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How to Start an eCommerce Business: A Step-by-Step Guide

About the Article

An eCommerce business is an appealing option for online-only entrepreneurs and established brands with physical stores. In recent years, the eCommerce landscape has grown remarkably.  In April 2020, U.S. retailers' online year-over-year revenue was up 68%, surpassing the holiday peak of 49%. With the world recovering from unprecedented disruption, many retailers are adopting an online platform for the first time.

This is your introduction to starting an eCommerce business, from the fundamentals of the eCommerce market, to getting your brand off the ground, to the criteria you should use when evaluating eCommerce platforms.

eCommerce Business 101

eCommerce refers to any type of commercial transaction made over the internet. While often associated with goods and products, eCommerce can also be used to sell services.

eCommerce Advantages

Almost any company can realize significant benefits from establishing an eCommerce presence. Here are some of the key advantages:

  • Low barrier to entry
    A brick-and-mortar business has significant up front costs. You have to lease space, purchase your inventory, get all the necessary equipment, and more. With eCommerce, you cut your operating and startup costs drastically, allowing your business to start generating revenue early on.
  • Flexibility
    You can use automation and AI technology to manage your business passively, giving you the option to easily run your company full time or as a side gig to supplement your income.
  • Unlimited audience reach
    Companies which have a brick-and-mortar storefront without an online presence can only reach those who have physical access to their store. An eCommerce storefront can reach customers all over the world, no matter the location or time zone. With access to such a wide audience, you have the freedom to find your niche and target those who genuinely need your product.

eCommerce Challenges

Of course, eCommerce comes with its own hurdles, roadblocks, and speed bumps. When considering an eCommerce business, be sure to think about the difficulties you might encounter:

  • Lack of a physical storefront for brick-and-mortar traffic
    If you don’t have a brick-and-mortar location in addition to your eCommerce store, you should carefully evaluate whether online-only shopping will be a barrier for your target audience. For example, if your audience skews older, they may find it difficult to shop online, or they may distrust the safety of eCommerce transactions.

  • No face time with customers
    Without face-to-face interaction, it's hard to know how your customers are responding to your services or products. eCommerce business owners have to go to greater lengths to understand customers’ needs and pain points to personalize the customer experience.

  • Competition
    You’ll face intense competition in almost every eCommerce space, making it difficult to build long-term brand loyalty and convince customers you're the best choice. eCommerce brands must define their brand and voice to connect with customers and distinguish themselves from competitors.

Take your B2B business into the digital commerce era

How to Start Your eCommerce Business

While anyone can start an eCommerce business, those who don't plan in advance will struggle to earn a profit. eCommerce companies must identify their niche, research their competition, choose a business model, and develop a marketing strategy. Using the framework below, you can create a foundation for a successful eCommerce business in five simple steps and avoid common pitfalls.

Step 1: Identify Your Niche

When determining what to sell, consider your passion, expertise, and trending products. Use this as a starting point for inspiration, but don't stop here. While you can make a lot of money from trendy items, every hot trend eventually runs cold. eCommerce businesses which meet a specific need while consistently satisfying their customers’ needs will achieve the most success.

Steer away from overly saturated markets as well. There will always be another store willing to provide more and charge less. Instead, choose a marketplace segment you’re confident you can build an exceptional customer experience around.

You should also consider whether your product will be digital or physical. Remember, your selected product will influence your overall business operations. For instance, large or fragile items will make shipping more difficult and costly.

Step 2: Research the Market

After you've identified your niche, you need to research your target audience. You may be inclined to target a very broad audience to maximize the number of potential customers, but this is a mistake. As the saying goes, “If you try to please everyone, you end up pleasing no one.” Instead, target an audience which will be the most interested in your offerings.

You should also decide which business structure will serve you best. Will you try dropshipping, or act as a wholesaler? Will you sell your product to consumers, other businesses, government agencies, or all of the above? Considering how you’ll manage orders and fulfill them is key to success.

Here are some additional tips to follow when defining and researching your target market:

  • Examine your competition to see what's working for them and to identify areas of opportunity.
  • Explore your target customers purchasing habits and interests.
  • Create buyer personas to help direct your brand's voice and ensure your messaging is relevant to their lifestyles.

After you've completed your research, formalize your findings into a plan. This plan will guide and prioritize your business efforts, providing a comprehensive goal framework.

Step 3: Set up Your Business

Once you've done the research, you're ready to set up your business. Decide on a business name and marketing messages, and select brand identifiers like colors, images, and font. Then design a simple logo using your selected identifiers to make it easy for customers to connect with your business.

Next, you need to pick the eCommerce platform you’ll use to build your online store. Look for a platform that includes the following capabilities:

  • Data collection and analytics
    Comprehensive reporting capabilities allow you to obtain the insights needed to personalize the customer experience
.
  • Customer segmentation features
    These make it easy for eCommerce site administrators to display different information to different groups of users based on factors like location and order history
.
  • Built-in SEO tools
    Optimizing for SEO is one of the best ways to drive organic traffic to your website.
  • Cloud hosting
    Hosting your site on the cloud gives you a high degree of confidence in your store’s availability at all times.
  • Scalability
    Your eCommerce platform should be able to scale so it fits your needs no matter how quickly your business grows.
  • Extensibility
    The ability to add features through extensions or plugins makes it easy to add site functionality which fits your marketing goals and meet the needs of your customers

You'll also need to incorporate your business and register for an Employer Identification Number (EIN) to meet legal and tax requirements. Think of your EIN as your company's social security number. You will need it to open a business bank account and file taxes. You must also check with relevant local, state, and federal officials to determine what business licenses you’ll need.

Discover how to define key requirements for your next B2B eCommerce platform

Step 4: Establish the Launch Campaign

Now you're ready to make some noise and bring in new customers to your eCommerce business. But before this happens, you must identify the goals of your launch campaign and key performance indicators (KPIs). What do you hope to accomplish with your campaign? What outcomes will prove that your campaign was a success? Use this information to craft a marketing plan, which is discussed further below..

You should take care of the following tasks as well to ensure your launch is a success: 

  • Set up shipping, fulfillment, billing, and tax automation to streamline the buying process.
  • Add email notifications to be sure you know when someone interacts with your store.
  • Install an analytics tool to capture data and retarget ads.

After launching your store, don't go dark. Continue nurturing audience relationships through email marketing with content and messaging which provide value. Speak to their problems and position your product as the solution to push prospects further down your buying funnel.

Step 5: Create a Sales and Marketing Strategy

Your sales and marketing strategy determines how you’ll shape your efforts to reach the right people at the right time.

SEO provides a great way to attract new visitors to your store. You need to create a keyword list to target and attract quality leads. Search Google and social media hashtags for keywords, and add common customer phrases to your keyword list. Incorporate those keywords into pages of your online store, including your product descriptions, page titles, and headings. 

You should also consider creating high quality, informative content like blog posts related to topics of interest to your target audience. This is the best way to rank for relevant keywords your competitors are likely targeting as well. It also gives you great free and gated assets to use in your email marketing campaigns. See which content leads to the most engagement and the greatest number of conversions, then use this to guide your future content development efforts.

While SEO leaves bread crumbs which lead prospects to you, ads on social media or search platforms like Google put your eCommerce business in front of existing and potential customers. Identify your targeted social media and sales channels by determining where your customers are spending their time online. Social media is also a powerful way to build brand loyalty through user-generated content in the form of customer testimonials and influencer marketing.

Be sure your plan includes periodic check-ins and tracking. You don't want to wait until the end of the campaign to find out if your strategy is working or not. When selecting an eCommerce platform, choose one that has built-in analytics tools to determine where people drop off in your funnel.

Build Your eCommerce Business with the Right Platform

With the number of consumers shopping online at an all-time high, this is the perfect moment to start an eCommerce business. But before jumping in, you need to identify the platform you’ll use to build your store and set it up for success. It should allow you to create a seamless customer experience, with features including reporting and analytics capabilities as well as frictionless fulfillment and order management.

Magento, a comprehensive B2B and B2C eCommerce platform, evolves with your customer along their journey. From crafting personalized content and promotional ads to segmenting customers and applying strategic business intelligence, Magento Commerce puts your brand experience first. It delivers everything you need to make strategic decisions regarding shipping, inventory, customer experience, and business operations. 

To experience the Magento Advantage for yourself, sign up for a free demo and start building your eCommerce business today.

 

How to Start an eCommerce Business: A Step-by-Step Guide