Did you know that e-retail sales are projected to grow to $ 5.54 trillion in 2023?
If you have patiently waited for a sign to start an eCommerce store, here it is.
Firstly, eCommerce businesses provide the flexibility that brick-and-mortar stores do not. Secondly, niche-specific eCommerce businesses are thriving at a great rate. But starting an eCommerce business involves selecting an eCommerce model and niche, developing a brand persona, setting up the store, promoting it, and much more.
What Is An eCommerce Business?
An eCommerce business is a type of business model where people buy and sell products & services on the internet. In this type of business, all transactions happen via online payment gateways such as PayPal, Stripe, and many more. It is predicted that online retail sales will go over $5.5 trillion by the end of 2023. So it is the best time to start an eCommerce business, and you can start your online store with Shopify’s free trial without spending anything.
Starting an eCommerce business is great for those who want to get financial freedom and create a business of their own from scratch. After doing thorough research, we have created a step-by-step guide for you so that you can start your eCommerce business with ease.
Today, we are here to cover every hurdle affecting your idea of starting an eCommerce store to help you thrive in 2023. Here is an infographic that contains all the info on starting an eCommerce business online.
Step-1 Select A Suitable eCommerce Business Model
Go through the following eCommerce business models to select the one best suited for you.
Types of eCommerce Business Models
Let’s look at some of the most preferred eCommerce business models.
- Business to Business
A B2B eCommerce model focuses on selling products from one business to another. Service providers generally dominate this niche, but you can also find many other suppliers. Some successful B2B eCommerce companies include Salesforce, HootSuite, Mailchimp, etc. These businesses create enterprise eCommerce platforms to cater to their target customers’ needs.
- Business To Consumer
A B2C eCommerce model focuses on selling products or services directly to consumers. It’s the most popular model preferred amongst others. Some examples of the B2C model include Amazon, eBay, Netflix, etc.
- Customer To Customer
A Customer to Customer or C2C model came into existence due to growing public confidence in online businesses. These businesses allow buying and selling of products or services between customers for a small fee. They act as intermediaries and have little control over product or service quality. Some great examples of C2C business models include Fiverr, eBay, Craigslist, Airbnb, etc.
Revenue Model Classification
Dropshipping is one of the most straightforward business models to put into action. It aims at providing goods directly from supplier to customer. As an intermediary, you don’t have the burden of maintaining inventory, packaging goods, etc. However, you are accountable for delayed orders or poor quality.
- Wholesaling and Warehousing
This eCommerce model demands extensive investment in the beginning. Firstly, you need to manage inventory. Secondly, keep regular track of customer orders, shipping, etc. Lastly, invest in the warehousing space required for maintaining stock. You need to invest time and effort in pushing out stocks through Amazon, eBay, Google, etc.
The subscription eCommerce business model focuses on delivering a box of products to customers at regular intervals. Dollar shave club is an excellent example of such a model. It’s suitable for maintaining a consistent income stream. However, businesses must delve deep into the right ways of encouraging or incentivizing customers to subscribe for extended periods.
- Private labeling and manufacturing
Some people have a great product idea but insufficient resources to execute it. In this model, you can get your product manufactured by a third party under your brand name, and that is called private labeling. Customers can place orders through platforms like Amazon; products are manufactured based on your specifications and shipped to the person. The costs associated with this model are minimal, and changing suppliers comes easily.
Step-2: Selecting An eCommerce Niche
Let’s move forward to one of the most important aspects of starting an eCommerce store— selecting a niche.
Conduct A Product Demand Analysis
Are customers willing to spend a particular amount on your selected products?
Identifying the products you are passionate about is crucial. But you must prioritize assessing the demand for those products in the market. Market demand often keeps fluctuating, and it becomes essential to monitor the major factors affecting it. You can conduct a product demand analysis in the following two ways:
- Interacting with your target customers to get insights on the same.
- Using Search Engine Optimization tools and social media insights to assess demand.
Social media allows you to target specific locations, filter information based on your acquired data sets, and provide a conceptualized report assisting decision-making. Target relevant keywords and social channels to obtain information about your prospects’ most heated conversations.
Other ways of conducting demand analysis:
- Surveys: Use social media and giveaways to obtain first-hand information about people’s preferences.
- Experimentation: provide a few products at a discounted rate to your target audience for a given time to assess their demand
- Observation: use your time to observe current trends and choose accordingly.
Conduct A Competitor Analysis
Now you know the demand for your selected products in the market. Next comes the importance of identifying well-established players. Collecting relevant competitor data will help you fuel your business strategy with the right ideas.
Here is how you can conduct a practical competitor analysis for your eCommerce business:
- Start with collecting data through the most popular search engine. Select relevant tools like Google Adwords Keyword Planner, Google Trends, Google Analytics, etc., required for competitor analysis.
- Use relevant keywords typed in by your customers to identify your top competitors. Keeping up with the top players will help you strengthen your strategy.
- Scan through your competitors’ websites and social pages they are most active on to identify patterns and collect data.
- Focus on analyzing their product offering, and conduct a competitive marketing and pricing analysis.
- Identify critical similarities between your competitors’ products and the ones you offer. Then focus on enhancing your current offering to capture the target market.
- Understand the marketing strategies used by your competitors to generate new leads, and increase website traffic. Go through their content strategy to identify their weekly blog posts, social media interactions, etc. Furthermore, follow their blog and newsletter to understand their content game plan.
- Lastly, conduct a competitor SWOT analysis and use their weak areas to strengthen your growth plan.
Make A List Of Restrictions And Existing Resources
Identify the restrictions associated with the sale of your selected products. Being aware of your hurdles is crucial before starting your store. Next, evaluate your current resources and assets in place. All this information will help you stay ahead in your marketing game.
Calculate Relevant Costs (Shipping, Storage, etc.)
Go through your products’ shipping, storage, and other costs. Calculating these costs in advance will help you evaluate your profit and growth potential. Make it a point of targeting high-dollar options instead of selling hundreds of eCommerce products with minimal profit margin.
List Of Best Performing eCommerce Niches in 2023
Here are some niches that performed exceptionally well in 2023 so far:
- Fashion and Apparel
- Home Decor
- Beauty and personal care
- Healthcare and fitness
- Custom-designed merchandise
Step-3: Developing A Brand Persona For Your eCommerce Business
A brand must have a well-defined identity to thrive amongst the competition. People should never doubt what your brand stands for at any given point. Let’s understand the right ways of creating a brand persona that stands out.
Understand your Target Audience
Understanding your target customers is the first step to creating a brand persona they resonate with. Create a fictional representation of your ideal customers with relevant traits. Include age, gender, location, interests, occupation, etc. Your buyer personas will vary based on the characteristics of different audience segments. For instance, one segment might consist of freelancers while the other focus on homemakers. Focus on targeting different demographics based on the audience segment in question.
Jot down your brand’s personality traits
Start by determining the top three brand personality traits. Let’s say your brand portrays excitement by continually experimenting with innovative ideas and concepts. Or you focus on being more approachable and sincere to your target audience. Some brands prefer a humorous aspect and make it visible through their marketing strategies. Lastly, sophistication is another excellent brand trait to depict class and luxury.
Identifying your brand’s role
Does your audience look up to you as a leader, curator, or nurturer? Here are some questions you need to ask to establish your brand’s role:
- Will your brand serve as a role model to the target customers? (Leader)
- Will your brand provide a space of knowledge about different aspects and guide your audience through them? (Curator)
- Do you plan on lending a year to people when they need it? (Nurturer)
- Are you more into spontaneity and providing meaningful experiences to prospects? (Adventurous)
-Mentioning relevant brand persona details
- Persona name
Personify your brand with an actual human name resonating with your voice.
Put a face to the assigned name based on your brand tone.
Decide the age based on the general age of your targeted audience.
Decide on varied interests your persona will have outside of business endeavors.
Work on a short yet crisp bio describing your persona in detail.
Developing a Consistent Theme Across Every Platform
Now you have a clear brand persona in mind. Next, create a consistent theme across your website and social media.
Logos play an essential role in conveying a message without using actual words. Spend enough time to ensure your logo speaks for your brand conveniently.
- Color palette
Deciding on color schemes relevant to your brand persona is crucial. Choose a blend of colors that represent your brand and develop consistency.
The visual element plays a huge role in establishing an instant connection with the audience. Use relevant and authentic images aligning with your brand.
Selecting the right fonts plays a massive role in brand representation. Select at least two different fonts that work well with your logo and color palette.
Step-4 Registering your eCommerce Business
Let’s now move forward to registering your eCommerce business.
Select a business name and get registered
Choose a unique name and ensure an existing eCommerce business does not already take it. Next, spend ample time choosing an entity type (sole proprietorship, partnership, LLC, etc.). Study the benefits and drawbacks of every kind to make the right choice. Get your business registered.
Acquire an EIN
An Employer Identification Number or EIN is required to open a business bank account and tax filing. Acquiring this number is essential even for businesses with no employees. This number provides a unique identity to your business and assists you in filing the necessary paperwork.
Apply for business licenses
Business licenses and permits are mandatory even operating an online store. License requirements vary based on the city, state, or country. Identify the licenses you require to begin the approval process successfully.
Step-5: Creating an eCommerce Store
Use a platform like Shopify to establish your eCommerce store without much hassle. Enjoy the free trial to understand the platform and its functioning better. These platforms are easy-to-understand and require minimal details to get started. Furthermore, all the right questions are asked in the beginning to help you establish a store that fulfills all requirements.
Here are some simple steps to get started with your eCommerce store:
- Head to the website and insert your email address to begin your free trial.
- Insert your unique store name, a strong password, and click on Create Your Store.
- Answer the questions that help Shopify understand your eCommerce business better.
- Select Products from the top left corner.
- Import your existing products (if any) or begin your search for products in your selected niche.
- Select Add Your Products and insert relevant details about the selected items.
- Click on Find Products To Sell for searching for new products. It will lead you to a list of apps that assist in selecting bestsellers.
- Browse through the available options and select one based on your preferences.
- Select Install App to initiate the installation process.
Step-6: Marketing your eCommerce store
Let’s now look at some marketing strategies you can use to promote your eCommerce store:
A robust email list is of utmost importance for running an eCommerce business. You can send out every vital notification to your prospective customers.
Let’s say you decide to launch your online store with a big promotion to lure in your target audience.
How do you plan to send them gentle reminders?
Emails will continue to play a crucial role in the eCommerce arena for increasing conversions. You can even offer a referral discount to encourage people to promote your store.
Here are some things you must keep in mind:
- Keep maintaining and increasing your email list with relevant prospects to achieve results.
- Decide on sending out weekly or bi-weekly newsletters to keep your audience updated.
- Provide a small discount or coupon on entering email addresses through pop-up boxes.
- Keep engaging with your email list apart from sending out generic promotional messages. The goal must remain intact in engaging with your audience.
Social Media Marketing
Paid social promotions are great for generating leads but never underestimate the power of organic reach. People are more driven by visuals. Your social channels must neatly present your collection of products. Keep updating your social media with images, videos, polls, etc., to drive engagement. Ask open-ended questions and generate interesting quiz ideas to boost interaction.
Top tips to boost social media interaction are as follows:
- Decide on a post frequency and experiment until you find the correct number and time to make your posts live.
- Do not keep your accounts limited to images. Invest your time in creating short yet crisp videos. Target your customer pain points and your suggested solution in the clips.
- Target the right social channels to get maximum results.
- Develop a content calendar to maintain consistency for enhanced results.
Referral marketing helps businesses acquire business through existing happy customers. Brands provide attractive offers to customers in exchange for referring the business to their friends or family members. It’s the fastest way to grow your sales with minimal costs. The cost incurred remains limited to the offers provided and promoting the referral marketing campaigns.
For example, you can provide a 30% coupon code for each successful referral and offer 30% off on the first purchase to the person referred. Make it a point to create a win-win situation for both parties involved.
What are the Common Disadvantages of Running an eCommerce Store?
Here are some drawbacks you must consider:
- Site crashes will frustrate customers and prevent them from returning to your store.
- Some customers still prefer trying before buying. But you can still ensure sales with easy return and refund policies.
- eCommerce is a highly competitive domain, and one needs patience to thrive in it.
- Lengthy shipping times might prevent customers from purchasing items.
Key Takeaways: How To Start An eCommerce Business (2023)
- Beginners can get started with dropshipping eCommerce model that requires minimum effort and investment.
- Use relevant SEO tools and social media insights to identify demand for your selected products.
- Research your top competing brands by analyzing their websites, social pages, and marketing strategies.
- Create a solid brand persona by obtaining clarity on what your brand stands for and maintaining thematic consistency.
- Register your business by selecting an appropriate store name and identifying of required licenses in your region.
- Use a blend of marketing tactics (email marketing, social media marketing, referral marketing, etc.) to promote and grow your store.
Starting an eCommerce business with little money requires a strong business plan and a relevant model. Select products with a good profit margin and choose a platform with budget-friendly plans. Then, get started with your store and keep increasing your investment as you progress.
The average cost of starting an eCommerce business with products ranging between 100-1000 requires an investment of at least $5000, to begin with. The price can be less or more depending on the design, development, the platform used, etc.
The most common type of eCommerce business models are:
Business to Business (B2B)
Business to Consumer (B2C)
Consumer to Consumer (C2C)
Direct to Consumer (D2C)
The right strategies and market understanding will ensure you run a profitable eCommerce store.