Blog Posts, eCommerce

Start an eCommerce Business the Right Way – All-in-One Guide



Start an eCommerce Business the Right Way – All-in-One Guide

Ali Ladha, CPA, CA / May 26, 2023

Start an eCommerce Business the Right Way – All-in-One Guide

With advanced technology powering online stores, buyers and sellers are now learning how to execute business transactions from the comfort of their homes. 

This and many more have birthed the concept of eCommerce. 

Savvy entrepreneurs have moved from the conventional brick-and-mortar business model to eCommerce. But this radical shift has caused more competition in the eCommerce world. 

Before jumping in, you must fully understand how eCommerce works and the best ways to set up an eCommerce store. This article explains it all.

How’s eCommerce Different From a Physical Store?

Many factors differentiate eCommerce from physical (brick-and-mortar) stores, the most important difference being location. eCommerce stores are online and, as such, can function from anywhere, while physical stores need physical offices to function. 

E-commerce store holders can optimize their product descriptions, social media marketing strategies, checkout process, and marketing campaigns to increase conversion rates. 

On the other hand, physical stores require physical efforts from the owner to win and convert potential customers. Thus expenses are typically channelled to areas like rent and construction. 

Online businesses have better reach than physical stores because owners can reach potential customers worldwide. Unsurprisingly, even physical stores are beginning to employ online strategies to increase their reach.

Online stores offer entrepreneurs an easier and more accessible alternative to selling their products to people without geographical limitations.

What is an eCommerce Business?

An eCommerce business has its establishment and operations on the Internet. This means that it caters to the needs of its customers via the Internet. 

E-commerce businesses vary in size and scope. So it can be a small store with a home-based operation or a multimillion-dollar enterprise. A successful eCommerce strategy allows entrepreneurs to reach audiences worldwide without spending so much on overhead costs. 

The two most popular eCommerce business models are:

  • Business to consumer (B2C)
  • Business to business (B2B)

B2C sellers focus on selling consumer goods to end-users, while B2B sellers sell to other businesses

Why Start an eCommerce Business in 2023?

Studies recorded 2.5 million eCommerce businesses in the U.S. in 2022 alone, serving over 280 million online shoppers. E-commerce is growing and thriving. 

With these numbers, it’s unsurprising that more entrepreneurs are opening online stores daily. The good thing about selling things online is that you can do it full-time or as a side gig. 

Here are some of the reasons you may want to venture into eCommerce:

  • To earn more money 
  • To become your own boss, therefore, having control over your work time
  • Work from anywhere, as long as you have an internet connection 
  • To enjoy the potential for quick growth
  • The ability to incorporate other products into your store to scale revenue and profits.

How to Launch Your eCommerce Store – Step-by-Step Guide

You’re probably wondering how to start your eCommerce store. What if we told you it’s easy? You need to understand the process, and you’ll be ready. Let’s guide you through creating your eCommerce store from scratch. 

Define your eCommerce business idea

Like every good thing, a successful eCommerce store start with excellent conceptualization and adequate planning. You need to put your ideas together until it makes sense. 

Your online business idea can include selling physical or digital products. It can also include selling a professional service online. Whatever the case, you want to create a clear pathway to what you want to do. 

This includes defining your business model and writing a detailed business plan outlining your goals and how to achieve them. 

The process involves a lot of research and questions. This is where you’ll need to find out who your ideal customers are and how to reach them. You’ll also need to find out the type of permits and licenses you need, how to get them, and the cost of setting up your business. 

Your business plan should be detailed enough to provide this information before you move to the next step.

Finalize Your eCommerce Business Plan

A detailed business plan will align your thoughts and keep you focused on the important steps to take. It provides a clear list of actions toward set goals and will keep you from getting off track. 

At this point, you should know where you’re headed with your online business. You have a brand name, a product niche, and a well-defined target market. It’s an excellent time to begin planning operations. Sit back, create a new business plan, and determine your operational needs. you can also hire an expert to create a professional business plan for you. 

Start Setting Up

Once you have a clear roadmap of what you want to achieve with your eCommerce business, the next step is to take action. Use the following steps to set up your eCommerce business. 

  • Name your business 

Before choosing a name for your business, we recommend consulting following the due process of business name registrations so you don’t choose an already-existing business name. Be sure to check the availability of your potential business domain name. 

  • Apply for an employer identification number 

Although this is not a critical step from the start, it makes sense to do it now before business operations get too cumbersome and you won’t have the time for it. 

  • Get permits and licenses 

Different locations require different permits and licenses. Visit the right offices to determine which permits and licenses apply to your state.

  • Choose an eCommerce platform

Several eCommerce platforms are available to entrepreneurs. You must pick the one best suited for your business model and goals. Some of the most common eCommerce platforms are Shopify, BigCommerce, WooCommerce, WordPress, etc. Some platforms are better suited for small businesses, while others are better for businesses with large inventory categories. 

  • Product sourcing/development

Now that your store is well-planned and ready, it’s time to have a product. If yours is a physical product, working with a manufacturer or producing it yourself makes sense. However, you’ll need to review your business strategy in-depth to know which works best for you. 

For example;

  • Do you intend to order bulk products and keep a robust stock inventory?
  • Do you want to try dropshipping, having manufacturers produce and ship the product when the order is placed? 

Each of these models has its pros and cons. So you should review them before deciding on a suitable model for you. 

If, in your case, you’ve started the website to sell professional services, you might just creatively list and explain your services on the website. Still, you must determine how much you’ll charge for each service based on overhead costs and how many clients you can service daily.

Promote Your eCommerce Business

Now that you’ve successfully launched your online business, it’s time to invest in e-commerce marketing. Although the process of finding the right e-commerce marketing strategy is somewhat complex at the start, you’ll soon find your way around it. 

The secret to an excellent e-commerce marketing campaign is finding the right channel that connects your target audience to your product. It could be Facebook, Instagram, LinkedIn, Google search, etc. 

Once you decide on a channel, perfect your marketing strategy until acquiring a new customer costs less than you earn from each sale. 

We recommend aiming for the infinite loop of spending less than you earn daily. Start using free marketing channels to promote your products and create awareness before using paid channels. 

Additionally, learn to reinvest your profit into readjusting your marketing strategies, as this is not the time to start taking money out of the business. Instead, concentrate on studying your advertising ROI and how it is affected by each new strategy.

Understand Financial and Inventory Management

This is when to consider how you intend to manage your business finances. Calculate your likeliest break-even point, but in unit sales and in time. Your business is an investment of resources, and you want to get returns. It helps to hire a financial expert to take care of the numbers, especially if this is your first eCommerce store. 

These experts typically offer multiple financial services like bookkeeping, tax, budgeting, and payroll and even help you refine your business model to position you to make more and spend less. 

The value of a professional financial manager in this critical stage cannot be overstated. You don’t want to fail in your first year due to mismanagement.

Another critical aspect of e-commerce is inventory management. There are many available options beyond storing physical products in your garage. However, the most popular is using a fulfillment center to handle inventory. These fulfillment centers have warehouse spaces where they store your inventory until you’re ready to ship them to your customers.

At this point, you also want to find the right inventory management software for your business. Many eCommerce solutions like Shopify have inbuilt inventory management features that make it easy. However, if you want a stand-alone solution, there are several options to explore. 

Solid inventory management software can help you better organize your business, especially with large inventories. However, it takes a good level of experience to incorporate inventory software.

Final Thoughts

You can launch an eCommerce business in five easy steps;

  1. Define your business idea
  2. Create and finalize your business plan
  3. Complete registration and set up processes
  4. Market and promote your business
  5. Get Financial and inventory management

Starting a successful eCommerce business can be challenging. It requires motivation, passion, strategy, and a stroke of luck. But it’s doable if you apply these steps and hire the right experts.

The accounting and tax information provided in this post does not constitute advice and is meant to be for general information purposes only. The information is current as at the date of this post and does not reflect any changes in accounting and/or tax legislation thereafter. Moreover, the information has been prepared without considering your company or personal financial/tax circumstances and/or objectives.

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