Creating an e-commerce store is the first step to starting an e-commerce business

Step 1: Research the e-commerce space and find your niche

The first step in?gaining knowledge of?how to?begin?an e-commerce?commercial enterprise?is performing the?essential?research. Just as if you?have been?beginning?a restaurant and?searching?into?exclusive?locations,?meals?options, and themes,?you will?favor?looking at?the e-commerce?location?you are?fascinated?in and making some?selections?with regard to your?particular?business.

For example, you'll want to consider what exactly your e-commerce business is going to offer. Will you be selling products or services? If you're selling products, are they physical or digital? Where will you source your products? Along these lines, you'll also want to think about the type of business model you want to employ — will you offer single products, packages, subscriptions, or something else?

Additionally, you'll want to think on a broader scale during this process as well: How will you get your products or services to your customers? What will your startup costs look like? Are there legal or other regulations on your product or service that you need to keep in mind?

These lines of questioning, among others, will be integral to the beginning of your business and will help you start to create and write your business plan. This process will give you a better sense of your specific goals and how you're going to reach them. Particularly in the e-commerce space, an important part of this step is finding your niche.

Although the growth of the e-commerce industry is a great benefit for those looking to learn how to start an e-commerce business, it also means more competition. You'll want to perform competitor research and find a space where you think you can establish your brand and find success in selling products and services.

Step 2: Select your business name and choose a legal structure

Once you've solidified the plan for your e-commerce business, the next step is to choose a name. Like any other business, you'll want to choose a name that's unique, but also that clearly indicates what your business is or does. You'll likely want to consult your local secretary of state's website, as well as the U.S. Patent and Trademark Office to ensure that you're not choosing a business name that's already claimed by another company.

Although you won't want to invest too much time on a website quite yet, it will be worthwhile to check to see if your potential business domain name is available. If your domain name is currently being used, you may consider a different business name, or a different structure, such as "your business name. co" instead of "yourbusinessname.com."

Next, choose your business's legal structure. The business entity type you pick will have important legal and financial implications for your e-commerce operation. Generally, you'll choose to create a sole proprietorship, general partnership, LLC, or corporation. There are benefits and drawbacks to each of these entity types, so you may decide to consult an attorney or another legal professional for advice on the best option for your business.

If you choose to start a sole proprietorship or general partnership, you won't actually have to register in the state where you're operating. Instead, your business will be associated legally under your individual name, meaning if you want to operate under the name you've chosen, you'll need need to file a DBA or "doing business as" application with your local government.

Step 3: Choose an e-commerce platform and create your website

Although there are hundreds of these platforms available on the market, you might consider any of the following popular solutions for starting your e-commerce business:

Shopify

Perhaps the most well-known and popular e-commerce software out there, Shopify offers an all-inclusive, user-friendly solution with a variety of add-ons. You can purchase a Shopify subscription in one of four plans, starting with Shopify Lite at $9 per month (this plan doesn't include a full online store).

WooCommerce

If you already have started a WordPress site, or are familiar with the platform, you can download WooCommerce to start selling on your WordPress site. This plug-in is open-source, free to download and includes the full range of e-commerce features. Compared with Shopify, however, WooCommerce is best-suited for business owners who have some technical knowledge to take advantage of its open-source nature.

Step 4: Source or develop (and list) products

After you've chosen your e-commerce platform and started your website, you've almost reached the end of the process. At this point, you'll need to actually source the products you're going to sell. You should have already thought about how you're going to go about this process when you performed your research in step one. You may make your own products, source them from distributors, or — if you're selling your own services, like as a consultant, for example, you may simply have to describe and list these services on your business website.

If you're selling products, as you might imagine, this step will be more complex, as you'll need to consider the inventory you want to start out, as well as what these startup costs will look like. You'll also want to make sure that you take the time to list your inventory on your online store — thinking about the customer experience, SEO, and the way the process will work from when a customer purchases a product to when they actually receive that product.

Step 5: Market your e-commerce business

There you have it — you've learned how to start an e-commerce business. Now that you have your products or services prepared and listed on your online store, your website is up and running, you're ready to start serving customers. In order to do this, of course, you'll need to properly market your e-commerce business.

There are a variety of marketing strategies you might decide to utilize — Google ads, social media ads, word of mouth, and more. At the most basic level, you'll want to optimize your business website for SEO and take advantage of any online marketing tools that are included within your e-commerce platform.

As your e-commerce business is up and running and you start to receive orders, you'll want to keep track of which marketing tactics are working and which aren't — especially if you're investing money in them. As time progresses, you'll be able to adjust and change your marketing strategy to find what works best for your business.

How much does it cost to start an e-commerce business?

With this in mind, you'll likely want to think about your budget carefully as you start out and keep track of all of your expenses along the way. Specifically, you'll want to consider the following costs:

• Business licenses and permits: Depending on your entity type, location, and what you're selling, you can face a range of costs for licensing and permits — some states charge low fees, anywhere from $10 to $50, where others can charge a few hundred dollars for incorporating.
• Ecommerce software: Although it may be free to download an open-source platform, there will be other costs associated with this type of solution (developer fees, hosting, add-ons, etc). For an all-inclusive platform, on the other hand, you'll be able to find some of the most basic options at low prices ($16 per month for Square Online Store, for example). More advanced and expansive solutions will require greater costs, with Shopify Advanced capping at $300 per month.
• Domain name and hosting: Some e-commerce solutions will include a domain name or hosting within the cost of the platform and some will allow you to purchase your domain name through them. If you need to purchase your own domain name and hosting, however, you can expect to pay anywhere from $1 per year for the domain to around $15 per year and an average of $30 per month for hosting.
• Payment processing: To accept payments online, you'll need to work with a payment processor like Square or Stripe. Once again, some e-commerce software solutions will include their own payment processing with the platform, whereas others will allow you to integrate with your preferred system. Generally, you'll pay around 2.9% plus $0.30 per transaction that is made at your store.
• Inventory and shipping: Depending on what you're selling, your inventory and shipping costs can range drastically. However, of all the costs we've discussed thus far, your initial investment for inventory will likely be your greatest. You'll want to purchase inventory carefully, especially when you're first starting out — you don't want to spend too much money on products you won't be able to sell. Your shipping costs, of course, will depend on your sales, the shipping services you use, the size of the products you're sending, and the shipping speed options you offer to customers.
• Marketing and advertising: As a general rule of thumb, it's safe to budget about 6% or 7% of your gross revenue for marketing and advertising. As you're starting out, this can be difficult to estimate, so you'll certainly want to take advantage of any free marketing and advertising options you have available. Then, once you have a better idea of what works well for your e-commerce business, you can start exploring paid options for promoting your store.