Starting an online eCommerce store can be an exciting and rewarding endeavor for entrepreneurs looking to sell products or services online. With the rise of internet shopping, building an eCommerce business presents a huge opportunity to tap into the multi-billion dollar online retail industry.
However, launching an eCommerce store requires careful planning, research and preparation. You need to make important decisions about your eCommerce platform, business model, target audience, products and inventory. Additionally, you need to address legal requirements, web design, shipping logistics and marketing.
The process of starting an online store may seem daunting at first. Here is a step-by-step guide to starting and growing a successful eCommerce business.
Step 1: Choose a Niche and Identify Your Target Audience
One of the most important things to consider when starting an eCommerce business is identifying your niche market and ideal buyer persona. Avoid the mistake of trying to be everything to everyone. Targeting a specific niche and ideal buyer allows you to tailor your products, brand messaging and marketing to appeal to those potential customers.
First, decide on a niche market relevant to your interests, background, experience or passion. For example, popular eCommerce niches include:
- Fashion and accessories
- Home furnishings and decor
- Outdoor recreational gear
- Toys and games
- Arts, crafts and hobby supplies
- Pet supplies
- Specialty foods
Do market research to assess the demand, competition and growth projections for your chosen niche. Make sure it has enough market size and opportunity to drive sales.
Next, identify your target audience by creating detailed buyer personas. Gather demographic information on your ideal customers such as:
- Age
- Gender
- Income range
- Location
- Pain points
- Purchasing habits
- Lifestyle and interests
Defining your niche and ideal buyer personas will direct every aspect of your eCommerce business from your brand image to the products you sell.
Step 2: Choose an eCommerce Business Model
There are different eCommerce business models to consider for your online store. The business model you choose will impact everything from your product selection to operations. Common eCommerce business model options include:
Dropshipping
With dropshipping, you sell products from a third-party supplier without actually stocking inventory. When a customer places an order, you forward it to the supplier to fulfill and ship. The supplier packages the order with your branding and ships directly to the customer. Popular platforms like Shopify and Oberlo make dropshipping easy to implement. The benefits are not having to store inventory or pay upfront product costs. However, the profit margins are lower and you have less control over order fulfillment and shipping.
Product Manufacturing
If you have the capabilities to manufacture your own products or partner with a co-manufacturer, you can sell your proprietary products through your eCommerce store. You benefit from higher profit margins and have quality control over the products. However, you take on more risk and need to invest in product development and inventory upfront.
Wholesale and Private Label
Sourcing products at wholesale prices from manufacturers, then reselling under your own brand and markup is a hybrid model. You can focus on marketing and sales while benefiting from bulk pricing discounts. However, you need a large inventory which requires significant upfront investment.
White Labeling
White labeling products involves purchasing finished goods from suppliers, then putting your own branding and packaging on them for resale. You avoid manufacturing costs but need to build relationships with white label suppliers and purchase inventory in bulk.
Consider the pros and cons of each model to determine the best fit based on your niche, target audience, budget and business goals. Many eCommerce stores also incorporate multiple models.
Step 3: Select Your eCommerce Platform
Your eCommerce platform is the foundation for building your online store and critical to your success. It handles key functions like your storefront, product display, shopping cart, payment processing, shipping and fulfilment. Carefully assess the leading platforms to choose the right solution for your business. Some top options include:
Shopify
Shopify offers a user-friendly platform to launch your store quickly. It handles hosting, security, design templates and scalability. Shopify also seamlessly integrates with payment, shipping and marketing tools. It offers flexible pricing plans based on your sales volume.
WooCommerce
WooCommerce is a free, open source plugin built for WordPress. It provides a customizable online store option and integrates with WordPress features. However, you need a WordPress site and technical skills to install and configure WooCommerce.
BigCommerce
BigCommerce provides an enterprise-level experience with powerful eCommerce functionality. It offers robust analytics, marketing tools and options for customization. BigCommerce plans are costlier but include more built-in features.
Squarespace
Squarespace combines website building with eCommerce capabilities. It offers designer templates but less flexibility for customization. It has seamless integration, a simple interface and responsive design. Limited marketing tools and lack of a dedicated support team can be drawbacks.
Compare eCommerce platforms based on your budget, features, support options and ease of use. Also factor in design flexibility, scalability and built-in functionality.
Step 4: Obtain Business Licensing and Registration
There are some legal and tax considerations when starting a business. Take the necessary steps for business licensing and registration early in the process.
You will likely need to:
- Register your business name and establish a legal business structure like a sole proprietorship, partnership or LLC.
- Obtain permits and business licenses that apply to your location and business activities.
- Apply for an Employer Identification Number (EIN) from the IRS if hiring employees.
- Register to collect state sales tax if selling taxable goods in or into specific states.
- Obtain insurance like general liability and product liability coverage.
Consult your state and local government’s websites for specific requirements. Consider hiring a lawyer or accountant to ensure you’re meeting all compliance needs.
Step 5: Source Your Inventory
Stock your online store with compelling product selections tailored to your target audience. Source inventory using methods that align with your eCommerce model.
For dropshipping, find suppliers willing to ship products directly to customers on your behalf. Use platforms like Oberlo that give access to dropship suppliers. Or reach out to manufacturers directly.
If selling wholesale or private label products, find reputable manufacturers or distributors to source inventory at bulk rates. Attending trade shows can help network with wholesalers.
For handmade or custom goods, partner with local artisans and small suppliers via contract manufacturing arrangements.
Focus on choosing suppliers that offer favorable product pricing, high quality materials, low minimum order quantities, and good shipment reliability. Make sure to properly vet and evaluate potential suppliers.
Only list products for sale on your eCommerce store once inventory sourcing is secured. Avoid taking orders you can’t fulfill.
Step 6: Build Your eCommerce Website
Your eCommerce site’s user experience and design are crucial for converting visitors into paying customers. Follow eCommerce web design best practices when building out your site.
Some tips for creating a high-converting online store:
- Use high-quality product photos and detailed descriptions.
- Make navigation easy with logical site menus and structure.
- Highlight top selling items on the homepage.
- Include customer testimonials and reviews.
- Enable one-page checkout.
- Make the mobile experience seamless.
- Include clear calls-to-action like “Add to Cart”.
Also emphasize speed and simplicity. Remove unnecessary pages and distractions irrelevant to purchasing.
Leverage the design elements and templates available with your eCommerce platform. But also consider investing in a professional web designer, especially if selling high-ticket items.
Step 7: Select Payment Providers
Enabling reliable payment processing ensures customers can securely purchase from your store. Integrate payment solutions that match your sales model and volumes.
Consider third-party payment gateways like:
- Stripe – Offers flexible pricing plans and global payment processing on Shopify and other platforms.
- PayPal – A widely used payments solution good for lower volume stores.
- Authorize.Net – Supports higher risk transactions with fraud screening tools.
- Square – Focuses on in-person credit card processing but also facilitates online payments.
Your eCommerce platform should integrate easily with top payment gateways. Compare transaction fees and additional services offered like recurring billing or customer management tools.
For higher sales stores, consider applying for your own merchant processor account to qualify for lower credit card processing rates.
Step 8: Set Up Your Shipping and Fulfillment Process
Establishing efficient order fulfillment and shipping operations helps you deliver quickly, reduce costs and keep customers satisfied.
First determine if you will handle order fulfillment internally or outsource to a third-party logistics (3PL) provider. Warehousing and shipping demand grows as your eCommerce business scales. But a 3PL can cost-effectively manage inventory storage, packing, and shipping for you.
Next, weigh the shipping carrier options for reliable, cost-effective delivery. Major carriers like USPS, UPS, FedEx and DHL all offer eCommerce shipping services. Compare rates across carriers.
Consider provider shipping discounts and integrations. For example, Shippo lets you manage shipping across multiple carriers from one interface.
Finally, choose services and options based on your products, volumes and customers:
- Ground, air or freight shipping methods
- Zone-based or flat rate pricing
- Speeds like express or overnight
- Signature confirmation for high-value items
- Insurance to cover damage or loss
Automate tracking numbers, status updates, customs forms, and label printing to streamline shipping operations.
Step 9: Account for Taxes
As an eCommerce seller, you are responsible for collecting and remitting sales tax in states you have a tax nexus in. This includes where your business has a physical location or exceeds economic thresholds.
Tax calculation can get complicated with varying product exemptions, tax holidays and consumer use tax across states. Consider using tax automation software or plugins like TaxJar to:
- Accurately calculate localized tax rates at checkout
- Generate and file sales tax returns
- Maintain taxability and exemption rules
- Update sales tax changes
Accounting software like Quickbooks can also help with managing sales tax workflows and payments.
Registering with an eCommerce tax service simplifies compliance. But consult a tax advisor to understand your business’ unique nexus and tax obligations.
Step 10: Sign Up for an Accounting and POS System
Proper financial management and reporting will help your eCommerce business thrive long-term. Link your online store to accounting and POS systems for centralized data and financial transparency.
For accounting, use platforms like QuickBooks or Xero to manage tasks like:
- Invoicing and billing
- Tracking sales, costs, and revenues
- Running financial statements and reports
- Processing payroll
- Recording tax liabilities
Integrating a POS system like Square or Shopify POS provides centralized inventory management and retail analytics across online and brick-and-mortar sales channels.
Using accounting and POS systems from the start instills good financial practices as you scale your business. They also improve accuracy during tax time with better recordkeeping.
Step 11: Develop an eCommerce Marketing Plan
An eCommerce marketing strategy helps attract qualified website traffic, convert visitors to customers, and drive repeat sales. Include a range of digital marketing tactics in your plan and budget.
Search Engine Optimization (SEO) helps people find your store when searching keywords related to your products online. Refresh content regularly. Include relevant keywords in text, image names, URLs, etc.
Pay-Per-Click (PPC) ads through Google, Bing and other networks placements ads alongside search engine results and websites. You pay only when users click your ad.
Social media marketing engages followers and promotes products where your audience spends time – Instagram, Facebook, TikTok etc. Create shareable content and offer promotions.
Email marketing converts subscribers and past customers via emails like welcome series, promotions, or cart abandonment reminders. Use a tool like Mailchimp.
Content marketing through your online blog or videos educates shoppers on products and builds trust. Offer tips, demos, and user-generated content.
Track key eCommerce metrics and continuously refine your marketing approach for the best ROI.
Step 12: Provide Great Customer Service
Providing exceptional customer service keeps buyers satisfied and improves retention. Make it easy for customers to get product help through:
- Detailed product descriptions, FAQs and support docs
- Phone, chat or email support channels
- Quick issue resolution times
- Active social media engagement
- User-friendly refund and exchange policies
Also implement customer service tools like helpdesk software, live chat, call centers, CRM platforms, and ticket-based support systems as your eCommerce business grows.
Prioritize responding quickly and positively resolving concerns. This earns long-term trust and loyalty. Send follow up emails to address feedback and offer discounts.
Conclusion
Launching a successful eCommerce store requires strategic planning, patience and effort. But the broad reach of selling online opens huge money making possibilities. Define your niche, choose a business model, assemble the technology, and market aggressively. Providing exceptional customer experiences ensures your eCommerce business endures and flourishes.
