E-commerce businesses sell goods, services, and funds over the Internet. Starting an e-commerce business is a lot like starting any other company. You'll need to create a business plan, obtain licenses and permits, and set up dedicated finance. You must also select: e-commerce website buildersource products and sell them to online customers.
Follow these six steps to get your e-commerce business up and running.
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1. Define your e-commerce business idea
The first step in starting a business is honing your idea. online business ideas This may include the sale of physical or digital products as well as professional services. Whatever you choose, you need to define your style. e-commerce business model Then write a business plan that outlines your area of expertise.
During this process, you'll get to ask a lot of questions.How do you deliver your products and services to your customers? What types of licenses and permits do you need? How much does it cost to get your business up and running? And how does it cost? Will it cover your business plan These questions need to be answered and provide a roadmap for the coming months.
Other resources to help bring your ideas to life:
Once you have solidified your e-commerce business idea, the next step is to prepare your company for success.
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This includes back-office steps such as:
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select business structure. Each of these business entity types has advantages and disadvantages, so you may want to consult an attorney to help you choose the right one for you.
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Name your business. To make sure you are not choosing a name that belongs to another company, check your local Secretary of State's website and the U.S. Patent and Trademark Office. Check to see if potential business domain names are available as well.
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Applying Employer identification number (EIN). You can obtain an EIN for free from the IRS online, by mail, by fax, or by phone. Although not every business needs an EIN, having one can help you separate your personal and business finances.
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open business checking account. NerdWallet recommends that all business owners have a bank account dedicated to their business.
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Obtain any licenses and permits required by your city or state. This will likely include a business license and may also require a professional license if you perform services. Check your state or local government website for requirements in your area.
The answer to starting a business:
3.Product procurement or development
Next, you need to source the products you want to sell. If you sell physical products, you may need to create the products yourself or work with a manufacturer.
Key decisions to make at this point: Whether to order and store the product in bulk. stock in stock? If that's the case, you'll need to think about storage space and financing to pre-order items. However, you are authorized to ship the item yourself.
Other companies are choosing to rely on drop shipping, products are manufactured or sourced at the time an order is placed. Dropshipping generally has lower overhead costs, but can be more difficult to manage as inventory levels and shipping are out of your control.
Other options for sourcing e-commerce products include:
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white label, Or you can order products in bulk from manufacturers and brand them with your company's identity.
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on-demand printing, Or, you can pay a third party to print your company's designs on products like T-shirts, mugs, and posters. Print-on-demand typically works like dropshipping in that a customer places an order and the manufacturer creates the product and ships it directly to the customer.
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retail arbitrage, Alternatively, you can buy discounted items from retail sellers, mark them up, and list them in your store.
If you sell professional services, you may just need to describe and list what you offer on your business website. Still, you need to figure out how much to charge and decide how many clients you can see each day or week.
Other information useful for product development:
4. Set up your e-commerce website
your e-commerce website This will be your storefront. It's where your customers learn about you and your business, browse your products, and make purchases.
The easiest way to set up your website is to online store builder. These platforms can guide you step-by-step through the process of launching a website, from purchasing a domain name to managing your inventory to taking credit card payments.
If you are a very small business or just experimenting with online sales, Free e-commerce website builder This might be a good place to start. But to list unlimited products and access a more robust suite of tools to help you print shipping labels, manage orders, analyze sales, and more, you typically need to subscribe.
In general, many online store builders are easy to use, even for people without web development experience. However, most sites offer the option of paying a professional designer or developer if you don't want to build your website yourself.
Choosing the right website builder:
5. Understand order fulfillment
Order fulfillment is the process of getting your customer's purchase.
Most e-commerce website builders offer the first step in the fulfillment process: printing a shipping label. Some services also offer the ability to add shipping charges to a customer's order at checkout.
If you handle the order fulfillment yourself, check the shipping rates to get an idea of how much it will cost. Look for an online store builder to make the shipping process easier or check out shipping software providers like: Shippo.
Also note that e-commerce can connect you with customers all over the world. If there are any locations you do not wish to ship to, please indicate so on the website.
If you do not want to manage order processing, you can outsource order processing. e-commerce fulfillment center Or use a service like Fulfillment by Amazon. The cost of fulfillment services varies depending on the size of the product, distance of delivery, and amount of delivery.
More information to help you manage your orders and inventory:
6. Marketing your e-commerce business
with this, Started an online storeyou are ready to start serving customers as long as they can find your product.
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omnichannel commerce, list your products on third-party marketplaces like Amazon and Instagram. Some e-commerce website builders can help facilitate this.
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Influencer marketing. Pay popular social media creators to feature your products.
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Social Media Content or Paid Social Media Advertising.
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Optimize your business website for search engines.
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Send email campaigns to past and future customers.
Many e-commerce website builders include some marketing features that help you create social media ads and send emails when customers abandon their carts.
However, if you want to develop more sophisticated campaigns, consider investing in. marketing software. These tools can help you create email templates and campaigns, compose text messages to customers, track individual customer responses to emails, and more.
Additional marketing support:
How much does it cost to start an e-commerce business?
The cost of starting an e-commerce business varies greatly depending on what and how much you plan to sell. Expenses may include:
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your e-commerce website. Online store builder subscription plans typically start around $25 to $30 per month when billed annually. You may also need to obtain a domain name if your e-commerce website builder does not include one. Also, be aware of the annual fee to keep your URL registered.
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Payment processing fees. Generally, the company providing the service is Payment procedure We take a cut of approximately 3% from each online sale.
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Preparation. If you plan on ordering a large amount of inventory, be prepared for a large up-front cost, even before you start generating revenue. inventory financing It may help fill in the gaps.
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Order processing. We generally pay a fee to a third party service to process each order. Prices vary depending on the size and weight of the item. The more customers you buy at once, the less you have to pay for each item. Order fulfillment services may also include warehousing, in which case there is a storage cost for each item.
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Warehouse. If you purchase more inventory than you can store in your home or garage, but you don't have an order fulfillment service that provides storage, you may need to secure storage space yourself.
Tips for starting an e-commerce business
Just like starting any other business, starting an e-commerce business can feel like a daunting task. Here are some tips for managing your migration.
1. Start simple
If you're not sure if e-commerce is the right path for you, start by setting up an online store with low overhead. This might mean starting with the free version of an e-commerce website builder, ordering small amounts of inventory, or selling only one or two types of products.
Starting small may limit quantities startup funding You need to be able to easily change direction if your initial idea doesn't come to mind. Once your business is taking off, you can switch to a more robust system. e-commerce platform Expand your product line.
2. Develop a loyal customer base
E-commerce businesses need customers who value their products, buy from them again and again, and ideally promote them to their networks.
Establishing a strong brand presence on social media can help you grow your following. But the more information you can collect from your customers, the more you can market to them directly, such as creating email marketing campaigns, sending discount codes via text message, or letting them know where to find your booth at a local event. The amount you can do will increase. .
3. Invest in multichannel sales
Loyal customers may be willing to visit your website frequently. But to reach a new person, you may need to meet him where he is: on Amazon, Instagram, TikTok, etc. Start with the platforms where your customers are most likely to be present, start integrating them, and see how they perform. You can add more platforms later if it fits your business strategy.
Keep in mind that in-person sales are also a channel. Craft fairs, local shops, and industry and trade events can help you connect with new customers while generating revenue.
A version of this article originally appeared on JustBusiness, a subsidiary of NerdWallet.
