How To Start An Ecommerce Business (Step-By-Step)

Online retail is a booming business. But I’ve seen too many eCommerce businesses struggle to get traction. Use the information here to set up your eCommerce store, protect yourself legally, get your finances in order, market and sell your product, and start building your store. There’s nothing more rewarding than starting a business from nothing and watching it grow. You build it up and no one can take it from you.

Building an eCommerce business takes more than choosing a brand name, writing product listings, and starting to sell products online. Even the best business ideas can flop if you aren’t driving enough traffic to your site.

Step 1: Research Ecommerce Business Models

Beginning your research is the first critical step. Don’t operate off of a hunch. Growing any online business is an investment. Treat it as such.

There isn’t a single business structure that works for everyone. Service-based business, software, digital product sales, and physical products are just the tip of the iceberg.

Before you can decide on what to sell online, you need to understand the different business models available. It’s not rocket science, but it does impact your business structure. If you want to turn a profit without touching your product or investing heavily at the start, dropshipping or print on demand is a smart choice.

If you like the idea of having your warehouse full of goodies, you’re investing more upfront and working with a wholesaling or warehousing (retail) model. There are subscriptions, where you carefully curate a set of products or a single product to be delivered at regular intervals to your customers.

The eCommerce business model that attracts me the most is a single product category that you supplement with affiliate marketing. You can control the content marketing and branding on a focused product and focus the rest of your energy on driving sales by monetizing traffic.

Step 2: Start Ecommerce Niche Research

Choosing your niche is the most important step in opening your online business. Start this process by identifying successful companies already working in this space. Make sure that the area is competitive – an absence of competition usually indicates that there’s no market, either.

Don’t pick an overly crowded niche, however, and skip anything dominated by major brands. If you’re having trouble with this, drill down further on what you want to do – the more specific you are, the less competition you are likely to face.

Niche-ing down also gives you the benefit of having a lot of “shoulder” niches, related to what you do, but not identical. You can work together with business owners in those niches to cross-promote, become (or acquire) an affiliate, and grow your customer base.

Pick a product category with a minimum of 1000 keywords and focus on a niche that does well in social media, where publishers in the area are affiliates on Amazon. If you can nab a few affiliate marketing opportunities, you won’t have to worry about shipping as much product, but you can still make a profit.

Step 3: Validate Target Market And Product Ideas

Now that you’ve identified a niche and business model, you might be tempted to start hunting for products to sell. Don’t. Before you think about product ideas, think about personas. You can’t expect people to buy your product if you don’t know who you’re selling to.

Who are you? What does the store represent? Who are your ideal customers? You need to project a consistent brand image (a journey that starts with your brand name). An organic seed company that started selling conventional fertilizer wouldn’t last very long.

Fortunately, Facebook makes it relatively easy for us to find your target audience online. Specifically, know exactly how many people you can target. You can drill down to get very focused numbers and detailed demographics.

You’d be surprised to know that most entrepreneurs have no idea how many people are in their target audience online. If you want a brand targeting hardcore triathletes that also enjoy mountain biking, you may have to go a little broader. You can’t build a business if your target audience is only 100K people.

Once you’ve identified the image you want to project and the customer you are catering to, it’s time to come up with product ideas. I suggest starting with one – you’ll invest less at the start, and if you want to offer more you can test the waters with affiliate marketing.

In the example of an organic seed company, you could find popular organic products on Amazon and create content to send traffic to those affiliate products. If something catches fire, you can consider making your brand of that product. If you’re not 100% sure what to sell, you can use affiliate marketing to validate your idea.

Before you invest in the product, though, evaluate it carefully. Even if you choose a dropshipping model, you want to test it carefully and get a feel for the product yourself so you can identify any potential problems and prepare customer service scripts to answer common questions.

Step 4: Register Your Ecommerce Business & Brand Name

If you want to start a successful business, you need a brand that connects with your persona. Identifying your persona makes building an eCommerce brand easier. You might avoid girlie colors and images if you are selling products to corporate businesswomen interested in living a sustainable life.

But before you set up your store and get into the nitty-gritty of building a brand – there are some basic steps you’ll need to take.

Register Your Business.

Choose a business name and register your company. There are legal protections and tax benefits for incorporating, so don’t skip it.

Pick Your Store’s Name

The name of your site and the legal name of your business doesn’t need to be identical, but keeping them consistent has its benefits. Make sure whatever you choose fits your niche – you don’t want to pick a brand name at the last minute.

Get Your Business Licenses

If you’re not familiar with this process, the Small Business Association has plenty of resources to help you get started, including a mentor-protege network and courses on small business basics. Look actively for mentors – their advice can be priceless, even for little things like acquiring business licenses. One of the smartest decisions I ever made was finding someone who could show me the ropes.

Get Your Employer Identification Number

You’ll need an Employer Identification Number (EIN) to open a business bank account and file your business taxes next April, even if you don’t plan on having any employees. Your EIN is a bit like your business’s social security number: it’s a unique number that identifies your business and helps you file important paperwork.

Apply For Business Licenses And Permits

Operating an online store does not exclude you from needing certain business licenses and permits. Check with your city, county, and state to see what sorts of sales tax licenses or home business licenses you need, and get those approved before you start operating.

Find The Right Vendors

You’ll have a lot of competition selling products online, so it’s in your best interest to find the best quality and best prices for the products you sell or materials you use to create your products. Shop around until you find a vendor you want to do business with long-term – this includes your eCommerce software (your “shopping cart”). Think scalable from the start.

Logo Creation

Don’t fret over it too much, but do make sure that it is not in use by another company in your niche. Logo design doesn’t have to be original, however (and really shouldn’t).

Get Visual

Consider the colors of your brand, the imagery you’ll use, and the typeface or fonts you’ll employ carefully. If you’ve got the budget, you might want to hire a marketing firm to create a design brief for your company. If not, you can create your own. Just keep it consistent and read marketing tips designed to help boost your brand.

Step 5: Finalize Your Ecommerce Business Plan

By now you should have a great idea of what your business will look like. You have your target market, your product niche, and your brand name.

Now is a good time to step back and put your business plan on paper and determine your startup budget, loan needs, and monthly expenses. 

The most important aspect of a business is the financial one. Figure out your break-even point, both in unit sales and duration (in months). Any real business is an investment of resources. That was one of the first things I learned in MBA school. A CEO’s role is to take resources and turn them into a return.

Yet, I am sad to see that many entrepreneurs don’t take the time to project their revenue and expenses. If you can’t figure out your profit margin, you will fail.

The business planning phase is also when you want to iron out details like your staff, product sourcing, logistics, and marketing budget. Make sure you understand all the available financial resources available to you.

Step 6: Create Your Online Store

Once you’re officially an eCommerce business owner, you need to register your domain name and any redirect URLs that might be relevant. You’re going to need the design info you settled on in the last step now, when you finally build your store. Whatever design you chose needs to be compatible with your eCommerce software, too.

There are hundreds of eCommerce shopping cart platforms. Choosing the right eCommerce software is not easy. You need to carefully evaluate things like loading speed, features, compatibility with different payment gateways, compatibility with your business structure, your web developer skills, SEO-friendly features, and more. I’m putting together reviews and comparisons to help you pick the right one. We’ve done a ton of research and the best options are below.

Step 7: Attracting Customers To Your Ecommerce Store

Apologies to any Field of Dreams fans, but if you build it there’s no guarantee they’ll come. You need to market your store. When you chose your cart, I told you to think about search engine-friendly features. They are NOT all the same. The keyword-stuffing days of the early 2000s are long gone, but SEO is alive and well. You need to keep keywords and search terms in mind on each page of your site, in your URLs, and in your ad campaigns. You also need to think about driving traffic to your site.

The best eCommerce sites invest heavily in online marketing. If you don’t have the funds, you better have the elbow grease. Subscribe to marketing newsletters or listen to digital marketing podcasts to keep a pulse on the digital marketing industry and get your fill of marketing tips. Will you use sponsored content, social media, pay-per-click ads, or a combination of strategies? How will you monitor what campaigns are driving traffic to your store? If marketing your site seems overwhelming, will you hire help?

Your site isn’t the only thing you need to drive traffic to. The product(s) you choose also need to be included in your marketing budget. Your mission is to sell products, not drive traffic. To sell products, you have to think beyond your site and look for expansion areas. No matter what and how you decide to sell, the first step is to create an email list. Place an opt-in freebie on your website, launch a social media campaign to gain subscribers, or host a giveaway where the entry ‘fee’ is your customer’s email address.

Running a giveaway is my go-to marketing tactic to get traffic and subscribers quickly. Giveaways have the added benefit of increasing your brand presence and product visibility. Building an email list gives you a group of warm leads to work with, making the sales process much easier. Providing consumers with coupons and content via email helps to keep your brand on their mind, boost sales, and establish credibility. 

Keep your emails interesting – ask for your customers’ input often, including reviews. Also, send them your new blog posts. It’s important to mix in helpful content and not just pummel them with sales offers. Respond quickly to customer service and product quality issues, and work on building relationships. No sales interaction is about the first sale; focus on the next one always.

On your site, look at how and where traffic flows. Are your product pages targeted to your persona? Are you losing potential customers in the same place? If you’re driving traffic to your store but nothing is selling, fix the leaks in your sales funnel by carefully optimizing each page and taking a close look at your product listings. Use Google analytics to help with this task. Some tools can help you monitor and optimize every step of the sales process. Make use of them.

Look into partner and affiliate marketing to boost your brand presence by offering affiliate marketing options and partnering with retailers in your shoulder niches.

You can also offer bloggers in your niche a free sample of your product in exchange for reviews. If you’re selling products on Amazon, one easy way to gain consumer respect and confidence (and reviews) is to ask for feedback. Include a card with each product that asks for an honest review and provides contact information for your company.

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