How to Start an eCommerce Business: A Complete Guide
When it comes to eCommerce—business is booming.
The pandemic throughout 2020 propelled eCommerce businesses far ahead of previous projections. According to Wix’s end-of-year eCommerce growth report, revenue in the industry surged on average by 174%. Some sectors saw growth upwards of 4X.
Critically, there has been a transformation of buyer behavior across all sectors. It is no longer “fringe” or “progressive” to seek out a variety of goods and services from online retailers. It’s the norm.
The age of eCommerce business is here, and we’re ready to help you make the most of it. This article will help you to understand eCommerce more generally as well as outline the essential steps of how to start an eCommerce business.
Do you want to start an online business? Create an online store today and use this article to guide your journey.
What is an eCommerce business?
Almost everyone actively engages with the eCommerce sector on a daily basis because any business transaction that takes place online is technically eCommerce.
Throughout this article we’ll focus on the sale of products within eCommerce. Nonetheless, it can be helpful to have a definition that answers the question: What is eCommerce?
eCommerce is a broad term that refers to any commercial activity that uses or takes place online, including the sale and purchase of goods or services as well as any related data or money transfers. Commonly, eCommerce is associated with the sale of physical products over the internet, but it technically refers to any commercial transaction processed via the web.
Now that we’ve got definitions out of the way, let’s dive in. This complete guide will walk you through the essentials of how to start an eCommerce business.
How to start an eCommerce business
01. Understand eCommerce business models
Starting an eCommerce business requires research, understanding, and adequate planning. From the outset, you’ll want to approach your new business just like any other investment.
First, consider the various product types you can sell with an eCommerce business. Typically, eCommerce products fall into four categories:
Physical products: Physical items are exactly what they sound like: products—such as clothing, gifts, books, plants, and more—that are purchased online and shipped to the customer.
Digital products: These are often forms of content, like eBooks, courses, or templates, that can be sold via an online store and easily downloaded or accessed by the customer.
Software: Digital programs and applications we use on our technological devices to work, play, communicate, and more.
Services: These are often time-intensive offerings centered around person-to-person interaction, like coaching, telehealth, or business consulting.
Second, as you begin to formulate your options, consider what eCommerce business approaches will work best for your products, goals, and lifestyle.
For example, you might dream of having a custom branded soap business but would prefer to white-label high-quality wholesale soaps than hand-make your own. Keep these factors in mind as you explore common eCommerce business models:
If you want to keep start-up costs low, consider:
Print on demand
If you’re comfortable with a higher up-front investment and want more brand customization, consider:
Wholesale with whitelabeling
If you want to retain full brand control and are ready to invest significant time, consider:
Unique custom products
If you want to create a continuous income stream, consider:
02. Identify your product
Once you have a strong sense of what category of eCommerce you want to work in, as well as the approach that fits your goals and commitment level, it’s time to explore your product offerings.
You may already have a concrete product in mind. If so, consider skipping down to the next section. If you’re still uncovering your perfect eCommerce product, this section will help to inspire and guide you to finding the key to your eCommerce business.
Top eCommerce Categories
Naturally, when starting a business, you’ll want to work in a category that’s trending upward.
In 2020, all Wix eCommerce business categories grew year over year—some exceeding more than 400% growth.
According to Wix’s end of year growth report, the eCommerce categories that experienced consistent growth last year include:
Animal Care & Supplies
Clothing & Accessories
Science & Technology
Antiques & Vintage
Food & Beverage
Home & Garden
Health & Beauty
Kids & Baby
With so many growing categories, it can be hard to decide what product is best for your eCommerce business. Your situation, interests and skills can help you determine the most viable product for you.
How to choose products for your online store
Consider the following valuable steps as you determine your ideal product:
Start with your audience: Identify, research, and listen to your potential customers.
Discover trending products: Once you know who you’re marketing to, uncover what types of products are trending among that audience. Identify what’s new and good in your chosen industry by browsing top selling items in online marketplaces or SEO searches. Use Google Trends to see what’s popular in your country and others. For example, a food supplement startup, researching trends in the vitamin industry, might create a product to meet the need of a “Breakout” search term, like “best prenatal vitamins”.
Fill a need in the market: Ensure that your product addresses a pain point that your target audience is experiencing. The more niche your solution, the better.
Factor in your profit: Try to determine the scalability of your product, indicated by the revenue generated per dollar and/or per hour invested.
Consider the following questions:
Will you create a product by hand?
Will you choose a product to manufacture?
Will you use dropshipping?
Will it ship well?
Will you need to outsource shipping?
How will you manage storage and inventory?
For example, Mizu & Kasai is a Belgian food supplement company co-founded by a pharmacist and his partner. Using their knowledge, skills and experience they identified a niche in the healthcare market and created a range of ethically produced food supplements. The company's strong sense of eco-responsibility is reflected in its practices and messaging, using local manufacturers, minimal plastic, and offsetting its carbon footprint by planting a tree for every product purchase.
The best eCommerce business ideas
If you’re still unsure of your product offering, here are some ideas to help jumpstart your vision. Be sure that you are considering each idea in the context of your potential target market.
Start a sustainable clothing brand
Resell curated collections of antique items
Dropship branded merchandise
Sell bespoke handcrafted jewelry
Manufacture and sell nutritional supplements
Sell handcrafted kitchenware for professional chefs
Sell gym equipment for home use
Sell eco-friendly toys for kids
Manufacture and sell paraben-free skincare products
As cliché as it seems, the sky’s the limit when it comes to successful eCommerce business ideas. As we mentioned previously, there is an explosion of business ventures within eCommerce and many different products and services can be adapted to online business with a bit of creativity.
Dikua Jewelry is a store owned by an architect-turned-jeweler, who adapted her skills to create uniquely designed contemporary jewelry which is shipped worldwide. Elements of artisanal Mexican work are incorporated into the designs—which are manufactured by hand—using materials such as gold, sterling silver, wood, clay, resin and precious stones.
More tips for choosing a great eCommerce product
Work with what you know: Personal and professional experience can inspire and support new products. Do you have a background in healthcare? Create a nutritional supplement brand using your expertise.
Follow your fire: Aim for a product or service that shares space with where your knowledge or passion lies. Are you keen on knitting and gardening? Maybe your eCommerce business is a boutique of whimsical planter sleeves. Remember (almost) nothing is too niche for a thriving eCommerce business.
Explore keyword searches: Not only is SEO a great way to identify new product ideas but some keyword research using a free SEO tool, like Moz, can be incredibly conducive to niching your product, validating the concept, and properly marketing the items.
Run a break-even analysis: So, you have a couple options for products that could work for your business. How do you determine if it will work? A relatively quick way is to determine the break-even point for each product and whether getting to that point is feasible for you. Learn more about how to do a break-even analysis.
Exploring eCommerce subscription models
It can be tempting to worry over whether or not you are opting for “the best” online business. Before you start second-guessing the work you’ve put in thus far, please recognize that for each business model or approach, there are infinite product offerings and no one idea is better than another.
The success of an eCommerce company, like any business, depends on your interest, demand for the product, and the market you are considering.
One major trend to explore—with whatever product you opt to sell—is subscriptions.
Subscription models are becoming the norm, even in industries that don’t intuitively lend themselves to the model. For example: sock subscriptions where you get a brand new pair of stylish socks delivered every month.
Subscription boxes are popular with businesses because the model helps to create a stable revenue. Consumers like them because they get a surprise delivery—from a brand they love—every month.
Subscriptions work particularly well for items that customers tend to use regularly and run out of without realizing it, like shaving kits and toilet paper, or for customers looking to start or enforce new habits, like skincare products for a new self-care routine. They also make great gifts that keep on giving.
Plastic negative water company, Mananalu, sells monthly subscriptions to its eco-conscious product, Pure Water, which comes packaged in refillable and recyclable aluminum bottles. Shoppers can hit their daily water intake and help the planet by choosing between either a one time purchase or a 12-pack monthly delivery which will save them 20% off the original retail price.
03. Find your unique selling proposition
Finding your unique selling proposition (USP) in any business is important. Your USP is that one special thing that makes your business stand out from the competition. Ask yourself: What is it that makes my business different? With the current boom in eCommerce, finding a USP is integral to differentiating yourself and building a successful brand.
Aspects of your USP to consider, include:
The benefits of nailing your USP are significant. Use it to guide your business journey, informing important business decisions, from sourcing your product, to marketing, branding, and designing your website.
Tiny Kitchen Candle Co found its USP selling hand-poured candles with a strong eco-friendly ethos. Its carefully curated candles are made using phthalate-free fragrance oils and a premium vegan wax blend that is FDA approved and free of toxins and parabens.
A distinct USP like this can slash your competition dramatically, making it a cinch for customers to find and relate to your offering and driving down marketing costs for your business.
Additionally, a sufficiently narrow USP opens up compelling opportunities to collaborate with tangential companies for cross-promotion. For example, returning to our planter knits boutique, not only is your unique product relevant for plant lovers, but it is highly relevant for plant enthusiasts who also identify with the cottage core movement. Cottage core influencers and related businesses would naturally become a powerful ally for your business promotion without being in direct competition.
04. Research your target audience
Feeling inspired? Ready to buy your product and start selling? Hold on. Avoid wasting time and money on an idea that doesn’t have legs by doing your homework.
Ways to validate your eCommerce business idea
Real product validation only occurs when someone has paid for the product, but there are a variety of approaches you can use to gain confidence in your idea.
Get to know your target market
Imagine your target market as your product’s soulmate-level customer. People who don’t just want your product, but need it to satisfy a need or passion they have.
How do you identify your target market? Here’s our key advice:
01. Ensure the product resolves a customer pain point
Check reviews on existing or related products, browse forums and subreddits that relate to your product idea, and review related keyword search histories. The related content linked to this research will help you identify the communities that exist within your potential market. Try creating a survey to gather more information on what users expect from certain products.
02. Research your competition
What are your competitors doing? What kind of people are they attracting? What kinds of ads are they running? A Google Alert for each of your competitors can be valuable in tracking what’s happening in their space.
03. Test your product idea
Try to gauge the level of interest in your new product. Create a free landing page to build interest and curiosity around your idea. Add a CTA asking visitors to sign up for notifications about when the product is ready for release. Create a countdown to a launch date and run an ad campaign on social media based around your keywords and your assumed target market. Ask yourself, are you seeing any indication that you’re onto a winning idea?
How to write a business plan for an eCommerce business
Once you’ve made some attempt at validating your product idea and the business model for selling that product, it’s wise to create a business plan.
A business plan is a written document that formalizes your business, how it will run, operate and develop. Business plans help to structure your business and guide your growth. If executed well, they can also help to attract partners and investment.
Your business plan should include:
Products and services
Marketing and operations plan
Management and organization
For detailed support drafting your business plan, try a business plan template.
05. Establish your eCommerce business
Launching your online store is a significant undertaking. Importantly, to get down to work with your eCommerce shop, you’ll need to follow all the best practices for how to start a business.
Some aspects of the process we’ve already covered, like refining your eCommerce business idea, doing market research, checking out competitors, and creating a business plan. There are a number of additional steps to bring your eCommerce dream to fruition and keep everything above board.
How to name your business and online store
Naming your new eCommerce business is one of the most important and exciting steps for creating your online store. Once you have a name, the business becomes that much more real.
A business name should be both functional and legal. First consider, how many names do you need? Depending on your business model and the product you’ve settled on, you may opt for one name that serves as your business’s legal name and the operational name, or you may find that two (or more) names are more suitable. In this case you probably will have a legal name, like “Acme Products Unlimited, LLC,” but use a more handy name like “Acme Products” or simply “Acme” for your branding. Just be sure that any operational names you use are filed legally. For example, in the U.S. you will need to complete the Doing-Business-As (DBA) forms in your state.
Next, you’ll need to brainstorm some good monikers. Make sure you get a solid list to work with as you might discover—through the vetting process—that many names you like may not be available to you. Some relevant tools for generating several options are:
Culturally or niche-inspired
If you are still hunting for your name, try a handy business name generator.
Finally, you want to review and check your names. Whittle your list of possible names down to your favorites. Make sure your names are:
Easy to read, say, spell, remember
Available as an acceptable domain
Once you have your final list, you’ll run one last step to verify your names: the legal review. At a minimum, you want to check each name on your list to ensure that there are no similarly named existing registered businesses, DBAs, or trademarks at the state level.
In the U.S., each state usually has a database that is free to access and check. If you are planning to operate nationally, you should run similar checks in national databases. The Small Business Administration of the United States offers clear resources on how to proceed.
Registering your online business
Legal registration of your business can sometimes be done yourself. Most business owners, however, opt to work with a lawyer or an online legal service tool to ensure their business is fully compliant.
Before you register your new eCommerce business, you are probably wondering: “What kind of business registration do I need?” There are 5 common types of classifications that may work for your business:
Sole proprietorship. An unincorporated business with just one owner who pays personal taxes on profits made from the business. There is no legal distinction between the business and its owner.
Partnership. A business with two or more owners who agree to establish and run a business together.
Corporation. A business entity created by individuals or shareholders. It has limited liability, so shareholders may reap profits but aren’t personally liable for company debts.
Limited liability company (LLC). An LLC is a business structure that combines the ease of a partnership with the liability protection found in corporations.
Nonprofit. While this unique business entity is required to file articles of incorporation, all nonprofits are exempt from paying federal income taxes as their purpose is to generate money for a particular charitable cause.
Once you’ve legally registered your business, you can request an Employer Identification Number (EIN) from the IRS. Business registration packages from lawyers and online legal services often include this step for your. You will need an EIN to do business banking and file taxes as a business, and apply for any relevant licenses, even if you don’t plan on hiring employees.
Do I need a business license to sell online?
It depends. If your business sells items or services that are regulated by a federal agency, you may need a business or professional license. You can get more information about whether this applies to your business here.
Creating your logo
Much like naming your business, creating a logo is a fun milestone that many business owners are excited to achieve. You might want to hire a professional designer or Wix Partner to help create this important part of your brand identity. Or, alternatively you could design your own, using a tool like Wix Logo Maker.
06. Launch your online store
Starting an eCommerce business is exciting. Launching your online store is even more so. Here are some important considerations:
Choose the right eCommerce platform
It can be overwhelming trying to decide what the best eCommerce platform is for small businesses. Keep the following priorities in mind as you research:
Tools: Will the platform have the necessary integrated tools for you to grow a lucrative eCommerce business?
Specialty businesses: Will the platform have the capabilities necessary to operate your ideal store?
Pricing: How is the platform priced? Does it make sense financially now? Does it offer plans that grow with your business?
Design capabilities: Will you be able to create a store that suits your brand and functions well? Can you customize your store’s design?
Mobile view: Will your website be mobile-optimized so it’ll look great on all devices?
Wix eCommerce is an all-in-one platform complete with the tools and features needed to create a successful eCommerce business. Create your online store with a designer-made template and customize it your way, integrate dropshipping or multiple marketplaces, and manage everything—from orders to analytics—from one dashboard.
Acquire your product
Whether you’re creating your own products, working with a wholesaler, or trying dropshipping, you’ll want to have some product in store. In the case of dropshipping, you can start dropshipping by creating your dropshipping account and connect it to your online store. You may want to purchase samples of the products you intend to dropship to ensure they’re of a high quality.
Connect a payment provider
To start making money, determine the payment methods you’ll accept. Plan on offering customers more than one payment method, so they can use their preferred option. Depending on geography, various online payment solutions are available:
Digital wallets (like PayPal)
Buy now, pay later solutions
Do your research and pay close attention to fees and surcharges from your chosen providers. If you build your website with Wix, you can easily get paid with our native payment solution, Wix Payments.
Getting your eCommerce business domain
To determine the optimal domain name, try to make sure it matches your store name. This helps buyers find you easiest. In fact, this is so important you may consider making it a deciding factor in choosing your store name.
With Wix eCommerce, you can find, register, and link a domain name quickly. While most domains will cost about $10-$15 per year, you will receive a free domain for the first year, if you sign up to a Wix Premium plan.
Design your eCommerce site for sales
To get the most out of your website and store, make sure that you’re optimizing the design of your storefront to maximize sales. Here are some tips to keep in mind:
Use an eCommerce template: Save time and money by using a template and customizing it. eCommerce business templates have a suite of functionality baked in, saving you a lot of effort. Looking for inspiration? Take a look at our designer-made online store website templates.
Be clear about what you sell: Make it easy for store visitors to understand what your business is about and use SEO to make sure search engines know what you sell. Wix sites that complete SEO setup receive 2X more visitors and 1.3X times higher turnover.
Use simple CTAs: At all points in the buying journey for your eCommerce store, your customers should know what to do. Clear calls-to-action, like “Shop Now” or “Buy Now,” ensure a smooth user experience.
Keep your store well structured: Use a handy navigation bar to make sure customers can orient themselves on your page. If you sell a variety of items, consider tabs for different categories.
Use high-quality imagery: Product photography plays a vital role in converting sales online. Make sure that your photos clearly show your products and will instill confidence in your customers that they will get what they see.
To get more information on creating your storefront, Wix has put together an updated guide on how to start an online store.
07. Manage your eCommerce finances
As you are getting started, especially if this is your first business, it can be overwhelming to consider how to manage money for an online store. eCommerce finance is more than how to get paid at checkout. It’s about managing the money for the business to enable growth and stability.
Expert eCommerce money management tips
There are a number of considerations you should factor in when planning your business finances:
Factor in recurring costs
Budget for marketing expenses
Plan for seasonality
Use sound inventory management strategies
Make sure you’re using the best eCommerce platform
Set aside enough to fulfill returns
Minimize shipping costs
08. Market a successful eCommerce business
Your approach to eCommerce marketing should be a robust plan built around strategies that resonate with your target market and are reflective of your brand overall. Building a winning eCommerce marketing strategy is the key to outshining the growing competition in the internet commerce space.
Marketing tactics for eCommerce
eCommerce marketing includes any kind of promotional activity you do for the business—whether it’s online or off. Some examples of common marketing types that support eCommerce are:
Email marketing. Sending emails to website subscribers offering incentives to purchase your product.
Social media marketing. Creating tailored content to promote your product on social media platforms.
Digital marketing. Promoting your brand through any digital device, using highly targeted advertising methods like Search Engine Optimization (SEO), Pay-Per-Click (PPC), social media advertising, and content marketing.
Print ads. Reaching customers on a broad scale through newspapers, magazines, brochures, or direct mail.
PR. Securing positive unpaid coverage for your brand through print, broadcast, or online media.
Wix stores that use Email Marketing have a 149% higher GPS on average. And stores that run Facebook Ads by Wix campaigns earn on average over 1,000% return on ad spend.
It can be tempting to dive in with one or more kinds of marketing. For example, many novice business owners will put a lot of effort into a certain social channel that they may use personally only to have it perform poorly for the business. So, before diving in with specific marketing actions, take some time to think about the promotion of your business.
Here are a few planning activities that can support your marketing efforts more effectively:
Crafting buyer personas
Focusing time and resources on where your buyers are
Understanding your sales funnel and customer journeys
Hone in on conversion rates
Are you ready to take a serious look at marketing your eCommerce business? Our guide to eCommerce marketing will walk you through 12 actionable marketing strategies for online businesses.
Common questions about how to start an eCommerce business
Is eCommerce profitable?
As with any business, the success of an eCommerce business depends on many factors, but trends within eCommerce show tremendous potential for growth and profitability.
According to our 2020 end-of-year report, online sales grew 140% YoY (year over year), and sales revenues increased 114% YoY. Furthermore, it’s predicted that by 2040, 95% of retail purchases will be made online.
How do I succeed in eCommerce?
While there are a number of factors at play, you’ll have a great start if you do your research and get organized before you ever start shipping products. The more clarity and understanding you have of your business before you launch, the more likely you are to have chosen a product that has a decent market with room to grow.
Follow the steps in this article and dive in with our guide to starting an online store to ensure you’re setting yourself up for success.
How much does it cost to start an eCommerce business? Can I start an eCommerce business without money?
The cost to launch your new eCommerce business depends on your product, the market, and the scale needed to get going. For many online businesses, it can be very affordable to get going.
Use the financial projections section in our business plan template to help clarify what your initial startup costs will look like. Here are some costs to consider:
Building your eCommerce website
Purchasing inventory or raw materials
Marketing and advertising
Business or legal expenses
Can you cover these costs using your savings? If not, you might want to seek out a loan or investment to get your business up and running. Whichever path you take, manage your finances by setting a realistic budget and use it to guide every decision that you make for your business.
What are the types of eCommerce?
There are several eCommerce business formats based on the kind of transaction that occurs. These include:
B2B: Business-to-business eCommerce
B2C: Business-to-consumer eCommerce
C2C: Consumer-to-consumer eCommerce
C2B: Consumer-to-business eCommerce
Within each of these classifications any of the business models could work, depending on the product or service being sold.
How can I run my eCommerce business internationally?
Setting up your international eCommerce business follows similar steps as establishing any eCommerce business, with a few differences:
Expand your scope of market research
Dive into laws and regulations for the region
Make sure your online store and marketing are localized
Take extra care of fulfillment and shipping
Ready to take the leap into the world of eCommerce? Launch your online store today.
Marketing Writer, Wix eCommerce
Geraldine is a marketing writer for Wix eCommerce. She uses her broad experience in journalism, publishing, public relations and marketing to create compelling content and loves hearing user success stories.