How to Start an E-commerce Business: Everything You Need to Know

The first e-commerce business, Boston Computer Exchange, was created in 1982. That was long before the idea of Amazon was born. After Amazon’s phenomenal success, digital shopping has become a new normal for the growing global population.

The convenience and accessibility of shopping online have significantly contributed to the growth of the e-commerce industry.

In 2024 alone, global retail e-commerce sales are estimated to exceed 4.1 trillion U.S. dollars, driving over 20% of total global retail sales. These sales numbers are expected to reach 6.5 trillion by 2029.

Despite being a saturated market, the e-commerce industry is still buzzing with opportunities that beckon even the most amateur businesspeople. This article will walk you through the specifics of the e-commerce industry and proffer a 12-step guide to starting your own e-commerce business.

In 2024 alone, global retail e-commerce sales are estimated to exceed 4.1 trillion U.S. dollars

What Are E-commerce and E-businesses?

The term “e-commerce” stands for electronic commerce. It defines activities that involve the buying and selling of goods or services over the Internet. However, many businesses operate and transact on the Internet today, making it confusing to specify which is strictly an e-commerce business.

Technically, an e-commerce business is one with a business model that uses the Internet as its primary medium of transaction. Several businesses have been created to meet this purpose, serving a unique set of customers. Online marketplaces offer cost-effective solutions compared to traditional brick-and-mortar stores, reducing operational expenses and providing a more manageable financial setup.

The definition of an e-business, on the other hand, is slightly different. It describes a business that operates and sustains itself entirely on the Internet. Many e-businesses do not have a physical office.

Types of E-commerce Businesses

Depending on the type of customers an e-commerce business serves, there are four categories of e-commerce.

Unlike a brick-and-mortar store, an online business typically incurs lower operational costs and can offer unique shopping experiences that physical stores cannot.

• Business-to-Consumer (B2C): These businesses sell their products or services directly to consumers.
• Business-to-Business (B2B): Sometimes, businesses sell products or services that help other businesses serve their customers. When this business-to-business relationship is facilitated remotely over the internet, such a company is considered a B2B e-commerce business.
• Consumer-to-Consumer (C2C): Some businesses are set up for consumers to sell their products or services to other consumers. These are usually marketplaces for used products or auctioning rare items. eBay is a perfect example.
• Consumer-to-Business (C2B): This type of business is designed to serve creatives mainly. They are internet-based companies that help consumers sell their products or services to businesses. Freelance and creative licensing marketplaces are excellent examples.

17 Steps to Start Your E-commerce Business

Now that you are familiar with the four types of e-commerce businesses, it’s time to find out how to start yours. These twelve steps simplify the complex process of setting up a functional e-commerce company.

Creating a successful online store involves more than just selling products: It requires a comprehensive business plan and marketing strategy to drive brand loyalty and convert casual shoppers into loyal customers.

1. Do Your Research

Nothing beats the old-fashioned research. You should consider looking deeply into the market you want to serve and verifying its viability.

Your research should enlighten you about the competition available in the market, the opportunities, and the threats you might face if you eventually decide to start your venture. A good old SWOT analysis is a great place to start.

However, finding the right information to keep you abreast of these details can be confusing. There’s so much information published on the internet. Combing through them can take a century, but you can focus on some industry experts who have taken years to earn the general public’s trust.

Several credible information sources exist depending on the e-commerce business you wish to start. For one, Shopify has a Shopify Reports offering and is a trusted source of information. Reports from McKinsey, Statista, and CB Insights are also highly trusted.

2. Create a Business Plan

After conducting your research, the next logical step is to create a business plan. Think of this as your roadmap to success — a document that outlines your goals, strategies, and resources to bring your e-commerce vision to life. Having your own e-commerce site allows you to present your products more effectively and ensure that customers recognize and remember your brand.

You can use a premade business plan template or build your own, but your business plan should detail:

• Executive Summary: A high-level overview of your business, including its mission, vision, and core values.
• Market analysis: A summary of your research, highlighting trends, opportunities, and competitors.
• Business model and products: A clear explanation of your e-commerce business model and the products or services you will offer.
• Marketing strategy: Your approach to attracting and retaining customers through methods like SEO, email marketing, and social media.
• Operational plan: Insights into how you will manage inventory, logistics, and customer service.
• Financial plan: A breakdown of your costs, revenue projections, and timelines for achieving profitability.

Creating a business plan ensures clarity, keeps you organized, and provides a valuable resource for communicating your vision to potential investors, partners, or stakeholders.

3. Define Your Target Audience

After researching the market, narrowing down your target audience ensures that the products or services you choose cater to a specific group’s needs. Alternatively, you can choose the products that you resonate with or are easy to handle/ produce, and then research into your target audience.

Clearly defining your target audience will help you understand their pain points, purchasing behavior, and preferences. Create detailed buyer personas, including demographics, psychographics, and buying habits. Tools like Google Analytics, social media insights, and surveys can offer valuable data.

4. Choose the Right Products or Services

After conducting your research, you will most likely realize that some of the products you have in mind are already on the market. You can choose to pour a bucket of table salt into the Atlantic or find something less common that could still be in high demand.

I suggest you find a demand that hasn’t been met completely and try meeting it. The fact that it’s an existing demand shows a viable opportunity there.

You can add other popular products to your catalog to increase sales and offer alternatives, but you should be known for these unique products.

5. Decide on Your E-commerce Business Model

Now that you have chosen the products or services that will bring you closer to success, it’s time to figure out how to manage inventory and fulfill customer orders. This may not be a challenge if your business has been operating offline. You might already have an inventory management process.

Starting out in the e-commerce space offers you a privilege not enjoyed in the offline world for an entirely new business. There are four effective business models that you can use to optimize business processes, increase sales, and cut down inventory waste to the minimum. 

• Dropshipping: This model allows you to list products that are not even yours on your e-commerce website. You can set the product’s price and minimum order to fit your business plan and suit your target customers.

When a customer buys any products, the order is routed to the original owner, who then packages and ships the order to the customer. You get to keep a profit from the sale and don’t have to get in contact with the product.

• Produce (or print) on demand: If you own the product but do not have the necessary resources for a large inventory, you can utilize a print-on-demand or manufacture-on-demand model. With this model, products are only created when an order has been placed.

Usually, this incurs higher production costs, especially when you have to make the products in small quantities. As a solution, you can use batch production to make products in bulk after ordering a certain number.

This on-demand model is particularly great when you want to test a new product without making major financial commitments.

• White-labeling: This model works best if you already have an existing network of loyal customers or followers. This means rebranding an already existing, high-demand product.

For instance, you can simply work with a vitamin supplement manufacturer who makes the same vitamins for their other clients. Then, get a packaging company to make containers and labels with your business name. Voila! You now own a vitamin supplement business.

• Subscriptions: This is pretty common these days. It’s primarily meant to increase a customer’s lifetime value (CLV). It is prevalent with service businesses since customers may have a recurring need for the services being provided. However, e-commerce businesses can utilize a subscription model for products as well.

You can curate a few products that customers will repeatedly need and create a subscription package for those products. For example, customers will need a skincare regimen and drugs to manage incurable diseases on a recurring basis. So, a subscription can keep them from buying it elsewhere.

6. Plan Your E-commerce Budget

Having a well-structured budget is crucial to avoid overspending. Outline all potential costs, including platform fees, marketing expenses, product sourcing, shipping, and customer service. Start small if needed and scale as your business grows. Accounting tools like QuickBooks or Xero can help you manage your finances.

Budgeting your business will help determine the platform and tools you can afford, as well as the scale of your operations.

7. Register Your Business and Secure Necessary Licenses

Ensure that your e-commerce business is registered with the appropriate authorities. Depending on your location, you may need to secure a business license or seller’s permit or adhere to tax regulations. For international e-commerce, familiarize yourself with cross-border trade policies.

Legal compliance is essential before launching your business to avoid potential penalties.

8. Pick the Right E-commerce Platform(s)

You know your market, decide on the products to sell, and have a model to maximize your e-commerce business experience. Now, it’s time to pick the court you will play on. These courts are called e-commerce solutions (or platforms). And depending on the type of business and products you offer, there are different solutions.

Choosing the right e-commerce platform is a foundational step for building a successful online store. It affects design capabilities, mobile friendliness, security features, and overall user experience.

Here are a few highly trusted recommendations:

• Wix: This is a perfect solution for small businesses that use picture heavy-content to sell products. This platform is a delight for designers and visual creatives.
• Square Online: Square Online is the right platform if you fancy a DIY experience when setting up your e-commerce business. However, it can get demanding for one person if you have so many products to list.
• BigCommerce: If you have an existing business with inventories and want to use one of the e-commerce business models to your advantage, BigCommerce is a good option. It is the perfect solution for established and high-growth businesses.

Thoroughly testing your e-commerce site’s functionality and performance before launching is crucial to ensure a smooth user experience

Choosing the right online store builder is crucial for creating a successful e-commerce website. With so many options available, it can be overwhelming to decide which one to use. Here are some factors to consider when choosing an online store builder:

• Ease of use: Look for a builder that is user-friendly and easy to navigate, even for those with no technical expertise. A simple drag-and-drop interface can save you time and effort.
• Customization options: Choose a builder that offers a wide range of customization options, including templates, themes, and design elements. This allows you to create a unique and branded online store.
• Integration with Payment Gateways: Ensure that the builder integrates with popular payment gateways, such as PayPal and Stripe, to provide a seamless checkout experience for your customers.
• Scalability: Select a builder that can grow with your business, offering features such as unlimited products and storage. This ensures your e-commerce site can handle increased traffic and sales as your business expands.
• Customer support: Look for a builder that offers reliable customer support, including phone, email, and live chat support. This can be invaluable when you encounter technical issues or need assistance.

Some popular online store builders include Shopify, Wix, and BigCommerce. Each of these builders offers a range of features and pricing plans, so it’s essential to research and compare them before making a decision.

9. Setting Up Your E-commerce Site

Setting up your e-commerce site is an exciting step in launching your online business. Here are some steps to follow:

• Register your domain name: Choose a unique and memorable domain name that reflects your brand. This is your online address, so make it count.
• Set up hosting: Select a reliable hosting provider that offers fast loading speeds and secure servers. A good hosting service ensures your e-commerce site is always accessible and performs well.
• Install a theme: Choose a theme that is responsive, customizable, and optimized for conversions. A well-designed theme can enhance the user experience and boost sales.
• Add products: Create high-quality product listings, including images, descriptions, and pricing information. Ensure your product pages are detailed and visually appealing to attract customers.
• Configure payment and shipping options: Set up payment gateways and shipping options to ensure a smooth checkout process. Offering multiple payment methods and reliable shipping options can enhance customer satisfaction.

By following these steps, you can set up a professional-looking e-commerce site that is ready to attract customers and drive sales.

10. Create an Irresistible Home Page

An exceptional homepage can separate the best e-commerce businesses from others. And since you are starting, you can use a good homepage design to your advantage.

Most e-commerce businesses can’t resist the urge to display as many products as possible in the homepage. This makes it congested and visually unpleasant.

Some of the best-selling businesses out there have simple layouts with dynamic designs. You can hire an excellent designer to put the homepage together for you. However, keep in mind that great content is your ticket to success.

Here are some of the elements you should consider including on your homepage to boost trust and convert visitors:

• For a starter, display your unique products to stand out.
• Share customer feedback, including their names (it adds a layer of credibility).
• Use high-quality images and concise sentences.
• Limit the colors to two or three (including backgrounds).
• Add effortless CTAs to avoid appearing too persistent.
• Make it responsive for all screen sizes.

11. Build Responsive and Optimized Product Pages

Having an attractive homepage is one thing. Making sure your product pages are not stretching over the margins of your customer’s screens is another thing. Having to pinch into a page on your smartphone while maintaining your grip on a New York train is a huge turn-off. So, invest some of your time into building a page that is adaptive regardless of the device.

Having responsive product pages is not enough to stand out. They should be visually appealing too. Use good quality pictures to present your products, write descriptions and headings in really lovely fonts, and use calm and eye-catching color combinations. And that’s not all.

80% of customers discover new products through search engine results.

Lightweight product pages have a higher chance of ranking in search engine results. You need to optimize your images to load fast to keep it lightweight. Remember, 80% of customers discover new products through search engine results. So, ensure that your product pages are built for search engines.

Search engines focus on content more than page architecture and the algorithms frown against content duplication. So, when you’re using a dropshipping or white-labeling model, you need to create unique product descriptions that are different from those on the manufacturers’ websites. This will help the search algorithms recognize it differently and enhance the page ranking.

12. Creating a Visually Compelling Experience

Creating a visually compelling experience is essential for e-commerce websites. Here are some tips to help you create a stunning online store:

• Use high-quality images: Invest in high-quality product images that showcase your products from different angles. Clear and attractive images can significantly impact purchasing decisions.
• Choose a consistent color scheme: Select a color scheme that reflects your brand and use it consistently throughout your site. Consistency in colors helps in building brand recognition.
• Use typography effectively: Choose fonts that are easy to read and use them consistently throughout your site. Good typography enhances readability and user experience.
• Add visual hierarchy: Use headings, subheadings, and bullet points to create a clear visual hierarchy. This helps guide visitors through your content and makes it easier to digest.
• Use white space effectively: Use white space to create a clean and uncluttered design. White space helps in highlighting important elements and improves overall aesthetics.

By following these tips, you can create a visually compelling experience that engages your customers and drives sales.

13. Organizing Your Products

Organizing your products is essential for creating a user-friendly e-commerce website. Here are some tips to help you organize your products:

• Create categories: Create categories that reflect your product range, such as clothing, electronics, and home goods. This helps customers easily navigate your site.
• Use subcategories: Use subcategories to further organize your products, such as men’s clothing, women’s clothing, and children’s clothing. Subcategories make it easier for customers to find specific items.
• Use product filters: Use product filters to allow customers to filter products by price, brand, and rating. Filters enhance the shopping experience by helping customers quickly find what they need.
• Use product sorting: Use product sorting to allow customers to sort products by price, popularity, and rating. Sorting options provide flexibility and improve user experience.
• Use product recommendations: Use product recommendations to suggest related products to customers. Recommendations can increase average order value and encourage additional purchases.

By following these tips, you can create a well-organized product catalog that makes it easy for customers to find what they’re looking for.

14. Establish Reliable Payment and Shipping Options

Offer multiple payment methods, including credit cards, PayPal, and digital wallets, to cater to diverse customer preferences. For shipping, partner with reliable logistics providers and offer tracking options. Consider free shipping for orders above a certain value to incentivize larger purchases.

Types of software to help with payment, shipping, and order fulfillment:

• Merchant Services software: Enables secure online transactions and supports multiple payment methods like credit cards, digital wallets, and recurring payments.
• Supply Chain Management software: Integrates logistics, inventory, and order processes, enabling efficient tracking and order fulfillment and simplified returns for an optimized customer experience.
• Shipping Management software: Streamlines the shipping process by integrating with carriers, generating shipping labels, and offering tracking tools.
• Inventory Management software: Helps track stock levels, manage product variants, and optimize inventory across sales channels.
• Warehouse management software: Coordinates storage, picking, packing, and inventory in warehouses for efficient order fulfillment.
• Customer communication tools: Automate shipping notifications, order updates, and tracking links to keep customers informed.
• Subscription management software: Manages recurring billing and subscriptions for products or services.

These software categories can enhance efficiency, ensure scalability, and provide customers with a reliable shopping experience.

15. Testing and Launching Your Store

Testing and launching your store is an exciting step in launching your e-commerce website. Here are some steps to follow:

• Test your site: Test your site for bugs, errors, and usability issues. Ensure that all links work, pages load quickly, and the site is mobile-friendly.
• Test your payment and shipping options: Test your payment and shipping options to ensure they are working correctly. A smooth checkout process is crucial for customer satisfaction.
• Test your product listings: Test your product listings to ensure they are accurate and complete. Verify that all product details, images, and prices are correct.
• Launch your site: Launch your site and make it available to the public. Announce your launch through various channels to attract initial traffic.

By following these steps, you can ensure a successful launch and start driving sales and revenue for your e-commerce business.

16. Develop a Marketing Campaign

The “build it and they will come” mentality doesn’t work in our digitalized world today. If you build it, you have to market it. That applies to your e-commerce business too. You have to make a conscious effort to market your business.

For a moment, imagine that you choose to adopt a dropshipping model for your new e-commerce business. Customers may prefer to buy directly from the manufacturer, probably offering a lower price. By marketing your business, the product can be seen by people who didn’t even know it existed in the first place. That will consolidate your position in their life as a trusted source of such a product.

However, how you choose to market your product depends majorly on the type of business you are operating. B2C marketing is quite different from B2B. As such, you need to familiarize yourself with the market that you’re serving and develop the right marketing strategy for them.

You can utilize several marketing styles to increase awareness and convert new customers. These marketing styles may include email marketing, SEO, direct response, social media, etc.

Here are some essential tools you can use to optimize and manage your marketing efforts effectively:

• SEO tools: Help improve your website’s visibility on search engines through keyword research, backlink analysis, and rank tracking.
• Email Marketing tools: Enable the creation, automation, and tracking of email campaigns to engage with and nurture leads effectively.
• Social Media Management tools: Allow scheduling, monitoring, and analyzing social media posts to manage and enhance your online presence.
• Analytics tools: Provide insights into website traffic, user behavior, and campaign performance to make data-driven marketing decisions.
• Content creation tools: Facilitate the design and production of engaging visual and written content for your marketing materials.
• Marketing Automation tools: Automate repetitive marketing tasks like email workflows, lead scoring, and campaign tracking to increase efficiency.
• Customer Relationship Management (CRM) tools: Help manage customer interactions, track leads, and support personalized marketing efforts.
• Project Management tools: Organize and monitor marketing campaigns, assign tasks, and ensure timely execution of marketing strategies.

17. Monitor Performance and Optimize Continuously

Use tools like Google Analytics, Shopify reports, or HubSpot to track key performance indicators (KPIs) such as traffic, conversion rates, and customer acquisition costs. Analyze the data to identify trends, strengths, and areas for improvement. Continuous optimization of your website, products, and marketing efforts is vital to staying competitive.

Final Thoughts

Starting your own eCommerce business is an exciting journey full of opportunities!

Building your online store is a key first step — it not only gives you control over your business but also lets you connect directly with your customers. Choosing the right e-commerce platform and website builder makes all the difference, giving you the tools to create a user-friendly store, showcase your brand, and easily manage your sales and marketing.

Remember, the e-commerce world is growing fast, and there’s plenty of room for you to make your mark. Keep learning, experimenting, and adapting as you go. With the right tools, a solid plan, and a commitment to serving your customers, your online store can be a success story waiting to happen.

Therefore, while you may not be an early adopter of this type of business, you will not be late to the party if you choose to start your free e-commerce business now. This step-by-step guide is designed specifically to help you do that.

FAQs

Q: What is the first step to starting an eCommerce business?
A: Begin with thorough research to understand your market, competition, and target audience. This will help you define your niche and plan your strategy effectively.

Q: Why is choosing the right eCommerce platform important?
A: The right platform streamlines website creation, enhances user experience, and integrates tools for marketing, sales, and inventory management.

Q: Do I need a business plan for an eCommerce store?
A: Yes, a business plan provides a clear roadmap for your goals, strategies, and financial planning, helping you stay organized and attract potential investors.

Q: What tools are essential for managing an eCommerce business?
A: Tools for SEO, email marketing, social media management, analytics, and inventory tracking are vital for running a successful online store efficiently.