Starting an e-commerce business in today’s digital age has never been easier. With the rise of online shopping, more and more consumers are turning to the internet to purchase products and services. This shift in shopping behavior presents a huge opportunity for entrepreneurs looking to build their own e-commerce brand.
However, launching an e-commerce business for the first time can seem like an overwhelming process with many steps to consider. In this article, I will provide a comprehensive step-by-step guide on how to start your own e-commerce business. By following these steps, you will be on your way to building a successful online store.
Understand What an E-Commerce Business Is
The first step is to understand exactly what an e-commerce business is. An e-commerce business is one that sells physical or digital products over the internet. E-commerce businesses range from small single-person operations to large multinational corporations. The common theme among all e-commerce businesses is that transactions and payments take place electronically over the web.
Some examples of popular e-commerce businesses include:
Amazon - The largest e-commerce company that sells a wide range of products like books, electronics, clothing, and more.
eBay - An online auction and shopping website where people and businesses buy and sell a diverse range of goods and services worldwide.
Etsy - An e-commerce website focused on handmade or vintage items and craft supplies. Most of the items sold on Etsy are handmade or vintage.
Shopify - A popular e-commerce platform that allows individuals and businesses to create their own online stores to sell goods and services. Many independent retailers use Shopify to start their own e-commerce business.
To build a successful e-commerce business, you need to first understand exactly what it is and the different business models that exist. Some of the most common e-commerce business models include:
Online retailers - Selling products directly to consumers through your own website. Examples are Amazon, eBay, and Etsy.
Subscription services - Providing ongoing services or products through monthly or annual subscriptions. Examples are Netflix, Dollar Shave Club, and Blue Apron.
eServices - Selling intangible services that are delivered digitally over the internet. Examples are online courses, consulting, and web design services.
Dropshipping - A business model where you sell products through your store without actually handling any inventory. You buy products individually from a wholesale supplier and have them ship directly to your customers.
Private label products - Manufacturing and selling your own custom branded products. You design the products, have them manufactured, and sell them through your own distribution channels. Many e-commerce businesses use private labeling to build a unique brand.
Defining your e-commerce business model and understanding how different models work is crucial to launching your business. Take the time to determine which model fits your skills, resources, and long-term goals.
Choose a Fulfillment Method
The next step is deciding how you will fulfill orders from your customers, known as your “fulfillment method”. The two most common fulfillment methods for e-commerce businesses are dropshipping and holding your own inventory.
Dropshipping is a popular fulfillment method where you list products for sale in your store but don’t actually keep any inventory on hand. When a customer purchases a product from you, you buy it from a wholesale supplier who then ships it directly to the customer for you. This allows you to run your business without having to deal with storing, packing, or shipping products yourself.
The main benefits of dropshipping include:
Low upfront costs. You don’t have to buy inventory upfront so you can get started quickly.
Easy scaling. You can add new products to your store quickly without investment in inventory.
Freedom to operate anywhere. Running a dropshipping business only requires a laptop and internet connection.
However, there are some downsides to dropshipping to consider:
Low profit margins. Because you’re buying products individually from wholesalers, you typically can’t get the volume discounts that come with large wholesale orders. This can cut into your profit margins.
Lack of quality control. You are relying on your wholesalers to source quality products and properly handle shipping. If they mess up, it can reflect poorly on your business.
Long shipping times. Most dropshippers source products from China which can take weeks or months to arrive. This can lead to poor customer experiences.
The alternative to dropshipping is buying your own inventory upfront to sell through your store. Owning your inventory gives you more control over the customer experience by allowing you to ship orders quickly, ensure high quality, and build your brand through custom packaging and inserts. However, buying inventory does require significant upfront investment and storage space. It also makes it more difficult to change or pivot your product line.
For a beginner e-commerce business, dropshipping is usually easier to get started with due to the lower upfront costs and risks. However, as your business grows, buying your own inventory can help boost profit margins and improve the customer experience. Many successful e-commerce retailers end up transitioning to holding their own inventory down the road.
The fulfillment method you choose depends on your product, budget, business goals, and risk tolerance. Evaluate both fulfillment methods based on your unique situation. Don’t feel like you have to commit to one method permanently. You can always test different methods, optimize, and switch as needed as your business grows.
Select an E-Commerce Platform
Once you understand your e-commerce business model and fulfillment method, it’s time to choose an e-commerce platform to sell your products. Some of the top options for e-commerce platforms are:
Shopify - Shopify is one of the most popular e-commerce platforms. It allows you to easily create your own online store to sell physical or digital goods. Shopify is very user-friendly and geared toward small to medium-sized businesses. It does have flat monthly fees that vary depending on the features and apps you need.
WooCommerce - WooCommerce is an open-source e-commerce platform that you can add to any WordPress website. It is free to use but you will need web hosting and a theme which does cost money. WooCommerce gives you a lot of flexibility to customize your store but may require more technical skills to set up and manage.
BigCommerce - BigCommerce is an e-commerce platform similar to Shopify that is easy to use with affordable monthly pricing. It offers more advanced features for enterprise e-commerce businesses along with integration options for payments, shipping, CRM, ERP, and POS systems. BigCommerce requires less design work compared to WooCommerce.
Amazon and eBay - If you want to start quickly without creating your own website, you can sell on major marketplaces like Amazon and eBay. These platforms already have massive amounts of traffic and customers that you can tap into. However, there are restrictions, fees, and less control/customization of how you can sell compared to your own platform. Many businesses start on Amazon and eBay before transitioning to their own e-commerce store.
Square Online Store - Square Online Store allows you to easily build an online store for free using Square’s e-commerce platform. It directly integrates your store with Square’s tools for payments, customer management, invoicing, and more. Square Online Store is ideal if you are already using Square to process payments in your physical store or other business. Fees are comparable to Shopify and BigCommerce.
The platform you choose depends on your technical skills, design needs, budget, and business requirements. Shopify and BigCommerce are popular, user-friendly choices for small e-commerce businesses. WooCommerce and Square Online Store both have attractive pricing but suit more tech-savvy retailers. Starting on Amazon or eBay can be good when you’re first getting started before investing in your own platform.
Take time to evaluate different options based on the size and needs of your business. Many e-commerce platforms offer free trials so you can experience the platform firsthand. Never feel locked into one platform—you can always switch to a new platform later on if your business needs change.
Select an Evergreeen Niche
One of the most important decisions you will make is choosing a product niche for your e-commerce business. The niche you select should be an “evergreen” one that sells well all year round. Some examples of evergreen niches include:
Pet supplies: Pet owners need to regularly buy food, toys, grooming products, and other essentials for their pets. Pet supplies is a huge niche that is always in demand.
Baby products: New parents frequently need to buy baby essentials like diapers, wipes, clothes, bottles, and other supplies. Baby products are a massive evergreen niche.
Office supplies: Businesses constantly need pens, paper, ink cartridges, desks, chairs, and various other supplies to operate. Office supplies are a reliable evergreen niche.
Kitchenware: Most people buy dishes, utensils, small kitchen appliances, kitchen tools, and other kitchen necessities on an ongoing basis. The kitchenware niche is massive and evergreen.
Gardening supplies: Avid gardeners need to regularly purchse seeds, tools, fertilizer, and other products to maintain their garden.