The 7 Key Steps to Launching an eCommerce Business This step-by-step guide contains everything you need to know about breaking in to the ecommerce space.
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The online retail industry is forecast to account for 24.5 percent of global retail by 2025. So there's never been a better time to start an ecommerce business. But it might seem overwhelming to decide on everything from naming a business to developing online marketing strategies.
Whether you're building your business from scratch or already have a business plan in the works, this complete guide will help you to set up an ecommerce business. Launching and running an online store is quite different from a brick-and-mortar business, as you will see below.
The steps for starting an ecommerce business
Step 1: Research your niche
The first step to building an online business is to research your niche. You may already have business ideas you wish to explore. Look at other online business owners you like. Can you build on their ecommerce market to offer niche products?
Additionally, you'll need to consider your ideal customers. Your target audience will impact the products and services you offer. Plus, it may tie directly into the business model you want to adopt. For example, whether you'll run a B2C (business to consumer) or B2B (business to business) — experts forecast that B2B ecommerce will account for 17 percent of all B2B sales by 2023.
The ecommerce market is competitive. If you don't find your niche, you may drown among all the other ecommerce platforms that offer the same thing. It would also help if you conducted keyword research to determine if there is enough search volume for your niche. Use Google Trends to see if there are any new trends you can spot.
Related: How to Position Yourself as the Go-To Expert in Your Niche
Step 2: Choose a business name and structure
Once you have your ecommerce business plan, the next step is to develop your brand name. You'll want something unique that represents what your business does. If you have no ideas, try using a business name generator for inspiration. There are plenty of name generators, such as:
- Namelix
- Looka
- NameSnack
Shopify and Wix also offer free business name generators. Alternatively, look at other business names that you like. For example, are they using:
- Portmanteau: Combine two words to make a new word
- Suffixes: Ity, ty, able, ify at the end of a word
- Prefixes: Pro, de, dis, un at the beginning of a word
- Adverbs: Ly at the end of a word
- Misspell a word on purpose: Binance (finance), Lyft (lift), etc.
Names and branding will bring your online business idea to life. It would help if you consulted the U.S. Patent and Trademark Office to check that you're not infringing copyright laws.
Next, choose the structure. Typically, it'll be a general partnership, LLC, corporation or sole proprietorship. The legal structure will impact how you run your business, and there are pros and cons to each.
Related: 9 Steps to Craft a Perfect Business Name
Step 3: Apply for an EIN
An employer identification number (EIN) is a nine-digit number separating your personal and business finances. Not all companies will need one. When you start an online business, you may wish to apply for an EIN from the IRS (for free) to help manage your finances. You can register your online business online, by mail, fax or phone and instantly receive your EIN.
Related: Starting a Business? Get Familiar With the 3 Most Common Entity Types
Step 4: Obtain permits and licenses
The next step to building your online store is to organize licensing and permitting. Fortunately, because most ecommerce businesses are home-based, you won't require many business licenses to begin selling your products.
- To receive a general operating license, sole proprietorships and general partnerships must register their business with the state
- Depending on your location, you may also need a local operating license
- You may need a home occupation permit if you are working from home
- Ensure to look into other permits; for example, health, safety and environmental permits
When building your online business, look at your local state's regulations. You may find you need to follow different requirements in your state to register your business.
Related: Do I Need a Business License for an Online Store?
Step 5: Create a website
The next step is to create an ecommerce website. Make sure both the domain name and social media handles are available. Then consider how you are going to create your site.
- Will you be hiring a full-time developer or outsourcing the build to a web design agency?
- Will you be creating the site yourself? (e.g., using a website builder)
- What type of software will you use? (e.g., WooCommerce, Shopify, WordPress or Magento)
- How will you write the copy for your website? Will you be hiring a direct response copywriter?
- What will you be using for website hosting? (e.g., AWS, Hostgator, WPEngine)
Related: 12 Steps to Building a Successful Ecommerce Site in 12 Months
Step 6: Create a list of products
You've almost finished building your business with your website ready to go. Create your product pages for each ecommerce product, with a product description and pricing. Your research will help you here. Whether you're making your products, selling a digital product to print on demand or sourcing them from distributors (dropshipping).
Related: How to Choose Your First eCommerce Product
Step 7: Market your business
The best thing about starting an ecommerce business is the incredible range of marketing resources that one can utilize. Consider what channel(s) you will use for marketing and growing your business:
- Affiliate marketing
- Content marketing
- Search engine optimization (SEO)
- Search engine marketing (SEM)
- Influencer marketing
- Email marketing (EDMs)
- Social media marketing
If you are unsure where to start, you could consider applying the bullseye method that DuckDuckGo's founder, Gabriel Weinberg, wrote about in his book, How any startup can achieve explosive customer growth.
Essentially, the bullseye framework lays out 19 different traction channels and focuses on brainstorming, ranking, prioritizing and testing these channels to see what works and what doesn't. The idea is to gain traction using under-utilized strategies or unconventional marketing tactics to target potential customers on one of these traction channels. When the said channel is not working, then start using a new channel.
Related: 6 Must-Have Marketing Goals for eCommerce Stores
Final remarks
Considering your target market and customer base is critical. For example, if you're aiming your products to sell to an older generation, promoting your business on social media may not be the wisest use of your time. Driving traffic to your ecommerce store is an ongoing effort to continue selling online and grow your business.
- Start simple: When choosing your products to sell online, don't overcomplicate things and keep it simple
- Multi-channel selling: Successful ecommerce businesses often begin selling on Amazon, Etsy and eBay and take advantage of different channels
- Social media: Social media can be a great channel to gain traction for many ecommerce businesses
Starting an ecommerce business is both challenging and rewarding. If you spend time researching, planning and growing your business, it is possible to turn a profitable side job into a multi-million dollar business.
