For entrepreneurs looking to start their own businesses, an eCommerce store is one of the most popular and accessible options.
It requires significantly less overhead than a brick-and-mortar store and has the same, if not more, potential growth due to the internet’s reach.
But starting one from scratch is overwhelming.
It’s never easy starting a business, and eCommerce is no exception. Our goal in this post is to give you the ultimate, step-by-step guide to starting an eCommerce business (while keeping most of your sanity intact).
We’ll go over the following:
- The different types of eCommerce businesses (and how to choose the best one)
- Practical software solutions for building a storefront and the best eCommerce “tech stack”
- How to market your business, even if you don’t have an audience
We’ve got a lot to cover, so let’s dive in!
What is an eCommerce business?
An eCommerce business is a business that buys and sells goods or services over the internet.
In simplest terms, eCommerce businesses are online stores that allow customers to purchase products from vendors or individuals on the web.
eCommerce has a bit of an elastic definition, and many have applied it to not only selling and shipping physical goods but digital goods as well, otherwise known as “info products.”
eCommerce businesses make it much easier for customers to find and purchase products they need in a convenient and safe way.
Customers can compare prices, read reviews, and even ask questions about the product before making their purchase.
The eCommerce industry is growing rapidly each year, with more people turning to the internet for their shopping needs.
Unsurprisingly, eCommerce sales skyrocketed during the COVID-19 pandemic, with even established brands changing up their strategy to better support contactless and purely digital sales.
In fact, eCommerce shot up from around 10% of all retail sales in 2019 to 15% of all retail sales in 2020, according to the November 2022 report from the U.S. Department of Commerce.
After the lockdowns, you might expect that number to go back to 10%, right? Nope.
It stayed around the 13-14% marker and is continually rising, making up exactly $251.7 billion of all retail sales in Q3 of 2022.
The point of sharing all this is to illustrate that there is still plenty of room in the eCommerce space.
It can sometimes feel like every store, every product, and every idea has already been taken, but that couldn’t be further from the truth.
For entrepreneurs looking to start their own businesses, an eCommerce store is one of the most popular and accessible options.
It requires significantly less overhead than a brick-and-mortar store and has the same, if not more, potential for growth due to the internet’s reach.
Different types of eCommerce businesses
eCommerce businesses come in many different flavors, with new types popping up every year.
Here are some of the most well-established and proven eCommerce business types.
Dropshipping
Dropshipping is a type of fulfillment model in which the seller doesn’t actually keep any inventory.
Instead, the seller works with a third-party supplier to ship products directly to customers on their behalf.
This means that drop shippers are able to offer a wider variety of products without having to worry about stocking and storing them all themselves.
The benefits of dropshipping are that it requires very little up-front investment or ongoing maintenance, and it’s quick and easy to get started.
However, since you’re not personally handling the product, maintaining good quality control is completely in the hands of your suppliers.
To dive deeper, check out our guide to dropshipping inventory management.
Retail arbitrage
Retail arbitrage, also known as “retail sourcing,” is the practice of buying products from a physical store and then reselling them online for a profit.
This can be done at brick-and-mortar stores or through online marketplaces such as eBay or Amazon.
The biggest benefit of retail arbitrage is that it’s relatively low risk and doesn’t require any upfront investment or specialized skill to get up and running.
The downside, however, is that you don’t control the pricing of your products, so it can be difficult to turn a profit if the market is saturated with similar items.
It also requires you to be a professional bargain hunter, which not everyone is wired to enjoy.
If you’re on the fence, check out our post on whether or not retail arbitrage is right for you.
Handmade eCommerce
The handmade eCommerce market has experienced tremendous growth recently thanks to platforms like Etsy and Amazon Handmade.
The beauty of a handmade business is that you can be as creative as you want in terms of your product offerings.
It also lets customers become more personally connected with the person behind the brand, which makes them more likely to come back for more.
The downside of handmade products is that they tend to have very high overhead costs, as the materials and labor involved can be expensive.
Additionally, since each product is unique, it can be difficult to scale your business without sacrificing quality control or customer service.
Private labeling
Private labeling, otherwise known as “white labeling,” is the practice of attaching your own brand to a product manufactured by another company.
This means that you’re able to source products from overseas manufacturers and then add your branding, customization, and other modifications before selling them as your own.
Examples of private labeling businesses include clothing brands, health supplement companies, and even food manufacturers.
Private labeling allows you to benefit from the economies of scale offered by overseas manufacturing while still establishing your own brand in a crowded market.
The downside is that it requires a larger up-front investment than some other eCommerce business models since you’ll need to cover the cost of production and shipping in addition to the cost of branding and marketing.
Wholesaling
Wholesaling is similar in many ways to private labeling in that it involves working with an overseas manufacturer to produce and ship products on your behalf.
The difference is that instead of selling the products under your own brand name, you’re buying them from the manufacturer in bulk and then reselling them as-is for a profit.
This means that you can keep costs low by cutting out the branding and customization steps of the product life cycle.
The downside is that your profit margins will be much lower since you won’t have any control over the pricing of your products.
Similarly to white labeling, you’ll also need to front upfront funds to cover the initial purchase of the product in bulk.
However, it’s important to note that due to the lack of branding and customization, you won’t be able to create a unique selling point or build an emotional connection with your customers.
To learn more, check out our post on wholesale vs. retail for eCommerce, as well as our step-by-step guide to wholesaling on Amazon.
Digital products
Digital products are, quite simply, any product that is delivered online.
This could be a PDF course, an eBook, a video tutorial, or even software as a service (SaaS).
If you’re at all familiar with eCommerce, you might be scratching your head at me classifying SaaS as eCommerce.
And the strict definition of eCommerce may exclude SaaS, but as more and more businesses are offering both digital and physical products, blurring the lines between the two.
Take Apple, for example. They obviously sell hardware in the form of iPhones, iPads, and MacBooks, but they also sell software like Logic Pro X and Final Cut Pro.
But this strategy isn’t just limited to massive conglomerates like Apple.
For example, the film company Black Magic Design sells a suite of high-end professional cameras, but they also give away their excellent video editing software, DaVinci Resolve, for free.
Users can pay to access premium features, but this is more than likely a clever way to get filmmakers into the Black Magic ecosystem.
The benefit of digital products is that they have very low overhead costs and can be delivered almost instantly after purchase, allowing for a great customer experience.
In fact, you can create professional-looking digital products with entirely free tools like Canva and Google Slides.
They also don’t require physical storage and can reach a much larger audience since they aren’t bound by traditional geographic restrictions.
Finally, digital products can be sold on an ongoing basis if you set up automated delivery systems like membership sites or subscription services.
This allows for more consistent revenue streams than other eCommerce models that rely on sporadic purchases.
Truth be told, there aren’t a whole lot of downsides to digital products, which is why many traditional eCommerce businesses leverage them to diversify their revenue streams.
Subscriptions
The subscription eCommerce model is a bit of an outlier on this list.
Unlike the other models, it involves customers paying a recurring fee to access some kind of service or product.
This could be anything from a monthly shipment of coffee beans to weekly deliveries of prepared meals.
The benefit of subscriptions is that they create a consistent revenue stream by locking customers into recurring payments.
Subscribers pay a fixed amount each month or year, meaning you can plan your budget and expenses more confidently than with other eCommerce models.
Subscriptions are particularly popular because they provide convenience and value by delivering products that people need on a regular basis, like food or household items.
Plus, since many subscription services are offered at a discount off the regular price, customers feel like they’re getting a good deal.
However, running a successful subscription business is incredibly tough as you need to consistently offer value in order to keep customers interested and subscribed.
One very popular example of the subscription eCommerce model is subscription boxes, which have exploded in popularity over the last few years.
If you don’t know, subscription boxes are monthly or quarterly packages that contain a curated selection of items, usually within a specific theme.
The subscription box model works well because there is always something new and exciting to look forward to, which helps keep customers engaged with the brand.
There are quite a few tools out there that make running a subscription business relatively easy, including Cratejoy, ReCharge, and Subbly.
It’s also an incredibly popular model with Amazon customers, as evidenced by the success of Amazon Prime.
Overall, subscription models can be a great way to generate consistent recurring revenue, but they require careful planning and execution in order to succeed.
Memberships
The membership eCommerce model is similar to subscriptions in that customers pay a recurring fee to access products or services, but there’s usually an added element of exclusivity.
A great example of this is the wine club Winc, which offers its members exclusive discounts on different wines each month.
The membership model is also an appealing choice because it can often be done digitally, meaning there’s no need for physical storage or delivery.
This makes it perfect for online courses, streaming services, and other digital products.
It’s also great for products that require ongoing support, like software-as-a-service (SaaS) offerings.
Most memberships offer customers access to exclusive products or services, personalized customer service, or access to a private community.
The downside of the membership model, much like the subscription model, is that it requires you to constantly provide value in order to keep members interested and subscribed.
You also need to find ways to attract new members while retaining existing ones, which can be difficult if you don’t have an effective acquisition strategy in place.
Steps to starting an eCommerce business
Now that we’ve gone over the different types of eCommerce businesses let’s walk through a step-by-step guide on how to start your own.
1: Choose a business model
The first step is to decide what kind of eCommerce business you want to run.
Do you want to sell products directly or offer a subscription service? Will you be selling digital products or physical goods?
If you’re not sure, try to find examples of each of the aforementioned models and see which one appeals to you the most.
Also, review the pros and cons of each model and make sure the business model you choose is aligned with your goals for the business.
A big differentiator between many eCommerce models is whether or not you want to build a brand that connects with an audience or stays anonymous.
Let’s be real: some of you are just interested in eCommerce for the money, and that’s totally fine. For you, retail arbitrage, dropshipping, or wholesaling may be the best models.
You don’t need to design and build your own products, and you essentially act as a middleman between the manufacturers and the customers.
However, if designing your own products and building a brand is important to you, consider starting with digital products (because of their low overhead) or handmade eCommerce.
2: Research your competition
Once you know what kind of business model you want to pursue, it’s time to do some research.
Start by looking at your competition and see what they’re doing right (and wrong).
What do their websites look like? What kind of products do they offer? How are they driving traffic and sales?
Study everything about their online presence. How do they interact with fans on social media? What does their checkout page look like? How do they price their products?
If you start to notice multiple competitors doing the same things, chances are that’s a best practice you should emulate in your own business.
Of course, this doesn’t mean duplicating it outright, but using it as a template and putting your own spin on it.
For example, let’s say you want to get into the business of selling handmade women’s apparel.
You notice that on all your competitors’ sites, the checkout pages include a sizing chart, frequently asked questions section, and multiple product photos of the product in action.
Chances are, these are things that you will want to feature on your checkout page for better CRO (conversion rate optimization).
3: Validate your product or service
This third step is often interwoven with the previous one.
Yes, you study competitors to understand best practices. But you also study competitors to validate that there’s even a market for the type of product you want to sell.
But your validation doesn’t end there.
Just because a market exists doesn’t mean that customers will actually want your product.
Talk to any experienced business owner, whether in software, eCommerce, or anything in between, and they will tell you that most online businesses fail because they don’t take the time to validate their product or service.
We can all fall into this trap of thinking that just because we believe in a product, everyone else will as well.
Here are some tangible ways to validate your product to practically guarantee you’ll get customers when you launch:
- Use a simple, one-page website builder to launch a landing page that describes your (currently nonexistent) product. Then, spend some money to run ads on that page and start collecting emails to measure interest.
- Join Facebook groups and follow Twitter hashtags in your niche. Run surveys to ask what potential customers think of your product.
- Conduct over-the-phone or Zoom interviews with prospective customers in your niche. Ask them for 15 minutes to ask a few simple questions about their pain points and how your product may be able to solve them.
- Start creating content optimized for organic search and build an audience. Then, just like in the first step, poll your email list to ask them what kind of products they’d want (this takes longer but is known as the “audience first” approach, something we’ll discuss later in the post).
4: Create a brand and website
The next step is to bring your vision to life and create a website for your business.
You don’t have to be a web designer or developer to do this, either. Thanks to platforms like Shopify and WooCommerce, you can use templates to quickly build an online store tailored to your product.
For the branding aspect of things, think about how you want to represent your product.
What kind of visuals do you want to use? Colors, fonts, images? What kind of language do you want to use in your messaging?
You can leverage a done-for-you service like 99Designs for logo creation or hire a freelancer on Upwork to do graphic design for you.
If you’re feeling bootstrappy and have some experience in design, you can also take a stab at your own design using a free tool like Canva.
Design and copy are arguably the two most important things when it comes to making your website look professional and earning the trust of new users.
If you don’t have experience in these things (and don’t have the time to learn them), we recommend outsourcing them to professionals.
5: Source products and suppliers
Once you have your brand and design figured out, it’s time to source products and suppliers.
This is probably the most daunting part of the process, especially if you’re selling physical goods.
Where do you even start? How do you find a good supplier who won’t rip you off or send inferior products?
These are all valid questions, and we wrote a post all about where to source products. For now, here are some quick notes on where to find your inventory:
Trade shows
Trade shows are a great way to meet potential suppliers in person and build relationships. Plus, you can actually touch and inspect products before committing to buying them.
Chinese suppliers
China is the world’s biggest hub for manufacturing, so it’s often the best place to start your search.
Alibaba is a great resource for finding reliable suppliers who offer competitive prices and fast shipping times.
Local stores
It may not be as cheap as buying from overseas, but sourcing locally can have its advantages, such as better customer support and faster delivery.
Plus, it’s essential for eCommerce models like retail arbitrage.
Once you’ve sourced your suppliers, make sure to read through their terms of service and double-check shipping times. That way, you’re not left with a bunch of unfulfilled orders when launch day rolls around.
6: Establish a foundational inventory management system
You may think that early on you can get away with managing your inventory on the back of a napkin or an Excel spreadsheet, but trust us: things in eCommerce get complicated very quickly.
This is especially true when you start dealing with in-transit orders, stockouts, multiple sales channels (such as marketplaces like Amazon or eBay), and customer returns.
If you want to set yourself up for success early on, do yourself a favor and invest in inventory management software like SkuVault.
SkuVault is a cloud-based inventory management platform that can help you automate your warehousing and operations, giving you an efficient (and accurate) way to keep track of everything from stock levels to order fulfillment.
To learn more, check out our features page, or click the link on this page to schedule a live demo.
7: Set up payment processing and optimize your checkout flow
The average shopping cart abandonment rate worldwide is 71.68%.
Just imagine that for a second. Nearly three out of every four customers you have will abandon their shopping cart before checking out.
Optimizing your payment processing and checkout flow is not a “nice-to-have” in eCommerce – it’s absolutely essential.
When it comes to payment processing, we don’t have to think about that too much thanks to industry-standard tools like Stripe, which comes built-in to most eCommerce websites and integrates with just about all other platforms.
When it comes to optimizing your checkout flow, here are some best practices:
- Make sure your form fields are as short and simple as possible.
- Offer a variety of payment options, such as credit cards, PayPal, or Apple Pay.
- Include order summaries in the checkout process, so customers know what they’re getting and how much it will cost them.
- Give customers the option to create an account so they can save their details for future purchases.
- Provide live support during the checkout process so customers can get help with any doubts or questions they may have
- Finally, make sure you’re up-to-date on all the latest security protocols to ensure your customers’ data (and money) is safe.
8: Market your eCommerce business
Your storefront is set up, your payment processor is processing, and your products are ready to go.
You’re officially ready for business.
There’s only one problem: nobody knows you exist. At least, they don’t know if you haven’t built an audience yet.
Finding success in eCommerce means you will likely spend just as much (if not more) time marketing the business as you will actually run it.
We wrote a comprehensive post about some proven ways to drive traffic to your eCommerce store, but here are the highlights:
- Make sure your website is optimized for mobile use, as most customers will be browsing it on their smartphones.
- Focus on organic search engine optimization to get organic traffic from Google. This is often best done by creating content around topics your audience will find interesting.
- Leverage influencers and social media to reach new audiences.
- Create an email list and start engaging with potential customers via email marketing campaigns. You can use social media, giveaways, or your search-optimized content to capture leads in exchange for a piece of valuable content (a lead magnet).
These are just a few ideas, but the key is to find the marketing channels that work best for you and double down on them.
Consider an audience-first approach
We’ve alluded to it throughout this post, but one of the best ways to ensure you’re not launching your store to an empty void is to start your eCommerce journey with an audience-first approach.
The idea behind the audience-first approach is simple: instead of focusing on the products you’re selling, first focus on building an engaged audience that can help spread the word about your brand.
This could involve creating content around topics your ideal customer would be interested in or engaging with potential customers on social media.
So, how exactly do you build this audience? By creating “top-of-funnel” or informative content related to your eventual product or service.
For example, let’s say you’re selling white-labeled workout equipment. You’ll want to tackle topics like:
- The best jump rope routine for weight loss
- How to use fitness bands
- How to bench press without injury
All of these things are likely topics your target audience will be interested in, but they don’t involve any explicit selling (at least not yet).
For now, you can capture their email addresses and build their trust for when you eventually launch your product.
Software essentials for eCommerce business
We’ve covered a lot in this post, so let’s finish up by going over some helpful software tools that can streamline or completely automate a lot of the work required in eCommerce.
Here are a few of our favorites:
1: Zapier
Zapier is an “if this, then that” tool that allows you to automate repetitive tasks. For example, you can use Zapier to automatically add new customers to your email list or post on social media whenever you get a new order.
One of the most important things in eCommerce is keeping your data consistent. Zapier acts as “glue” that can connect multiple apps to each other and perform actions based on certain triggers.
2: Shopify
Shopify is a popular eCommerce platform that makes it easy to set up an online store. It comes with built-in payment processing, inventory management, and other essential features you need to get started.
3: QuickBooks
QuickBooks is an accounting software designed specifically for small businesses. It allows you to easily track sales, expenses, and other financial data.
It’s especially useful for online stores since you can automatically sync your orders with QuickBooks and have an up-to-date view of your finances at all times.
4: MailChimp
MailChimp is a popular email marketing platform that allows you to create newsletters, automated emails, and more. You can use it to stay in touch with your customers, nurture leads, and send special offers.
5: SkuVault
SkuVault is a cloud-based inventory management solution that helps eCommerce businesses keep track of their stock.
It provides analytics and reporting tools to help you make data-driven decisions about stocking, pricing, and more.
While there are many other tools you can use to streamline your eCommerce operations, these should be enough to get you started.
Final thoughts
Launching an eCommerce business is no easy task, but with the right strategy and tools, you can turn your idea into a successful venture.
Start by building an audience of potential customers, then optimize your store for conversions using SEO and other marketing tactics.
Finally, use software to automate some of the tedious tasks associated with running an online store, such as managing inventory or sending emails.
With the right strategy and tools and a lot of perseverance, anyone can build a successful eCommerce business. Good luck!
