Table of Contents
Show more
Show less
E-commerce is more popular today than ever before. Between 2019 and 2023, the number of e-commerce websites increased from 9.2 million to 26.5 million. If you’re looking for a way to earn money online while being your own boss, an e-commerce business may be worthwhile.
While it takes much time, effort, and dedication, it can become a profitable, enjoyable venture. With our handy guide on how to start an e-commerce business, you can hit the ground running and bring a successful e-commerce store to life.
Featured Partners
Price Per Month
From INR 165.53 ($1.99) onwards
Benefits
Free CDN, Domain and SSL for 1st year
Features
10 GB SSD Storage and 1 Website
Buy Now
On Bluehost’s secure website
Price per month
INR 149 onwards
Features
Drag-and-Drop Editor, Free Domain and Unlimited Free SSL
Buy Now
On Hostinger’s secure Website
Price per month
INR 219 ($2.64) per month
Benefits
Free domain and SSL for 1st year
Features
10GB SSD Storage and Basic email included
Buy Now
On HostGator’s secure website
What Is E-Commerce?
Before we discuss what it takes to start and run an e-commerce business, let’s define e-commerce. Put simply, e-commerce refers to the buying and selling of products or services online. An e-commerce website acts as a virtual storefront, allowing customers to purchase what they want from their desktop or mobile devices. While brick-and-mortar locations can be attached to e-commerce websites, many e-commerce businesses solely operate online.
Types of E-Commerce Businesses
In general, e-commerce businesses fall into these four categories:
- Business to customer (B2C): A B2C website sells to individual customers, similar to brick-and-mortar storefronts. Customers can choose a product, check out, and wait for the product to be shipped to them.
- Business-to-business (B2B): A B2B website sells products or services to other companies. It usually receives many bulk and recurring orders.
- Consumer-to-consumer (C2C): A C2C website or marketplace allows customers to sell to one another. Etsy and eBay are popular examples of C2C sites.
- Consumer to business (C2B): A C2B website allows individuals to sell to businesses. Customers can often write reviews, exchange affiliate links, or provide places on their websites in exchange for compensation.
Why Start an E-Commerce Business?
There are a number of benefits to e-commerce stores, including:
- Lower overhead costs: Compared to running a brick-and-mortar store, an e-commerce website is often more affordable. There’s no need to pay for a commercial property and the utility costs that come with it. Instead, you’ll invest in a domain name, web hosting, inventory and digital marketing.
- Chance to reach a broader audience: With an e-commerce store, you don’t have to limit your customer base to where you’re located. Even if you’re in a small town, you may reach customers across the country and world. This can lead to higher profits and greater success.
- Ability to easily scale: It’s much more difficult to grow a business with physical storefronts than one that operates online. If you go the e-commerce route, your website and store can grow as your business grows. You won’t have to open and manage more brick-and-mortar locations.
- Flexibility for customers: In today’s day and age, customers are busy and often lack the time or desire to drive to a store and purchase what they need. If you can serve them through an e-commerce website, they’ll be able to make purchases whenever they want, from the comfort of their own home, office or anywhere with an internet connection. Flexibility can lead to happy customers who return to your store and refer their friends.
- Access to customer data: An e-commerce business can allow you to collect valuable customer data. You may gain insights on your customers’ buying habits and demographics. In addition, you’ll have a better understanding of demand and be able to reduce the risk of understocking or overstocking as a result.
Featured Partners
Price Per Month
From INR 165.53 ($1.99) onwards
Benefits
Free CDN, Domain and SSL for 1st year
Features
10 GB SSD Storage and 1 Website
Buy Now
On Bluehost’s secure website
Price per month
INR 149 onwards
Features
Drag-and-Drop Editor, Free Domain and Unlimited Free SSL
Buy Now
On Hostinger’s secure Website
Price per month
INR 219 ($2.64) per month
Benefits
Free domain and SSL for 1st year
Features
10GB SSD Storage and Basic email included
Buy Now
On HostGator’s secure website
8 Steps To Start an E-Commerce Business
1. Define your e-commerce business idea
First and foremost, figure out what you’re going to sell. Ideally, you’d choose a product or service in a very specific niche. This way, you’ll have less competition and increase your chances of success.
If you decide to sell clothing, for example, you can target young professionals with affordable suits for young children with comfortable formal wear. Make sure that you’re passionate about whatever you’re trying to sell and/or can do or make well.
2. Validate your idea
A business idea is only worth pursuing if you determine it’s actually viable. To do so, consider the following:
- Market-based criteria: Market-based criteria focuses on market factors that will impact your business. It considers market size, competition, target customers and whether your products or services are trends or part of a flat or growing market.
- Product-based criteria: Product-based criteria revolves around your products and services. It examines your potential selling prices, size, weight and durability, how seasonality may affect demand, product regulations and whether your product caters to a passion or solves a pain point.
Both market-based and product-based criteria can help you understand whether your products or services have potential. If you believe that there is a market for your offerings, you can move on to the next steps.
3. Write a business plan
Once you hone in on and validate your business idea, it’s time to create a business plan. Think of your business plan as a blueprint that outlines what you hope to accomplish and how you’ll get there. In general, a business plan involves the following components:
- Executive summary: This is where you discuss your structure, industry, leadership team, and offerings.
- Competitor research: Competitor research is all about your competitors and their tactics.
- Product or service descriptions: Product or service descriptions explain each offer and how customers may benefit.
- Marketing and sales strategy: The marketing and sales section should describe what you’ll do to reach prospective customers and retain the ones you land.
- Financial projections: Here’s where you may want to work with an accountant to estimate your pricing strategy and profit goals.
Learn more: Simple Business Plan Template (2024)
4. Set up your business
After solidifying your e-commerce business idea and finalizing a business plan, you can take the plunge and set up your business. You’ll choose a business structure, name your business, apply for an employer identification number (EIN), and open a business checking account. Getting all the licenses and permits you’ll need to operate legally is also a good idea. For help with the setup process, don’t hesitate to contact an attorney, accountant, or other professionals who can answer any questions and steer you in the right direction.
5. Develop or source your products
Next, you’ll need to develop the products you plan to sell. If these are tangible products, you may make them yourself or leave the task to a manufacturer. At this point, you should decide whether you want to produce or order your products in bulk so you’ll have inventory in stock.
You may decide to start small and only stock a few products until you get a better sense for demand and determine whether bulk inventory makes sense. Another option is dropshipping, which is when products are manufactured and sourced when orders are placed. If you’re selling professional services online, such as graphic design or bookkeeping, you should zero in on what they’ll be and how much you’ll charge for them.
Learn more: How To Start A Dropshipping Business
6. Create your e-commerce website
Your e-commerce website will be one of your most important assets. Customers will visit your site to learn about you, explore your offerings, and, hopefully, make purchases. The easiest way to launch a site is through an e-commerce website builder, such as Shopify or BigCommerce. While every builder is different, most allow you to market your offerings, manage inventory, collect payments, ship orders, access analytics, and more.
If you’re limited on funds or don’t want to invest too much in your business, a free e-commerce platform can be helpful. As your business grows, you may always upgrade to a paid plan or platform. Do your research and compare your options to figure out the best e-commerce tool for your unique budget, preferences, and goals.
Featured Partners
Price Per Month
From INR 165.53 ($1.99) onwards
Benefits
Free CDN, Domain and SSL for 1st year
Features
10 GB SSD Storage and 1 Website
Buy Now
On Bluehost’s secure website
Price per month
INR 149 onwards
Features
Drag-and-Drop Editor, Free Domain and Unlimited Free SSL
Buy Now
On Hostinger’s secure Website
Price per month
INR 219 ($2.64) per month
Benefits
Free domain and SSL for 1st year
Features
10GB SSD Storage and Basic email included
Buy Now
On HostGator’s secure website
7. Figure out order fulfillment
Fulfillment is essential to your e-commerce store because it ensures your customers receive the products or services they paid for. Fortunately, most e-commerce website builders come with shipping label printing, allowing you to add shipping costs at checkout automatically. If you want to take the entire fulfillment process off your plate, you might want to outsource it to a company. Just make sure your potential profits outweigh the fees they’ll charge.
8. Market your e-commerce business
In a perfect world, you’d launch your e-commerce website, and countless customers would run to it. The reality, however, is that you’ll need to find, attract, and convert your target audience. While your marketing plan will depend on your budget, products or services, and capabilities, it may include search engine optimization (SEO), social media marketing, paid search, email marketing, and/or influencer marketing. Regardless of your chosen strategies, be consistent and establish a brand that allows you to stand out from your competitors.
5 Tips for Running Your E-Commerce Business
Once you have all your ducks in a row and your e-commerce store is ready for business, keep these tips in mind:
- Focus on customer retention: Retaining a current customer is more accessible and less expensive than landing a new one. That’s why you should keep your customers returning through excellent service, loyalty programs, exclusive discounts and new products and services.
- Optimize your shipping strategy: While an e-commerce store offers many benefits to customers, high shipping costs can turn them off. If possible, offer free shipping or deals for loyal customers or those who spend over a certain amount.
- Offer excellent customer service: In the world of e-commerce, the customer truly is king. That means you must be responsive and cater to customer needs and preferences through friendly agents, live chat and 24/7 availability. Otherwise, your reputation and profits will likely take a hit.
- Diversify your distribution channels: To raise your likelihood of success, go beyond your website and use other channels to sell your offerings. Amazon, social media and affiliate marketing are a few options to consider.
- Upsell and cross-sell: When you upsell, you encourage customers to purchase a higher-end product or service than the one they were considering. A cross-sell is when you encourage customers to buy products that are related to complementary products. Both strategies can boost profits.
Bottom Line
An e-commerce business can be advantageous. It may allow you to share your passions, interests or experience with customers near and far while providing some great income. By following the steps and tips listed above, you’ll put yourself on the path to success. Best of luck!
Frequently Asked Questions (FAQs)
How much does it cost to start an e-commerce business?
Several factors will determine how much you’ll pay to launch an e-commerce business. These include fees for your website, payment processing, stocking, order fulfillment, and warehousing. The general costs of running a business, such as accounting, marketing, and employee payroll, will also affect your overall cost.
What are the three types of e-commerce?
The three main types of e-commerce businesses are B2B, B2C, and C2C. Your products or services will help you determine the suitable business model for your e-commerce store.
Is e-commerce actually profitable?
Just like a business with a physical storefront, an e-commerce business has the potential to be profitable. However, profitability often takes time, so you must be patient before your efforts genuinely pay off.
