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Covid-19 has accelerated ecommerce by 5 years. As consumers are forced to make online shopping a habit it opens the door to new entrepreneurs to jump in the mix with their passions and begin a new chapter in their life.
For those who have a traditional “brick and mortar” business, the time to open for business online as well was yesterday. We show you how easy it is and all can be done in one day!
In 2019, ecommerce had a 14.1% share in the global retail marketplace; by 2023, Statista projects that 22% of all retail transactions will take place online.
In hard money terms, sales in the U.S. could total more than $475 billion by 2024 — and that’s just B2C.
In this beginner’s guide, we’re going to cover how to set up and launch a thriving (and Covid19-proof) ecommerce business. Though this pandemic will eventually fade away, your online business will thrive for as long as you have the passion to keep it bringing you income.
We’ll touch on everything you need to start your own ecommerce business, including:
By the time you’re done reading, you’ll know what it takes upfront to launch and run a successful online store.
Let’s get started.
Disclaimer: We receive affiliate compensation for some of the links below at no cost to you. However, these are the best tools I have used and tested that I believe are most effective for launching and running an online business. You can read our full affiliate disclosure in our privacy policy.
To be successful, you need to sell one of two types of merchandise:
Niche products serve a very specific consumer base. Instead of a hundred different product lines, you choose one high-quality item — perhaps with multiple variants — and develop a targeted marketing strategy. Because they’re exclusive and desirable, niche products tend to be price inelastic and usually have quite high-profit margins. This also helps with website indexing and SEO (Search Engine Optimization) which will result in better search results on the web. (click here to see more about that)
Niche products can be one-of-a-kind (a crocheted shawl or a piece of hand-thrown pottery) or small-batch (handmade leather bags, seasonal preserves).
An ecommerce niche is a specialized market of shoppers. It’s a simple concept and is often divided into these categories:
Commoditized products are high-demand or essential digital or physical products with a broad existing consumer base. In short, they’re things everyone needs. Across the board, commoditized products make up the majority of B2C ecommerce sales. They’re common, and competition is fierce, so e-tailers frequently adjust prices to stay ahead of industry rivals.
All kinds of products are commoditized: chargers, saucepans, sneakers, software programs, clothes, kids’ toys — you name it. Interestingly, commoditization usually begins with a genuinely innovative product, which becomes popular; other companies start imitating the original product and establish rivalries. Footwear company Hush Puppies and technology company Fujitsu are two businesses in the commoditized product market.
Many successful ecommerce start-ups sell a mixture of niche and commoditized products. Their niche products make them stand out, while the handpicked commoditized products add volume to their online stores. Take an ecommerce website like Berlin Packaging, for instance. Its niche service is custom packaging design, and it also sells a range of standard packaging products.
Maybe you already have a completely unique idea — maybe you’re an inventor or a designer with a working product prototype. If so, great. If not, don’t worry; you don’t have to come up with the next big thing to start a successful ecommerce store.
Instead of worrying about breakthrough innovation, think about what customers want and consider what you can offer them.
The following tips can help you come up with a solid niche product idea to sell online:
Hopefully, you’ll have a product or service shortlist by the time you finish brainstorming. If so, try to identify the main competitors for each product. If you find yourself in the middle of an overcrowded field, move on to the next idea — and the next — until you find a less cramped niche. Then, decide which product you want to go with.
You know what you want to sell — now you need to figure out where to sell it. There are four main business models in ecommerce: business to consumer, business to business, consumer to business, and consumer to consumer. Let’s look closely at each classification:
Simply put, B2C is traditional retail ecommerce with your “Brick and Mortar” location. Your customers are regular people, and you sell products or services at retail prices and it is somewhat local to your geographical location. Some B2C companies sell physical products, while others sell computer software or smartphone apps. Still, others sell various kinds of recurring subscriptions.
B2C ecommerce has a short-sales cycle because the stakes aren’t so high. Most transactions involve one consumer rather than the whole of an executive board. B2C businesses generally have lower average order values (AOVs) than B2B businesses, but they make a greater number of sales.
C2C businesses connect consumers to other consumers. They charge subscriber fees, listing fees, or transaction fees when people sell products or services to other people. Examples include auction companies, like eBay, and online classified sites, like Craigslist.
Business models define the structure of your company; business revenue models bring home the bacon. Also known as value delivery methods, business revenue models determine your approach to inventory management. Here are other popular options:
Direct to consumer brands sell goods to consumers without going through a middleman. Some of them manufacture their products, while others create a supply chain and outsource the production process. D2C companies maximize profit margins by refusing to sell products wholesale.
Because they communicate with and sell directly to consumers, D2C companies retain a lot of control over the customer experience (CX). As a result, they tend to grow quickly and build loyal fan bases.
C2B is slightly obscure, but it’s a genuine business model. In a consumer to business situation, consumers sell goods and services directly to businesses. You can see this business model at work on freelancing sites, where companies hire self-employed people to complete various projects. Fiverr comes to mind for those who promote their consulting services directly to business and having a website to list your resume and experience. It is a perfect place to take payments as well! Check out Fiverr here and sign up for contract work.
B2B ecommerce businesses sell products to other businesses. Occasionally, the business buyer is also the end-user (stationery, office technology, or furniture). Most B2B transactions, however, revolve around wholesale stock, components, or raw materials.
Generally speaking, B2B ecommerce ventures have longer sales cycles. High-stakes deals can take months because complex sales often require committee approval. In return for patience and diplomacy, you get high-value orders and recurring purchases.
Dropshipping is a fantastic ecommerce business model: you sell a selection of products on your site as a retailer while your dropshipping supplier manages the shipping and order fulfillment process. It allows you to sell goods without having to keep any inventory or worry about delivery and returns. It gives you control over your brand building and leaves the backend product manufacturing and delivery to specialists, it’s also a great way to test out new product ideas without having to invest money spent on production and storing inventory.
To get started in earnest, you need to pick a business structure and register your business. If you’re a freelancer trading under your own name, you can sign up as a sole proprietor; otherwise, you’ll most likely register your ecommerce company as a partnership, an LLC, or an S corporation. Click here to see how to form a corporation!
This type of business structure is ideal for self-employed people who don’t want to (or aren’t ready to) register as an LLC. It’s a straightforward process in most parts of the country. In many states, you don’t have to register your freelance business unless you operate under a pseudonym. Five states — Oregon, Alaska, Montana, Delaware, and New Hampshire — don’t have statewide sales taxes. In most other states, you pay sales and use taxes quarterly.
The setup might be simple, but there are a couple of major drawbacks to sole trader status. Firstly, if your company goes bust, your personal assets aren’t protected under the terms of a sole proprietorship. Secondly, you’ll be subject to self-employment tax, which increases as your earnings go up. The way out of both issues? Pick a different business structure.
When you register an LLC, you limit your personal liability by separating your own assets and your business’s assets. To get going, appoint a registered agent — the person who’ll represent the LLC — and file articles of organization with your home state. You’ll need to pay a fee, but it won’t come to more than a few hundred dollars. Click here to see how to get an LLC!
As the owner (also known as a member) of an LLC, you can manage your own company or hire staff to do the work for you. You’ll need to get an Employer Identification Number (an EID, also known as a Federal Tax Identification Number, or FTIN) from the IRS before hiring employees.
You don’t have to file a tax return specifically for your LLC; instead, its profits travel through the company to you, and you pay self-employment taxes on all of your profits.
If your company hits the big-time and you begin to earn a lot, you can elect to pay taxes as an S corporation instead. At that stage, you can allocate yourself a “reasonable” salary and avoid any taxes on profits over that amount.
You can create an LLP just as easily as an LLC, but there are a few differences between the two business models. An LLC can have one or more members; an LLP has to have at least two members. Unlike LLCs, LLPs have to define at least one partner member who will take legal responsibility for the partnership’s actions. Silent partners and investors in an LLP are not personally liable if the company goes bust, gets into business debt, or gets sued.
Small business owners usually register as LLCs; professional partnerships — law firms and accounting firms, for example — go for LLP status. In many states, LLCs and LLPs both have to produce annual reports. Like LLCs, LLPs function as pass-through organizations for tax purposes.
You don’t have to bring in millions of dollars a year to incorporate your company. With that said, nearly all very large publicly traded businesses are corporations. Two corporate structures exist:
All businesses that incorporate are automatically C corporations unless they apply for S corporation status with the IRS. Like LLCs, C Corp owners have limited liability, so they’re not held responsible for business losses. If you need to raise significant capital, you can take your business public and sell corporate stocks and bonds to investors. On the flip side, you’re taxed twice: once on your own salary and again on company profits.
To create an S corp, you first need to form a C corp and then apply to the IRS for S corp taxation status. Like LLCs, many S corporations act as pass-through organizations.
Owners pay themselves salaries and pay income taxes on those earnings, but then don’t have to pay taxes on their remaining profits. S corporations can’t have more than 100 shareholders, so if you decide to go public later on, you’ll need to convert your S corp to a C corp.
You’ll almost certainly spend more on accounting services after you incorporate your company. Corporations have to issue regular financial statements and tax season is quite a bit more complex if you decide to register your business as a corporation, so you’ll almost certainly spend more on accounting services every year.
If you plan to do business as an LLC, an LLP, or a corporation — basically anything but a sole trader operating under your own name — you’ll probably need some type of business license. If , for example, you run a dropshipping business from home under an assumed name, you’ll have to get a DBA license and a sales tax license, for example. Business licensing and permitting requirements vary from state to state, so it’s important to check if you fall into any of the categories in your jurisdiction. Be sure to check with the city you live in to see if you need any business licenses when you operate within the city limits.
Visual branding is a complex topic worthy of its own 2,000-word article, but we’ll go over it in nutshell form here. To make your company memorable and create brand awareness, you need to come up with a logo and complementary branding colors that stay the same across all of your sales channels.
You can design a logo yourself, or you can use a freelance designer to get a professional result. Fiverr has incredible designers that will crank out logos and designs at very reasonable prices, as the name implies it could be only $5! Check out Fiverr here to see.
In either case, consider the following when branding your company:
The best logos in the world are unmistakable, even when you take all peripheral text away; even toddlers recognize McDonald’s Golden Arches — sometimes from half a mile away. There are a number of options in looking at designing logos and there are great ideas and free advice available at Wealthy Affiliate (join here to take advantage of all the free training and tutorials.)
Once you have a logo you’re happy with, use its colors to influence the rest of your visual branding, including your site design, packaging materials, marketing emails, and ads.
It’s time to get a little more specific about the product sourcing methods we wrote about in the business models section. There are three main ways to source products: DIY production, wholesaler or manufacturer, and dropshipping. Many online retailers combine methods to achieve a balanced income stream.
People have been making and selling things for thousands of years. Neolithic traders had to travel overland to sell beads, pottery, and sculptures; nowadays, you can sell handmade items globally via the internet.
Startup costs for a DIY tend to be low, but you put in a lot of your own time to make up for it. On the other hand, you have full control over the production process and the UX, and you can tweak designs on the spot if products don’t perform optimally.
As you scale your business, you might decide to form an alliance with a manufacturing company to create products en masse.
If you choose the DIY route, remember to:
If you’re ready to make and ship products on a larger scale, consider using a wholesaler or a manufacturer as a product source. Let’s look at both options in a little more detail:
Wholesalers sell brand-name goods in bulk. They also sell white-label products in bulk. You apply your branding and resell generic merchandise to your customers.
If you’d rather concentrate on the marketing and scaling your business rather than product development, you can save time and money with a wholesaler.
If you have a product prototype or you want to scale up your DIY business, you can partner with a manufacturer. Production companies in the U.S. and overseas create private-label goods in bulk for their customers.
Some manufacturers help entrepreneurs create new products and manage the development process from start to finish.
If you decide to work with a wholesaler or a manufacturer, consider the following:
If you don’t have a unique product idea and you’d rather not work with a manufacturer or store merchandise in bulk, dropshipping might be your best product sourcing solution. It also allows you to feature multiple products to offer to your visitors which will keep them coming back and keep them on your site longer.
When you partner with a dropshipping supplier, you become a retail distributor. You list the wholesaler’s merchandise on your site, and the vendor creates products and ships orders on your behalf.
Dropshipping has a lower profit margin than white-label or private-label reselling, but it’s a quick and easy business model. Some companies combine Dropshipping with DIY. For example, an artist who sells and ships one-of-a-kind paintings from home might also sell reproductions and branded mugs via a Dropshipper. BTW, Dropshipping it also allows you to see different products and the demand and interest without having to invest in inventory or manufacturing.
You’ve validated your product ideas, registered your company, and written a business plan — now it’s finally time to build your website affiliate link Most online retailers and wholesalers choose sales as a service (SaaS) platforms because they’re simple to use and offer website-building tools and ecommerce platforms.
Quite a few SaaS providers exist — and some are better than others. Before choosing one, start with a free trial to test out its features.
Remember to look for the following features when deciding on your ecommerce platform:
Shopify is an ecommerce giant. Overall, they work best for dropshipping stores because integrations and store setup is fast and easy. A longtime name in ecommerce, Shopify launched in 2004 and became a prominent SaaS provider pretty quickly. Platform perks include abandoned cart recovery, free website SSL, marketing tools, and decent customer service.
Overall, they’re a great, easy to use ecommerce website tool best for small sellers and dropshippers.
Get started with a free trial of Shopify.
3dcart offers you a complete, all-in-one hosted eCommerce solution that includes everything you need to sell online. Their powerful online store builder and robust suite of inventory management tools will enable you to design your store, sell digital downloads, track sales, and more, all from within your site’s product management software.
Get started with a free trial of 3dcart.
Take some time to think about the future before you jump in at the deep end. Roughly 50% of new businesses fail within five years, often because they don’t plan ahead.
Writing a business plan can give you a deeper understanding of your unique offering and help you:
Business plans usually have at least seven sections. You can use the following blueprint to create a strategy of your own:
An executive summary condenses your business idea into a few paragraphs. It sits at the front of your business plan and tells readers about:
You’ll almost certainly write your executive summary last. Doing so will give you the chance to digest every other part of your business plan before providing a recap.
Here’s where you provide readers with a really thorough company overview. This section begins with your business name before moving on to its business structure (LLC, S-corp, etc.) and domain name.
After that, you’ll write a brief mission statement, and then you’ll clarify your vision for the company. Write some background information about your business idea and unique value proposition, then wrap it up with a list of major competitors.
You get to show off what you know about your target consumer base in the market analysis section. Many company owners begin with the results of a SWOT (strengths, weaknesses, opportunities, and threats) analysis. Then, they move on to competitive analysis.
Competitive analyses help you understand your competitors so you can gain ground in the marketplace.
They do this by identifying and listing each competitor’s:
This section concludes with a paragraph detailing how you intend to make your company an industry leader.
You can do this in three main ways:
This is where you go into detail about your product or service. Tell your readers more about the merchandise you sell or the service you provide; if you sell a lot of different products, write in general terms about your inventory and why your company stands apart from its industry peers.
In this section, you’ll tell readers about your marketing strategies. The segment begins with a breakdown of your marketing budget and continues with a list of the marketing channels you intend to use to promote your business. Marketing channels fall into two main categories:
Your operations and logistics plan cover everything you need to physically run your company. Office space, technological needs, personnel, and warehousing needs all fall into this category.
Don’t forget to include details about:
This part of your business plan helps investors understand the everyday expenses associated with your ecommerce business.
You’ll need capital to get your ecommerce business going. If you don’t have start-up costs in hand, you’ll need investors or a bank loan to begin trading. You need to convince potential backers and lenders that you can handle money and that you will make your business profitable.
Most financial plans include:
With the right business plan in hand, you’ll find it much easier to find investors and convince your bank to approve vital business loans.
Launching an ecommerce site is easy. The challenge comes when you need to drive traffic to it. We’ll cover both paid and free digital marketing tactics to boost your website traffic – and sales.
Organic marketing channels take time to build traction, but they create the strongest long-term return on investment (ROI). A few of the best tactics include:
Paid marketing channels produce quick results, so they’re a popular choice for start-ups as well as large-budget businesses. While they provide quick online marketing wins, they typically have a lower ROI than free tactics (excluding affiliate marketing, which has a strong ROI).
Here are some of the top paid acquisition channels for ecommerce brands:
The most effective marketing strategies use a combination of different channels to capture consumers and generate conversions.
One thing to keep in mind as you start an ecommerce business from scratch today, create a strong SEO strategy. This includes conducting keyword research around terms that have high search volume and could bring in your target audience.
For example, if you sell camping supplies, you could write a blog post on “The Top 10 Backpacking Tents” and link to your product pages within the content.
Next, you’d want to develop a strong link building strategy and partner with other blogs in your niche to get backlinks. This will increase your website’s Domain Authority (DA) and make it easier to rank all of your pages on search engines.
Think about using paid advertising, plan ahead and we suggest starting with retargeting ads on Facebook. Then move to PPC ads on Google only if you can generate a strong ROI.
Ecommerce analytics tools, like Google Analytics, help you understand how visitors reach your site and what they do when they get there. Ultimately, they also provide insight into your conversion rates and sales.
You can use the data you gain from analytics to optimize product descriptions and page content so that more of your visitors turn into customers.
SaaS ecommerce platforms and Hosting companies like Wealthy Affiliate support Google Analytics integrations in the WordPress installations. It is fairly easy set up an account with Google Analytics and launch once you see the training videos in WA. Check the box next to Google Analytics and paste your tracking ID into the Property ID field to get started.
Wealthy Affiliate WordPress Google Analytics integration supports Enhanced Ecommerce and Site Search, which lets you evaluate individual page views and search terms.
You can view analytics within Google Analytics (site traffic), Facebook Insights, and your email provider.
Here are some metrics and key performance indicators (KPIs) to pay attention to:
Overall, you need to view and take action on these insights to drive more sales.
It takes determination and dedication to set up a successful ecommerce store. Start with some great products in a growing niche, a solid business plan to guide you, the right ecommerce platform, and a well-researched marketing strategy.
It definitely takes some dedicated time and work and if you break down goals into manageable tasks, you’ll create an ecommerce business you can be proud of. It is something you can launch and set up in the first 24 hours of starting the process even with computer novices and those new to online ecommerce and business.
What kind of ecommerce business are you planning to launch? Are there any challenges you’re facing? Let us know in the comments below.
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