In this ultimate guide, we are going to go through all of the main aspects of starting an ecommerce business and things that you need to think about BUT this isn’t one of those guide from someone who knows all the theory.
This is pulled from my seven years of running my own ecommerce business and my years of blogging about ecommerce and I created this guide to be the resource I wish I had had when I started my ecommerce journey. So let’s get started!
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1. Decide What Type of Product You Want to Sell
Before going any further, you need to decide what type of product you want to sell because there are many different types of products that fall under the banner of ecommerce.
Quick Fact! Ecommerce stands for electronic commerce and is the exchange of money for goods and/or services where the whole transaction is completed electronically.
Now you don’t have to choose just one of these and there are many cases where you can sell multiple types of products but having a core product type and the others as secondary ones can be beneficial.
For example, you may sell knitting supplies such as wool and needles as your core product lines with downloadable designs being sold as a secondary product, while also selling an online course on how to get started with knitting (I have no idea where knitting come from as an example!)
But knowing what types or types of product you are going to sell can make some decisions easier further down the line.
2. Find Products to Sell Online
Once you know what type of product you are going to sell, you can now begin doing the research into which products you are going to sell.
This is one of the steps where new businesses can make a fundamental error, they choose their products based of what they think will sell but you want to conduct data driven research so that you can make an educated decision.
But how do you make an educated decision?
- You need to know the current and upcoming trends for your chosen niche
- Understand the size of your potential market
- Understand the demand for these potential products
- Find out if the product is going to be profitable to sell
Doing this type of research is often easier if you are already involved in that niche either professionally or as a hobby as you will already have an understanding of the industry and may also have access to forums, Facebook groups or subreddits, which can be a goldmine of information.
If you are brand new to the niche, then you are going to have to put in more time and effort to find this information out.
Related Post: How to Find Products to Sell Online
3. Choose Your Business Model
The next step is to choose your business model as there are a few different options and for this post, we are going to be focusing on B2C (business to customer) as the majority of new ecommerce stores fall into this category and things are slightly different with other options such as B2B (business to business)
So what kind of business models are there to choose from for an ecommerce store?
Similar to the product types, you aren’t limited to just doing one of these business models and it can often be very profitable to offer multiple types.
Sticking with the Knitting example above, they could have a traditional ecommerce store where people buy their supplies as and when they need them, they could also offer a subscription service where the customers get a different design and some wool every month.
When you are just getting started, it is best to pick one and build your business around that and then look to add others as your business starts to grow.
4. Decide on a Business Name
Your business name is your brand, it is hopefully what people will be searching for to find your business and become paying customers, so it is very important.
Quick Point! While your brand name is important and ideally you want to get it right first time, you can always rebrand but be it can be quite a lot of work!
When deciding on a name, you ideally want to keep it short (less than 15 characters if possible) and simple as this makes it easy for people remember, which makes it easier for them to find you again but you may find yourself running into a few obstacles because when you think of a name, because you want to find out if:
If you find that the name is ok to use and domain names and social media accounts are available, then you want to get them ASAP as someone else might get them if you don’t and you will be kicking yourself if that happens.
When it comes to domain names, there are a couple of best practices you want to try and follow:
- Avoid Hyphens – most people will forget the hyphen when typing your domain name and this can lead to a loss of traffic as they will be going to a domain that you don’t own
- Use a .com if Possible – .com domains are seen as the most trustworthy and they are also the easiest to remember. If you are just targeting a certain country, then country specific domains such as .co.uk or .com.au may be the best option for your primary domain
When buying the domain name, if the .com and your country specific ones are both available, it is often best to get both and redirect the one you are not using to the one that you are. Some business will also acquire domains ending in .net and .co just to make sure that all possible options lead back to the main site.
Your brand name also serves as the base of everything for your business from your branding to your marketing, which is why it is best to get it sorted as early as possible.
5. What is your Unique Selling Point (USP)?
What makes YOUR ecommerce business different to every other business selling online?
This is a hugely important question that you need to answer as the world of ecommerce is incredibly competitive and that is why you NEED as USP!
To answer this, it can sometimes be easier to break this down into smaller questions, such as:
Each business and niche is different and there may be more opportunities to stand out in some than other but one of the main reasons that businesses fail is because they are generic and as you are new to the market, you need to do something different or a lot better than your competition, such as:
These are just a couple of ideas that can set your business apart but one thing I wouldn’t recommend as your USP is being the cheapest as it simply isn’t a sustainable business model. The reason is that if your business grows and you incur more overheads, a leaner start-up company can easily come in and undercut you and thus what brought you to the dance has gone!
6. Create a Marketing Strategy
Lots of guides and tutorials leave marketing to the end, once your site etc is all up and running but this can be a really bad thing to do.
Instead, it can be much better to not only have a marketing strategy in place before you start building your site but even start marketing your business before launching.
This is because you can start building buzz around your site and get people interested in buying your product, which if you collect email addresses and grow a social media following can result in you generating sales from day one.
Which is better than having a site sitting there, doing nothing and costing you money while you try and generate sales!
But how do you develop a marketing strategy? Well there are some questions you need to find the answer to (I know, there are lots of questions!):
Answering these questions is going to take time and research, especially if you are new to the niche but by knowing this information, you can create a far more targeted strategy and potentially save you a lot of $$$ from running pointless marketing campaigns.
But what are some common marketing methods that you could consider?
As you can see, there are quite a few different options when it comes to marketing and I’ve included links to guides on most of these to help you learn more about these methods if you want to.
But as with many of the steps in this guide, you will probably be best off doing a combination of different strategies, for example:
Running Facebook ads to get sales in quickly, SEOing your site to appear high in search results as a long term strategy and Email Marketing to try and make the most of the customers that you do get.
Marketing strategies are constantly evolving to match demands, so be prepared to revisit your strategy every few months to see that changes and improvements can be made.
7. Choosing an Ecommerce Platform
Next up, it is time to start thinking about building your online store and in order to do that, you need to choose which ecommerce platform you are going to use.
Now there are lots to choose from but there are ways you can narrow down the selection by identifying what you want from the platform and also what your business needs from it, these can include:
Some of these questions, you may not be able to answer until you have been going a few months but having a basic idea of what you need will help you get started.
For people who are new to ecommerce and building websites, hosted ecommerce platforms are what I recommend due there being less technical requirements on your part, which leaves you to focus on building and growing your business, rather than learning how to be a web developer!
It is also best to try out as many platforms as you can and fortunately most hosted platforms offer some form of free trial.
8. Building Your Ecommerce Website
Once you have decided which ecommerce platform you are going to use, you then need to think about the design of your shop.
Now most people will start thinking about the look of their shop and making it look nice and many people will spend far too long messing around with small design details that have little to no impact on your store (I know as I have been there and done it!).
When it comes to the aesthetics of your site, there are a few things you do want to think about, such as:
- Is the colour scheme visually pleasing? If you look at most ecommerce websites, the colour schemes are usually quite subtly as to keep the focus on the products
- Is your font type and colour easy to read? The font style should be easy to read, while things like handwriting styles can look nice, they can be difficult to read, especially on mobile devices. The colour of the font should also contrast against the background so it can easily be read and the size of the font should be easy to read on all devices
But you do want to focus on is making sure that your site is easy to use and navigate, aesthetics are great but usability it king when comes to ecommerce, so think about:
If you go and visit some of your competitions websites, especially established ones, you will start to notice some of the things that I have mentioned above and you can use this as inspiration for your own site (be inspired but don’t copy!).
Having a visually attractive site that is easy to use and navigate is going to have a positive effect on your online shop as the more time visitors spend browsing your site, the higher the chance of them buying something.
Related Post: The Ultimate Guide to Building an Ecommerce Website
9. Customer Service
Customer service can make or break ecommerce stores, so start planning out how your business is going to manage this.
One of the first things when it comes to customer service is what contact options are you going to offer your customers? When it comes to contact options, you ideally want to offer as many as possible, such as:
- Contact Form
- Phone Number
- WhatsApp Number
- Live Chat
Offering a good selection of contact options can be beneficial to sales as it makes your store seem more trustworthy and if you want to have a phone number but don’t want to give out your personal number or have an additional phone line installed, you can use something like VoIP.
You also want to make your contact information easily accessible, such as a link to your contact form in your navigation menu and footer, contact number and email either in your header or footer and an easy to access live chat icon.
You may also want to link to your social media profiles as some people will contact you via these and it also increases the chances of growing your following.
It can also be good practice to display your contact times, this way your customers know when you are available and if they have sent an email etc, when they should be expecting a reply.
Another important part of your customer service is to set up your businesses policies and create pages on your site so that they can easily be accessed, but what policies should you set up?
Both of these policies can increase conversions as customers like to be informed about the business that they are dealing with.
Quick Tip! Don’t hide your shipping costs as they are one of the main causes of abandoned carts, be honest and don’t give your customers any nasty surprises in the checkout, it will lead to more sales!
10. Make Sure Your Website is Legal!
When you are selling online, you need to make sure that your business is operating legally. Because if you don’t, you can end up in a lot of trouble with the government or the tax authorities and that is the last thing you want to have to deal with!
*Disclaimer – this is a guide only, always get anything legal or financial checked by a legal professional, accountant or the relevant authorities*
When it comes to being legal, it does depend on where you are based in the world as to what the requirements are as some countries are much stricter than others but some things you want to check on are:
1. What are the Legal Requirements for Starting a Business?
This is one that is very country specific as some countries require businesses to have licences or permits in order to be able to trade, where as others do not.
For this, you would need to contact your local government or business bureau in order to be able to find out what these are and how you would go about getting them.
2. Business Structure
When you are starting an ecommerce business, you need to let the relevant tax authorities know that you are A) Going to be trading as a business and B) What the legal structure of that business is. This is so that you can ensure that you are paying the correct taxes for your business.
Once again, business structures can be country specific but some common options in many countries are:
- Self-Employed – this is generally where you and your business are the same entity for tax purposes, meaning that any business profits are classed as personal income
- Partnership – this is a formal agreement between yourself and one or more business partners to jointly own and operate the business
- Private Limited Company – this is where the business is a separate entity from the owner/s, who are shareholders in the business and the shares are not available to be bought publicly
It is always best to consult the advice of an accountant before deciding which business structure is going to be best for you and your business as they will be able to give advice tailored to your situation.
3. Online Selling Regulations
You need to check for any online selling regulations relating not only to the country where you are based but also countries that you are selling too as some countries have very specific laws and regulations relating to sales that are made online, such as the Distance Selling Regulations in the UK.
Another area where you want your store to be compliant is in relation to any data and privacy regulations as failure to comply with these can end up with you being in a lot of trouble, some examples of data and privacy regulations are:
- GDPR (General Data Protection Regulation) – this is a very strict set of privacy regulations for businesses based in and also getting traffic from the EU and/or UK
- CPPA (California Consumer Privacy Act) – regulations about consumer privacy in the state of California
- LGPD (General Data Protection Law) – a set of data protection laws, similar to the EU’s GDPR but for Brazil
11. Testing Your Store
I cannot stress enough how important it is to go through a thoroughly test your website out to make sure that is working correctly!
This is because you are now at the stage that you can go through and easily fix any errors because finding out that things aren’t working properly with paying customers is not only stressful but it can cost you sales and customers.
When testing your site, things you want to check are:
Basically, you want to go through and do everything on your site that a customer would and once again, creating a list of things to check can be helpful.
It can also be good to get a friend or family member to go through a similar process and see if there are any issues that they come across as it is always useful to get the perspective of someone else and if possible, multiple people.
Frequently Asked Questions (FAQ)
What is Ecommerce?
Ecommerce stands for electronic commerce and is the term used for the buying and selling of goods or services over the internet, along with the associated transmission of money and data between the parties involved in the transaction.
While ecommerce is primarily thought of as the sale of physical goods via the internet, it also includes digital products, services and any other commercial transaction that is carried out purely online.
Ecommerce or E-commerce?
A very common question and one that there is no definitive answer to as both terms are correct.
E-commerce was the original way of spelling it as it was a shortened version of electronic commerce but as the term has become more commonly used, many people started dropping the hyphen.
This is very similar to the way that e-mail has now become email, so there is a good chance that in the future that the non hyphenated version will become the most commonly used version.
For this site and all of my blog posts (as you may have already guessed), I use the non hyphenated version.
Different Types of Ecommerce Business Model
B2C stands for Business to Customer and is the most common type of ecommerce out there and it is when an individual buys a product or service from any business that has an online sales portal.
This could be things like buying a new pair of jeans from Asos, an ebook for your Amazon Kindle or your Netflix subscription.
B2B stands for Business to Business. This is when one business buys a product or service from another business using an online transaction.
This could be a retail business placing an order for new stock using their suppliers or manufacturers website or a business paying for ecommerce software such as Shopify, EKM or Bigcommerce.
C2C stands for Customer to Customer and most commonly takes place within online marketplaces such as Ebay or Shpock. This is most commonly done with physical products as it is one individual looking to sell something they no longer need to another individual.
C2B stands for Customer to Business. This is a sector of the ecommerce industry that is seeing considerable growth due to platforms like Fiverr, Upwork and Freelancer where individuals can offer their skills and services to businesses for a fee.
This can also work for physical products as well as where individuals can sell products to businesses who will then sell the products on for a profit. Pre-owned retailers and sites like Music Magpie are examples of this type of ecommerce.
So there it is, my ultimate guide to starting an ecommerce business!
I hope you found it helpful and learnt something from it as there was many hours put into writing this all to publish it for free.
My one final bit of advice is to just get started, it is so easy to spend weeks, months or even years planning on how you are going to start your perfect ecommerce business but planning only gets you so far at it all means nothing if you don’t take action to actually get started.
So create a plan of action, with deadlines for certain things and work through this plan, so that you actually get started and one more thing, you are never going to get this 100% right, whether it is your product selection, your website or your marketing but you learn from these mistakes and adapt, which helps both you and your business grow.
So go out there, get started and enjoy it, it will be stressful but it will also be one of the best learning experiences you will ever have and there are very few feelings like getting that first sale!