How Does eCommerce Work?

eCommerce is an excellent field to get into these days as it is one of those markets that keeps growing steadily. Predictions say that global eCommerce sales will hit $4.2 trillion in 2021, which is a considerable cake to cut your little piece of profit from. However, just like starting any other business, it is not the most straightforward task for newcomers. What would you sell, and how would you market it? Is there a profit to be made in your particular niche?  One of the most important questions you will ask yourself is what eCommerce business model you should adopt. Will you open your eCommerce store and handle inventory, warehousing, and shipping? Or, should you consider weighing in on the dropshipping vs. drop surfing debate and use one of these models? Let’s start with a quick refresher course on what dropshipping is and take it from there.  What is Dropshipping? Dropshipping is an order fulfillment method in eCommerce. It comes with a significant advantage over your traditional eCommerce store in that you can outsource a considerable part of your inventory and shipping to someone else. With no up-front inventory expenses, starting a dropshipping business is easy and cheap - all you need is a solid understanding of how to use an eCommerce builder. You “only” need to create an excellent selection of products, market them well, and then provide top-notch customer service. Here is how it all works: A dropshipper creates an eCommerce website, selects their products and wholesale suppliers for those products, and then lists them on their site. Once a customer places the order on a dropshipping site, the dropshipper forwards it to the wholesaler. The supplier takes it from there and ships the product to the customer. All you have to do is source the best products, offer a reasonable price, and make sure your customers are happy with the support they are receiving.  How About Drop Surfing?  Drop surfing is essentially a type of dropshipping that focuses on maximizing profits. This business model is also often referred to as “surfing the wave,” an expression that earned the process its name. Let’s see how drop surfing works in practice.  This eCommerce model operates in the same manner as standard dropshipping, with a single exception. Here, the dropshipper focuses on maximizing their profits on top of their regular dropshipping duties. Many old-school sellers agree that drop surfing is just a smart way to do traditional dropshipping and that the new term is simply a marketing trick.  You can achieve what is considered to be drop surfing in two ways. The first means that you choose a different supplier for each order, basing your choice on where you will get the best deals. It complicates the process slightly, as selecting suppliers is not as simple as it may seem. It works best if you have the time to make sure the new supplier matches the quality of the product and provides equal or better shipping costs and timeframes.  The second definition of drop surfing you will see online is the one that explains drop surfing as switching products on offer to make as many sales as possible. It means doing in-depth research and finding items that are currently trendy or are expected to be fashionable in the future. It is exceptionally time-consuming, and you will be facing a lot of hit-and-miss moments in the lifespan of your online store. Still, if you select the right products, you will undoubtedly make much more sales and earn significantly more money. Now, let’s get back to our debate: drop surfing vs. dropshipping. Let’s cover the pros and cons of each so that you’ll have the information you need when starting your new online business. Pros of Dropshipping We’ve already covered the basic pro of dropshipping: no inventory. With any type of dropshipping model, you don’t have to store any inventory, keep stock of items, or handle the shipping yourself.  With that in mind, traditional dropshipping has some advantages compared to drop surfing. Since you are working long-term with the same supplier, and hopefully, the same customers, you get the unique opportunity to build long-term relationships. Furthermore, you get to build your brand, which is something that will undoubtedly pay off in the long run. Investing in earning a returning customer is much more profitable than constantly chasing new ones.  Also, the most significant benefit to the traditional dropshipping model is the possibility of doing it part-time. Once you achieve a deal with a good and reliable supplier, complete your website, and list your products, your ongoing work is almost done. Since it is predictable, you can also automate many remaining tasks, for example, by using order fulfillment software. It is not something you can do as quickly with the drop surfing model. All you have to do is provide exceptional support, handle an occasional return or two, and work on updates to improve the customer experience.  Cons of Dropshipping As mentioned before, the major downside of dropshipping model is that a major portion of your business is out of your control - the product itself. You cannot control its quality, how it will be shipped, and many other significant aspects of the dropshipping business itself. You should test each provider, but you’ll have to compromise on some aspects. Still, once you manage to score a good supplier, you’re set. Compared to the drop surfing method, the most significant con of dropshipping is the slim profit margin. After all, since it is effortless and cheap to get started, you’ll be facing a lot of competition. They will be offering the same products for next to nothing in an attempt to attract customers. While you can provide your customers with the best shopping experience, nothing stops them from comparing your prices to those on other sites.  You should expect to lose a significant portion of your budget-savvy customers to these sites.  Pros of Drop Surfing The primary positive side to drop surfing is the opportunity to change your profit margins per product by outsourcing the order to a different supplier to get the best price for each product. You are also not tied up to a particular set of products. Instead, you can and should change them as often as possible to get more sales and increase your profits.  It makes for a much more hands-on experience and gives you a faster turnover pace, making it better than dropshipping for some people. “Riding the wave” will undoubtedly skyrocket your sales, especially if you have a knack for marketing. If you have enough customers and market knowledge, you can even become the one setting the trends.  Cons of Drop Surfing First off, drop surfing is a time-consuming effort, and you can’t really do it part-time. It requires constant research and always being on the hunt for cheaper and better products. Also, some aspects of this type of business are a bit difficult to automate. Also, the field of research constantly changes. If you want to maximize your profits, you’ll have to dedicate enough time to your drop surfing eCommerce business. This means dedicating enough time to compare suppliers’ prices for each product manually, as that’s the only way to ensure you’ll have the highest profit margins. Keep in mind -  suppliers tend to change their prices often, so you’ll have to do this repeatedly to achieve optimal results. As your business scales, this will require a much more substantial time investment.  It is also a considerable gamble as you’re not creating long-term relationships with either suppliers or customers. Since your offer constantly changes, you might have to start multiple drop surfing eCommerce websites to accommodate the new trends outside your niche.  Furthermore, once you start changing your selection to accommodate the newest trends, you’ll have to spend a considerable amount of time managing those changes and getting the best deals from your suppliers. It won’t leave you with much time to focus on your marketing efforts, so attracting new customers might prove to be a challenge. Which Method is Better? Since drop surfing is essentially a sub-class of dropshipping, it’s impossible to separate the two business models from each other. When setting up your dropshipping store and adding new products, you are effectively drop surfing. On the other hand, every drop surfing business follows the same order fulfillment model as dropshipping. Both require an eCommerce platform or website to operate. So, there is not exactly a lot of difference between the two to make one intrinsically better than the other. The main difference lies in how much time you have available for your business. You can do drop shipping part-time, but full-on drop surfing requires your complete dedication, especially as your business grows. With standard dropshipping, you can make a decent selection within a chosen niche. You can expect to eventually cultivate a loyal customer base that looks to you for the product(s) they need. You also have plenty of time for focusing on marketing efforts and further improving your customer experience by implementing credit card or crypto payments, for example.  Of course, you can always employ drop surfing software or hire someone to help you out with these parts of your business so that you can focus on finding the best deals or improving your customer support. It all comes down to profit margins - if your business grows enough, you can either expand your dropshipping model with people hired to do drop surfing for you or, alternatively, do that part yourself and leave customer support to someone else.  Which Business Model Should You Choose? When deciding which of these two business models is better for you, think about the following questions: How much time do I have to invest in this? How much do I want to earn?   In this situation, one answer heavily influences the other. If you have enough time and are comfortable doing a lot of research and constantly hunting for a better deal, then one of the two drop surfing models is the perfect choice for you. The ultimate model would undoubtedly be a combination of dropshipping and drop surfing. A careful selection of products and suppliers is a must. However, if you could get a better deal with another reputable provider, there’s no reason why you shouldn’t take it. The same goes for finding new products and niches. You should always watch for trending products that could work with your website and the current selection you have on it.  On the other hand, if you are getting into dropshipping as a part-time gig, then a more traditional dropshipping model will work better. After all, once everything is set up and done, you don’t have to spend too much time on stuff like finding new products to rotate on the site. If you have an excellent selection of products that bring decent revenue, you should have more than enough time to focus on scaling.    Whichever method you choose, keep in mind - a happy customer is a returning customer, and you need as many of those as possible to earn a living. Compromising your product quality, not answering inquires from worried customers, or providing poor-quality products for the sake of increasing your margins is never a good idea.

Here’s the biggest nightmare of all online retailers: Seeing potential buyers dropping by their virtual store, filling the cart with items, clicking through the checkout pages, and when the payment is about to be initiated, giving up and abandoning the shopping process. A 2021 study by SaleCycle revealed that the percentage of cart abandonment across all sectors stands at 81.8%. The figures are the highest in the travel sector that traditionally has longer research phases and more complex checkouts. ECommerce business platforms and online retailers often seek for cart abandonment solutions to tackle this issue and better cater to their customers. How does one go about unclogging the bottlenecks of the shopping process and boosting sales? We’ve compiled a list of ideas, tips, and tricks to optimize the checkout flow. Keep reading and learn if you should stick with traditional methods or go for brand new technologies for an innovative approach to fixing the cart abandonment issue.  What Does an Abandoned Cart Mean for My Business? Let’s start by diving deeper into what shopping cart abandonment is and what the abandonment rates mean for your business. When the potential buyer orders items online and initiates the checkout process but gives up before completing the purchase, we talk about cart abandonment. Other forms of this practice include booking abandonment, form abandonment (which refers to abandoning forms for quotes, subscriptions, and financial products). There’s also browse abandonment, which refers to customers who give up while browsing and before placing an order. As an important metric for tracking customer satisfaction, the cart abandonment rate should be regularly monitored and analyzed to boost sales. The rate is calculated by dividing the number of completed transactions by the number of initiated transactions. The final figures indicate the percentage of prospective buyers who initiated a purchase but never finalized it. Analyzing this rate is important, but understanding the reason behind it - why potential customers give up on buying your products - is your primary goal.  Why Do Consumers Abandon Their Carts? Even though the reasons vary depending on the sector, there are some common issues that all consumers experience and cite as the cause of giving up on buying the desired item. Cart abandonment analysis can give you useful insights into the bottlenecks you need to address and clear in order to offer a swift and smooth shopping experience. Browsing for fun; Many consumers state they were simply browsing the website and checking the prices and shipping fees without the real intention of buying anything. Additionally, some of them might say they got discouraged by high shipping costs, even though they were satisfied with the product in general and genuinely wanted to buy it.  Comparison shopping; Aside from high shipping costs, shopping cart abandonment rates spike due to high prices of products and finding better deals with the competition. Buyers may add a product to their cart prior to comparing prices and then abandon it for a cheaper deal they’ve found elsewhere. Lack of trust; According to data, almost 61% of shoppers who abandon a purchase decide to opt out due to the lack of trust logos. Trust indicators include Site Seal, Corner of Trust, and TrustLogo. Not seeing any of these logos on a website can hold off potential customers.  Lack of payment methods; One of the common shopping cart abandonment reasons is the inability to swiftly complete the shopping process due to insufficient payment options. Opening a PayPal account for the sole purpose of buying a single product is a hassle and instead of doing that, consumers are likely to search for an online shop with the same or a similar product that offers more diverse payment options.  Complex checkout process; Don’t expect your customers to be patient and tenacious - that’s just not what online shopping is about. The main strategy for improving the sales process would be to make it as straightforward as possible. Think of Amazon and its 1-Click ordering. If you make your prospective buyer dig through dozens of pages and fill out tons of forms, you’ll probably lose them.  Technical difficulties; Finally, cart abandonment statistics indicate there’s a significant number of customers who give up due to technical glitches, bugs, or slow loading times.  How Can You Reduce the Number of Abandoned Baskets? Obviously, not all of these reasons behind cart abandonment can be addressed by the seller. If someone is just browsing your website and adding stuff without a serious intention to buy your products, you usually can’t influence that by simply optimizing your website.  On the other hand, most of the rough edges and obstacles that make customers give up can be smoothed out. Let’s take a look at some of the best cart abandonment solutions you can go for. Exit-intent popups Exit-intent technology employs sophisticated tools to identify customers’ exit behavior. If the potential customer signals reluctance, starts comparing the item with other websites’ similar offers or is about to exit the page, a prompt pop-up message will try to get them back on track.  These layouts can ask for an email, or carry a message that encourages customers to stay by offering discount codes, gifts, or free shipping for purchases over a certain amount. Not only can this motivate the shopper to complete their purchase but it can increase the overall value of the cart, so it’s a win-win approach. To reduce the average cart abandonment rate, you need to implement the right strategy when creating popups; first, analyze your target audience and your site heatmap, determine your sales goals, and figure out what the best offer might be. Then, hire a designer or expert to help you out with the subtle message display and optimize popup timing for better results. Email remarketing campaigns Good old emails remain one of the most effective solutions for attracting customers’ attention once again and having them rethink their decision to completely abandon their digital basket. Sending a cart abandonment email to remind the potential buyer of the product they were about to buy can increase purchases 19 times more than standard marketing emails.  So, let’s see how these emails should look and what information they should contain. Send the first email within 24 hours of the cart abandonment, and two more emails in the following days. Aim to create a sense of FOMO with a personalized tone and an offer such as a discount code, or simply with a reminder that the product is still waiting for them in the cart. Cart abandonment emails shouldn’t sound like one of those generic, cookie-cutter marketing messages; customize them toward potential customers instead and add a touch of intimacy.  SMS remarketing campaigns In the context of eCommerce businesses’ massive migration to mobile platforms, SMS communication makes more sense than ever. According to a study, text message marketing has grown 23% since 2016. People seem to like reading SMS offers sent by companies, and they spend twice the time on texting than emailing, so that’s your chance to get them back to purchase your product. Mobile cart abandonment can be easily addressed while the consumers are still holding the phone they were shopping on, using SMS marketing tools.  To refocus a customer’s attention back to their forgotten cart, you’ll first have to obtain their phone number. A good way to do it is to add a phone number capture in the checkout process. Make sure to include a message about the products they’ve added to their basket or a link to the shopping cart. You can also send an SMS to thank customers for the purchase or ask for feedback. Chatbot Service Indecisive and reluctant consumers can be stirred into action with a couple of messages via live chat or a chatbot service. This AI-based technology for cart abandonment recovery can be a decent replacement for those employees in brick-and-mortar stores who are good at talking customers into buying their goods, and we know that 37% of people use a customer service bot to quickly get answers. The live-chat function with a detailed and well-organized FAQ section can assist the buyers with the usual doubts and questions regarding sizes, returns, shipping, and delivery times. Of course, if you have customer agents available round the clock - even better.   Chatbots can follow the potential buyer along the whole shopping journey - from welcoming them, assisting them with the purchase, suggesting similar products in case the one they want isn’t available, to serving offers and discounts to reduce shopping cart abandonment rates. Consider using chatbot builder software to help you out with writing creative and personalized chat messages.  Retargeting advertising Retargeting is a common and powerful marketing strategy. When you’re retargeting someone, you have more chances of winning their attention, as you remind them of something they have already shown interest in acquiring. Focusing on people who are in-market can potentially curb the negative effects of shopping cart abandonment. When creating retargeting ads, make sure to include brand recognition and targeted content, as well as a special offer to convince customers to get back to your website. On a slightly different note: Invest some time and effort into optimizing your website for online sale and its design. Not having enough funds is no longer a valid excuse - you can go for one of the many excellent and affordable eCommerce website builders.  Trust and social proof Creating trust is of utmost importance, especially if you’re a new brand that’s not yet established in the eCommerce business. Cart abandonment solutions we’ve reviewed so far have focused mostly on getting customers back to purchase. The method of implementing trust and social proof relies on prevention instead, convincing customers into purchasing your products by building confidence. Most consumers will at least browse through customer reviews before proceeding with the order, so make sure to provide verified testimonials or star ratings. Also, include trust badges and certificates on strategic positions on the website, close to payment details. By doing so, you’ll reassure the customers that your page is legitimate and that they can expect a safe and secure shopping experience. Straightforward checkout A lengthy checkout process is a nightmare for consumers and one of the most common reasons for shopping cart abandonment. Too many steps and requirements, having to fill out too many forms, as well as not knowing when the process will end can all discourage potential buyers from completing their purchase. That’s why having only a few essential steps with a clearly visible progress bar can make all the difference. With so many online distractions, consumers nowadays have a short attention span and require simplicity. After all, shopping should be fun, not a chore. Some research shows that the best checkout process has four steps, a prominent progress bar on top, and a visible order summary along the way so that customers can be sure they haven’t made a mistake. Another useful tool for preventing digital shopping cart abandonment is a “Review” step, where buyers can make changes to their order or add more items to the basket without having to start all over again. Having to create an account is another drawback, so you’re well-advised to enable customers to check out as guests. Payment methods Eventually, it all boils down to payment; if the customer made it all the way through the checkout process and reached the final step, but there isn’t a single payment method that suits them, chances they’ll quit are very high. Most millennials require flexibility in the way they pay for goods and services, so having an option to pay in installments via third-party checkout partners is one of the most effective shopping cart abandonment solutions. Offering alternative payment methods along with the standard wire transfers and credit and debit card payments would make the whole process customer-friendly.  Conclusion Reengaging your visitors and persuading them not to give up on their purchase will reduce your abandonment rate and increase your revenue so don’t hesitate to invest time and effort into implementing at least some of the solutions we’ve proposed in this article because these are efficient tools known to work. When choosing shopping cart abandonment solutions, compare and test several and analyze which one works the best for your eCommerce business. Don’t set a bad example for your customers by giving up!

The standard 9-5 work schedule definitely isn’t a good fit for everyone, so those who are brave enough to take the leap might be tempted to become their own boss and start something of their own. If you’re an entrepreneur at heart, you’ll probably enjoy the process immensely. Now, thanks to the internet and some specialist software designed to make our lives easier, running your own business definitely isn’t a far-fetched dream.  Depending on what kind of business you’d like to start, you might want to consider eCommerce as a vehicle for success. eCommerce is a rapidly growing market in which online stores sell goods and services globally. It’s estimated that by 2023, eCommerce revenue is expected to reach $740 billion in the US. If your business does manage to become the next Amazon or Etsy, you’ll be taking home a significant portion of that.  Of course, getting started is never easy, mainly because you have so much to think about. You need to plan and organize yourself before you dive in if you want your store to be a success. For all these reasons, we’ve prepared this detailed guide on how to start an eCommerce business. After reading it, you’ll likely have at least the first couple of steps of your action plan pinned down. So, without further ado, let’s get started.  Work Out What You’re Going to Sell People who are looking into starting an eCommerce business typically already know what they’d like to sell. Some are interested in turning their hobby into a living, while others already have a brick-and-mortar store and are looking to expand, or move entirely online. However, if you’re unsure what to sell, here is some food for thought. Typically, there are three categories of products you can sell online: physical goods, digital downloads, and services.  Physical goods are an excellent choice if you can manufacture or source things people are looking to buy. Of course, you can always resell physical goods - you just have to buy them from a wholesale provider first or set up a dropshipping store. These processes include their own set of challenges. For example, you need to find out which wholesale provider you want to go with, how you’re going to store the items, and which shipping method won’t cost you an arm and a leg. Selling digital downloads is an excellent way to open an eCommerce website if you don’t want the hassle of handling, storing, and shipping physical products. These could be anything that your customers can download on their devices: online courses, artistic designs, eBooks, printables, plugins, and templates, among other things. Depending on your skillset and the type of digital product you want to sell, your profit margins can vary greatly. While selling digital products doesn’t always entail the considerable initial investment you would need to provide for physical products, you might also not earn as much.   Selling services can also be an excellent choice for your eCommerce store. This solution allows you to get started with minimum investments and earn profits fast. Still, the main thing you’re selling is your time, and you only have so many hours in a day. Expanding beyond what you can accomplish (and earn) on your own typically requires that you hire someone else. They can take on some of the workload, but that in itself carries its own set of costs and responsibilities. Once you decide what type of product or service you’ll be selling, you should assess the viability of your idea. In other words, you want to be sure the result will be worth the effort. How can you determine that? By doing your market research first. Let’s take a quick look at how to perform that properly.   Research Your Products and Markets Just as you would when opening any other type of online business, you need to do your research before starting an eCommerce website. You need to find out what kind of products perform well, how much competition there is in the niche, and what type of business model can most effectively bring your eCommerce business ideas to life.  Since you’ll be selling online, doing a bit of Google research might help you pinpoint what type of product will work. By analyzing Google’s results for a particular keyword and its relative terms, you’ll be able to gauge how popular certain options are. Look for the type of product popping up on the first page and which companies are selling it. The autofill option might also give you a couple of online business ideas. “People also ask” is another excellent section that could be helpful.  You probably already have an idea in your mind of what you’re going to sell, so it’s time to work out whether or not that idea is plausible. You can do so by evaluating product viability. Here are a couple of things you should ask yourself about the product or service you’re thinking of selling: Is there a demand for it? Is it a fad, or will I still be able to sell this in five years? Are there reasonable profits to be made here? What do the numbers say? Is there already a successful eCommerce company selling the same products or services? The third question leads us to competitor research, which is a crucial component of starting a successful business. Finding out who the key players are is just the first step. The most important one is putting their business model under the magnifying glass.  Look for anything they’re doing well and make a note of how you could emulate it. More importantly, look for any ways you’d improve on their business model; you might be able to find a gap your business could fill. At the very least, you could identify that special factor that could help you set your business apart from the competition in your niche, which is crucial when starting an eCommerce site. Remember, just because someone else is already doing it doesn’t mean you can’t do it better.  Work Out Who Your Ideal Customer Is If you want to make sure your business will be successful, you also need to target the right audience. This means figuring out who your ideal buyers will be, which will significantly influence the steps you take. For starters, you need to be where your target audience is and speak their language. To ensure this, you should look into your customers’ demographics and psychographics. Start with their essential characteristics; you want to know their age, gender, and income. Once you have a good picture of that, you should then try to find out more about their opinions and beliefs.  Why is this important? Well, once you have these terms pinned down, you can clarify the approach of your eCommerce business. For example, if you want to appeal to environmentally conscious customers, you wouldn’t want to sell items packaged in lots of plastic. By the same token, Instagram isn’t the ideal platform for promoting bingo games to senior citizens. Getting this approach right will significantly improve your eCommerce website and your overall online presence. If you’re selling software for accountants and bankers, you might consider adjusting the tone of voice on your website to avoid the slang the kids use these days. To target a younger audience, having a flashy, highly responsive website might be the most effective thing you can do. Pinning these details down will help you figure out your marketing strategy later.  Create a Business Plan Now that you know what you’ll be selling and to whom, you should create a business plan. It sounds daunting, but this is an excellent way to ensure you stay on track while you’re setting up an eCommerce business. Don’t overthink it - you don’t have to show that first version to anybody. It can serve as a to-do list for you as you plan each step in more detail. However, if you need a business loan, an advisor, or a partner to help run your new business, you really need to create a thorough and professional business plan. Here are some things it should include: What your business is and what you’re selling How you expect your business to earn money Your operational model Where you plan to get your financing from A list of any executives and employees (if applicable) Since this business plan will also serve as marketing material, you should keep your target audience in mind while writing it. If you’re going to show it to your potential employees, the business plan could help them see your vision and why it might or might not work for them. Before showing it to investors, you’ll need to have every aspect of your financials and operating model pinned down. After all, you want to maximize your chances of getting their approval and funds for your new online eCommerce business.  If you aren’t creating the plan for yourself, it’s advisable to look at some online templates first. These will help you keep your business plan consistent, thorough, and as detailed as possible, and will make sure you keep your goal and target audience in mind. If this is too troublesome for you, you can also consider hiring someone to write the business plan for you.  Lastly, it’s important to stick to the 20-page rule. You want to be informative enough, but you don’t want anyone to spend too much time trying to wrap their head around your concept.  Decide on Your Business Name and Structure You might now have a business plan, but you still don’t have a business. This next section of our guide is about formally establishing your company. You’re probably wondering how to start an eCommerce business step by step. First things first, you’ll need a name, a defined legal structure, all the necessary licenses, and an employer identification number (EIN). Let’s go through those steps one by one. Picking a Name Picking the right name can be difficult, and there are many things to keep in mind when doing so. You need a name that is distinctive, easy to remember, and clearly shows what your eCommerce business sells or does. On top of that, the name needs to be available, both with the US Patent and Trademarks Office and on websites that sell domain names. Even if you haven’t started working on your website, it’s worth registering a domain for your business as soon as you decide on a name. After all, the availability of a domain name can heavily influence the name you choose for your business. By acquiring a domain as soon as possible, you’re preventing someone else from taking it.   Defining Your Legal Structure Putting in place a defined legal structure is one of the most important steps to start a business, and it requires your time and attention. Consulting with a lawyer at this point is a good idea. After all, the type of entity you choose to establish will have important legal implications for your business. The most common types of business entities used for startups are sole proprietorship, LLC, general partnership, and corporation. Let’s give these categories a brief overview. Sole Proprietorship With a sole proprietorship, there isn’t a legal distinction between the business and its sole owner. That means you are personally liable and taxed for owning this type of business.   General Partnership If you’re not starting an online business on your own, you might consider a general partnership. These are typically conducted between two or more owners. Everyone in the partnership is equally liable, and this partnership is treated as a pass-through entity for tax purposes.  Limited Liability Company (LLC) LLC is one of the most common types of businesses out there. With an LLC, you and any other members have only limited liability and are typically taxed as a pass-through entity. Corporation  As an entity, a corporation is entirely separate from those who run it. That’s because a corporation is considered a legal person, meaning that the people controlling it have no liability. It’s owned by its shareholders and governed by its directors. Corporations aren’t the right choice for single entrepreneurs, but this legal structure works perfectly for large businesses.  If you’re still not sure which business structure is right for you, consulting with an experienced professional might be the best course of action. Once you decide on a suitable business model, they’ll help you file the necessary papers.  Applying for an EIN The next step is to apply for your EIN. Depending on what type of business entity you opt to establish, this nine-digit number may or may not be required. Regardless, it’s a great way to help you separate your business and personal finances. For this reason, getting an EIN is highly recommended for everyone looking to start an online business. You can apply for an EIN for free online or via mail, fax, or phone. If you choose the online route, you’ll likely receive your number immediately.  Getting a Business License Every business, whether online or offline, needs a business license. Depending on the state your business is located in, you might need to get yours sooner than later. Some regions allow you to sell up to a certain threshold before getting your license, while others require you to have it beforehand. All this information is neatly listed on the SBA website, together with which licenses are required in your state. You’ll likely be able to obtain your license online, although again that can vary by state. Find or Create the Products You’re Going to Sell Once you’ve done everything required to set up your online eCommerce business, it’s time to stock up on your product. If you’re selling digital products created by someone else, stocking up might be relatively simple. However, if you want to sell something you create yourself, you’ll need to do much more preparation for your launch, as the production process will probably involve a lot of work. When prepping for your grand opening, make sure you don’t compromise on the quality of what you’re offering.   If you plan to resell, you should contact wholesalers to work out how you can put together your inventory efficiently and cost-effectively. You need to select your inventory carefully and make sure you’re satisfied with what’s on offer in your store, taking industry trends into account. If you’re considering dropshipping, now’s the time to make the appropriate deals with suppliers and manufacturers.   Create Your Website Now that you have all the data, products, and paperwork figured out, it’s time to start working on your eCommerce website.  Your website is your online storefront, and you should dedicate the same amount of time and effort to building it as you would to setting up a brick-and-mortar store. After all, this is what your customers will see, browse through, and use to have your products delivered to their doorstep. It’s up to you to make that experience as pleasant and convenient as possible.  We’re assuming that by this stage, you’ve already selected and purchased your domain name. The next step would typically be finding a hosting provider, but that doesn’t really apply here; you’ll have to decide which eCommerce platform to use, and you’ll get hosting as part of that package. Here’s a quick overview of some of the popular eCommerce software options out there: Shopify Probably the world’s most popular eCommerce platform, Shopify is an excellent choice for anyone looking to open their own online store. Shopify accounts start at $29 per month and allow you to create and customize your store to an impressive extent.  WooCommerce If you decide to create your website on WordPress, you should definitely opt for WooCommerce as your eCommerce provider. With its most basic package, this plugin allows you to create an online store for free; all you have to do is download it and enjoy its multitude of features. Just be aware that if you’re not familiar with WordPress, WooCommerce might present a bit of a learning curve. Magento Magento allows you to customize your new eCommerce site to the fullest. It’s free to download and offers many more options than any other solution on the market. The potential problem is that you need to be quite tech-savvy to get the most out of it.  As such, it’s not the best option for new eCommerce entrepreneurs with a DIY approach. However, if you can find the money to hire a developer, you can use Magento to open up a world-class shop that will put your competitors to shame.  Squarespace Squarespace is another excellent solution for making an eCommerce website, especially for beginners. It’s famous for its easy-to-use shop templates that will get you started in no time. As is the case with Shopify, Squarespace allows you to set up shop without having to know how to write a single line of code. It’s also relatively cheap - the basic plan that includes eCommerce capabilities starts at $18 per month. Still, Squarespace is more of a website builder than a full-blown eCommerce platform. As such, it’s somewhat limited in terms of the tools, features, and add-ons it offers.  Some eCommerce website builders will offer hosting packages that cater to your needs adequately, but there’s also a chance you’ll have to figure out hosting by yourself. If this is the case, you should consider cloud hosting, which is widely considered one of the best solutions for an eCommerce site.  You’ll also see many other options, such as shared hosting or even dedicated server hosting. Both of these are good options when you’re just starting your own eCommerce business, so it’s not something to stress too much about. Still, you should be aware that these options can be much more difficult to scale than cloud hosting.  Whether or not you’re ready to scale depends on how well your eCommerce site is performing. You need to think about the features, usability, and customization options you need as your business grows. More importantly, you need to be conscious of the system you’ll be using to manage your day-to-day business online. For example, if integrating payment systems into your eCommerce site is as complex as brain surgery, you might not be able to scale that quickly.  If your customers can’t navigate your site or find what they’re looking for effortlessly, it could be a dealbreaker for them. Consider hiring a UX design agency to help you create an online store and set up the basics.  Define Your Brand Another reason why you might not be able to scale as extensively as you'd like to is failing to attract and keep customers. For this reason, you need to pin down your brand building strategy. This starts with your eCommerce website and goes on to include your marketing efforts later. But the most important place for your brand to thrive is in your customers’ heads, so that it’s your company that comes to mind when they think about a specific product. With all this in mind, you can see why branding is crucial when you’re building a business. After all, there’s a fair chance that when someone mentions coffee, a green Starbucks sign pops into your head. Your ultimate aim is to create that kind of instant association for the products or services you’re selling. One of the most important aspects of branding is thinking about the design of your website, your logo, and your visuals in general. Unfortunately, selecting colors, typography, and other elements for your website is more difficult than you might expect. Don’t overthink it too much right now; you can always rebrand down the road. Finding a logo maker is one of the best ways to consolidate your brand identity when starting your own business.  Testing everything before you go live is non-negotiable. You want to be sure that every inch of your website functions as intended. One way of doing this is to ask your friends to help you test the site, or if budget allows, hire a QA specialist to test it professionally. You want to make sure the website looks good on all devices, every button works, and you don’t have a single broken link.  Add Your Products to the Site Once you’ve done everything to set up your eCommerce store, the last step is to add your inventory. When doing so, pay close attention to categories and the overall organization of your site; you want your customers to find what they need quickly.  Once they find the product they want, the customer will likely dwell on its description and image. For this reason, you need to provide them with high-quality visuals and accurate and detailed product descriptions. Think about what they’d like to know about each product. Excellent visuals and precise descriptions are key to unlocking more sales.  It’s Time for Marketing You don’t want your store to open to the sound of crickets; you need customers lined up in front of your virtual door and stampeding towards your “buy now” button. That doesn’t happen on its own; you need to put effort into marketing your new business on the internet. Of course, marketing something properly is no small feat, and there’s a lot to think about. Newsletter? Social media marketing? Paid promotions?  In an ideal world you’ll employ all of those strategies. But which will be your top priority - the one that will bring you the most customers with the least effort? To answer this, you should backtrack a couple of steps in this eCommerce startup guide to the section where we talk about analyzing your target audience. Do they use social media? If so, which social platform might they be on, and what type of groups would they be active in? Think of any correspondence you might have with your audience and the tone that would best speak to those potential customers.  Promo codes, giveaways, and free goodies are also an excellent way to create interest and buzz about your store opening. If you’re offering services, free consultations may be the best way to get customers through the door. A free download each month could work for digital products. Listen to your audience’s feedback and you’ll quickly realize what works. Grow Your Business  Once you launch and sell all of your initial inventory, it’s time to grow further. Most aspects of running your business will remain the same, but on a larger scale. It could be beneficial to invest in some tools, hire someone to help, and draw from the experience you’ve gained while building an eCommerce business to find room for potential improvement in the future. You’ll want to consider upping your current eCommerce marketing efforts. This could mean creating a lengthy email marketing list, collaborating with influencers in your niche, and focusing on SEO.  As you gain new customers, you might consider investing in good customer relationship management (CRM) software. This kind of program is bound to upgrade your customers’ experience at your eCommerce store. CRMs do a solid job of replacing the face-to-face experience people have at brick-and-mortar stores.  As your customer base grows, you’ll also likely have more inventory to handle and warehousing problems to solve. Thankfully, there are plenty of software options that can help you with inventory management. On top of that, you should keep an eye out for other things you can do to help you further optimize your processes. As always, the best way to improve your business is to listen to your customers. You should also look out for ways to improve your back-office processes when you notice that something is unnecessarily complicated. Any improvements you make will surely help your profits down the line! How Much Does it Cost to Start an eCommerce Business? This is a difficult question to answer, as there are many unknowns at play. Creating an eCommerce website can be expensive, but you might have friends who are willing to lend their expertise for a percentage of your profits. On the other hand, you might have to pay for someone to help with marketing, or you might need to splash out more to get special inventory in.  With all that in mind, we’ll try to answer this question: how much money does it take to start an eCommerce business? If you need just the basics - domain, platform, and hosting - it could cost you as little as $40 per month. On top of that, creating your business and acquiring all the permits you need can cost anywhere from $30 to a few hundred dollars, depending on your location. And while it doesn’t seem like much, this minimum investment will mean you have to do a lot of heavy lifting yourself.  From there, hiring a website designer could cost anything from $300 to several thousand. On top of that, hiring a graphic designer to come up with a beautiful logo will likely cost you anywhere from $15 to $300. A warehouse typically costs $4 to $7 per square foot per month, and if we’re not even going to get started on the costs of marketing - there’s really no limit to how much you could spend getting your company’s name out there. Social media marketing starts off being quite affordable, but if you’re trying to reach a broader audience, you’ll also need to consider expanding your budget.  Any additional software or service will create extra dents in your budget. Keep in mind that $5 might not sound like much, but if you have to pay that amount every month for multiple apps, it will soon add up. Still, many of those services are well worth their price, so it’s up to you to figure out what you can handle yourself and what you need help with when starting an eCommerce website. Overall, excluding your inventory purchases, you could be looking at an initial investment of around $700 to $3,000. So, Is eCommerce the Right Business for You to Start? Especially in this day and age, eCommerce is the best option if you’re looking to start your own shop. After all, few business owners these days want to deal with all the extra expenses and challenges that come with operating a brick-and-mortar store. If you start an eCommerce business, you can enjoy high levels of flexibility while forking out much less cash than you would to open a brick-and-mortar shop, and you might even be able to work from the comfort of your home. Before you get too excited, you should be aware that the niche is very competitive. Unless you’re offering a product that enough people need but can’t buy anywhere else, you’ll likely have to grind a lot to turn your store into a success. Still, the opportunity to be your own boss might just be too good to miss out on.