Starting An eCommerce Business -Introduction
Most people don’t set enough aside for their retirement. And as the years go by, they get closer to that day where they have to live on what little they have saved.
The truth is, if you don’t have enough for retirement, it’s unlikely you’ll be living very comfortable. However, many retiree’s have found a solution in the idea of starting an eCommerce business or online business.
You may also like: The Retiree’s Guide To Starting Email Marketing -A Simple Step by Step Approach (2019) and How To Choose A Niche: 3 Must Have Attributes
Unless you have been living under a rock, you’re probably aware that more and more people shop online these days for just about everything.
From Amazon to eBay, to countless other websites that will sell you just about anything you could possibly want, e-business is how things are done.
Digital commerce has all but replaced the days of spending a full day of your weekend to take care of all of your shopping needs.
With this understanding, it is not surprising that having e-commerce business ideas or how to start a successful eCommerce business presents genuine profitable business opportunities.
It’s the wild west online for people wanting to start their own electronic commerce shop. The barrier to entry is lower than it has ever been and there are countless tools to make things easier than ever before.
Furthermore, the internet has the ability to target and reach just about any group of people you can possibly think of. That means you can cash in on smaller, specific niches, and get yourself a nice chunk of the pie without the need to compete with the giant online retailers like Amazon.
If this all sounds great, but you don’t quite know where to begin, then you’re in luck. This ultimate guide is going to show you exactly how starting an eCommerce business could be quite simple. In fact, we have broken it into sections and made it step by step.
Whether you are already familiar with the process of starting an eCommerce business from scratch, or not this guide is for you.
You will find that we have also added a Table of Contents. That way you can quickly navigate your way to whichever of the starting steps appeal to you most. You can, therefore, choose which ones are most relevant. Steps 08, 09 and 10 are advanced concepts that may interest our advanced readers.
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Step 01: Choosing Your Niche
Starting an eCommerce business from scratch is not as difficult as many people think. A lot of people who are completely new to eCommerce often make the huge mistake of not carefully researching when selecting a niche. They jump right in with the first thought in their head. Or worse, they don’t choose a niche at all, they create a store that sells everything. You aren’t going to make this mistake.
Here are the 3 critical essential attributes you must have before choosing a niche.
So the first thing you don’t want is an “everything” store.
By having a store that just sells everything you can think of, you’re going directly up against websites like Amazon. You simply can’t compete with them, especially on price. Not only that, if you’re just a person working by yourself or with a small team, you’re not going to be able to have the sheer number of products needed to fill the store.
The easiest success most eCommerce entrepreneurs are having these days is by finding a specific niche within an already established market.
By “niching down” like this, you’re able to more easily build trust and establish your authority an expert with people who are already interested in your niche.
For example, if you were interested in starting an eCommerce shop specializing in pet supplies, you will likely have more, and quicker success by niching down to a specific pet, or even a specific breed of that animal.
Have you ever met someone who is crazy about a specific breed of dog? they are constantly reading about them, looking up videos, and shopping for items specific to that breed.
Another example is anyone who has a very specific hobby.
Take an example of a hobby where they tend to already spend money, and sell them related-products to that hobby. This can be something like outdoor supplies for people who are into outdoor survival activities.
Similarly, this could be parts and accessories for people who like drone photography, or even craft supplies for scrapbooking.
Clearly, there are millions of eCommerce niches and sub-niches you can choose to start from, but how do you find one that is right for you?
First of all, it’s important to work on something that you actually like and have some passion for. You’re going to be dealing with this stuff all the time, and if you’re not passionate enough about it, it will be easy to lose momentum or just give it up altogether.
You want something that you’ll still enjoy the subject, even when the work is difficult.
The easiest ways to find something like this is to start making a list of your interests, hobbies, etc. Just write down as many things you can think about which you personally like and might even already know about more than your average person. Take plenty of time on this, hours if you need.
Once you have your list, go online and do some research about each subject. You can narrow down things on your list by figuring out which you will have a relatively high chance of making some money from.
Here are two questions to ask yourself:
- Is this a niche where people are already spending a lot of money?
- Does this niche have forums, Facebook groups, or other online communities where they fanatically talk about this stuff?
Don’t be afraid of competition within the niche, competition is a good thing, that means there is money to be made there.
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Now that you have chosen your specific eCommerce niche, you need to do some thorough market research on it. The more research you do at this early stage, the easier things will be later. Consider the following questions that can help you identify your ideal customer:
- What is the average person like within this niche?
- What is their age range?
- Are they mostly male, female, or a mix of both?
- What is their education level?
- Do they have a family?
- What are their other interests?
- When you are reading in their groups and forums, what kind of problems do people bring up a lot?
- What pain do they have?
- What do they need?
- What do they desire?
The better and more specifically you can answer these questions, the better you can help them by selling them the products that best meet their needs and desires.
Step 02: Researching Your Competition
For most eCommerce niches, you’ll already have some healthy competition.
Like we already mentioned, competition is a good thing. It means there is already money to be made within the niche. Of course, over-saturating can make things difficult, however, this is where finding a specific sub-niche makes it a bit easier.
Narrowing down to niches like a specific dog breed instead of just dogs in general always helps. Regardless, start researching exactly who your competition is.
A simple google search within your niche will already find you tons of websites that are your would-be competition, especially with the Google ads at the top.
If you have this niche listed as an interest in Facebook, you’ll likely already be seeing advertisements from competitors. You can also see what online stores are recommended the most within communities based around this niche.
You should be aiming to find the top 10 competitors specific to your niche.
Once you have a good idea who your competition is, it’s time to start doing some deep digging. Spend some time browsing their website. Any info that can help in starting an eCommerce business is fair game.
Try and answer the following questions:
- What kind of content is on it? What kind of products are they selling?
- Do they have social media accounts? Follow them and see what kind of stuff they post.
- Do they have an email list? You should opt-in to it.
Pay particular attention to their business model.
How are they selling to their customers? Are they mainly selling one product? Do they have an online shop? Within that shop can you sort by bestselling items?
If you can see all of your competitors’ bestselling items, you’ll have a good idea of the types of items that will sell well on your eCommerce store.
Something you don’t want to overlook is the “about us” section on their store, which most of them should have.
This will give you a good idea of who they are and more importantly, how they position themselves to their customers.
You may even be able to learn whether they make their own products or if they are just a retailer for items they buy at wholesale. They may even use a drop shipping fulfilment model -they sell the product on their website, but instead, the manufacturer delivers it directly to customers. We will go into more of these details later.
Now, there’s no need to do in-depth customer research on every single competitor website you can find, just focus on the top 5-10 competitors. It’s likely they are doing something right, so you want to learn from them first:
- After you see what they are doing right, what are they doing wrong or what can they be doing better?
- Are they missing products that people in that niche say they want?
- Are their websites poorly designed and hard to navigate?
- Are they missing social media profiles to continue to engage with their customers?
- Do they have exciting and informative content to help their audience?
- Do they have an email opt-in form?
Additionally, look up reviews from previous customers.
Do they have any specific problems with their products that can be improved upon? Maybe the company is bad about replying quickly when customers have a problem.
Basically, by what these companies are doing right, you have a decent model of what you should also be doing right.
In addition, by researching what they are doing wrong or can be improved upon, you are finding pockets where you can easily capture some of the market share from them. If the reviews seem to talk about a low-quality product, you can make sure yours is better either through manufacturing or better sourcing your wholesale products.
If their customer service is lacking, you can be known as the company that focuses on the customer first. If they seem to have very little social media presence, you can be the website with a huge social media presence where you can constantly engage with potential customers.
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Step 03: Choosing The Right Business Model
This can be a bit tricky if you are new to eCommerce. That’s why all the niche research in the previous sections is so vital. Through all of your research, you should have a pretty good idea of the business models that are already working for your competitors, and which models that your niche responds best to.
Traditionally there are four models to consider when starting an eCommerce business.
- Business to consumer, where you are selling directly to the consumer. An example of this would be Amazon.
- Business to business where you are selling things to other businesses. This would be any business that sells things wholesale to a retailer, or maybe you sell materials that other businesses need for manufacturing.
- Consumer to Business where you help consumers sell things to other companies. Sites like this would be freelancing websites where users can sell their services to people hiring. And lastly
- Consumer to consumer, where you are connecting consumers who are selling things to each other. This is something like eBay or related websites.
For our purposes, we are focusing on the one most people think of when they are starting an online store, and that’s business to consumer (B2C).
This is where you are selling products directly to consumers within your niche.
There are several more options that you need to look at when it comes to your business model.
Will you be manufacturing your products and selling them directly to customers? Unless you have experience in this already, it’s best to avoid this one until you already have a successful store online.
Once you already have a successful store with a large customer base, it’s much easier to make the transition to selling your own product that you’ve manufactured.
One way of appearing to have your own manufactured product is via white labelling.
This means you buy blank products in bulk at wholesale prices from a manufacturer, but then you include your branding and customization to make it your own.
One common way to source products online is through a dropshipping business model.
This is by making deals directly with manufacturers, and they ship it directly to your customer. The beauty of this model is you don’t need to buy products upfront and risk zero customers purchasing your inventory.
You can sell the products on your website while testing which products they seem to like the most. Whenever a product is purchased at your retail price, you then place the order with the manufacturer and purchase the item from them at wholesale.
At the time of placing the order, you give them your customers shipping information. They then ship the item directly to your customers.
Not only do you not need to worry about handling products this way, but you also can use more of your capital for advertising and other costs instead of spending thousands on inventory before it’s sold.
If you do have the capital, you can always order the products in bulk from the manufacturer and have them shipped to you, your warehouse, or a third party fulfilment centre.
This will get you better rates on the product, increasing your product margin.
You can also combine a dropship model with this bulk ordering. You dropship products when testing and your bestsellers can then be ordered in bulk to lower your wholesale price. Because you already know it’s a hot seller, there is a smaller risk of ending up with a lot of inventory that you can’t move.
Once you have your basic business model decided, it’s important to do some research about sales strategies.
How are you initially going to get customers attention and get them to buy? There is a lot to choose from.
There is SEO, or Search Engine Optimization, where you are trying to become one of the top links for chosen keywords related to your niche through backlinking methods and strategies.
This isn’t recommended to beginners as it’s slow and incredibly difficult for high competition niches. If you do want to go this route, you should hire an SEO expert and this should only be in addition to other methods.
For beginners, some form of paid advertising is best.
The two best platforms for this are Facebook and Google. The main difference between running ads for both Facebook and Google is that Facebook is interruption advertising, and Google is search advertising.
With Facebook, you are directly getting potential customers’ attention within their news feed, interrupting them from what they are doing. For this reason, it’s important that your ads are well-crafted to get their attention and especially to click to your website.
Luckily, Facebook targeting is fantastic, so their algorithm will help show your ads to people that are not only directly interested in your niche but also the people who are most likely to click based on previous history.
Don’t worry, it is not as complicated as it sounds!
For Google, you are directly advertising to people who have searched for something related to your niche.
This is great because you can target people who are actively looking to purchase items like you are selling. The downside is that for many niches, the competition can be pretty steep, and you’ll often find ads from large stores that can severely undercut your prices.
For this reason, if you choose to advertise on Google, your ad will need to be convincing and compelling to make up for your slightly higher prices.
Lastly, you can try some form of content marketing.
If you have a lot of time and you’re good at creating content, you can try to grow a large YouTube following with informative and entertaining videos, and link your store under each video with strong calls to action at the end of your videos.
Similar to SEO marketing, this can be very difficult and take a really long time. I’d definitely recommend paid advertising to have the most control over your business and get the fastest response.
No matter what form of lead generation you choose, try to stick to one and master it completely before adding new methods.
Jumping from method to method is a common mistake that many first time eCommerce business owners make.
This advice is based on ensuring you encounter minimal stress in starting an eCommerce business.
So the first thing you don’t want is an “everything” store. By having a store that just sells everything you can think of, you’re going directly up against websites like Amazon. You simply can’t compete with them, especially on price.
Step 04: Picking A Business Name for Your Online Store
This one may be pretty obvious, but a great business should have a great name!
Try to pick something catchy, short, and easy to remember. Whatever it is, you’ll want to make sure the domain name is available for purchase and not already used by another competitor.
Picking a business name can be daunting for a lot of people, so the goal here is to write out as many ideas as you can possibly think of.
Start writing out words and phrases that are related to your niche, try unique combinations or your own fun spin on them.
Don’t worry if the ideas are bad at first, just write as many as you can and the good ideas will start coming.
Try not to get too frustrated if the name is already taken.
It happens. Just don’t get too attached to a name until you find the right one and its domain name is available.
If you’re still stuck, there are plenty of online business name and domain name generators you can find with a quick google search.
These generators let you enter keywords and will search for available domain names using combinations of your keywords, or new keywords that they suggest.
Avoid hyphenating names if they are already taken.
Also, you should only be trying to get the dot com version of your name.
Many other domain extensions like net and org can make your store look unprofessional, cheap, and untrustworthy in your customers’ eyes.
Once you have your name, and the domain name is available, purchase it.
Then create social media accounts on whatever social media platforms you’ll be using. Facebook, Instagram, and Twitter are all recommended.
Try to get your social media account profile name as close to your purchased domain name as possible.
However, if that social media account name is taken, it’s fine, just modify it slightly if needed. In fact, one thing that is becoming very common these days is that some of these social media platforms become extensions of your eCommerce shop.
When that is the case, your customers can buy directly when they visit these pages.
Step 05: Designing Your Branding And Logo
One of the most important aspects of your digital commerce store will be your branding.
Because the internet allows such a low barrier to entry, great branding is essential for your store to set itself apart and be memorable.
An E-business with a compelling name, a great logo, and consistent branding, will have an edge over a lot of the competition in your journey to starting an eCommerce business.
What exactly is branding?
Branding isn’t just your logo or the colour scheme you use on your eCommerce store, although those things are part of it.
Branding is the style of not only the way your store looks, but also in its mission, tone, and the general way it operates.
So if you have an eCommerce store that not only have a logo with a great colour scheme, but you have a consistent and compelling tone to the way you talk to your customers, that’s branding.
If your company has a specific mission statement that sets you apart from competitors, that’s also part of your branding.
The key here is that it all needs to be consistent.
If you have a personal and playful way of speaking in your advertising or on your company’s social media posts, but everything written on your website is stiff and serious, you’re lacking consistency.
Likewise, if your ads are serious and professional, but your product descriptions and sales pages are goofy and informal, you’re going to turn away your audience.
Whatever tone you choose that fits your audience, you must follow up with that same tone throughout all points of engagement. Otherwise, the stark contrast of tonal engagement will act as a repellent.
You would be wasting money on advertising just to push them away when you aren’t consistent with what actually got them to your eCommerce business website in the first place.
Step 06: Your First Products for Your Online Shop
Throughout all of your research earlier in this step by step guide, you should have a pretty good idea of what your customers are passionate about, what their pain points are, and what problems they want to be solved.
This is how you will begin choosing your products.
You don’t simply throw any product that is remotely related to your niche on the store. Take your time and use your research.
To begin with, all of your competitors probably have a way to sort their stores by bestselling.
This is a great place to start. If you are getting your products through a large sourcing website like AliExpress, keep in mind you don’t need to sell the exact same product as your competitor.
However, you can find something similar enough that solves the same problem even better.
When adding new products, think what a customer may need or could want if they are purchasing an item you already have in your store.
For example, if they are buying the ultimate, super-bright survival flashlight from you, then you should probably also have batteries available.
If your selling platform allows it, you can even suggest it to your customers the second they add the first item to their cart.
Another example would be if they are buying a phone case, that means they might be interested in other phone accessories.
Be creative, but keep in mind the logical thought process of your customers during their buying experience.
Once you actually begin sending traffic to your online store and making sales, the numbers will tell you what your bestsellers for your particular store are.
A good idea is to analyze your bestsellers and try to see what about it sets it apart from your weaker sellers. Now ask yourself the questions below:
- Did you do something different with the advertisement?
- Is your product description particularly good?
- Are the images of the product better than other products?
Sometimes you may find something you did well with a winning product, and then you can replicate that success for your other products by following a similar formula.
Step 07: Building Your Website
For those really serious about starting an eCommerce business, getting their web presence is where a lot of people start to have difficulty.
But it’s important to remember that there are tons of options these days that make building your website pretty easy.
You don’t need any programming knowledge, and you can have a great-looking online store up and running within a day or two. On top of that, a lot of these platforms allow you to install additional third-party plugins to your website for additional functionality.
The two most common platforms for eCommerce stores are Shopify and WooCommerce.
Shopify is great because it is an all-in-one platform. They take care of your hosting, domain name, and have a great system for designing your online store.
There are a lot of third party plugins you can use, many of which are free. They also include tons of free themes.
Shopify is great because it is an all-in-one platform
There is a set monthly price with Shopify, so you are paying for the added convenience. Regardless, it is a pretty good option for beginners who just want something easy that works.
The other great option is WooCommerce.
The difference with them is that it is free to use. However, you do need hosting and a domain name, both of which will cost you money and need to be set up elsewhere.
However, they offer tons of versatility and customization.
It’s an add-on to the wildly popular WordPress, so there are years of tutorials out there for some extreme customization.
This option is definitely for someone who wants more control in the long term and lower initial (startup) fees.
So with this option, you not only get to start your eCommerce business but also get along with it the platform flexibility that can help you scale up the business when the time comes.
Both of these eCommerce business platform options are fully customizable, and if you don’t want to do any of it yourself, you can find designers that specialize in both of these platforms to handle everything for you for a reasonable fee. Starting an eCommerce business thus becomes quite a breeze!
If you need features of both, there are ways to make them work together, however, for most stores, this isn’t really necessary, and likely will just create additional, time-consuming headaches.
Either way, it’s definitely recommended to choose an eCommerce business platform for ease of use, so you can focus on actually making sales and helping your customers.
Trying to design something from scratch is completely unnecessary these days and a waste of time, energy, and money.
Step 08: Developing Your Marketing Plan
We already covered this a bit previously, but now we will go into it in more detail.
This is where we get into the initial planning of how you are actually going to make money after opening the eCommerce shop.
The basis of this step is that you need to generate traffic to your store and get them to purchase an item.
Of course, that’s an oversimplification, so let’s break down both.
Generating traffic, or lead generation is crucial.
You can have the nicest, most well-designed eCommerce store on the entire internet, but if you aren’t getting people (traffic) to it, you aren’t making money.
The trick here, is you want to specifically be sending a targeted audience to your website.
These are die-hard fans of your niche or people with the problem that your product is solving. The most common traffic sources are:
- Paid Advertising
- Organic Traffic
- Social Media Influencers
- Email Marketing
Paid advertising is pretty straightforward. You directly pay for advertising, and your goal is to make more than you’re spending.
We already covered Facebook and Google ads and the pros and cons of each.
One additional note is that if your niche and products are very low competition, Google ads will be easier since you can target direct buyers.
Choose Facebook ads if you have a lot of competition already on Google within your niche.
Organic traffic is any traffic found organically that you are not directly paying for.
This is a Google search (we covered the pros and cons of SEO previously), people sharing links on social media with their friends, or even potential customers looking for reviews on YouTube.
Most organic is out of your control, and the stuff you can’t control (like SEO), should be left to a professional.
The exception is if you have significant experience.
However, if you post any content on social media, write blog posts, make videos, or anything else like that, try to make the content as interesting as possible.
With any luck, it will go viral and viral content has a way of bringing in a lot of additional and unexpected sales.
There is one downside to this: relying on viral marketing is not a good business model, just a happy bonus.
The use of Social media influencers is another great option.
You don’t need to personally have a large Instagram or YouTube channel to take advantage of this.
You can actually pay influencers that already have massive audiences to send traffic to your website for specific deals or promotions you are running.
Depending on the influencer, your product, and your promotion, this can sometimes be a cheaper way to start generating sales than running paid advertising.
However, unless you are amassing a large audience yourself while doing this, it’s difficult to scale your business at a later date with this method.
Something like paid advertising is much easier to scale later on.
Email Marketing is a great way to continue promoting additional items to existing customers so that they keep coming back to buy again and again. Here is our Step by Step Guide to Starting Email Marketing
Regardless of what way you choose to use as your traffic source and generate leads, try to stick with one single source until you’ve mastered it.
We often, beginners jump from source to source with nothing working.
The best strategy is to learn more about that specific advertising platform or strategy and stick with it until they figure it out.
The infographic below shows the different elements required to build an eCommerce store.
This will help explain many of the concepts covered in this post. Anyone interested in starting an eCommerce business should familiarize himself with it.
Step 09: Conversion Optimization
So you have opened your online shop -congrats!
You have also started sending traffic to your eCommerce store and generating those all-important leads and making sales.
Indeed you are in business.
But you need to pay close attention to your numbers and optimize them for conversion. You will notice that this is not a basic step to starting an eCommerce business (recall we mentioned this in the introduction).
However, we have added this for completeness
In the beginning, this will include optimizing your advertisements that customers first see.
You do this by split (A/B) testing several different ads to see which are working best for your individual products.
Once your customers are on your website, you can then split test the product descriptions for better sales conversions. Also, make sure that you are using high-quality product images.
Again you don’t have to worry about many of these. There are tools that do this for you in a breeze.
You need to pay close attention to your numbers and optimize them for conversion
Step 10: Increasing Average Order Value
Now that you have started your eCommerce business and also started getting consistent sales, you can increase the average order value by doing things like suggesting items that go together.
This goes back to having products that are the natural progression of what the customer would buy next. You can offer things like extended warranties on your more expensive items.
This has no additional upfront cost to you.
You can also offer free shipping to customers who spend a certain amount in your shop. Be creative!
We hope you have enjoyed our guide to starting an eCommerce business. Be sure not to skip any important steps and remember that good research is vital.
If you tackle each step one at a time, it’s easier to keep yourself from getting overwhelmed. And the most important lesson is that imperfect action is always better than perfect inaction.
As more and more people are starting their online entrepreneurial journey, it’s only getting harder as time passes. The best time for you to start an eCommerce store was yesterday and the second best time is right now.
So start your own eCommerce shop today and start earning that passive income you have been dreaming about.
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We welcome your feedback and would love to hear from you.
- What challenges (if any) are you experiencing in your attempt at starting an eCommerce business from scratch?
- How far are you in your eCommerce business journey?
- What tools do you use?
- Do you already have some e-commerce business ideas? if so, what help do you need to start?
Use the comments box below to share your experiences.
Don’t also forget to share this article with your friends and colleagues who may be interested and could benefit from reading it.
Don’t be discouraged even if you think they are not searching for ideas on starting an eCommerce business. Just share it. Your gesture may just ignite their interest.
You can find our related recommended reading below. You will find them quite useful.
- Shopify’s Ultimate Guide to Dropshipping
- Oberlo’s Guide to Writing Better Product Descriptions
- What is Email-Marketing?
- Affiliate Marketing Guide
- Earn Money Online
- A Beginner’s Guide to Successful Email-Marketing
- The Complete Email Marketing Guide for Beginners
- Email-Marketing Made Simple
- Internet Marketing Essentials
- Email-Marketing Guide for Successful Campaigns
- 9 Best Email-Marketing Services