What is an Ecommerce Business
Ecommerce business is a business model where the buying and selling of goods or services is done over the internet. Ecommerce business's will digitally transfer money and data to execute these online transactions.
With retail ecommerce sales worldwide reaching nearly $5 trillion in 2021, it’s never been a better time to start an online business.
If you’re a skilled entrepreneur or craftsperson, you’ve probably dreamed of starting your own ecommerce store and building a business that gives you a sense of achievement and freedom. You’ll learn each step in this guide.
We’ve put together a comprehensive blueprint for starting a business, compiled from Shopify’s most popular content. These blog posts, guides, and videos have been organized based on the most important tasks you’ll face when researching, launching, and growing a profitable e-commerce store.
How to start an ecommerce business
- Find product opportunities and choose what to sell
- Thoroughly research your competition and write a business plan
- Choose a logo and name and set up your online store
- Choose your shipping strategy and set sales and marketing goals
- Launch your business
1. Find product opportunities and choose what to sell
Finding a product to sell
The first step to building an e-commerce store is knowing what products you want to sell direct-to-consumer. This often is the most challenging part of starting a new online business. In this section, we’ll highlight strategies you can use to find product opportunities, explore the best places to look for product ideas, and finally, look at trending e-commerce products to consider.
- Find a Product to Sell: 12 Strategies for Finding Your First Profitable Product
- Product Ideas: 17 Places to Find Profitable Products
- 17 Trending Products to Sell in 2022
- 29 Ideas for How to Start an Online Business in 2022
Evaluating your idea
Once you have a product idea in mind, how do you know if it will sell? In this section, we’ll cover a few approaches that active entrepreneurs have used to validate their product ideas and potential market.
- Video: How to Validate Your Product Ideas
- Product Research: The 15-Step Checklist for Finding Profitable, In-Demand Product Ideas
Free Guide: How to Find a Profitable Product to Sell Online
Excited about starting a business, but not sure where to start? This free, comprehensive guide will teach you how to find great, newly trending products with high sales potential.
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Obtaining your product
After landing on a strong product idea, your next step is figuring out where and how you’re going to obtain your products. The next four posts cover the various methods for acquiring your products, along with the pros and cons of each model.
- From Dropshipping to DTC, Here Are the Most Popular Types of Ecommerce Business Models
- How to Find a Manufacturer or Supplier for Your Product Idea
- How to Source Products for Your Online Store: Top Apps and Tips
- Print on Demand: A Low-Risk Way to Sell Custom Products
Sell your retail products online
Many independent retailers face a challenging road ahead. Shifting your brick-and-mortar business online can help you weather this storm, generate cash flow, and build a more resilient business. You’ll need to find a good ecommerce solution to build your store on, like Shopify.
- Bricks to Clicks: How to Move Your Brick-and-Mortar Business Online
- Sell Gift Cards for Your Brick-and-Mortar Business with a Simple Online Store
- Local Delivery: Add Local Delivery to Your Store to Increase Sales
- The Ultimate Guide to Curbside Pickup (With Examples of Local Retailers Doing it Right)
2. Thoroughly research your competition and write a business plan
Research your competition
You’ve found your product, evaluated its potential, and sourced a supplier. But before you get into that, you’ll need to thoroughly research your competition so you know what you’re up against and how you can differentiate your business from theirs.
- How to Conduct a Competitive Analysis for Your Business (Plus a Free Template)
- SWOT Analysis: A Simple Way to Find Your Competitive Edge (Plus a Free Template)
Writing a business plan
With your competitive research complete, it’s time to write your business plan. A business plan is a roadmap that helps bring your ideas and thoughts together. It's vital in determining what to prioritize and how to effectively reach potential customers. A business plan also highlights your company's mission statement to show investors and employees the core values of your brand.
- How to Write the Perfect Business Plan in 9 Steps
- Business Plan Template: A Practical Framework for Creating Your Business Plan
3. Choose a logo and name and set up your online store
Choose a business name
Aside from finding an actual product to sell online, another challenging decision is determining your business or brand name and choosing an appropriate and available domain name. These blog posts will help you tackle these important tasks.
Creating a logo
Once you’ve selected a memorable name and registered a corresponding domain, it’s time to craft a simple logo. In these resources, we’ll show you several options for creating a great logo for your new business.
- Hatchful: A simple logo maker by Shopify
- The Top 10 Paid and Free Logo Makers Online in 2022
- How to Design a Memorable Logo in 7 Steps (We Make One From Scratch)
Understanding search engine optimization (SEO)
You’re almost ready to begin building your online store. However, before you jump into it, you should understand the basics of search engine optimization so you can properly structure your site and pages for Google and other search engines.
- The Beginner’s Guide to Ecommerce SEO
- Want to Rank Your Store? Get On Page One With This SEO Checklist
Free Download: SEO Checklist
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Building your store
With a better understanding of search engines, it’s time to build out your store using a website builder. There are many crucial elements to consider. Below, we’ve listed our essential reads to help you build high-converting product pages, write captivating product descriptions, shoot beautiful product photography, choose your ecommerce color palette, and much more.
- 50 Exceptional Shopify Stores to Inspire Entrepreneurs
- How to Optimize Your Product Pages For More Sales: 11 Expert-Recommended Tips
- Product Description Examples and Tips to Inform and Persuade Your Customers
- A Picture Is Worth a Thousand Sales: A DIY Guide to Beautiful Product Photography
- Customizing Your Shopify Theme: How To Use Images, Colors, and Fonts
- 10 Must Know Image Optimization Tips
- How to Create a Coming Soon Page and Start Marketing Before You Launch
Don’t forget, if you run into any problems getting your store set up, you can always hire help from Shopify Experts.
Choosing your sales channels
One of the best ways to reach new customers is to choose sales channels where they already shop. The right mix of sales channels will depend on your products and your target market, but there are a number of great options that can complement and support your self-hosted store.
- Etsy and Shopify: How Three Makers Used Both to Grow Their Businesses
- Scaling Sales on eBay: How One Business Balances Growth, Customer Service, and Life
- How a Jewelry Business Generates 76.8% of Orders Selling on Amazon with Shopify
4. Choose your shipping strategy and set sales and marketing goals
As you get close to the launch of your new business, there are several shipping and fulfillment elements you need to prepare for. In this section, we’ve curated a few comprehensive guides on how to determine your shipping strategy.
- Ecommerce Shipping and Fulfillment: A Complete Guide
- International Shipping: Everything You Need to Know to Deliver Beyond Your Borders
- Shipping Strategy: Get Packages to Customers Without Cutting Into Your Bottom Line
- How to Reduce Shipping Costs for Small Businesses: 6 Helpful Ways
It’s also a good idea to define your key performance indicators upfront so, once you launch, you know what measures of success to track.
- 67 Key Performance Indicators (KPIs) for Ecommerce
- What Are the Basic Ecommerce Metrics I Need To Focus On First?
As a final checklist, this post covers the 13 essential things you need to do before launch.
5. Launch your business
Acquiring your first customer
Now that you’ve launched, the hard work of marketing your products begins. While many new store owners should consider selling their physical products in person, the rest of digital marketing relies on doing one thing well: driving targeted traffic. Next, we’ll share a variety of marketing tactics that will help you in your first months.
- How to Get Your First Sale in 30 Days: A Marketing Checklist for New Entrepreneurs
- Need Traffic? Here's How to Get Visitors to a New Website (Even If You Don't Know Where to Begin)
- Customer Acquisition: How to Calculate It and Create a Profitable Strategy For Your Business
Marketing your store
You’re well on your way now and likely have a few sales under your belt. It’s time to get serious and invest in marketing your store. The following posts will help you zero in on your top-performing ecommerce marketing tactics or expand into new ones for driving traffic and converting that traffic to sales.
Email marketing essentials
- Learn Email Marketing: Everything from List Building to Advanced Lifecycle Automation
- 7 Automated Email Campaigns That Win Customers and Keep Them Coming Back
- How to Write Engaging Welcome Emails (+ 12 Examples to Inspire Yours)
- What I Learned Analyzing 60 Days of Emails from a Fast-Growing Ecommerce Brand
Free Ebook: How to Grow Your Ecommerce Business with Email Marketing
Whether you're just getting started or dreaming up your next big campaign, this email marketing guide will provide you with insights and ideas to help your business grow.
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Driving traffic from social
- Go Beyond Likes and Follows: How to Create a Social Media Strategy That Sells
- How to Get More Followers on Instagram: 15 Reliable Ways to Grow Your Audience
- Pinterest Marketing 101: How to Successfully Promote Your Business on Pinterest
- How to Start a Successful YouTube Channel: 12 Steps
- Find The Best Fit: Your Beginner’s Guide to Influencer Marketing in 2021
Driving traffic and conversions from paid ads
- How to Advertise on Facebook: A No-Nonsense Facebook Ads Guide For Beginners
- The Google Ads Playbook: 13 Campaign Types And What to Expect From Them
- 17 Best Price Comparison Engines to Increase Ecommerce Sales
Optimizing for higher conversions
- The Complete Guide to A/B Testing (Tips from Google, HubSpot, and Shopify)
- How to Find and Plug the Leaks in Your Conversion Funnels
- Drive More Ecommerce Sales with Live Chat Without Being Trapped at Your Desk
- 19 Growth and CRO Experts on Increasing Revenue Without Increasing Traffic
- 9 Ways to Earn Customer Trust When You Have Zero Sales
- The 39-Point Store Trust Checklist: How Trustworthy Is Your Online Store?
- Driving Traffic but No Sales? Here's How to Diagnose and Improve Your Store
Using analytics to uncover insights
- The Beginner's Guide to Analyzing Shopify Reports and Analytics
- 5 Google Analytics Segments (and How to Use Them to Increase Revenue)
- 9 Google Analytics Custom Reports by the Experts (and How to Use Them)
- Facebook Custom Audiences 101: A Starter Guide for Ecommerce Businesses
How much does it cost to start an ecommerce business?
An ecommerce business can be started for as little as $100, which is spent on a subscription and purchasing a theme for your store. Ecommerce companies cost less than brick-and-mortar stores because they don’t require the same amount of licenses and permits, and you don’t need to pay rent for a retail space.
If you operate as a dropshipping business, for example, it’ll likely cost less to start because you don’t need to pay for raw materials, inventory, or manual labor. You only pay for products after a customer purchases them. If you’re creating your own products by hand or working with manufacturers, you’ll need to pay for equipment, materials, and labor upfront.
Many ecommerce entrepreneurs start a business on a shoestring budget. To get a better idea of upfront costs, we surveyed 150 entrepreneurs and 300 small business owners in the US to find out.
According to our research, new ecommerce store owners can expect business costs to total up to $40,000 in the first year, which is paid back to the owner through profit margins.
Expense categories included:
- Product: raw materials, inventory, supplier, manufacturing, patents, etc.
- Operating: incorporation/legal fees, additional software, business insurance, accounting, etc.
- Online store: website/platform subscription, hosting/domain, contract developer/designer, etc.
- Shipping: packaging, labels, etc.
- Offline: stall/table fees, rent, gas, etc.
- Team/staff: salaries, benefits, perks, etc.
- Marketing: logo, branding, ads, printed materials, business cards, etc.
In the first year, business owners spent:
- 11% on operating costs
- 10.3% on marketing costs
- 9% on online costs
- 31.6% on product costs
- 8.7% on shipping costs
- 18.8% on team costs
- 10.5% on offline costs
Now, this doesn’t mean you will definitely spend $40,000 opening up your ecommerce store. The amount spent in the first year varied significantly, depending on industry and ecommerce business model, whether the business had employees, or if it was a full-time gig.
You also don’t need $40,000 in cash lying around to start an ecommerce business. While many (66%) entrepreneurs use their personal savings to fund their business (respondents could choose more than one funding source), they also used financial support from friends and family (23%) and personal loans (21%).
Tips for starting an ecommerce store
Starting an ecommerce business is thrilling. Whether you’re starting your first or fifth one, keep the following tips in mind:
- Forget about year one profitability
- Know your target audience
- Sell an in-demand product
- Experiment with marketing and advertising
- Invest in outreach and link building
Forget about year one profitability
Starting a successful ecommerce business is a marathon, not a sprint. Don’t measure business success by profitability in your first year. Give yourself a runway of 18 to 24 months for your business to get off the ground. Spend your first year testing, reiterating, and reinvesting your sales back into your business using the above budget guidelines.
Know your target audience
Outside of developing or sourcing products, you’ll spend a majority of your time getting the attention of customers. The challenge? You want to get your products in front of the right customers—the ones who will actually buy on your site. Understanding these people, a.k.a. your target audience, can help you reach them faster and make more sales.
Sell an in-demand product
Create or sell an amazing product with proven market demand. Take a look at the top retailers today—Allbirds, Tushy, Bombas—and you’ll notice they all sell top-tier products. “Product quality is critical because a good product sells itself,” says Eric Even Haim, CEO of upsell and cross-sell app ReConvert. “When you marry a great product with an audience who’s hungry for it, your marketing becomes 10 times easier.”
Eric explains that new products don’t need to be the “next big thing.” You just need to “look for growing trends and markets where customers are underserved. Then step in with an excellent product and give them what they want!”
Two places to find market demand are:
- Google Trends, where you can research topics people search for
- Trends.co, which uses data to predict trend and business opportunities before they become popular.
When you marry a great product with an audience who’s hungry for it, your marketing becomes 10 times easier.
Experiment with marketing and advertising
It’s important to get the word out about your new business after launch. You’ll want to try different marketing strategies to understand where your audience hangs out and responds best to your content.
Test different online marketing tactics like:
- Affiliate marketing
- Instagram ads
- Website pop-ups
- Checkout upsells and cross-sells
- Organic search
- Content marketing
- Loyalty programs
“Success depends on your ability to experiment, test, and analyze your ad and marketing strategies,” says Stephen Light, CMO and co-owner of mattress company Nolah. “Experimentation is the best way to avoid falling into any assumptions about your audience that could end up hurting you rather than helping.”
Stephen suggests being open to getting things totally wrong, “especially when you’re just starting out.” Use the data you collect to create more effective campaigns that drive traffic and profit. “Plus, optimizing your ad campaigns and gathering data regarding how your customer base responds to them can help you shape your website’s features.”
Experimentation is the best way to avoid falling into any assumptions about your audience that could end up hurting you rather than helping.
Invest in outreach and link building
Another tip for new ecommerce stores is to have an outreach and link-building plan in place. These tactics can help boost your SEO rankings in Google.
“The sooner you have an approach to link building and driving authority into your site in place, the sooner search engines will recognise your website as an authority in its niche,” says UK-based SEO consultant James Taylor.
“Search engines see a link from an authority source as a vote of confidence towards your website, so the more links you have from trusted websites, the more search engines are going to trust you as an authority.”
James recommends new ecommerce store owners and marketers invest in digital PR and link-building campaigns early on. This sets the stage for long-term SEO success, so you can rank higher in Google, earn more organic traffic, and make more sales.
“The sooner you have an approach to link building and driving authority into your site in place, the sooner search engines will recognize your website as an authority in its niche.”
Building your own ecommerce business is as exciting as it is challenging. At a rapid pace you’ll learn a ton about choosing a product, evaluating its viability, figuring out how to get it produced, building an ecommerce website, and marketing and selling to new customers. The process can feel like you’re solving a head scratcher of a puzzle, but it’s rewarding all the same.
We hope following this resource roundup helps provide you with a clearer roadmap. As always, the best advice anyone can give is to just get started and to enjoy yourself along the way.
Illustration by Cornelia Li
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Starting an ecommerce business FAQ
How do I start an ecommerce business?
What are the 4 types of ecommerce businesses?
- Business to consumer (B2C): When you sell a good or service to an individual consumer (e.g., you buy a jacket from an online retailer).
- Business to business (B2B): When you sell a good or service to another business (e.g., a business sells wholesale products for another business to use).
- Consumer to consumer (C2C): When you sell a good or service to another consumer (e.g., you sell vintage clothes on Facebook Marketplace to another consumer).
- Consumer to business (C2B): When you sell products or services to a business (e.g., an influencer or affiliate offers exposure to their audience in exchange for a fee).