What to Know About Starting an E-Commerce Business

E-commerce businesses can be lucrative ventures. To start, do market research, determine the need for the products you want to sell, choose an e-commerce platform and online payment methods, determine logistics, and promote your products.?

By Brandi Fowler

E-commerce is big business, and it pays to have the right strategy before launching your first online company.?

Revenue from retail e-commerce in the United States was estimated at roughly $905 billion in 2022, according to Statista.?

And all signs are pointing to more growth. Morgan Stanley reported that the e-commerce market could increase to $5.4 trillion in 2026.

“I have seen an increase of the direct-to-consumer trend, where the manufacturer actually created its own e-commerce business model,” said U.S. Business Association of E-Commerce chief executive officer Tayde Aburto. “You place your order directly with the manufacturer, you can customize it, and then you can integrate it into your YouTube channel or you can integrate it into Etsy.”

Etsy has become a “huge platform” for e-commerce, Aburto said, adding that he saw that e-commerce business model increase following the height of the pandemic and provide people with additional revenue even if they had full-time jobs.

But, success doesn’t always come overnight.?

When you start your e-commerce business, be ready to work, said e-commerce strategist Anita Ray.

“It's a lot of work, because e-commerce isn't just your website,” Ray said. “It also includes all the digital pieces to it. What's your marketing piece going to be to get yourself out there? [Will you] do Facebook ads? Social media? There's so much to this, so make sure that you plan it out.”

Consider pairing with a mentor to help answer those questions and tackle challenges, Ray said.

“My mentor helped me with my business plan, my pitch decks, and so many different things that I just didn't know, because he's more of a CEO entrepreneur. You are in for some hard work, but at the end of the day, it's going to be so worth it.”

Also, don't be afraid to try and fail, said Ramp Digital founder Erin Kreissmann.

“There will be a lot of iteration and it's a process of continual trial and error,” Kreissmann said. “It’s a constantly changing landscape even for people like myself who have been doing this for nearly 20 years. What worked last week or last month or last year might not necessarily work today and it might not work for this brand.?

“So don't be afraid.”

Do Market Research to Start an E-Commerce Business

Determine the best demographic for your products, find out who your competitors will be, price points for similar products, etc.?

“I think most good businesses are based on a founder identifying a need, maybe looking for a product themselves that they can't find in the marketplace, experiencing or witnessing other people who are disappointed in the options that are available to them and creating something that they would like to use themselves,” Kreissmann said.

Ray suggested answering these questions in a document: How will this work? What is the goal of my website? Who am I? Who is my customer? What do I expect them to buy? What is my expected AOV?

Create a Business Plan and Determine the Best E-Commerce Platform for Your Business

Create a business plan to develop a clear idea of where to take your business, Aburto said.

Then, establish your e-commerce presence once you’ve sourced your product and decided how you will price it, Kreissmann said.?

“First determine what features and functionality you want on your website,” Kreissmann said. “For example, you might have different requirements if you're planning to be a subscription business versus a product that people buy one time, if you're selling multiple products versus single products, if you're selling kits versus standalone products.?

“In most cases, for a business just starting, there are a number of different e-commerce platforms that are pretty turnkey, that are mass customized, and really easy to use. Shopify is my go-to for 99% of e-commerce businesses that are just getting off the ground. And at this point, Shopify now scales to meet the needs of [small businesses]. Until you are a very large enterprise business with millions or even billions of dollars in revenue, it's going to suffice.”

Once you determine what you will sell, who you will sell it to, the resources you have to reach your target audience, and have created a website that has an e-commerce capability, the first question you should ask yourself is if you want to have a hosted shopping cart or a self-hosted shopping cart, Aburto said.?

You can use Shopify or create your shopping cart using WordPress and an e-commerce plugin, Aburto said. He recommended adding an e-commerce plugin to your website to avoid exorbitant costs. The process may take longer initially, but doing it that way can help you save money and create a stronger online presence.?

Aburto said Shopify, Wix, Square, and BigCommerce are a few of the most common hosted shopping carts. One of the most popular self-hosted shopping carts in WooCommerce.?

“WooCommerce can easily be integrated with WordPress,” Aburto said. “For any small business that is generating less than $50 million a year, I think they can be fine with WooCommerce if they do the settings right. You also have Drupal and CubeCart. If you Google ‘self-hosted shopping cart,’ you will find 10 good options that you can consider for your business.”

Once you choose your e-commerce platform, you need to think about how you will accept online payments. Stripe, Paypal, Amazon Pay, Google Pay, Square, and Authorize.net are the top platforms, Aburto said.?

Expect to see 2.8-3.2% (in fees) on average on those platforms, but you can offset those costs by incorporating them into your pricing strategy for your products, Aburto said.?

Determine your Logistics When You Start Your E-Commerce Business

How you will handle fulfillment is a major component of launching an e-commerce business too.?

Most small businesses, who have a small assortment of products, handle the fulfillment themselves, Kreissmann said.?

“When you have an e-commerce shop, you have [to address] logistics: where you're warehousing your product, where your product is shipping from, and sending order confirmation emails,” Kreissmann said. “If you want to have all of the standard functionality of an e-commerce experience, such as order confirmations, trackable shipping confirmation emails, you will want to choose an e-commerce platform that builds all of that in.?

“And then it's very easy. There are integrations with all of these different channels where you might want to sell your products, such as Instagram, Facebook, Google Shopping.”

Once you've set up a storefront on BigCommerce or Shopify, you can integrate those selling channels, promote your products there, and take in orders on your e-commerce platform.?

When handling shipping for your business, Aburto recommended that start-ups and small business owners ship with the U.S. Postal Service, Shippo, or Sendle. Shippo and Sendle have deals with different carriers, and can integrate with Shopify, WooCommerce, or any other hosted or self-hosted e-commerce platform.?

“For home-based businesses, the U.S. Postal Service is one of the best resources that they have for shipping because you can use a flat rate and easily integrate your flat rate as part of your pricing,” Aburto said.

Promote Your Products to Start an E-Commerce Business

Start promoting your products once you launch your e-commerce website.?

“How you promote them will be a ‘process of trial and error,’” Kreissmann said. “For anyone selling products, ensuring that your website is SEO-friendly so people can find your products organically is a no-brainer. You would rather have organic unpaid traffic than having to pay for every visitor that comes to your website.”?

Ensure the SEO for your products is clear and visible on your website, including product type, category, and brand name.

In addition to SEO, Kreissmann recommended starting with paid search, influencer collaborations, and email marketing to help raise awareness about your e-commerce brand.

For email marketing, capture email addresses as well as mobile numbers.?

“[Email marketing] drives the majority of revenue for most of my e-commerce clients,” Kreissmann said. “So anything you can do to create a relationship with a customer and get the email address so that you have permission to communicate with them, is a super important part of growing a brand.”

If you don’t know where to start or have a tight budget, take classes, Ray said.

“I learned photography 101 with my iPhone,” Ray said. “Canva is a great graphic design tool that you don't have to know anything about graphic design to use. I think it's so much easier than Photoshop or any of those other ones. They have little videos to teach you how to use it.”

Ray also recommended searching YouTube for instructional videos about other things you want to learn how to do for your e-commerce business. It can help you cut costs, which is critical when you launch a business.

Top Takeaways

What to Know About Starting an E-Commerce Business

• Do market research. Make sure there is a need for what you want to sell.?
• Create a business plan and determine the best e-commerce platform for your business.
• Determine your logistics, like fulfillment and shipping.
• Promote your products on social media. Take online classes if you need help learning how to take photos of your products, create graphics, etc.