How to Start an Ecommerce Business

Written by Merchant AlternativesApril 14, 2021
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More products are being sold than ever before, thanks to the booming world of eCommerce. There has never been a better time for one to start their own digital storefront.

But it’s not easy.

Building an eCommerce business takes time and effort — and a little capital investment. It requires many steps to be taken, which can be altogether quite confusing.

That’s why we’ve put together this ultimate guide. It’ll take you through a step-by-step process, teaching you how to start an eCommerce business. We’ll cover such issues like:

  • How to find viable products to sell
  • How to perform competitor research
  • How to create your eCommerce store
  • How to market your eCommerce store
  • Frequently asked questions

Excited to get into this? Let’s go.

Ecom Product Research

The first step you must take in order to start an eCommerce business is to identify the products you wish to sell. This is often the most difficult and challenging step, which is why it requires your full attention.

Product research will involve 3 key steps:

  • How to find a good product to sell
  • How to evaluate your product idea
  • How to obtain your product idea

How to Find a Good Product to Sell

When it comes to finding a good product to sell, it’s usually best to start with your hobbies and interests. If you have expertise in a specific niche, this’ll ensure you will have a greater chance to succeed.

Listed below are 3 strategies you can utilize to find a good product to sell.

1. Address Customer Pain Points

An easy way to find a product that sells is to address a customer pain point. People buy things for a purpose, to solve a problem. Aspirin sells because people want relief from headaches. Vacuum cleaners are sold because they provide an easy, efficient way to clean a house.

These pain points will largely be found from complaints, criticisms, and bad experiences with existing products. It’s highly unlikely you’ll solve an original problem, or reinvent the wheel. Moreso that you’re looking for ways to improve existing products and ideas.

2. Get In Early on Trends

Acting fast and getting in early on a trend will position you for eCommerce success. It ensures you get a strong market share before too many others enter the space. As the saying goes: “the early bird gets the worm.”

To stay ahead of the curve regarding trends, use these tools:

You can also use on-site social media analytics suites to track and measure mentions and hashtags.

3. Look For Product Opportunities From Keywords

Another way you can find product opportunities is to look at keywords. People typically use Google to find, research, and buy products. Before they end up on Amazon, they’re on a fact finding mission on Google.

By looking at the search volume and CPC of various keywords, you can identify what products people are buying. This strategy will require you to have some technical SEO knowledge, specifically regarding keyword research.

How to Evaluate Your Product Idea

So you’ve identified a product you wish to sell — but how do you know if it’ll actually sell? Evaluating your product idea is crucial, which is the next step we must take.

Below you’ll find 3 strategies you can use to evaluate your product idea.

1. Research Your Product Competitors

When it comes to starting an eCommerce business, competitor research is vital. In fact, we’ve dedicated an entire section to it further below.

But, for the purposes of evaluating your product’s commercial potential, it’s invaluable. We’ll briefly cover it here.

You can search for your product on Amazon and see what comes up.

ebay is also a good place to check as well.

Your product might not be sold on those marketplaces. If that’s the case, try doing a simple Google search. Try the following search queries:

  • “Your product” + buy
  • “Your product” + purchase
  • “Your product” + store
  • “Your product” + shopify
  • “Your product” + sale

These methods should give you a clear idea regarding whether or not your product will sell.

2. Research Your Product’s Existing Demand

If you want to assess the commercial potential of your product, you should obviously see if it already has demand.

NOTE: You may have already done this when you found your product. This step is for those that found their product via alternate methods.

We can do this by using Google Trends.

It allows you to see how popular a search query is within various locations, regions, and countries. It’s a fantastic free tool to see if your product is relevant in your intended selling regions.

Google Keyword Planner can help you go further in depth on these search queries.

It’ll give you extra information that Google Trends doesn’t, such as commercial intent.

3. Create a Crowdfunding Campaign

Creating a crowdfunding campaign is a good way to gauge the market to see if there’s demand for a product. It’s also a convenient way to get funding if you lack it.

The best crowdfunding platform is Kickstarter.

Indiegogo is also very good.

How to Obtain Your Product

You’ve identified a product, and evaluated it, ensuring it’ll sell — now you need to find out how you’ll obtain it. This will obviously vary, depending on what exactly your product is. But regardless of your unique situation, you’ll need to find a manufacturer.

What Is a Manufacturer?

A manufacturer is someone who uses raw materials to create your product. These are businesses that sell to retailers, consumers, and wholesalers.

Manufacturers tend to only work to create products with a particular raw material. An example would be a glass manufacturer that creates various different glass products, like cups, and vases.

Manufacturer vs. Supplier vs. Dropshipper

When it comes to obtaining your product, it’s important we discuss the difference between a manufacturer, supplier, and dropshipper. They each are different eCommerce business models. Simply put, here’s the difference:

  • Manufacturer: someone who creates your product from raw materials. All products are initially made by a manufacturer.
  • Supplier: someone who buys an existing product from a manufacturer, and sells it to retailers. They buy in bulk from the manufacturer, and sell to retailers for profit. Suppliers can also be manufacturers.
  • Dropshipper: someone who orders pre existing products for you, holds inventory, and fulfills orders. It’s a way to outsource as many processes as possible.

If your product is original, then obviously you’ll need to find a manufacturer yourself. If however you’re selling an existing product, you can use either a supplier or dropshipper. You’ll need to do your own analysis and decide which is right for you.

How to Find a Manufacturer

There are 5 basic ways you can find a manufacturer to create your product:

  • Looking at NAICS codes
  • Using Alibaba
  • Using online directories
  • Searching on Google
  • Getting a referral
NAICS Codes

NAICS codes — North American Industry Classification System — are a way to identify products, based on industry. It’s a government system that makes it easy to identify manufacturers.

You can use this online government directory to find NAICS codes in the USA.

Alibaba

Alibaba is an extremely popular online platform that connects you with manufacturers from China. It’s one of the best ways to get cheap, affordable sourcing for your product. Aside from creating custom products, you can also buy existing ones, too.

Online Directories

Online you can find a bunch of free directories that have listed thousands of different manufacturers. There are ones for the domestic USA, as well as overseas.

Domestic USA online directories include:

Overseas online directories include:

Google Search

One of the easiest ways to find a manufacturer for your intended product is to simply head to Google Search. Try entering in these search queries:

  • “Your product” + manufacturers
  • “Your product” + wholesale
  • “Your product” + wholesaler
  • “Your product” + distributors
  • “Your product” + suppliers

You’ll probably have to look beyond the first page, as lots of these manufacturers have old websites.

Referrals

If you have any industry connections, you can simply ask for a referral for a manufacturer. Try asking someone who’s had success in a particular industry, niche, or with a particular product. If you’re lucky, they might share their sourcing contact with you.

You can check out various social media groups, like on Facebook. These platforms have made networking and referrals much easier.

Domestic vs. Overseas Sourcing

One of the biggest decisions you’ll have to make is whether you go with domestic or overseas manufacturers. Each has its own benefits, but it’s usually good practice to have both, in case your main one falls through.

Domestic Sourcing

Domestic is usually higher quality, with less of a language barrier. Shipping times are also faster and more reliable. Payment security is greater, too.

The downside is that it’s more expensive, and you have less options available.

If you want to prioritize quality, and aren’t worried about paying top dollar, definitely go with domestic.

Overseas Sourcing

Overseas is primarily beneficial because of its cheaper costs. You’ve also got a wider variety of options available. The Alibaba platform makes it easy to navigate these international manufacturers.

But with cheaper costs you’ll get a lower quality product. Language barriers can be tough, and shipping times are longer.

If your margins are small, and you need to keep costs to a minimum, overseas is your best bet.

Manufacturing Your Product

Although this falls outside the scope of this guide, we’ll cover it succinctly. There are 5 basic steps:

  • Research manufacturing options: create a list of all appropriate manufacturers, both domestic and overseas.
  • Get quotes: get an estimated price from those manufacturers. This’ll help you narrow in on a suitable candidate, qualifying and disqualifying all the options on your list.
  • Send over your product design concepts: after identifying an appropriate manufacturer, send over design concepts of your product. This’ll help them figure out whether or not they can make your product.
  • Order some samples: if everything’s good, get them to make some samples. Order a few, and test out the quality of them.
  • Place an order: after analyzing the samples for quality, place an order for finalized products you wish to sell. You can order a large bulk amount for inventory, given you’re confident it’ll sell.

Competitor Research

You’ve got your product now — you’ve got a manufacturer, and know it can sell. Now it’s time to do some extensive competitor research. We’ll do this by conducting a competitive analysis.

What’s a Competitive Analysis?

A competitive analysis compares the different strategies your competitors utilize with regards to selling products. This will include their pricing, distribution, and also marketing tactics. It’s a way for you to assess the pros and cons of these various methods within the industry.

Competitive analyses can be very specific, analyzing an individual facet, like perhaps their website strategy. They can also be all encompassing, covering everything about their operation.

Basically? It’s a way for you to get up to speed with your marketplace. It tells you what works, and what doesn’t — so you don’t have to waste time, effort, and money.

How to Conduct a Competitive Analysis

A competitive analysis can be done in a few different ways. To make it easy, follow the 7 steps outlined below.

1. Make a List of 5-10 Competitors

Start by identifying your top 5-10 competitors. You can find them through Google Search, Amazon, or eBay. You’ll want to create a list that features competitors which:

  • Sell products similar to yours
  • Have a similar business concept to yours
  • Target a similar audience, or demographic
  • Are newcomers to the space
  • Are established in the space

Your list needs to be diverse, featuring all the above. This’ll give you a solid look into the competitive marketplace.

2. Open a Spreadsheet

After you’ve got a list of 5-10 competitors, you should create a spreadsheet. Excel or Google Sheets will do.

You’ll want to enter in all your competitors, creating a list of different pieces of data, including:

  • Competitor type
  • Business name
  • Price
  • Target audience
  • Market share
  • Key competitive advantage
  • Marketing strategy
  • Number of products
  • Unique selling point

Here’s how it might look:

3. Classify Your Competitors Into Types

Now that your spreadsheet is created, you’ll now want to classify your 5-10 competitors into “types.” This will help you understand how they relate to your eCommerce business. Some competitors may be exactly the same as you, while others are somewhat different.

The 3 competitors types you can classify them should include:

  • Direct competition: those that sell the same/similar product as you do, to a same/similar audience.
  • Indirect competition: those that sell a variation of your product, to a different audience.
  • Periphery competition: those that target the same audience as you, but they sell different products entirely.

As an example, if you’re Nike, then Adidas would be direct competition. Indirect competition would be a skateboarding shoe brand like Vans. Periphery competition would be Gatorade.

4. Identify Your Competition's Unique Selling Point

The next step is to identify your competitior’s unique selling point. This is how they separate themselves from the others in the marketplace. You can find this out by checking out a number of different places, including:

  • Their social media profiles
  • Their YouTube channel
  • Their website
  • Their Blog posts
  • Their press releases
  • Their events
  • Their product’s descriptions/copy

There are a number of things you should keep an eye out for. What is the story that they’re trying to tell to customers? How do they describe their products? How do they describe their company? Do they have a mission statement? What sets them apart?

Also observe how they interact with commenters and followers on social media. How do they respond to reviews? These are all pieces of evidence that clue you into their unique selling point.

5. Uncover Potential Advantages or Offerings

You should also identify and uncover all your competitor’s competitive advantages or offerings. These are usually price or quality related.

Scour the product reviews of your competition, and look for any consistencies. Is there any mention of affordability? Or perhaps excellent quality? Maybe they trust in the suggested expertise of the business.

6. Analyze Your Competition's Marketing Strategy

One of the major keys to success when it comes to eCommerce is marketing.

Marketing is so crucial when it comes to all forms of business, eCommerce especially. A bad product with excellent marketing will often outsell a good product with bad marketing. That’s not right, but it’s the truth.

To round out your competitive analysis, you need to analyze your competitor's marketing strategies. This will specifically entail observing what offers they promote, how they build their email list, and how they operate their content marketing.

Some ideas to get a better understanding of your competitor’s marketing strategies include:

  • Sign up to their email list
  • Check out their blog content
  • Follow their social media profiles
  • Subscribe to their YouTube channel
  • Buy a product of theirs
  • Abandon a cart on their website

7. Finish Off With a SWOT Analysis

To round things out, bring the focus back to your eCommerce business by doing a SWOT analysis. This stands for:

  • Strengths: what do you feel are the strengths of your products?
  • Weaknesses: what do you feel are the weaknesses of your products?
  • Opportunities: are there any opportunities in the marketplace for you to exploit?
  • Threats: are there any threats in the marketplace that make you vulnerable?

As an example, your strength might be that your product is cheaper. Your weakness, however, is that your product isn’t as high quality.

An opportunity might be an increase in demand, and for cheaper alternatives. Although a threat could be a shrinking marketplace, where quality is prioritized.

Create Your eCommerce Store

You’ve got a great product that will be likely to sell, and you’ve vetted the competitive landscape — great. It’s time to create your eCommerce store.

Create Your Business Plan

Creating a business plan is a vital step towards starting any business, eCommerce included. The specifics of putting together one is outside the scope of this guide, but we thought we’d mention it briefly.

NOTE: If the product you are selling requires permits or licenses, then you must get them.

Creating Your Business Name

The right business name will make your brand stick in the minds of consumers. It needs to be something that they’ll remember. If it’s effective, it’ll set your eCommerce business up for sustained success.

Depending on the nature of your eCommerce business, you might have to register your business name.

Here are some pointers to follow:

  • Research existing business names: you don’t have to reinvent the wheel — use existing business names as a template.
  • Get creative: don’t be afraid to get courageous and do something different. The goal of a business name is to stand out from the rest.
  • Choose specificity or uniqueness: business names are usually either specific to the products or industry they’re in, or simply unique brand names. Both have their advantages and disadvantages, so choose wisely.
  • Get help from others: if possible, seek the expertise of others. If you know anyone who’s a business owner, or in your specific niche/industry, ask them for their insight.

You can also use a business name generator. Shopify has a free one you can use.

Oberlo is another good option available.

Creating Your Business Logo

Like your business name, your business logo is your eCommerce brand’s unique identifier. It’s another aspect that separates you from the competitors. It needs to catch the attention of consumers, as well as be memorable.

Here are some guidelines to adhere to:

  • Look for inspiration: use the logos of existing brands to work off of. This’ll make creating your logo easier.
  • Use the right colors: ever heard of color psychology? Different colors convey different moods and emotions in consumers.
  • Use an awesome font: if there is text featured in your logo, make sure you use an appropriate font.
  • Create multiple variations: look to make a few different versions of your logo. Slight tweaks might make significant differences to your logos.
  • Get feedback: show the multiple variations of your logos to family and friends. If you have any mentors then show it to them, too.

There are many free logo tools available on the internet. Hatchful from Shopify is one of the best.

Canva is also awesome.

Ucraft is another free logo maker.

Create Your Website

As an eCommerce business, it’s likely that you’ll need a website. This is a place where you can sell products, as well as build an email list with, among other things.

You only need 3 things to create a website:

  • Web hosting
  • Domain name
  • CMS or website builder

These days web hosting is very cheap, as is a domain name. The cost of hosting will depend on how much activity will occur on your website. If you get a lot of website visitors, and sell lots of products via your website, hosting will cost more. That’s basically how it works.

But, if you’re just starting out? It’s cheap and affordable.

The CMS — content management system — or website builder is either free, or packaged in with web hosting. With them, you’ll be able to put your website together.

Important Pages For Your Website

There are a number of important pages your website needs. These include:

  • Home page: acts as a primary landing page. All websites have one.
  • About page: tells people what your business is about.
  • Contact page: a specific page dedicated to how to get in touch with you.
  • Store page: this is where you sell your products. Easy to create as there are plenty of eCommerce plugins available.
  • Product pages: these are the individual product pages, featuring pricing, descriptions, and images.
  • Product category pages: a subcategory page of the store page. Categorizes all your products, if you have many.
  • Blog page: where all your blog posts are featured, in chronological order.

Website Structure For eCommerce

Your eCommerce website should have what’s known as a “shallow” link architecture. This means that you can reach the homepage in 3 clicks or less — from anywhere on the website. This improves SEO, and makes it easier for people to navigate your website.

Create Your Marketplace Storefront

If you intend to sell your products on eCommerce platforms like Amazon and eBay, you’ll need to set up storefronts. Keys to succeed here include:

  • Use great images: the better the images of your product are, the better it’ll sell.
  • Make your product descriptions powerful: use copywriting principles to make your product descriptions resonate with consumers.
  • Experiment with your storefront layout: Amazon lets you customize your storefront layout. Test and experiment to see what works best for you.
  • Use videos: some eCommerce platforms allow you to use videos. Take full advantage of this.
  • Use appropriate keywords: remember that these eCommerce platforms work as search engines, just like Google. Use the right keywords for your products, so that they rank well.
  • Have consistent branding: your branding should be the same across all your products and pages of your storefront.

Market Your eCommerce Store

With your eCommerce store created, it’s time to spread the word about it. Your marketing strategy will make or break whether your venture is a success.

Create Social Media Profiles

You need to create social media profiles for your eCommerce business. You should be on the following platforms:

  • Facebook
  • Instagram
  • Twitter
  • Pinterest

Facebook

Facebook is by far the most popular social media platform, which is why you should be on there. You can join groups in your niche, grow your own page, and even sell on the marketplace.

Instagram

Instagram is a platform you should definitely be on. You can reach your target demographic, building a substantial following. By creating new image and video posts, you can funnel that activity and engagement to your website or storefront.

Twitter

Twitter is a different social media platform, which is significantly valuable for customer service and support. Tweets can also go viral, thanks to hashtags. Twitter is, overall, a platform you should absolutely be on.

Pinterest

Pinterest is an awesome image-based social media platform that lots of eCommerce businesses take advantage of. In fact, the average sale that comes via Pinterest is $50 — considerably higher than other marketplace.

Create a YouTube Channel

Although YouTube is technically a social media platform, it deserves its own heading. On YouTube, you can create video content that promotes your eCommerce brand’s products. You can also create various forms of other content related to your industry or niche.

The future of marketing is video content, and if you’re starting an eCommerce business, you must be on YouTube.

Create TikTok and Snapchat Profiles

TikTok and Snapchat, like YouTube, are unique social media platforms that deserve their own section. They allow you to create short videos that can promote your brand and its products. Although you’re more limited on these profiles, don’t underestimate them.

Build Your Email List By Creating Blog Posts

As an eCommerce business, it’s vital that you build an email list. Email marketing is the most powerful, personal form of marketing, which is why it results in the highest ROI. The catch is that it’s not easy to build an email list. This is why you need to get started right now.

The best way to build an email list is to create high quality blog posts for your website. These pieces of content need to be started for specific keywords that’ll bring in website traffic. Each post will have an opt-in form, prompting readers to subscribe to the email list.

The digital marketing practices here are content marketing, SEO and list building. Going into depth on these topics is outside of the scope of this guide, so do extensive research.

Frequently Asked Questions

How Much Does It Cost to Start an eCommerce Business?

It depends. You can start an eCommerce business for as low as $100-200 dollars. If you're an established brand going online then it’ll cost much more. It all depends on the cost of your product, and the cost of your website.

Dropshipping is the cheapest eCommerce model, but it’s highly competitive because of that. Low barrier of entry and all.

What's the Best Small Business eCommerce Platform?

Shopify is a great option for small businesses looking to go digital. It’s known for its great sales features.

Wix is another good choice. It’s easy to use, and has lots of creative control.

Other good options include:

What Are the Different Types of eCommerce?

It’s generally accepted that there are 4 basic types of eCommerce:

  • Business to Consumer (B2C): when a business sells something to a consumer. Products sold on a brand’s website are B2C transactions.
  • Business to Business (B2B): when one business sells to another business. Great examples include SaaS software products.
  • Consumer to Business (C2B): when a business buys something from a consumer. Stock photo websites are great examples of C2B.
  • Consumer to Consumer (C2C): when a consumer sells to another consumer. The business facilitates the transaction, taking a cut themselves. Amazon, or eBay are great examples.

Are eCommerce Businesses Profitable?

Absolutely, however it doesn’t happen overnight. You’ll have to commit yourself to building something. It can take a year or two to get the ball rolling. It’s critical that you don’t measure success based on your profits in year 1.

How Do You Build an Ecommerce Business?

Research and identify a product that you want to sell, then study the competition. Write a business plan, create and register a business name, and acquire any necessary licenses or permits. Then, create a website, order products, and market your eCommerce business.

Is It Difficult to Start an Ecommerce Business?

No, thanks to easy to use eCommerce platforms like Wix, Shopify, and Weebly. There is also an endless number of free educational resources, guides, and videos online. It’s never been easier to start an eCommerce business. You can be up and running in a day or two.

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Merchant Alternatives