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Ultimate Guide: How To Start An Ecommerce Business

how to start an ecommerce business

If you recently developed a great product and have been selling it with success in your brick-and-mortar store, the events of 2020 might have been a huge shock to you. You may have been selling your products and services online as well, but you were probably not focusing your efforts in that direction since your in-person sales were going so well. You probably thought that your brick-and-mortar stores were the right place to focus your efforts!

Then the pandemic came along and you had to close your physical store location or locations. Now what? How are you going to sell your products and services? Can you make the transition to an online-only sales model without hardship?

There Has Never Been a Better Time to Start an Ecommerce Business

Ecommerce sales were already on the rise before the pandemic hit in 2020. With the rise of remote shopping, remote work, and remote connections replacing face-to-face interactions, ecommerce has become a necessity for many businesses. Ecommerce has enjoyed a decided uptick in popularity that has led to giants like Amazon hiring 175,000 new employees to cover the needs for their increased sales.

Ecommerce has been around long enough now that you don’t need to scrape together resources to make your ecommerce site work hard for you. All you need to do is pick your platform and do some research about the niche that your product falls into!

How Much Does it Cost to Start an Ecommerce Business?

While the cost to start an ecommerce site may not be as high as a brick-and-mortar business, there are definitely some costs that you will need to budget for. There are different ways that you can model your business and these different setup methods can change the costs that you will need to pay upfront.

  • DIY: This method is the cheapest route that you will choose if you are going to run your site on beginner-style sites. The cheapest of these options is around $60 a year for the hosting plan, your domain, and associated costs.
calculating ecommerce business spending
  • If you want to go truly beginner-friendly, you will need to pay about $29 a month plus a domain name which can be about $14 a year. This might be hosted on WordPress without any plug-ins or Shopify, both of which do so much of the heavy lifting for you if you are new at ecommerce.
  • If you are ready for the big leagues, you will need to step up to some of the more complex sites that offer lots of customization. Expect to pay more for your monthly costs and to invest money into web design and development for your ecommerce site.

How to Plan and Launch Your Ecommerce Business

If you want to know more about how to start your online business, read on to find out the best way to structure and research your new e-commerce business platform.

Part 1:

How to Find the Niche Product to Sell Online

woman planning her ecommerce business

This is the most important step that you will need to undertake to get your ecommerce business up and running. Even if you were already selling some products successfully in physical stores, you may have to adjust to the different demands of selling online. That same product might be marketable in your niche in the ecommerce space, but you will need to determine if this is the case through some analysis.

There are two factors that you need to consider when looking into your niche.

  • High-demand products in a niche that is growing.
  • High-quality commoditized products.

Each of these products has a different growth potential inside of your niche, and you need to know if you are working with one or the other to be able to market your product successfully. Whether you are selling inside of a niche market or inside of a commoditized market, you need to be sure that there is room for your products.

If the market space that you are considering is very crowded, you might be working against yourself from the beginning. Marketing strategies and other aspects of your sales strategy can improve your sales, even in a crowded market space, but the best rule of thumb is to have a truly unique product to sell.

ecommerce business team meeting

Part 2:

How to do Market Research & Analysis

This is the stage of the game where you determine what the market that you want to sell in is like. Are you selling a lifestyle product or are you marketing tech? Are you speaking to a small niche population or to a wider audience?

If you are selling a high-demand commoditized item, will you be able to get a foothold in your market space before the competition comes up to steal your thunder? Branding and marketing strategies for these kinds of products have to be developed well before you start selling your products so that you do not slip behind the 8-ball right away.

Market research will compare the selling platforms, branding, and identity of competitors so that you can determine where you can improve on their sales models and customer interactions. If you do not think that you can improve on a competitor’s branding and customer experience, you should be wary of entering this market space.

At the end of the day, you can sell any product, whether it is a luxury product or a high-demand product if you can find room for your unique presence inside of unique market space. If you cannot offer competitive pricing, a better sense of brand presence, or a better buying experience, you may not be able to justify entering this market space.

These kinds of questions are the driving force behind good market research and market analysis process. You want to be sure that your product and your brand can get rolling quickly or you may need to reconsider your sales plan and your product.

person typing at an ecommerce business office

Part 3:

How to do Competitive Analysis Effectively

This is the point in your business planning where you analyze your top competitors in detail. You will look at how their customers rate their interactions with the brand and you will identify areas that you feel you can improve customer experience.

You will also look at new ways of positioning similar products or consider ways in which you might make a better version of an existing product in your niche. You may also consider how many products they sell overall and whether you want to try and sell more than they do, or less. These kinds of facts and figures can greatly alter your branding strategy and your approach to marketing.

You will also need to identify and consider competitor’s objectives and strategies. Are your goals and strategies so similar that you are going to be overshadowed by them? You will need to be assured that you can stand out from these larger players as you are getting established in your market space.

Maybe you can sell your product at a better price or maybe you have access to a better supply chain. Maybe you know you can offer a more interactive buying process that will connect with customers right away. No matter what your unique business model might be, it will need to attract buyers away from your competitors.

Part 4.

13 Must-Know Tips for Online Business Success

woman smiling at online ecommerce business office

Expert advice is always helpful, and you will want to leverage all of the accumulated knowledge of business professionals whenever you can. Tips and tricks are some of the best ways to gather knowledge and improve your plans before you even start developing your ecommerce business.

If your business was affected by the pandemic, you know how difficult it can be to plan for all eventualities. However, with the online sales space growing in leaps and bounds, you can be assured that ecommerce is alive and well. Ecommerce sales had already grown 15% in 2018, and they are projected to continue to increase exponentially over the next ten years.

Tips and tricks from industry pros can help you to get your business back on its feet and selling online like there were never any obstacles in your path. If you are just starting out fresh as you enter the ecommerce world, these tips and tricks are even more important! Leveraging the advice of those with more experience can save you time and money.

Part 5:

Ecommerce Laws & Online Sales Tax

online ecommerce business employee looking at tax forms

Do you know about the sales tax rules and regulations for each state in the US? What about the ins and outs of sales tax and regulations overseas if you are going to sell internationally? The chances are that you do not know much about these items because your brick-and-mortar locations did not have to contend with any of these challenges.

Knowing about sales tax, permits and fees, regulations related to certain products, and the taxation that needs to be assessed for international sales is a big ask, even for experienced business professionals. Amazon has an entire team that works on their side, which shows you how complex these rules and regulations are.

Thankfully, you can seek expert advice for many of these questions and a lot of your tax and international fees worries can be handled by a quality Point of Sales (POS) on your side. Making sure that correct taxes and fees are wrapped into each sale without you having to manually input them is a major factor in overall business success.

Remember to consider shipping regulations for hazardous or restricted items as well. You might also need to implement changes to the structure of your website to conform to rules and regulations related to sales to minors or children under 13 years of age. This is a lot of information to absorb, but you do need to be versed in these laws and sales tax questions to avoid legal issues related to your business.

post it notes and keyboard at online company

Part 6:

10 Best Ecommerce Platforms of 2021

There are lots of ecommerce platforms out there. How to choose the right one? This can be a tough question, especially if this is your first foray into ecommerce. The answer to this question depends on your level of programming and coding expertise, but there are other factors to consider as well.

Checking out our list of the best ecommerce platforms for 2021 will give you some guidance about how to choose the right platform for your needs. You will be spared the anxiety of making this choice as well as the hassle of moving your business to a new platform after you have already started selling products.

There is nothing that is more stressful than a shift to a new sales platform, so it is always best to start out with the platform that you intend to work with long-term.

This is one of the best places to do some research into costs, upgrades, plug-ins, and other features that might affect your decision. Look at competitor’s ecommerce stores and see who they are hosted with. You can learn a lot about what you do and don’t like about certain ecommerce platforms by visiting them as a customer.

Part 7:

How to Source Your Products to Sell Online

man choosing products to sell from his ecommerce business

No matter what product you are going to sell, you need to consider how scalable it is and if you can continue to develop new versions of it as times change. You have numerous ways to source your products and also to send them to your customers. These things can be linked to your sourcing processes.

You can choose between these sourcing models:

  • DIY products or services
  • Work with wholesaler or manufacturer directly
  • Hire a dropshipper

DIY is the most limited kind of product as far as sourcing. You can control all of the parts of the creation process, but DIY products are very limited in how scalable they can be. If you work with a wholesaler, you can get products at cost and likely save yourself a lot of money and affect your bottom line significantly.

The downside to wholesalers and dropshippers is that you may be limited in how unique you can make your products. This can affect your long-term branding and your business processes overall. Sourcing is a major step in the development of any ecommerce business.

people meeting at an online business office

Part 8:

How to Create, Launch & Showcase Your Online Business

Creating your ecommerce store can require the help of programming and web design experts if you are not versed in the creation of your store. There are drag and drop models out there but they usually offer fewer custom options and might not be as scalable as you would prefer if you are thinking long-term.

Launch day needs to be paired with an excellent marketing campaign that makes people aware of your brand and your products. This is a great time to use the data that you gathered during your market research phase and put it to use to create meaningful targeted ads that will reach your target audience efficiently.

You will want to test all of the functionality of your ecommerce store before launch day and make sure that there are no bugs or kinks that might discourage customers. People are more than willing to move on to a new brand with a better online shopping experience, so you need to make sure everything works perfectly.

Showcasing your business is an ongoing project that you will undertake as a portion of your branding campaign efforts. Another important part of showcasing your online business is leveraging SEO Optimization strategies to make sure that your products and services show up at the top of search results.

Added value content like blog posts and informational articles and videos can also help showcase your products and your business. You should look into possible opportunities to work with social media influencers as well to showcase your brand to new audiences that you have not been able to reach.

ecommerce business site

Part 9:

How to Drive Traffic to Your Online Store

Driving traffic to your online store can be done through ad campaigns, influencer outreach, and also through the social media channels that you utilize to create brand awareness. An often-overlooked factor in organic sales growth is connected to your branding message and how connected it is to your target customer base.

If your store and your products stand for the right things that your target audience cares about, you will enjoy a much bigger boost to organic business growth than if you do not use branding to create this bond. Lifestyle products and luxury products tend to enjoy an easier organic growth than other types of products, but that does not mean that you cannot grow other product types readily.

Being visible, relatable, and reliable are all important factors when you are trying to drive organic growth to your online store in 2021. People want to get to know you before they become customers, but once they feel bonded to your products, they will help share your brand with everyone they know and connect with.

man planning online sales website

Part 10:

Data & Analytics For Ecommerce Business

Even if data is not your favorite part of analyzing your business, you need to take the time to utilize it to determine where your branding outreach and your ads are working and where you can improve. If you do not take the time to leverage the data that you are collecting when you run ads, do branding outreach, or offer new products for sale, you will be working blind more often than not.

There is no way to run a successful online business without looking at the key performance indicators that tell you what you need to adjust and what you need to keep doing. Business success in the ecommerce world is based almost entirely on your evaluation of metrics, like it or not.

You will need to pay attention to conversion rate, click-through rate, pay-per-click, page views, average order value, and average time spent on your site. There are many other metrics that you can look at as you assess the performance of your business, but these are the major metrics that you should not neglect.

Based on the numbers that you are seeing from these KPIs, you will be able to adjust to improve your visibility, the frequency of page visits, and much more!

person working on online business platform

Part 11:

How to Scale Your Ecommerce Business Right

You need to plan your online business with growth in mind. This might seem daunting. You can’t predict the future after all!

However, there are some good strategies that you can use that will prevent hang-ups related to shipping, sourcing, and volume of sales as you get further down the road. If you are worried about the scalability of your current platform, you should analyze what would need to be changed for you to double or triple your orders.

Fulfillment solutions can make a huge impact on scaling concerns, as can picking an ecommerce platform that is built for scalability. You should avoid having to rework every part of your business model just to grow and service more customers.

Budgeting and marketing go hand in hand during the scaling process and you will want to have a good marketing plan as well as some money in savings before you start growing your business. The key is to avoid abrupt scaling whenever possible so that you do not create issues with servicing your customers.

two woman working on their ecommerce website

Ecommerce Business FAQ

1. How do I Know Which is the Right Business to Start?

This is all about personal preference and the research that you have done. If you are trying to decide between two business models or two product types, consider which one you think you will be able to feel passionate about for the long haul. Running your own business is a lot of work and you will need to feel strongly about the products that you are selling to be able to work on them for years with investment and energy.

2. What Size Should I Aim for my Business to be?

This is again about the resources that you have available to you and your ability to hire employees and outsource tasks like fulfillment. Everyone’s successful business goals look different and you should think about what your end goals are before you start trying to scale your business. Not everyone has the same goals for their ecommerce business and that is okay.

3.  How do I Find Areas I can Improve Over my Competition?

You can leverage opportunities to improve over your competition if you do some research about their fulfillment models and check out their storefronts. Look at customer buying experience and consider places that you think could be improved or streamlined. Another good resource is reviews that have been posted about your competitor’s products and services. 

woman looking at an online business on her laptop

4. What if I am Not Skilled at Technology?

If you are not a technical wizard with coding and other skills related to building a website, you are not alone! These skills do not have to become your burden to learn and try to leverage for your business needs. There are many skilled website designers and other IT professionals out there who can help you to create the right ecommerce experience for your customers for a fee. Outsourcing these kinds of skills is often necessary to get your ecommerce store set up the right way.

5. How Many Products Should I Sell?

This has a lot to do with your fulfillment model and your ability to finance the original run of products before you start selling. It is always best to make sure that you are not overextended financially and most of the time you will overwhelm buyers if you offer too many kinds of products to them in the beginning. Honing in on one good product is the best route when you first start your ecommerce business.

6. What If I Don’t Have Enough Money to Develop Products?

This is a common struggle for people with a good idea that they need to finance with their own money as it is developed. You can use a variety of crowdfunding options to gather money to start your ecommerce product development or you might be able to get a business loan. Where there is a will, there is a way! Just make sure your product is projected to make enough money back that you can justify a loan or running a crowdfunding campaign.

online business owner typing on laptop

7. Should I Pay for Advertising?

While this might not be what you were hoping to hear, the answer is always yes. You may not be able to pay for much in the way of advertising at first, but no one can buy your product if they do not know it exists! Budget for your ads clearly and conservatively at first, and then branch out into new ad avenues over time.

8. What if My Niche Changes Over Time?

This is always a possibility for companies in the ecommerce space and you will need to continue to monitor your niche and your market space over time. If your product stops selling well in the niche it is placed in, but another group of buyers is still interested in it, adjust and change to meet demand.

9. Should I Use a Fulfillment Company?

Perhaps you will not need a fulfillment company at first, but over time if you want to scale your business you will. Fulfillment companies save you money on shipping and time and effort that can be directed toward new product development and other necessary functions. There is no way to scale a company without a fulfillment plan.

people looking at online business details on tablet

10. What if I am Not Sure How to Craft my Branding Strategy?

This is a common problem and not one that you should attempt to work out alone if you are not experienced with product branding. Enlist the help of a branding expert or an experienced advertising agency if you need help with branding. There is no way to market an ecommerce brand successfully without the right branding.

Summary

person working on their ecommerce platform

Determination and dedication are essential if you are thinking about starting an ecommerce business. You can’t just set it and forget it if you want to succeed in the ecommerce space. You will need the right product, the right business plan, and the correct platform to make sure that your ecommerce business is a success.

If you are invested in the potential of your ecommerce business, and you are willing to do some hard work, you will be able to succeed! Make sure that you think about all of the information that you will need to gather before you launch your business and do your research thoroughly. Being prepared for all eventualities will help you to launch your business and start getting sales right away!

Ultimate Guide: How To Start An Ecommerce Business

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Hey there! I’m Dan Ben-Nun. I’m a Growth Marketing Expert dedicated to increasing ROI for your business. Let me share my tips with you so you can achieve the results you want.

About Dan Ben-Nun

Dan Ben-Nun is a successful entrepeneur and digital marketing guru. He’s founded & grown 2 companies from zero to multi-million dollar businesses and has helped hundreds of companies grow with digital marketing.

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Ultimate Guide: How To Start An Ecommerce Business

how to start an ecommerce business
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Do you want to boost revenue?

Hey there, I’m Dan Ben-Nun. I’m a Growth Marketing Expert dedicated to increasing ROI for your business. Let me share my tips with you so you can achieve the results you want.