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 your business idea and validate it, 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 what each offering is and how customers may benefit from it.
- 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: How To Write a Business Plan
Learn more: Simple Business Plan Template
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4. Set up your business
After you solidify your e-commerce business idea and finalize 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. It’s also a good idea to get all of the licenses and permits you’ll need to operate legally. For help with the setup process, don’t hesitate to reach out to an attorney, accountant or other professionals who can answer any questions you may have 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’ll 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 In 6 Simple Steps
Learn more: 13 Profitable Dropshipping Products To Sell In 2024
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 of them 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 at first, a free e-commerce platform can come in handy. You may always upgrade to a paid plan or platform as your business grows. Do your research and compare your options so you can figure out the best e-commerce tool for your unique budget, preferences and goals.
7. Figure out order fulfillment
Fulfillment is an important part of 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 and allow you to automatically add shipping costs at checkout. 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 which strategies you choose, be consistent and establish a brand that allows you to stand out from your competitors.
