If you’re interested in launching an e-commerce business or selling products or services online, these seven steps will help get you started!
Step 1: Research
As with any new business endeavor, the first step in learning how to start an e-commerce business is conducting the necessary research. Thoroughly evaluate the e-commerce space you’re considering and begin making decisions about your specific business.
Some considerations include: What exactly will your e-commerce business offer? Will you be selling products or services? If products, are they digital or physical? How and where will you source your products? What type of business model do you want to employ?
More broadly: How will you deliver products or services to your customers? What is your startup cost? Operational cost? Are there legal or other regulations on your product or service that you need to evaluate?
These lines of questioning are integral not only to your launch but also your ability to create your business plan. This step should also give you a better sense of your specific e-commerce goals and how you’re going to reach them.
Step 2: Business Entity Selection
Once you’ve solidified the plan for your e-commerce business, the next step is to choose a name. Aim to select a name that’s unique and memorable as well as something that clearly relates to what your business is or does. Once you’ve made your selection, be sure to check your local secretary of state’s website, as well as the U.S. Patent and Trademark Office, to ensure that your business name is not already claimed by another company. You should also conduct a domain search to see if your potential business domain name is available. If your domain name is already claimed, you may consider a different business name, or a different structure like using “.co” or “.net” rather than “.com”
Once you’ve selected your business name, you will need to choose your business’s legal structure. This is an incredibly important decision as the business entity type you select carries important legal and financial implications for your e-commerce operation. Generally, you’ll opt for a sole proprietorship, general partnership, LLC, or corporation. If you are unclear about the differences or have questions about which business entity type is best for your business, consider consulting with an attorney, accountant, or other legal professional for guidance.
Step 3: Apply for an EIN
Next, apply for an employer identification number (EIN). While not every business entity type requires an EIN, this nine-digit number can be useful to help you separate your personal and business finances. Plus, you can apply for an EIN from the IRS, for free — either online, by mail, fax, or phone. You can apply for your EIN online and receive your business tax ID number instantly.
Step 4: Obtain necessary business permits and licenses
After you’ve applied for your EIN, you need to obtain any business licenses or permits needed to operate legally within your city and state. If you’ve established your e-commerce business as a sole proprietorship or general partnership, you do not need to register your business with the state; exclusions include if you’re filing a DBA to legally operate under a specific business name. For the other business entity types, you will need to register your business with your state and receive a general operating license. Depending on where your business is located, you may also need to acquire a local operating license as well.
As most e-commerce businesses are home-based, they do not require as many business licenses and permits as brick-and-mortar stores. You will want to determine what the specific requirements are in your area; this information can often be found online on your state or local government website.
Step 5: Select e-commerce platform and design your website
Creating your e-commerce website is one of the most important steps in launching your business. Your website is not only the face of your business but also your lifeline to your customers and the portal through which they experience your brand and purchase your products.
After selecting your domain name, one of the most important decisions you’ll face is selecting which e-commerce platform to use. Whether you opt for an all-in-one software, like Shopify, or an open-source platform, like Magento, your e-commerce platform will be the base you use to build and develop your online store. Most e-commerce platforms allow you to create and launch your online store, customize your design, add your domain (or purchase one), manage inventory, take and ship orders, receive payment, and more.
Some of the most popular e-commerce solutions are:
Shopify – Arguably the most well-known and popular e-commerce platform, Shopify offers an all-inclusive, user-friendly solution with a variety of add-ons.
WooCommerce – If you already have a WordPress site, or are familiar with the platform, you can download WooCommerce to start selling on your WordPress site. This plug-in is open-source, free to download and includes the full range of e-commerce features. Compared with Shopify, however, WooCommerce is best-suited for business owners who have some technical knowledge to take advantage of its open-source nature.
Squarespace – Generally regarded as a website builder, Squarespace also offers e-commerce capabilities and modern templates. Similar to Shopify, Squarespace is user-friendly and can accommodate business owners of all technical skill levels. However, as a website builder first, Squarespace may not offer as many features, tools, or add-ons as some other alternatives.
Magento – If you want to customize every aspect of your online store and have the technical skill to develop your website, the open-source version of Magento will appeal to you. With this e-commerce platform, you can manipulate every element and customize your site.
When selecting your e-commerce platform, consider cost, features, usability, and more and ensure you will be able to design a fully functional website system that not only allows you to get up and running and but also easily manage your operations on a day-to-day basis.
Once you’ve selected your platform, it’s time to customize and launch your site. Think about how you want your online store organized, what you want the design to look like, what colors you want to use, etc. Depending on your platform and budget, you may decide to create and launch your website yourself, or you might invest in a professional designer or developer for assistance.
Step 6: Product development and sourcing
Depending on your business, you will either make your own products, source them from distributors, or sell services. If you’re selling products, consider your initial inventory needs and start up costs. Then take the time to list your inventory on your online store. Be sure to keep the customer experience top of mind and leverage a design that is SEO friendly. If selling services, you will have to describe and list these services on your business website.
Step 7: Market your e-commerce business
There are a variety of marketing strategies from which to choose: Google ads, social media ads, influencer marketing, organic/word of mouth, and more. At the most basic level, you’ll want to optimize your business website for SEO and take advantage of any online marketing tools that are included within your e-commerce platform.
Once you’ve launched your new e-commerce business and you begin receiving orders, begin tracking the results of your campaigns to learn which marketing initiatives are working and which aren’t. Revisit the strategy as time progresses and make the necessary changes and adjustments until you find what works best for your business.