These seven steps will teach you how to launch an ecommerce business and sell goods and services online.
Similar to establishing any business, understanding how to start an e-commerce firm can be difficult; however, setting up, launching, and managing sites where entrepreneurs, designers, and artists of all types can sell their products is now easier than ever.
E-commerce firms, which transport goods, services, and finances via the internet, range in size and breadth, from retail giants like Amazon to artisan sites like Etsy. During the past five years, online shopping is only one of several fields that have experienced rapid expansion. According to a study from the U.S. Census Bureau, e-commerce sales in the United States reached around $154.5 billion in the third quarter of 2019, accounting for 11.2% of total retail sales in the country.
Depending on your objectives, it may be prudent to launch an ecommerce business. In fact, without the necessity for a physical site, e-commerce enterprises offer many entrepreneurs greater freedom, affordability, and potential.
We’ll break down how to establish an e-commerce business into seven simple stages, so you can get your online business up and operating in no time.
How to establish an online retail business
While there are significant distinctions between launching an e-commerce firm and a brick-and-mortar business, there are also many parallels. As we’ll see below, many of the planning and legal processes you’ll need to take will (more or less) follow the same procedure as any other business. However, once it’s time to launch, you’ll realize how different it is to launch an e-commerce firm.
Step 1: Conduct e-commerce market research and identify your specialization.
Conducting the appropriate research is the first step in learning how to launch an e-commerce firm. You’ll need to explore the e-commerce niche you’re interested in and make judgments on your unique business, just like you would if you were opening a restaurant and considering several locations, menu options, and themes.
Consider what your e-commerce firm will specifically provide, for instance. Will you be offering goods or services for sale? Are the items that you sell physical or digital? Where will you obtain your goods?
Additionally, you should consider a larger scope during this process: How will your items or services be delivered to your customers? What would your initial expenses entail? Are there any legal or other laws pertaining to your product or service that you must consider?
These questions, among others, will be essential to the launch of your firm and will assist you in developing and writing your business plan. This procedure will provide you a clearer understanding of your unique objectives and how to achieve them.
Although the expansion of the e-commerce sector is advantageous for people who wish to learn how to launch an e-commerce firm, it also increases competition. You will need to conduct competitive analysis and identify a market where you believe you can successfully create your brand and sell items and services.
Step 2: Determine your company’s name and legal structure.
Next, select a name for your e-commerce firm after you’ve finalized your business plan. As with any other business, you will need to select a name that is both distinct and descriptive of your company’s products or services. Check the U.S. Patent and Trademark database to confirm that you are not selecting a business name that is currently in use.
Although you won’t want to spend too much time on a website just yet, it’s a good idea to verify if the domain name you’re considering for your business is accessible.
Next, select your company’s legal structure. Your choice of company organization will have significant legal and financial repercussions for your e-commerce enterprise. Typically, you will establish a sole proprietorship, general partnership, an LLC, or a corporation. There are advantages and disadvantages to each of these entity kinds, so you may choose to seek the counsel of an attorney or another legal professional to determine the most advantageous structure for your firm.
If you opt to establish a sole proprietorship or general partnership, you are not required to register your business in the state in which you operate. Instead, your firm will be legally connected with your personal name; if you wish to operate under the name you’ve selected, you must file a DBA or “doing business as” application with your local government.
Step 3: Request an EIN
Apply for an EIN, or employment identification number, for your e-commerce company. Despite the fact that not all company entities are obliged to acquire an EIN, this nine-digit number might be handy for separating your personal and corporate funds. In addition, you may apply for a free EIN from the IRS online, via mail, fax, or phone. Since you’re studying how to establish an e-commerce firm, you’ll almost certainly apply for this business tax ID online, and you’ll receive your number immediately.
Step 4: Obtain business licenses and permissions
After you’ve applied for your EIN, you’ll need to get any licenses or permissions required to lawfully conduct business in your city and state. As stated previously, if you’ve formed your e-commerce firm as a sole proprietorship or general partnership, you do not need to register your business with the state, unless you’re filing a DBA to operate lawfully under a certain business name. For the other business entity kinds, state registration and a general operating license are required. Depending on the location of your business, you may additionally be required to get a municipal operating license.
Because the majority of e-commerce enterprises are home-based, they often require fewer business licenses and permissions than traditional storefronts. However, you will need to discover the precise criteria in your location; this information is often available on the websites of state and municipal governments.
Step 5: Choose an e-commerce platform and develop a website
Thus far, the bulk of our actions have paralleled the process of launching a traditional brick-and-mortar firm. Now, however, rather than hunting for a place and preparing to open a physical store, you will begin developing your website and online store.
Your website, like a real shop, will be the public face of your business; it’s what people will use to browse and purchase your items or services. In light of this, designing your website will be one of the most crucial aspects of launching an e-commerce firm.
You should first choose your domain name which should (at least nearly) correspond to your business name. Choosing an e-commerce platform will likely be your most important choice in this vein. Your e-commerce platform will serve as the foundation upon which you construct and develop your online business. Ultimately, as the backbone of your e-commerce firm, you will want a working system that enables you to get up and running and manage your operations on a daily basis.
Next, you’ll need to concentrate on modifying and launching your site once you’ve selected the best option. You will need to consider how you want your online store to be structured, how you want it to appear, what colors you want to use, etc. Depending on your platform and budget, you may opt to design and publish your website on your own, or you may decide to hire a professional designer or developer for assistance.
If your target market includes universities, hospitals, government agencies, and other large institutions, integrating a punchout catalog into your e-commerce business can be a game-changer. These organizations often have complex procurement processes and strict compliance requirements. A punchout catalog streamlines the purchasing journey by seamlessly integrating with their procurement systems, allowing buyers to access negotiated pricing, catalogs, and supplier information directly from their purchasing platforms. This not only enhances efficiency but also ensures accuracy and compliance with procurement policies.
Step 6: Sourcing or creating things (and listing them)
After selecting your e-commerce platform and launching your website, you are nearly through with the process. At this point, you will need to source the things that you will sell. In step one, when you conducted your study, you should have already formulated a plan for how you would do this task. If you’re offering your own services, such as as a consultant, you may only need to explain and list them on your business website.
Obviously, if you’re selling things, this phase will be more complicated, as you’ll need to consider the inventory you want to start with as well as the initial costs. You’ll also need to take the time to list your inventory on your online store, keeping in mind the customer experience, search engine optimization, and the procedure from the moment a consumer orders a product to the time they get it. There are several order fulfillment companies that work with startups and entrepreneurs. They can advise you on the best methods for shipping, managing your inventory, and can even dropship for you. Today, a customer expects to receive their product fast and you can work with an order fulfillment company to constantly improve order fulfillment and the customer experience.
Step 7: Promote your e-commerce enterprise
You now know how to launch an ecommerce business. Now that your items or services have been produced and posted on your online store, and your website is up, you are set to begin servicing consumers. Obviously, you will need to effectively promote your e-commerce firm in order to do this.
You may leverage a variety of marketing techniques, including Google AdWords, social media ads, and word of mouth. At the most fundamental level, you should improve your business website for search engine optimization (SEO) and utilize any online marketing tools provided with your e-commerce platform.
As your e-commerce firm becomes operational and you begin to get orders, you’ll want to monitor which marketing strategies are successful and which are not, especially if you’re investing money in them. As time passes, you will be able to adapt and modify your marketing approach to determine what is most effective for your organization.
The conclusion
There are many advantages to starting an ecommerce business as opposed to a brick-and-mortar one: the initial investment is much lower, you can start big or small, and your online store can be open 24 hours a day, seven days a week, for customers across the country (or the world, if you’re willing to ship that far). Additionally, it is considerably simpler and less expensive to expand operations if necessary, which makes launching an e-commerce firm even more appealing for budding entrepreneurs.
There are, however, essential measures to take and expenditures to make if you want your firm to become a web-based success story. You should treat your e-commerce website as you would any other business — comply with tax laws, obtain the required permits, invest in customer retention and communication, and don’t forget to create a mobile-friendly platform.