9 Vital Steps in Starting an E-commerce BusinessWritten by InvoiceBerry Team on December 20, 2021
Now more than ever, e-commerce allows retail businesses to continue their operations online and even boost sales. In fact, over 2 billion people purchased products and services online in 2020. If companies aren’t hopping in on the digital trend, they’re missing a massive opportunity.
Of course, everything’s easier said than done. The real question is—how can entrepreneurs start their own e-commerce business? In this article, they’ll learn about the six crucial steps to take to get their e-commerce journey started.
1. Doing the Necessary Research
Before anything else, entrepreneurs need to do their research. Otherwise, they’ll risk losing their business to existing competitors before it has even started.
Some of the factors they’ll want to consider include the following:
- The product or services to sell
- The type of product offering—digital or tangible goods?
- Where to source the products
- The business model—subscription or one-time payment?
Answering these questions will give entrepreneurs a good grasp on the niche they want to take. Another factor that will also help with this is reading the many useful resources that are out there. It will also help them prepare for the next step.
2. Crafting a Business Plan
A business plan will be every entrepreneur’s guide to setting up their business. It should contain the following essential information:
- The business’s description
- Market analysis
- A detailed explanation of its products or services
- How the company will generate income
- Its operations model
- Marketing and financial plans
Mainly, a business plan will define a business’s goal and explain how the company can achieve this goal. Once this is complete, entrepreneurs can use it to find partners and obtain funding for their new business.
3. Sourcing the Products
After preparing the business plan, the next step for business owners is to find a supplier to source their products. Or they may choose not to manage the inventory themselves through a dropshipping model.
– Finding a manufacturer
Finding a reliable manufacturer can be challenging. They rely on these manufacturers to bring their product idea to life, so e-commerce brands must do their due diligence before choosing one.
There are two ways to choose suppliers: source them locally or overseas. Many businesses prefer the latter because of its cheaper rate.
But it’s best to get both local and overseas suppliers for emergency purposes. For instance, a business may be expecting delays with international shipments due to the Chinese New Year festivities. In this case, the business may need to replenish its supplies from nearer locales to keep its operations going.
– Considering dropshipping
Dropshipping is an excellent method for e-commerce starters, especially if they’re short on the budget. This approach allows them to build their brand and sell their products to customers without clearing inventory to get ROI.
In fact, business owners don’t need to hold any inventory. There are three key players in dropshipping: the supplier, the retailer, and the customer.
The supplier or manufacturer handles the inventory and shipment of products to the customer. They sell their merchandise at wholesale price to the retailer.
Meanwhile, the retailer—in this case, e-commerce businesses—is the one who markets the product with their own pricing and sells it to customers.
4. Setting Up the Business
Once the plan is set, it’s time to get into the business’s specifics. Setting up the business includes selecting the business name and legal structure. Business owners also need to apply for an employer identification number and acquire the necessary permits and licenses depending on their business entity type.
Before anything else, business owners need to choose a business name that another company doesn’t currently own. Otherwise, they could end up facing legal battles sooner or later.
To do this, they can consult the US Patent and Trademark Office or their local secretary of state website.
5. Building the Brand
One of the key areas business owners shouldn’t miss is branding. This includes creating the logo, colors, and tone that will be used in all creative and content assets of the brand. It’s crucial that branding stays consistent across all platforms to boost consumer trust and build a brand’s reputation.
Once a business settles on a name, the next things to do are as follows:
– Defining the brand
A brand is a business’s promise to its customers. It should answer the question: how do you want your customers to perceive your business?
– Crafting the logo
A logo is the first thing a customer associates with a brand. One of the golden rules of logo making is having an excellent recall. This means people should easily remember a brand when they see its logo.
– Building the brand aesthetic
Every brand should have a style guide or a memorable aesthetic. There are a lot of design ideas to choose from, such as classic, retro, or minimalist. However, it’s best to base the style guide on the brand’s core messaging.
For instance, a swimwear brand that promotes fun and confidence may want to integrate bold, bright colors like red, orange, or yellow.
– Creating the brand voice
Aside from a brand’s look, creating the brand voice is also essential. How will it communicate with its audience through its published content? A brand can choose to use a friendly, serious, educational, or professional tone based on the products or services it offers.
6. Building the Online Store
After completing the paperwork, the next step is to start putting together the online storefront. Like brick-and-mortar businesses, e-commerce brands must craft a head-turning display online to hook potential customers. They need to choose the right e-commerce platform to sell their products or services.
Retail businesses can choose to sell on behemoth e-commerce platforms like Amazon or eBay. These channels receive thousands of visits a day, so it’s a great starting point for a budding small business.
Or they can build their own e-commerce website where customers can purchase their goods. This is not only good for branding, but it also gives business owners complete freedom over their inventory and income.
Some of the most popular e-commerce builders out there include the following:
- Magento – needs some technical skill to build the e-commerce website
- Shopify – one of the most popular and most user-friendly e-commerce software out there
- Squarespace – a website builder with convenient beginner-friendly e-commerce features
- WooCommerce – users can use this software to start selling on their WordPress site
When choosing an e-commerce software to use, business owners should consider their technical skills, the time and effort they can spare, and their budget. If they don’t have enough knowledge in building a website, they may consider hiring a team of web developers to do it for them.
7. Choosing a Payment Gateway
Upon building an e-commerce website, businesses must carefully consider what payment gateway to integrate. It’s crucial to find a reliable payment platform that keeps online transactions secure for both the business and the consumer.
Payment gateways handle these three actions within seconds:
- Encryption. This process encodes the data between the user’s browser and the retailer’s server for private use.
- Request. The payment gateway will then request authorization from the financial institution involved to proceed with the transaction.
- Fulfillment. Once authorization is granted, the website will proceed to checkout the product.
There are a lot of popular payment gateways businesses can choose from, including PayPal, Stripe, and Apple Pay. Before choosing one for their online store, entrepreneurs should determine which platform their customers prefer using and its limitations.
8. Spreading the Word
The next step? Marketing. With the tough competition out there, knowing where and how to introduce a new business’s products to potential customers is vital.
There are two effective ways marketers should apply:
– Leverage paid ads
Websites, apps, and social networks are all playing the advertising game, and it’s one of the few things business owners don’t want to miss. With millions of people using these channels, they are the best places a business can put up its ads.
Depending on their target demographic, marketers can advertise their products on Facebook or Youtube. But e-commerce businesses, in particular, put the most of their advertising budget on Google Ads. This is because 58 percent of shoppers research a certain product on Google before purchasing.
Entrepreneurs who don’t have a team to manage their advertising can speed things up for their business by getting an expert Google Ads team. Doing so will minimize mistakes and give them more time to focus on launching their new business.
– Apply search engine optimization (SEO)
On top of online advertising, businesses can apply SEO on their website. SEO is a series of on-site and off-site methods that optimize a webpage so search engines like Google can index and show it on their search engine results pages (SERPs).
Without SEO, an e-commerce store won’t show up on SERPs when users search for relevant queries. And unlike paid ads, SEO can help a website drive traffic and sales without spending a single cent.
– Bring marketing to social media
Brands that don’t have a social media presence are missing out on a lot. Social media is a powerful tool to raise brand awareness, especially for new market players.
In fact, 54 percent of social media users use these networks to research a product.
E-commerce businesses can utilize social networks through paid advertising or good old marketing. With the latter, they don’t need to hard sell their products. They only need to get their message across through engaging captions, short-form unboxing videos, and word of mouth.
9. Preparing to Launch
Before the big launch, it’s essential to ensure that shipping and fulfillment elements are settled. Otherwise, businesses will be scrambling to handle unfulfilled orders and customer complaints on their first day.
When it comes to shipping, it helps to find ways to reduce the costs. This can be through sourcing light custom packaging materials to reduce the weight of packages or offering local delivery services or pickup options.
It’s also a good idea to create and implement a returns policy relevant to their business model.
Open Up Shop
After completing the necessary steps, business owners can get ready to launch. Social media also helps get the word out and drive much-needed traffic for their e-commerce website. But the most important thing to remember is that there is feast and famine in the e-commerce industry. Optimizing their online storefront is an ongoing process that requires trial and error to achieve their desired outcome.
Melissa Harmon is a customer relations management professional with a passion for business and blogging. She has a degree in Marketing from NYU and is an avid reader. Melissa believes that the best marketing strategy is to provide great, personalized service that exceeds expectations.