How To Launch A Successful Ecommerce Business In 2022:
{The A-Z Guide For Beginners}
Ecommerce businesses have become extremely popular since 2020.
It doesn’t seem to be going anywhere, in fact, it seems like it’s growing more rapidly.
Most people are trying to start an online business and many are taking the route of an e-commerce store.
If you’re thinking about starting an e-commerce store but not sure what it is, how it works, or even how to get started, then keep reading.
In This Post You’ll Learn:
- What an e-commerce business is.
- Different tyes e-commerce business models
- Steps to starting an e-commerce business
- Different e-commerce revenue models
- Important e-commerce terms
Online businesses are a big deal. Ever since the Corona pandemic hit the globe in early 2020, eCommerce businesses have seen some serious growth.
In fact, according to Statista “e-retail sales surpassed 4.2 trillion U.S. dollars worldwide; global retail e-commerce sales grew by more than 25%”.
Did you know that China is the leading country in retail e-commerce sales, and Amazon is the leading online marketplace by the number of monthly visits? These are facts from Statista.
We don’t know when things will get back to normal or if it ever will, one thing is for certain, we have to adapt to the changes if we want to survive.
So, if you’re thinking about starting an online business, now is the time to do so and an e-commerce store is a great start.
Don’t know anything about e-commerce or how to start an e-commerce business? No problem!
Whether you’re looking to pursue e-commerce as a side business or build it into your main gig, there are many benefits to starting an e-commerce store.
In this guide, you will learn about different types of e-commerce businesses, revenue models, and the steps to starting an e-commerce business so that you can make a better decision before starting your own e-commerce store.
We’ll go over some tips on what kind of business structure will work best for you as well as how to build an e-commerce store from scratch.
We’ll kick things off with:
What Is An E-Commerce Business?
E-commerce is short for electronic or internet commerce. It is used in reference to the buying and selling of goods and services online.
Any kind of transaction that is conducted via the internet, whether it be a physical or digital product or service is an e-commerce transaction.
An e-commerce business is when you use a platform, set up a storefront, and sell multiple products and services.
Some examples of e-commerce stores are
- Amazon
- Walmart
- Etsy
- Ebay
There are several ways to start an e-commerce business. One of the most popular ways is to open a physical store and use an e-commerce website as a supplement.
Another way is to open a traditional brick-and-mortar store and then offer an online delivery service as well.
However, starting an e-commerce store is easier and cheaper than starting a brick-and-mortar store.
Steps To Start An E-Commerce Business
Below is a list of the steps needed to start an e-com business.
1. Decide which area you are going to focus on. For example, fashion, food, pet, electronics, etc.
2. Figure out who your target audience is. For example, are you going to cater to, men, women, cat owners, etc?
3. Decide which product/s you’re going to sell. For example, shoes, organic food, cat food, iPhones, etc.
4. Figure out where you’ll source your product/s, that is, who will be your supplier, or will you manufacture yourself.
5. Check out your competitors.
6. Research the different business models and decide which one is best for your product, as well as the one you’re most comfortable with.
7. Figure out how you’ll drive traffic to your business.
8. Decide on a business name and register it.
9. Pick a platform
10. Set up your store
Further down in the article, we’ll take a closer look at each step. But for now, let’s move onto
Types Of E-Commerce Business Model
I came across this video and found it very helpful. I dropped it in here because I believe it will add value to you.
Before you dive into starting an e-commerce business, you need to understand the different types of business models that are available and decide which one/s is best for your intended business.
An e-commerce business can offer different types of revenue models and use one or more types of e-commerce business models to reach its goals.
E-commerce businesses fall into one or more of the following four categories
B2B: Business to Business
In the B2B model, businesses focus on selling to other businesses. In this model, the end-user buys the stock wholesale.
For example, you’ll find gas stations purchasing fuels from main fuel companies to resell.
This type of business generally has recurring income.
B2C: Business to Consumer
The B2C category is when businesses sell directly to consumers, this is a retail transaction.
Using the example above, this is when the gas stations sell fuel at retail prices to individual customers.
This is the most popular type of e-commerce business.
C2C: Consumer to Consumer
In the C2C business, a consumer sells to another consumer. Typically they would use a middleman such as eBay to facilitate such transactions.
With this, the seller would pay a fee to the middleman for facilitating the transaction.
C2B: Consumer to Business
This occurs when a consumer sells their products or services to businesses.
For example, you bake pastries and sell them to gas stations or local neighborhood shops for resale. Another example is a photographer selling photos to a stock photo company like iStock.
Choosing a specific business model helps you determine who you’re going to sell to.
Each model has its own set of benefits and drawbacks, so be sure to research which one will work best for your business.
Don’t forget to consider things like your budget, the products you want to sell, and your target market.
With the right planning, you can create a successful e-commerce store that meets your needs and exceeds your customers’ expectations.
Categories Of E-Commerce Transactions
E-commerce transactions typically fall under one of the following categories
1. Retail: selling products directly to customers.
2. Dropshipping: selling products that have been produced, packaged, and shipped by a third party to customers.
3. Wholesale: selling products in bulk to a retailer.
4. Subscriptions: monthly, quarterly, or annual recurring payments for a product or service.
5. Crowdfunding: collecting money from a number of individuals to start up a business, or create a product.
6. Services: skills that are exchanged for cash, for example, freelance writing.
7. Digital Products: downloadable digital products such as eBooks, audio, images, etc.
8. Physical Products: tangible products that require storage, shipment, and restocking of inventory.
Important E-commerce Terms Defined
Retailer
A retailer buys products from either a manufacturer or wholesaler and then resells them to individual consumers.
There are some retailers that create their own products and sell them. Some do white labeling, which is when they purchase products from manufacturers and put their name and label on them.
Wholesaler
A wholesaler buys products in bulk at a discounted price and resells them.
Manufacturer
Manufacturers create the products themselves and then sell them to wholesalers, or distributors.
Some manufacturers also sell directly to consumers and retailers; they also offer the option of private labeling, which means that a retailer can put their label on the product.
Distributor
Distributors buy products directly from a manufacturer (creator) and sell them to a wholesaler
Franchise
Franchises pay for the right to sell the products under their franchise name.
Now, we’ll take a look at the different types of revenue models you can use in your e-commerce business to make money.
An e-commerce revenue model is the way/s a business plans to make money online.
Types Of E-Commerce Revenue Model
There are different ways to make money from your e-commerce business. An online business can use multiple revenue streams at the same time to generate an income.
Five of the most popular models that are used to make money from an e-commerce store are:
Dropshipping Revenue Model
In this model, you partner with a supplier who ships products directly to your customers. This eliminates the need for you to maintain a stock of products.
Product Sales Revenue Model
This is the most common way to monetize an e-commerce business.
A business makes money from this model by selling products or services directly to customers over the internet.
Affiliate Marketing Revenue Model
With this model, you promote other people’s products or services; consumers are redirected to a partner website to complete their purchase.
When this happens you are given a commission once the purchase has taken place.
This is a very popular e-commerce business model, it is used by most, if not all online entrepreneurs.
Subscription Revenue Model
The subscription revenue model is another popular way to monetize an e-commerce business.
With this business model, consumers pay a recurring fee either monthly, quarterly or annually. You can offer different features and benefits to your customers based on the plan they choose.
Examples of such models are Netflix, subscribe, and save by Amazon.
For a list of other types of models check out this article by Noah Parsons.
Advertising Revenue Model
This model is when you charge advertisers for having their products advertised on your website or blog through display ads, affiliate ads, sponsored posts, and so on.
There are various types of business and revenue models that the business can adopt.
A startup company can choose from the traditional business model of investing in inventory or focus on a marketplace model, where they don’t have to hold large inventories.
Different Types Of E-Commerce Stores
When starting your own online store, it’s important to think about the different types of stores that are available to you.
The most common types of e-commerce stores are dropshipping, Amazon FBA, private label, and white label.
We’ll discuss each in more detail below…
Dropshipping stores have other people’s products that they sell to the customer. When you dropship, you simply partner with a supplier who will ship products directly to your customers on your behalf.
A dropshipping store is a great option for entrepreneurs who are looking to get started with their own e-commerce business without having to invest in inventory or shipping.
Amazon FBA Stores: FBA means fulfillment by Amazon. These stores sell things that have been bought from Amazon and all product fulfillment are handled by Amazon.
Amazon FBA is one of the easiest ways to sell things online. You can charge less because there are no fixed costs.
Amazon FBA is a great way to get started with e-commerce. They take care of the technical parts, so you can focus on marketing and customer service.
Private Label Stores: are things you either design yourself or hire a manufacturer to create just for you.
Now that we’ve covered all the basics of an e-commerce business, let’s discuss
How To Start An E-Commerce Business From Scratch.
I hate reading long articles only to find a bunch of fluff that doesn’t get straight to the point, so I’m going to spare you all that and get straight to the point.
1. Conduct Research And Make A Plan
The very first thing you’ll want to do is research the e-commerce market. You want to know what you’re getting yourself into.
Think of it like buying a house, are you going to just buy a house without first checking out what the neighborhood is like, or if it’s in a flood zone, or if they have a lot of break-ins, etc.
I wouldn’t and I hope for the love of God you wouldn’t either.
So, ultimately with your research, some of the things you need to find out are:
- What’s the best niche to go into?
- How competitive is that niche?
- Who’s your target audience going to be?
- What are you going to sell?
- How you’re going to stand out from the competition?
- What business and revenue model you’re going to use?
- Are you going to manufacture your own products or use a supplier?
Let’s dive into each part a bit
2. Pick A Niche
Some marketers might tell you that the first thing you need to do is decide which product you want to sell.
While I’m no expert, I have given some serious thought to it and I would say, decide which area or industry you want to build your e-commerce store around first.
Here’s what I mean, if you don’t niche down, you’ll be competing with many different stores (like Amazon, target, etc) based on the different categories of products your store sells.
However, if you niche down and focus on a particular industry, then your brand will begin to be recognized within that industry.
For example, if you decide on the pet industry, then whenever someone is looking for pet-related things they’ll know that you sell pet products so they can check your store.
So, before you pick a product, I suggest you pick a niche, you can refer to that guide for tips on what to look for when choosing a niche.
3. How Competitive is that niche
Next, you’ll want to have an idea of what the competition is like for that niche.
If the competition is too high then you may end up having a hard time getting a share of the market, especially if you don’t niche down.
With high competition niches, it’s best to find a micro niche within that industry and build a reputation around that.
On the flip side, if the competition is too low or there is no competition, then it may not be worth your time and effort.
It may mean that there is no money to be made in that niche, or no one has found the sweet spot in that niche yet.
You’ll want to try to find a balance somewhere in the middle of high and low competition.
4. Choose your target audience
After that, you want to identify who you’re going to be selling to.
Are you going to build a B2B or B2C business? What gender or age group are you targeting?
You can narrow in on the demographic of your audience, and get as specific as possible, by doing this you will be able to choose better products to target your audience.
5. Decide What you’re Going To Sell
Now, it’s time to decide what you’re going to sell.
Are you building an eCommerce store that sells products or services? Will it be physical or digital products/services?
Here are a few tips to keep in mind as you decide what to sell:
- Light and small items are easier and less expensive.
- Large and heavy items will cost you more to ship and cut into your profit margin.
- Look for products that have a long shelf life
- People find it easier to buy low-priced items (under $50).
- Find products that have branding potential whenever possible.
Look at trends, competitors, and search queries to find ideas for the best products to sell within your niche.
6. What’s your USP?
USP means a unique selling point. In other words, how are you going to stand out from the competition?
You have to analyze the top competitors in your niche and figure out how you’re going to be different from them, and decide what tactics you will implement in order to attract their customers and make a name for yourself within that niche.
Pay attention to what’s working for your competition, as well as what they are missing. As you analyze their businesses, think of what you can add to your own e-commerce business to make it better.
7. Which revenue model to use?
The next step is to figure out which revenue model will work best for your niche, product, and audience.
Are you going to build a product retail store, dropshipping, Amazon FBA, or private label business?
There are many options to choose from, so carefully weigh the pros and cons and make the best decisions that will provide your audience with the most benefit and you the most profit.
8. Product Sourcing
In this step, you’ll have to make the decision as to whether you’re going to create the products yourself or you’re going to use a manufacturer.
By using a manufacturer you can either have them create the products exclusively for you or you can sell their existing products.
9. Set Up Your Business
After conducting your research, and populating a business plan, your next step is to put your business into action.
You’ll need to:
- Choose and register a domain name
- Decide which legal structure you’re going to use
- Apply for an EIN
Let’s start off by choosing a business name.
Pick and register a business name
You’ll need a name for your business so people can find you online. Your business name is the first step in creating a brand for yourself.
Once you’ve come up with your business name, it’s time to register a domain name.
A domain name is the web address of your eCommerce business. It is how visitors and search engines will be able to identify and find you on the internet.
Registering a business name also protects it from being used by anyone else.
A few tips when choosing a domain name:
- Make it easy to pronounce and remember
- Choose something that reflects your niche or product
- Avoid using hyphens, abbreviations, and misspelled words.
- Let the .com extension be your first option
For more tips on picking a domain refer to this article.
Once you’ve chosen your domain name it’s time to register it with a web hosting provider.
A web hosting company allows your business to be visible online. There are many web hosting services and providers available for you to choose from.
If you’re looking for cheap hosting, go with either Hostinger or Namecheap.
For the most popular and best hosting, try Bluehost or Hostgator.
A2 Hosting is your go-to company for fast speed.
If you want fully managed WordPress hosting, Kinsta is one that operates on Google cloud.
You can refer to this post to get a detailed explanation of web hosting and web hosting service providers.
Decide your business legal structure
There are a number of business structures that you can choose from, namely:
- Sole Proprietor: You’re in full control of your business. It’s best for self-employed persons.
- Limited Liability Corporation (LLC): This means that you separate your personal assets from your business assets. With an LLC license, you can manage your business yourself and hire employees if needed.
- Limited Liability Partnership (LLP): This means that you have at least one partner.
- Corporations
For a detailed explanation of the different business, structures check out this article by Small Business Administration (SBA).
Apply for EIN and business license
After registering your business structure, you’ll want to apply for an employee identification number (EIN), this is also known as a federal tax ID.
It’s needed for opening bank accounts, hiring employees, paying federal tax, etc.
This part is not applicable to all business structures. So depending on your business structure, you may not need it.
For more information please refer to the article above by SBA.
10. Build Your Store And Market It
Now that you’ve got your business/domain name registered, it’s time to build your store.
The first thing you’ll need to get started building your store is a website. Read the following article if you want to learn how to create a website.
For your e-commerce store, there are 3 options you can take:
1. Use a fully hosted platform: You pay a third-party company to host your store and take care of everything for you. Examples, Debutify, Shopify, etc.
2. You can add an e-commerce store to your existing website. Examples are Ecwid and BigCommerce.
3. Use a free open source shopping cart: You are in control of the source code and you host it yourself. Examples of this are Opencart and Woocommerce.
Once you’ve decided which of the 3 options to use its time to
Choose a platform
There are many different e-commerce platforms to choose from. Below are some of the most popular platforms.
Debutify
This is a fairly new all-in-one e-commerce platform.
They have beautiful themes, great add-ons, and marketing strategies to help take your business to the next level.
Debutify offers a 30-day free trial for you to test drive their platform.
BigCommerce
BigCommerce is one of the leading e-commerce solutions on the market today.
They offer a number of different mobile responsive themes, sales channels, unlimited storage, and bandwidth.
You can try BigCommerce free for 1 month.
3dcart
This is another popular e-commerce platform that’s around.
It has amazing SEO features, a pre-built Facebook store, and no transaction fee. This is a great choice for small to medium-sized businesses.
3dcart is also offering a 15-day free trial for you to test out their platform.
Volusion
Another great e-commerce platform is Volusion.
Its pricing starts at $29 per month, depending on the plan you choose. It includes unlimited products, zero transaction fees, and good customer support.
Volusion also offers a 14-day free trial.
Shopify
You could say that Shopify is the king of the e-commerce jungle, after all, it is more popular than the others.
They have themes that are mobile responsive, marketing tools, and other resources that you can use for your store.
Shopify is currently offering a 14-day free trial for you to test out their platform.
Wix
Wix is another great e-commerce platform that you can build your store on.
They have a store builder tool and built-in product gallery; they also have a range of payment gateways that you can add to your store.
Wix does provide you with the option of trying out their platform for free.
The final step of the process is to
Market your business
Now that you’ve learned how to start an e-commerce site, you need to market it. Anyone can start an online store, but the real struggle is driving traffic to it.
There are two ways you can drive traffic to your website and each way has different methods and strategies to do so.
1. Organic Traffic (SEO): With organic traffic, a combination of content marketing and SEO are the dominant factors.
Off-page SEO mainly involves relationship-building tactics such as social media, email marketing, and link building.
2. Paid Traffic (SEM): This is using paid methods to market your e-commerce store.
Such paid options include Google ads, FB ads, influencer marketing, as well as other paid advertising mediums.
Paid advertising, especially via FB is the easiest and fastest way to increase traffic to your business, however, it can be costly.
The good news is that most online e-commerce business platforms include marketing and tracking tools in their plans that you can take advantage of, to help make your business a success.
E-Commerce FAQs
An e-commerce business can cost less than $100 to start or more depending on the platform, theme, services, add-ons, etc that you choose.
Yes starting an e-commerce business can be very profitable. It may not be quick or have huge profit margins but with volume, it will add up quite nicely.
There are many different e-commerce platforms and each has its pros and cons. It is hard to say which is best out of all, it all boils down to what services you want for your business. Ultimately, only you can decide based on your preferences, which one best meets your needs.
The four main types of e-commerce models are business to business (B2B), business to consumer (B2C), consumer to business (C2B), and consumer to consumer (C2C).
The Wrap On ECommerce Business
Starting and launching an e-commerce business is very easy and anyone can do it.
But, not everyone knows how to start and grow a successful e-commerce business, as there is a lot more to it than just picking a platform and adding a few products.
A successful e-commerce business involves driving customers to the business and making sure that they are satisfied. On top of that, customer retention is also a major concern.
Despite all that, with a specific niche, good platform or management, time, strategy, and patience it can definitely be accomplished.
Share your tips for starting an e-commerce business in the comments below.
