How to Start an Ecommerce Business: Taking Control of Your Financial Future
Ready to take control of your financial future? Ready to live life on your own terms? It’s possible to make money online, but you need to be an entrepreneur in order to do that. The good news is that starting an ecommerce business does not need to be super difficult. This convenient guide will walk you through everything you need to do in broad strokes to get your business up and running, and experience success on your terms.
Choose What You’ll Sell
The very first thing that you need to decide is what your ecommerce business is going to sell. You have a ton of different directions you could go here, but I recommend selling something that has both demand in the market, as well as at least some personal interest.
For instance, if you love gardening, then starting an ecommerce business that sells gardening tools, implements, supplies and even seeds might be a good option. If you enjoy geek culture, consider opening an ecommerce site dedicated to things like D&D, STEM topics, and geek humor. If you’re into beer and craft beer culture, you could sell products related to that – t-shirts, barware, and the like.
You get the idea. There’s a niche out there for just about any interest, hobby, or pastime, and you can create a thriving ecommerce business based on that. Find one that jives with you, personally.
Check Out the Competition
You can pretty much bet that no matter what your idea might be, you’re not going to be the first person to claim it as a business. At this point in human history, pretty much everything has been done at least once. That’s not a bad thing, though. Most niches have enough room for many businesses selling related merchandise. You just need to make sure that’s the case with your own potential business. Dig into the niche.
A quick Google search using the niche name plus “merchandise” or “products” will give you an idea of what you’re facing in the way of competition. For instance, going the geek merchandise route, you face some heavy hitters in the form of Think Geek, Geek & Sundry, and about a hundred more such businesses. So, that might make going this route a poor idea, or it could mean that you find something that none of those businesses is doing yet and focus on it. This allows you to get into the niche that you want, and it positions you as a business with something that no one else can offer.
Start Thinking about Your Ideal Customer
You need to identify who will be buying your products early on. The earlier, the better. Who is your ideal customer? Are they middle-aged? Are they part of an ethnic minority? Are they college educated? Do they have children? What do they earn per year? These are just some of the questions that you’ll need to answer. Why, though?
What you’re doing is creating ideal customer personas – avatars that represent the people who buy whatever it is that you’re selling. This allows you to create highly tailored marketing campaigns with minimal wasted capital and the perfect amount of reach. It also informs things like branding, product displays, product types, how your product descriptions are written, and a great deal more.
Put simply – you need to know who is going to buy your products, and then tailor everything around that audience.
Sourcing Your Inventory
Once you’ve come up with an idea and you’ve decided what you’re going to sell, you need to find someone to supply you with inventory. You can do that in any number of ways, but they all have their own list of pros and cons. For instance, you can buy from manufacturers overseas, but this leaves you to deal with things like getting their products to your location (and a way to warehouse those products), deal with customs, and more.
You can go with a dropshipper, which is essentially a company that manufacturers, warehouses and ships their own products when your customers order. This is a great option for many needs, but it precludes the ability to personalize any orders (custom t-shirts, mugs, and the like, for instance).
You could also go the route of designing and manufacturing your own inventory, and that opens up a slew of other considerations, such as where you’ll house your manufacturing equipment, whether safety testing is needed, how to get the best product pictures to display on your website, and more.
There is no one size fits all solution here, and walking you through every potential source of inventory is far beyond the scope of this article. You can find a lot of excellent information from the Small Business Association (SBA.gov), as well as through platform sites like BigCommerce to name just two options. Personally, I prefer using BigCommerce over Shopify just because they're simpler to use, they're cheaper and they have way nicer templates.
Choosing Your Name
After you’ve nailed down how you’ll deal with sourcing inventory, you need to think of a name for your business. It needs to be very memorable. It needs to stand out. It also cannot have been used within the same industry, as you’ll be unable to register it in most cases. I highly recommend coming up with a list of several names that you love and that fit the business well, and then conducting a corporate name search to make sure that no one is using them yet.
Once you’ve got your name, you need to file the right paperwork with your state government and register your business name. Before you create your business, though, you need to give some thought to the structure that you’ll use. There are multiple options out there, but sole proprietorships are the most common. They’re also the simplest to set up. However, my personal recommendation is that you go with an LLC, or limited liability corporation. This allows you to separate your personal finances from your business’ and it offers some tax protection that isn’t available with a sole proprietorship.
Ideally, you’ll work with a business attorney who can guide you through the legal setup process and advise you on the right business formation for your specific needs and goals.
During this process, you’ll also need to take care of some other legal issues. For instance, you’ll need to obtain your Employer Identification Number (EIN) from the federal government, but only if you’ll have more than just one employee. Finally, you’ll need to pay for business permits and licenses – your state, county and possibly city will all have requirements.
Build Your Web Presence
When you’ve jumped through all the legal hoops and your business is a legally-recognized entity allowed to operate in your state, you need to take the next step, which is to come up with a website name, purchase it, and find hosting. If you don't know where to get your domain name from, I would recommend using DreamHost. They're reliable, cheap and extremely simple. Note that this step and the preceding one are often completed in conjunction with one another because your website name is often your business name, or a derivative of it.
Your URL should be easy to remember, and it should tie directly into your business. However, be prepared for the most relevant URLs to be unavailable. If that happens, come up with memorable alternatives that still connect with your business’ identity. For example, if BobsTshirts.com isn’t available, you could go with BobsCustomTs.com or BobsCustomShirts.com.
This is also when you’ll incur what will almost certainly be your greatest expense – the site through which you will sell products to customers. There are tons of different ecommerce platforms out there, each with their own list of pros and cons, their own costs and inclusions. The biggest players in the market at the time of this writing are:
You’ll need to compare the features and capabilities of each platform to your needs, your budget, your expected audience and then choose the one that is the best fit. Note that there is no one-size-fits-all solution here. What works perfectly for one ecommerce business may be a poor fit for another.
Build Interest before Going Live
Even if you have no financial investment in physical inventory because you’re going with a dropshipping company, you still need to be fiscally conservative. You want to hit the ground running. That means building buzz before your site goes live. This will require a multi-pronged marketing initiative, but it can be handled by just one person if necessary.
Social media is the best option here, with Facebook and Twitter being the “must have” websites. Feel free to throw other social sites into the mix, but you probably can’t omit those two. Create a business account for both sites, and start building buzz about your products, about your company, about special deals you’ll offer when you go live, and more.
Starting an ecommerce business isn’t necessarily impossible, but it does require careful planning and strategizing. If you want to hit the ground running with the best chance of success, you’ll need to follow all the *right steps*. Not sure that you have what it takes? Worried about the amount of work you’ll have to put in? Sign up for my NEW Six Figure Sunday course (click here) and learn how to earn six figures *easily* by working just one day per week.