Like starting any business, learning how to start an eCommerce business isn’t always easy — but setting up, launching, and maintaining websites where entrepreneurs, designers, and makers of all kinds can sell their wares is easier now than ever more available.
Depending on your aim or goals, starting an eCommerce business may make sense. eCommerce businesses offer greater flexibility, affordability, and opportunity for various entrepreneurs.
We’ll break down how to start an eCommerce business in seven easy steps – so you’ve every information you need to get your online business up and running fast.
How to start an eCommerce business Online
Here we’ll discuss below, several of the planning and legal steps that you’ll need to take to follow the same process (more or less) than any other business. However, once it’s time to start your operation, you’ll find how different starting an e-commerce business can be.
1st Step: Research the e-commerce space and find your niche
The first step in learning how to start an eCommerce business is to doing the necessary research. Just like if you were starting a restaurant and looking at different locations, food options, and themes, you will want to research the e-commerce sector of your interest and make some decisions regarding your specific business.
In addition, you’ll want to think broadly during this process: How will you get your products or services out to your customers? What would your startup costs look like? Are there any legal and other regulations on your product and service that you must take into account?
These lines of questioning, among others, will be integral to your business launch and will help you plan and write your business plan. This process will give you a better idea of your specific goals and how you’re going to reach them. Especially in the e-commerce space, a crucial part of this step is finding your niche.
While the growth of the e-commerce industry is a huge advantage for those learning how to start an eCommerce business, it also means more competition. You want to do competitor research and find a niche where you think you can establish your brand and have success selling products and services.
2nd Step: Choose your business name and choose the legal structure
Once you have solidified your e-commerce business plan, the next step is to choose a name. Like any other business, you will want to choose a name that is unique, but also clearly indicates what your business is or does. You can check your state’s local secretary of state website as well as the U.S. You will want to consult with the Patent and Trademark Office that you are not choosing a business name that has already been claimed by another company.
While you may not want to invest too much time on a website just yet, it may be useful to check whether your potential business domain name is available. If your domain name is currently being used, you might consider a different business name, or a different structure, like “yourbusinessname.co” instead of “yourbusinessname.com.”
Next, choose the legal structure of your business. The business entity you choose will have important legal & financial implications for your eCommerce operation. Generally, you will decide to form a sole proprietorship, general partnership, LLC, or corporation. There are advantages and disadvantages to each of these entity types, so you may decide to consult with an attorney or other legal professional for advice on the best option for your business.
If you choose to start a sole proprietorship or general partnership, you won’t actually need to register in the state where you’ll be operating. Instead, your business will be legally associated under your personal name and which means that if you want to operate under the name you pick, you’ll need to file a DBA (doing business with) application with your local government.
3rd Step: Apply for an EIN
Next, you will want to apply for an EIN (Employer Identification Number) for your eCommerce business. Although an EIN is not required for all types of business entities, this nine-digit number can be useful in helping you separate your personal and business finances.
Also, you can apply for an EIN from the IRS for free – either online, by mail, fax, or by phone. Since you are learning how to start an eCommerce business, you will want to apply for this business tax ID online, and once you do, you’ll get your number right away.
4th Step: Get business permits and licenses
After you have applied for your EIN, you will now want to obtain any business licenses or permits needed to legally operate within your city and state. As we mentioned above, if you set up your eCommerce business as a sole proprietorship and general partnership, you don’t actually need to register your business with the state — unless you’re a DBA’s are not filing to operate legally under specifics. Business Name.
However, for other business entity types, you’ll need to register your business with your state and get a general operating license. Also, depending on where your business is located, you may need to get a local operating license.
Usually, because most e-commerce businesses are home-based, they don’t require as many business licenses & permits. However, you will want to determine what the specific requirements are in your area—you can usually find this information online through your state or local government’s website.
For example, most places require that home-based business owners obtain a home business permit in order to operate legally. This type of permit simply states that by operating your business from your home, you are not adding traffic, noise or problematic conditions to your location.
Some other types of business licenses and permits you may need include:
- Professional and trade licenses for certain industries.
- Health, safety, and environmental permits.
- Signage permits.
- Sales tax permits.
- Building and construction permits.
5th Step: Select an e-commerce platform and create your site
At this point, you’ve absolutely the paperwork required to register and legally start your e-commerce business. However, now instead of searching for a location and preparing to set up your physical store, you’ll start building your website and online store.
This website will be the face of your business such as a physical storefront, – it’s what your customers will see first and what they will use to browse and buy your products or services. With this in mind, building your website will be one of the most crucial parts of starting your e-commerce business. There are some different points you’ll want to consider when developing your online storefront:
First, you will want to think about your domain name, as we mentioned above. You want your domain name to (at least closely) match your business name. Along these lines, and perhaps your most important decision will be choosing an e-commerce platform. Whether an all-in-one software, such as Shopify, or an open-source platform, such as Magento, your e-commerce platform will be the foundation you use to build and grow your online store.
Most e-commerce platforms not only allow you to build and launch your online store, but also allow you to customize your design, add your domain (or buy one), manage inventory, take and ship orders, receive payments, and more.
Although there are a lot of these types of platforms available in the market, you can consider any of the following popular solutions to start your e-commerce business:
The Extremely well-known and popular e-commerce software out there, Shopify offers an all-inclusive, user-friendly solution with a variety of add-ons. You can buy a Shopify membership or subscription in one of four plans, starting with Shopify Starter at $5/month (In this plan doesn’t include a full online store).
If you’ve already started a WordPress website, or are familiar with the platform, you can download WooCommerce to start selling on your WordPress website. This plug-in is open-source, free to download, and includes a full range of e-commerce characteristics. However, compared to Shopify, WooCommerce is best suited for business owners who have little technical knowledge to take advantage of its open-source nature.
Oft thought of as a website builder, Squarespace also grants e-commerce capabilities and is known for its modern templates. You can choose from two eCommerce-specific plans from Squarespace – Basic for $26/month or Advanced for $40/month.
Like Shopify, Squarespace is user-friendly and can accommodate business owners of all technical skill levels. However, as a site builder first, Squarespace may not offer several features, tools, or add-ons as some other options
Lastly, if you want to customize every aspect of your online store, you can choose to use the open-source version of Magento. With this e-commerce platform, you can manipulate every element and customize your website – but you must also have (or pay for) the technical skills to do so.
While it’s safe to say that this platform is generally not suited for e-commerce beginners. If you have the necessary technical skills or have the budget to pay to work with a developer, you’ll find that Magento is probably the best solution. Offers the most of any open platform. On-source solution on the market — plus, it’s free to download.
As you can see, there is a lot involved in this step and there are many important considerations when choosing the right platform for your e-commerce business. You will want to think about cost, features, usability, and more – ultimately, as the backbone of your e-commerce business you will need a functional system that grants you to get up and running and manage your operations within day one – today’s basis.
Once you have decided which solution is right for you, the next thing you will need to do is actually work on customizing and launching your website. You will want to think about how you want your online store to be organized, what kind of design you want to see, what colors you want to use, etc. Depending on your platform and budget, you can decide to build and launch your own website. , or you can invest in a professional designer or developer to assist.
6th Step: Source or Develop (and List) Products
After you have selected your e-commerce platform and started your website, you’re almost at the end of the process. At this point, you have to source the products you will sell. When you did your research in step one, you should have already had an idea of how you were going to go about the process.
You can make your own products, get them from distributors, or — if you’re selling your own services, for example as a consultant, all you need to do is describe those services on your business website and may have to be listed.
If you are selling products, as you can imagine, this step will be more complicated, as you’ll need to consider the inventory you’ll need to start with, as well as what those startup costs will look like. You will also want to ensure that you take the time to list your inventory on your online store — thinking about the customer experience, SEO, and the way the process will work from when the customer buys a product to when they actually receive that product.
7th Step: Market Your eCommerce Business
Now there you have it — you have learned how to start an e-commerce business. Now that you have your services or products ready and listed on your online store, your site is up and running, you are ready to start serving customers. To do this, of course, you have to market your e-commerce business properly.
You can decide to use a variety of marketing strategies – Google ads, social media ads, word-of-mouth promotion, and more. At the most basic level, you’ll want to optimize your business website for SEO and take advantage of any online marketing tools included in your e-commerce platform.
As your e-commerce business gets up and running and you start receiving orders, you’ll want to keep track of which marketing strategies are working and which are not — especially if you are investing money in them. As time progresses, you will be able to adjust and change your marketing strategy and tactic to find what works best for your business.
The bottom line
There are many advantages to starting an e-commerce business – the initial investment is very low, you can start big or small, and your online store can serve customers across the country 24×7. (Or the world, if you are willing to ship that far). It’s also much easier and less expensive to expand operations when needed – making it all the more worthwhile for entrepreneurs looking to start an e-commerce business.
However, if you want your business to emerge as an Internet success story. There are some important steps and investments to be made. You should treat your eCommerce website like any other business – stay compliant with tax laws, get necessary permits, invest in customer retention and communication, and don’t forget about building a mobile-friendly platform: because 60% of sales happen via mobile devices.