churn with our 3 Simple Customer Retention Strategies

Understanding SEO (Search Engine Optimization) and Generating Organic Traffic

Content marketing and search engine optimization might be largely free, but you still need to put in the effort here. To make sure this effort is not wasted, you need to spend time getting your strategy right.

  • Use Keyword Planner tools to find the right keywords and phrases for your content
  • Use these keywords naturally and relevantly. Don’t stuff keywords into your copy or use any irrelevant keywords
  • Research what your audience members are searching for on Google
  • Focus on Google’s E.A.T. guidelines of Expertise, Authoritativeness, and Trustworthiness — i.e., create quality content that is genuinely useful and backed up with great sources
  • Encourage organic backlinks to your site by creating great content, but don’t incentivize or pay for any links or you may be penalized!
Blogging

You need to be creating blog content fairly regularly to get the best out of your content marketing efforts. It’s difficult to say exactly how many blog posts you should be producing each week, but smaller businesses tend to achieve success by releasing one to four posts every seven days.

Hot tip: If your online store is still quite new, Google can take a while to come back and crawl your website to see if there is any new content. When you publish an article, make sure you submit it for indexing through Google Search Console to place it higher in Google’s priority crawl queue!

Of course, posting on its own is not quite enough. You also need to make sure that what you’re posting is up to scratch.

  • Focus on creating great content that meets the E.A.T. framework mentioned above
  • Use long-tail search terms in your content, maximizing conversion while reducing the competition
  • Plan your blog posts ahead so that your bloggers release posts around times of seasonal demand and interest
  • Use infographics, images, and video where possible to increase engagement
  • Use a content optimization tool like Frase, Clearscope, or SurferSEO to help you create content that Google loves. Although, if you’re planning to work with a freelance writer — they may already have access to tools like these!

Using Paid Advertising to Create Brand Awareness and Drive Sales

Blogging for SEO rankings is a long-term strategy, so you’ll still need to use paid advertising to get the most from your promotional efforts.

Paid advertising will:

  • Create significant demand for your products, putting your brand in front of eyes that may not have been aware of you
  • Put you shoulder-to-shoulder with your competitors — or even ahead of them — in search results
  • Be highly cost-effective as long as you get your strategy right

To get your strategy right, you need to consider different kinds of advertisements. These include:

  • Google’s Shopping search results ads
  • Google’s standard search results ads
  • Pay Per Click ads, where you pay for traffic even if it does not result in a conversion
  • Social media ads and sponsored posts

You’ll need to spend time working out which ads work the best for you. Think about your total ad spend and weigh this against the conversion rate. Often, A/B testing — i.e., running one form of ad (A) and then comparing this with a slightly tweaked version (B) — will give you the insight you need.

Maintaining a Presence on Social Media

Your customers are on social media, so you need to be on there, too. Social media gives your customers a chance to engage with you and get to know your brand, encouraging them to make a purchase. You can achieve this by combining a great influencer marketing strategy with your content marketing plan.

  • Remember to stay personable and friendly on social media
  • Promote your content on the platform
  • Integrate social media buttons into your shop pages for easy sharing
  • Use paid social media advertising alongside your free strategies
  • Reach out to influencers and engage in product marketing deals

Performing Email Marketing

Email marketing is useful for raising the profile of your brand. There are a number of strategies you can use to get the most out of this:

  • Promote blog posts and articles you post on your website
  • Use email marketing automation to encourage users who may have abandoned their shopping cart or purchasers who may have churned
  • Request product reviews from your previous customers
  • Offer exclusive promotions and publicize your new product launches
  • A/B test your subject lines to get the best open rate
  • Plan your email series so that one email follows on from the next
  • Build your email list from your customer base, and also use lead capture forms to grow your list of prospects

Generating Product Ratings and Reviews

Online reviews are very important for your business. 72% of customers say that Google reviews are useful in deciding which businesses to work with, while 94% of customers will avoid businesses with bad reviews. What’s more, customers expect businesses to be engaged on review platforms, with over half of customers expecting businesses to respond to negative reviews within a week.

Encourage your customers to leave reviews about their experience. Of course, you’d want to receive good reviews, but be transparent and request negative feedback, too. You can turn a negative into a positive by responding to a bad review, thus building trust in your brand.

Step 6: Providing Stellar Customer Service

You can’t get 5-star reviews unless you’re providing 5-star customer service. As mentioned above, you can’t always expect everything to go smoothly, so be sure to respond quickly when the experience is not so good. You’ll gain a reputation as a business that really cares, leaving a lasting impression on your customers and leads. 

Provide plenty of communication channels so that customers can get in touch with you — live chat is a good idea. Be friendly and personable at every stage. And surprise your customers with personal touches, like a handwritten note.

Step 7: Analyzing Sales Performance to Hone Your Marketing Efforts

Ongoing analysis is critical now. You need to know exactly what you’re working with in terms of marketing performance so that you can improve your strategies for the future. This means:

  • Understanding how many sales you are making compared to your ad spend
  • Analyzing conversion rates — check out Flippa’s guides to building e-Commerce conversions and optimizing these conversion rates
  • Working to develop benchmarks — for example, the average conversion rate for e-Commerce is between 1% and 2%. Are you exceeding this?
  • Track crucial metrics such as traffic to your pages, email opt-ins, customer lifecycle value, average order value, cart abandonment rate, and cost to acquire new customers
  • Examining who is clicking on your ads — make sure you are not wasting ad spend on people who won’t convert
  • Understand your new and returning customers — are you getting the best out of the full customer lifecycle? 

Your Online Business Is a Success! 

So what comes next? Perhaps you love selling and want to keep at it, growing your sales revenue in the future. Conduct market research to achieve future projections and discover growth trends that will help you understand the developing value of your business.

Or, have you considered flipping it? Use the handy Flippa tool to calculate how much you can expect to sell your e-Commerce store for. You can always use this revenue to start a new online business, ready to grow and flip again. The choice is yours, and your future is bright.

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