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How to start an eCommerce business in 10 steps

how to start an eCommerce business

Learning how to start an eCommerce business can be a complex endeavor. To put your business on the path to success, you need more than an idea; you need a plan. This post provides a step-by-step guide to the process of starting a business, from initial inspiration to the first online sale and beyond. 

You have a business idea and you’d like to build it online. After all, eCommerce is big and the market is growing; with a tap or two on your phone, you can place orders for everything from dog treats to jeans to meal planning kits. And with the variety of ecommerce tools available, building an eCommerce website and an eCommrce business is easier and more accessible than ever.

Ready to start selling? Build your eCommerce website with Wix.

What is an eCommerce business?

An eCommerce business is a company that sells products or services online. With an online store, you can serve customers around the world, and buyers can browse and make purchases at any time of the day. 

Ecommerce sales have increased faster than other retail businesses in recent years. In the third quarter of 2023, for example, the U.S. Department of Commerce reports that retail eCommerce sales grew 7.6% year over year to $1.8 billion, compared with 2.3% growth in the overall retail sector. In the past 10 years, eCommerce has grown from 6% to more than 15% of all retail sales, according to the Department of Commerce.

Given this growth, it’s no wonder that merchants of all types now view eCommerce as an essential part of their business. The number of eCommerce websites worldwide nearly tripled between 2019 and 2023 to 26.5 million.

It’s worth noting that while some eCommerce sellers operate exclusively online, others use their websites to enhance and complement offerings at physical store locations, manufacturing plants or offices. Business-to-consumer (B2C) eCommerce serves individual retail shoppers, while business-to-business (B2B) sellers offer products or services to other companies. 

Learn more:

start an ecommerce business - types of businesses

How to start an eCommerce business

As with any entrepreneurial venture, careful planning and preparation are essential to your success. Here are the steps to follow to get started with your own eCommerce business: 

01. Identify your online business niche

While it may seem counterintuitive, your chances of making it big in eCommerce are better when you start by thinking small—that is, when you start by defining a niche for your business.

While it’s helpful to study the general trends, broad categories can be crowded with competitors. As one example, health and personal care is slated for growth to over 13% of the eCommerce market through 2027 but trying to compete with major drug chains or beauty retailers can prove difficult (if not impossible) for new players. 

Instead of targeting a large, general market, target a niche market. For instance, you could start an eCommerce business that focuses on organic skin care for teens, with a selection of cleansers, moisturizers and sunscreen for acne-prone skin.

It helps to have expertise in your chosen niche. You’ll spend a lot of time researching the right products or services to provide. You’ll dive into every detail of the business. And, at least at first, you’ll likely manage day-to-day operations, so you should be passionate about what your ecommerce business idea

start an ecommerce business - choose your niche

02. Do market research

Once you’ve pinpointed an ecommerce business niche or idea, it’s time to research and evaluate your potential market. Not only will you learn more about your audience but you’ll also gather the quantifiable data you need to make revenue projections and calculate costs. To understand the market, consider these strategies:

  • Identify your audience type: Are you catering to corporate professionals or individual consumers? The audience you have in mind will help determine the type of business you intend to operate. While many eCommerce businesses serve exclusively B2B or B2C customers, some sellers serve both. For example, a gourmet food seller that typically sells to individual consumers may offer corporate gifting services for the holidays. Or, an apparel retailer may provide customization options for bulk orders, enabling companies to print custom uniforms that include their logos. Get familiar with the main ecommerce KPIs before getting started.

  • Size your market: Build a profile of your ideal customer based on their demographics, geographic location, interests, spending habits and any other salient details. Then use that profile to guide your research into census and market data to arrive at realistic numbers. Your goal is to understand your potential customers better as you gauge the ultimate potential for growth for your eCommerce business. These benchmarks will also help you forecast revenue and demand as accurately as possible until you begin generating sales and have an earnings history to use as a guide.

  • Immerse yourself in the trade: Follow trade media and individual thought leaders in your chosen category and read up on overall eCommerce trends via publications. The Wix eCommerce Blog is a great place to get started.

  • Study the competition: Dive deep into competitor websites, sign up for their email updates and track news coverage on your competitors. Pay attention to how they market themselves, both online and offline. If you can dig up financial reports or earnings, that information can guide your own forecasts and projections.

  • Ask your audience directly: Use surveys and polls to gather information from your potential customers. Hang out in relevant social media groups and forums and attend in-person events where potential customers congregate. 

03. Select the right product mix

Your niche and your target market will guide decisions about which products to sell or services to offer. Consider, for example, whether your audience would be receptive to curated kits or gift sets, and whether seasonality is a factor.

Price and profit margin are essential to consider, as they determine the potential for your business to scale. A break-even analysis will help you figure out how much of each product you need to sell to recoup your initial costs and begin making a profit. 

When selecting products to sell, you’ll want to consider factors like: 

  • Product life: Know your expected product life cycle. This will help you create a multi-year plan for your eCommerce business. Some big-ticket items are built to last decades; buyers who ordered a sofa may not return to your site immediately, unless you offer complementary items. On the other end of the spectrum, replenishable goods like pet food or beauty supplies may inherently attract repeat purchases. For these, you may want to offer bulk discounts or start a subscription box business to further encourage repeat business. 

  • Price expectations: While offering a variety of price points can broaden your appeal with buyers, if your audience is used to purchasing luxury goods, then you may want to limit your selection to top-of-the-line offerings. If you’re a B2B seller, consider whether your corporate clients expect you to offer items in bulk at wholesale prices. 

  • Cost of goods sold (COGS): As you select products, consider overhead costs and logistics, such as whether items require fancy packaging or “white-glove” delivery and installation. Digital products, by contrast, have no shipping or physical procurement requirements. You can calculate COGS with the following formula: beginning inventory + purchased inventory − ending inventory.

Once you have guidelines in place, dive into the specifics. If you need inspiration and want to see what’s trending, turn to competitor websites or search best-selling items on marketplaces like Amazon. Ecommerce tools like Google Trends and Algopix can also help identify hot products. Or, use your favorite SEO or keyword research tool, like Semrush, to find frequently searched products, validate a product concept and/or discover which brands are most frequently searched in your market.

start an ecommerce business - ecommerce product mix

04. Secure product sources and suppliers

Once you have specific items in mind, you’ll need to determine the right product sourcing method. Perhaps you create all of your products by hand and want to keep it that way. Or, maybe you’re interested in dropshipping with a platform like Modalyst, Wix’s native dropshipping solution.

Depending on your budget, resources and preferences, you have a few options to choose from:

  • Make goods by hand yourself: Quality is fully within your control, but it can be tricky to scale your business or keep up with high order volumes. 

  • Hire a manufacturer: You source products from a third-party manufacturer but sell them under your brand name. Items are made to your specifications, and you retain control over production, pricing and branding. You can make goods efficiently in large quantities, but good communication with your production partner is essential to ensure quality is up to snuff.

  • Partner with name-brand manufacturers: If you seek products from specific manufacturers or designers, you can contract as an official reseller or dealer and offer those products through your eCommerce site. While your brand will get a boost from the affiliation, you’ll need to price items low enough to compete with other sellers, and some brands may have policies around a product’s minimum advertised price (MAP). Both can cut into margins. Retailers can also create their own branded merchandise via private label lines in partnership with manufacturers, straddling the manufacturer/retailer divide. Costco’s Kirkland line or Amazon’s AmazonBasics are just two examples of this strategy.

  • Source from wholesalers: Wholesale suppliers offer catalogs of goods, often from multiple manufacturers. You can find inexpensive products to buy wholesale, which gives you leeway in pricing. On the flip side, products sourced overseas may bring additional delivery costs and tariffs as well as the expense of inventory and warehousing.

  • Work with dropship suppliers: Dropshipping shifts traditional retailer responsibilities to suppliers, enabling you to launch an eCommerce business with minimal upfront investment. You handle the marketing and choose your products, but incoming orders are routed directly to your suppliers, who are responsible for shipping items directly to your customers. You never have to buy and hold inventory, run a warehouse or ship items yourself. On the flip side, you have less control over product quality and delivery, putting your brand in a vulnerable position if suppliers slip up. Ghost commerce takes it a step further, where the supplier ships items, yet you maintain your brand’s image and handle customer relations.

start an ecommerce business - sourcing dropship products

It’s important to weigh your options when choosing a product sourcing method, and truly evaluate all of them carefully. Before you make a definitive decision, ask yourself the following questions:

  • Do you want to customize or brand your products? Because wholesale suppliers produce in bulk, it may be hard to tweak selections to match your criteria. As an intermediate option, some suppliers offer white labeling, which allows you to sell ready-made products with your logo and branding. And if you want to personalize products further, explore print on demand. This is a subset of dropshipping that allows you to offer custom designs on a selection of products created to your specifications as orders come in. 

  • How much capital do you have to invest in inventory? If you’re working with limited startup funds, dropshipping can be a more economical route for launching your brand. 

  • How complex are your warehousing and fulfillment needs? If you offer recurring subscription shipments, corporate gifting services or bulk order capabilities, you may need to manage logistics yourself to ensure deliveries are accurate and on time. 

  • How do your competitors source their products? While you don’t want to outright copy your competitors, research as much as you can about their processes to identify any potential differentiating advantages they have. Do they have exclusive dealer rights to brand-name merchandise you want to stock? Do they offer products sourced exclusively from sustainable suppliers? 

  • What is your backup plan if one of your suppliers has issues? Nearly four in 10 shoppers have abandoned online purchases due to items being out of stock, so take proactive steps to avoid disappointing buyers. Find backup sources of widely available wholesale products, and cover contingencies in your contracts with suppliers. 

  • How will you scale your business? Manufacturing or making your own products gives you the greatest amount of control, but they also make it difficult to meet rising demand. You may need to contract with a new factory altogether, hire staff or find other expensive solutions. For a more flexible option, you may want to consider dropshipping or wholesaling. 

  • What are your audience’s expectations? Buyers are prioritizing sustainability more and more. In fact, U.S. consumers are reportedly willing to pay an 11% premium for products with reduced environmental impact. If your customers expect ethically sourced products, include those factors in your sourcing criteria.

05. Write a strong business plan

Document all the research and planning you’ve done up to this point with a formal eCommerce business plan. Not only does a business plan capture your work in a comprehensive and detailed format, but it also provides a touchstone for keeping your day-to-day operations focused on your mission. The strongest business plans keep teams aligned during launch and lay the foundation for attracting the right business partners and investors. 

While the individual components of a business plan can be tailored to your unique priorities, you should include the following elements to be sure the document is relevant and useful: 

  • Mission, description and unique selling proposition (USP): Your business plan should outline the reason your company exists, summarize at a high level what it does and identify what sets your brand apart from others. This information helps you stake your claim in the marketplace and guides future decisions about priorities. In particular, it’s critical to flesh out your unique selling proposition. Your USP guides your product positioning, helps you to stand out from the competition and identifies partners and consumers who share your values. For example, “plastic-negative” water company and Wix merchant Mananalu differentiates its products by supporting a larger cause. Mananalu water is packaged in refillable aluminum bottles, which are easier to recycle than plastic. In addition, each time a consumer buys a Mananalu water, the company pledges to remove a plastic bottle from the ocean waste stream. Shoppers can even buy further “plastic offsets” to support the company’s cause. Climate Neutral certification and “1% for the Planet” membership provide third-party credentials attesting to the company’s commitment to sustainability.

start an ecommerce business - product positioning

  • Market and SWOT analysis: Summarize your market research and describe your company’s position relative to the competition. Provide an analysis of strengths, weaknesses, opportunities and threats (SWOT) to pinpoint your areas of greatest potential growth. A realistic analysis will help maintain focus not only as you launch, but as you scale and add new offerings. 

  • Your offering: Use your previous research and planning to create a detailed description of your products and/or services, product sourcing and pricing strategy. Describe how this offering aligns with your audience’s needs. In addition, describe your plans for customer service and order fulfillment as crucial components of the brand experience.

  • Marketing plans: Describe how you plan to introduce your eCommerce business to your target audience, including which digital channels you’ll prioritize and which technologies you’ll rely on to execute marketing tactics.

  • Financial forecasts: Using your previous research, build a model forecasting expenses, revenues and growth. To ground your projections in reality, use real-life results from competitors or other businesses in your field. Consult trade publications and category experts for growth benchmarks and formulas to incorporate.

  • Funding sources: Describe how you’ll secure the startup resources you need, whether through your own savings, private equity, crowdfunding or investors. If you’re presenting your plan to potential funding sources, customize the information to explain the rationale behind your request and describe the benefits of funding your business.

start an ecommerce business - business plan

06. Set your business name and legal structure

After you put your business plan together, you’ll need to set up the actual legal framework to support your business.

Start by picking a business name that reflects your brand identity and USP. If you need some inspiration, try researching popular search keywords, brainstorming names related to your niche or playing with different spelling variations. Wix’s free business name generator can provide more ideas. As you narrow the list, check that the names are:

  • Easy to read, say, spell and remember

  • Search-friendly

  • Available as a website domain 

  • Not being used by another business (in the U.S., individual states maintain registries of businesses you can check)

Once you have your business name figured out, you’ll need a logo. You can create one yourself, work with a graphic designer or try out the Wix logo maker for free.

Next, you’ll want to choose the right legal structure for your eCommerce company—a key step in starting a business of any type. Your overarching business structure will define your liabilities, tax status and more.

Consult with legal professionals and accountants to determine whether a sole proprietorship, partnership, limited liability company (LLC) or corporation is right for you. In the U.S., you’ll also need to register your business and apply for a federal employer identification number (EIN) in order to pay taxes, open a business bank account or obtain financing. You can do this through the IRS’s website for free.

how to start an ecom business, common eCommerce business structures

07. Choose an eCommerce platform

At this point, you’re ready to bring your brand to life through your own website. 

The first step is to choose the best eCommerce platform for your needs. There are dozens of website builders on the market, so evaluate your options carefully. To ensure your eCommerce website development goes smoothly, look for a platform that provides:

  • Professional aesthetics: Wix offers hundreds of specialized online store templates you can customize to reflect your brand.

  • A domain name: You’ll need a domain name of your own to match your business name.

  • Enterprise-grade security: Wix offers a secure infrastructure with 24/7 security monitoring to protect against data breaches.

  • Top performance: It’s critical to have web hosting with the capacity to support a speedy, high-performance site on both mobile and desktop devices, even during peak sales periods.

  • Built-in analytics: Wix’s analytics dashboard helps you track key metrics, such as website traffic and generate historical performance reports.

  • Customizable shopping cart pages: A customizable shopping cart page will ensure your branding and messaging are consistent throughout the purchase process.

  • Variety of checkout options: Flexible eCommerce checkout options should support whichever payment method your customers prefer. Wix Payments is an integrated payment gateway system that can connect to in-store point-of-sale (POS) registers, too.

  • A content management system: A content management system (CMS) should ideally support robust product information and brand-building features such as blogs, how-to articles and buying guides.

  • Back-office functionality: Look for integrated tools that help automate back-office functions, like bookkeeping and order fulfillment. Wix offers tools for tasks like inventory management, invoice creation and more.

  • A reasonable pricing model: Your platform’s pricing model should make sense financially for your business, both now and in the future. As you research, pay close attention to recurring fees and special surcharges so you understand the total cost. With Wix, you can build a website with eCommerce functionality for as little as $27 per month.

Get ready for launch. Sign up for Wix today.

start an ecommerce business, Wix online store templates

08. Create your online store

Regardless of which eCommerce platform you choose, it’s important to research the best practices for designing an online store. Knowing how to make a website includes the following best practices:

  • Be clear about what you sell: Make it easy for customers to understand your business and products by using consistent design elements and language throughout the site. Avoid jargon-heavy or overly cutesy names for product categories and individual items; use accurate language that matches the search terms your audience enters. Once shoppers are ready to buy, don’t beat around the bush; use clear calls-to-action like “Shop Now” or “Buy Now.” 

  • Invest in high-quality imagery: A picture is worth a thousand words, and that’s especially true in eCommerce. Buyers can’t physically touch and try products, so photos and videos help convince them to have faith and click “Buy.” High-quality photos that clearly show details and features are essential, while videos demonstrate products in action and can be repurposed for social platforms like TikTok. 

  • Showcase user-generated content (UGC): Buyers trust others like them to communicate authentically about products and services, so find ways to spotlight customer reviews, user-submitted photos and social media comments. The same holds true in the B2B world; 86% of businesses consider verified reviews a critical factor in purchase decisions when deciding vendors.

  • Embrace mobile: Transactions on mobile devices already account for four in 10 online sales, and an even higher share of product research occurs on smartphones thanks to their “anywhere, anytime” availability. Your eCommerce site shouldn’t just be mobile-compatible. You should assume the majority of interactions with your brand will occur on the go. Make sure that pages load quickly even when wi-fi isn’t available, and that images render clearly on small screens.

start an ecommerce website, branding

09. Manage your eCommerce business finances

Once you’ve launched your eCommerce business, you need the tools to track sales, profit and growth. These eCommerce money management tips offer best practices to ensure you have adequate cash flow from month to month and can keep your business humming along. 

Three things in particular are worth monitoring closely:

  • Plan for seasonality: Holidays, annual weather patterns and other cyclical influences can cause your income to spike and dive. For example, in the U.S., the final quarter of the year can account for more than 30% of annual sales for some categories of retailers. Other cycles might be particular to your industry: if you offer bookkeeping or accounting services online, for example, your peak season might end on April 15, the filing deadline for personal income taxes. Accurate forecasting can help predict when sales will pour in so you can manage cash flow to cover leaner months.

  • Get a handle on fulfillment costs: If your eCommerce business involves delivering physical goods, be prepared to spend 15% to 20% of net sales on fulfillment costs. Of course, if you provide a virtual service or a downloadable app or software product, you can avoid these costs altogether. If you use dropshippers to fulfill orders instead, you won’t carry those overhead costs yourself, but the suppliers will likely pass them on to you as part of your fees.

  • Guard against costly chargebacks and returns: It’s estimated that 17.6% of all online sales are returned. Add in the cost of reverse logistics—where goods are returned to stock for resale or simply discarded—and you’ll want to prevent returns in the first place. Try to create detailed product pages that include fit and sizing guides, compatibility information and materials. In addition, bolster your customer service content to address common questions before purchase; communicate shipping timeframes so consumers don’t cancel orders in transit if they don’t arrive in time. Finally, set a return policy you can actually afford.

Read more: SMB online commerce for acquiring banks and merchant acquirers.

start an ecommerce business, manage finances

10. Market your eCommerce business

Launching your online store is an achievement, but by no means can you “set it and forget it.” With so many eCommerce websites available, you need to promote your brand to attract new buyers and create incentives that keep customers coming back.

As you allocate your marketing budget to sell more products online, focus on the digital channels you know your audience uses. Follow these strategies: 

  • Boost word-of-mouth buzz: Encouraging customers to create and share reviews is just the start when it comes to building word-of-mouth advocacy for your brand. Create promotions that reward customers for referring friends and family, and post share-worthy takes and exclusive offers on the social media networks that your customers use most. To further boost visibility on social media, consider working with micro-influencers. These personalities may not have millions of followers, but they have devoted audiences whose interests can align closely with your brand offering.  

  • Prioritize SEO: More than half of consumers rely on search engines as their top tool for shopping research, so stay up-to-date on best practices for search engine optimization to give your brand the best possible chance at visibility. Develop rich content, optimize for mobile devices, maximize site speed and earn inbound links to improve your rankings. 

  • Build loyalty: While it’s natural to devote attention to finding new customers during launch, you also need a plan for keeping the customers you already have. It’s less expensive to build a loyal following than to continually churn through one-time purchasers, and repeat customers tend to outspend new buyers. Consider creating a loyalty program that rewards buyers with perks and exclusive offers based on how much they spend.

Drive more sales with Wix eCommerce marketing.

start an ecommerce business, marketing

How much does it cost to start an eCommerce business?

The cost of starting an eCommerce business depends on many factors, from the type of products you sell to the features you need to power your online store. But when all is said and done, you could spend anywhere from $5,000 to $50,000.

That range may seem high—in fact, you may wonder if you could drop a zero from the lower end of the scale. Dropshipping can eliminate upfront inventory and fulfillment costs, and platforms such as Wix offer inexpensive eCommerce site hosting plans and design services. But even with this minimalist approach, you still may need to factor in costs for things like marketing, technology and software, legal and administrative fees, and more.

No matter how much startup capital you have at your disposal, it's important to do your research and plan carefully before starting an eCommerce business. This will help you avoid costly mistakes and increase your chances of success. The potential costs to consider include: 

  • Business formation and licensure: Setting up your business structure and governance, securing any required licenses and filing registration and tax paperwork can add up to several billable hours from legal and accounting professionals. 

  • Ecommerce platform: The technology behind your eCommerce website is all-important and should support integrated shipping, payments and marketing from one unified dashboard. Depending on the platform, each module may be priced separately, or you may be charged a single annual fee for all-in-one service.

  • Products: The upfront cost of your products will vary depending on what you're selling online and which sourcing method you choose. If you hold inventory, add the overhead expense of storage or warehousing space.

  • Design, eCommerce photography and copywriting: As you set up your online store, you may wish to enlist professional help with the website design, product photos and written content. If you’re launching in more than one country, you may need to find translation services to ensure product copy is localized accurately.

  • Customer service: Responsive service is a must for building your brand’s reputation. Make a plan to personally handle incoming questions and requests or hire staff to ensure adequate coverage.

  • Logistics: If you want to handle order and ecommerce management yourself versus outsourcing to a dropshipper, you need to invest in packaging, staff to pick and pack orders, and contracts with freight carriers or third-party logistics providers to handle deliveries.

  • Marketing: Even if you don’t allocate budget to paid advertising, you’ll still need to invest hours into setting up social media accounts and optimizing your website for search engines.

Why start an eCommerce business in 2024?

U.S. eCommerce sales are expected to grow 10.5% year over year in 2024, so there’s no time like the present to get started. Here are just a few reasons to start an eCommerce business this year:

  • The barriers to entry are (relatively) low: While launching an eCommerce business successfully does take some initial investment, it’s far less expensive to build a brand online. In the past, shopping technology was prohibitively expensive and required a professional IT staff to manage.

  • You can earn a profit (relatively) quickly: While you won’t generate millions overnight, the relatively low startup costs and efficiencies of scale you can access via dropshipping means that you may be operating in the black within a year to 18 months. While the size of your profits depend in large part on your category and your wholesale product costs, relevant, high-quality products and superior service can help justify the higher prices that lead to bigger margins.

  • You can access rapidly-growing global markets: As much as the U.S. represents a huge eCommerce market, other parts of the world are seeing even more exponential growth—and you can sell to these nascent markets without needing a physical presence or local staff. While China is dominant in terms of eCommerce market size and penetration, countries that are potentially more accessible, such as Canada, Mexico and the U.K., are all top global targets to consider.

  • You can run your business your way: As the world discovered during the COVID-19 pandemic, digital businesses can be managed remotely. You can route orders to dropshippers and respond to customer service queries on your own time, anywhere—a stark contrast with traditional retail, which tethers you to a store location and requires staff to serve customers during set hours. 

why start an ecommerce business

How profitable is an eCommerce business?

The profitability of an ecommerce business is dependent on many factors, including the type of industry and niche you choose. When trying to determine how profitable this business type might be, or how long it might take to reach profitability with an ecommerce business you'll need to consider the following:

Industry and niche

Different industries and niches have varying profit margins. For example, businesses selling high-value products or unique items with low competition, such as luxury or handmade goods, may have higher profit margins than those selling low-priced commodity items such as stationary for example.

Business model

The business model you choose, such as dropshipping, wholesale or manufacturing, directly impacts profitability. Dropshipping, for example, means lower overhead costs especially at the start but may mean lower profit margins. Manufacturing products requires more upfront investment but can also mean higher profit margins especially long term.

Operating costs

Keeping your operating costs low, including website fees, marketing expenses and shipping costs, is crucial for maximizing profitability with an ecommerce business.

Marketing and sales strategies

Effective marketing and sales strategies that drive traffic and conversions are essential for generating revenue from your online store. This also means controlling your Customer acquisition cost (CAC) - the cost of acquiring new customers should be lower than the lifetime value of a customer to ensure profitability. At the same time, increasing your average order value by offering product bundles, upselling or cross-selling can boost the profitability of your business. This also means focusing on customer retention and building strong customer relationships for repeat customers.

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