How to Start an E-Commerce Business: An Easy 5-Step Guide

Victor Grytsai
ETEAM
Published in
10 min readMar 21, 2024
A guys starting an e-commerce business by following this easy 5-step guide.

Have you ever aspired to launch an e-commerce business, but hesitated to take the leap?

Even though establishing a successful e-commerce company requires commitment and hard work, it can also generate a significant income once your business is active.

In this guide, we’ve compiled 5 essential steps that will assist you in planning, creating, and launching your first e-commerce business, along with advice on:

  • the initial expenses and when you can anticipate profits
  • how to determine what to sell and product opportunities for novice e-commerce entrepreneurs
  • insights on constructing your online e-commerce store

Why start an e-commerce business in 2024?

If you’ve been considering embarking on an e-commerce entrepreneurship journey, consider this the sign you’ve been waiting for.

Why?

Because 2024 is predicted to be a year filled with promise for online stores.

A report from Shopify reveals that global e-commerce sales have been growing year after year, peaking with a 9.4% expected growth in 2024. This is the second-fastest growth rate anticipated in the forecast period between 2021 and 2027.

Bar charts showing the evolution of global e-commerce sales between 2021 and 2027.

Whether you engage in it as a full-time endeavor or a side venture, e-commerce presents a promising outlook. Shopping habits haven’t reverted to pre-COVID trends, implying that a greater number of people choose to shop online rather than in physical stores, and e-commerce shows no signs of decelerating.

What type of e-commerce business is most profitable?

E-commerce businesses can vary from a small shop you operate from your living room to multi-million dollar corporations like Amazon.

Two of the most dominant e-commerce business models include:

B2B e-commerce: This sells products that are typically required in bulk or regularly by businesses.

B2C e-commerce: This serves end consumers directly by selling a variety of products, from everyday items like clothes and cosmetics to specialized goods.

Naturally, each business model has its own markets, so it’s important to understand which niche would be most beneficial for you. A great starting point would be to examine general markets that attract the most customers.

According to recent industry statistics, electronics and fashion top the list for consumer goods, followed by furniture and items related to toys, hobbies, and DIY.

Table showing the annual spending in various consumer goods e-commerce categories in 2022.
Source: Upmetrics

After identifying your general market, you can narrow it down to a niche that remains competitive without being overwhelmed by major brands.

For instance, if you’re in the fashion e-commerce business, you could explore various subcategories like vintage clothing or plus-size apparel.

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

Launching an e-commerce business involves various expenses, depending on factors like your business model, product type, and operational complexity. To streamline financial planning, it’s suggested to categorize these expenses into one-time and recurring costs:

One-time Initial Costs:

  1. Legal fees for business registration.
  2. Domain name acquisition and setup expenses.
  3. E-commerce development costs, including storefront creation, payment integration, and UI enhancements.
  4. Branding expenses for logo design and brand identity development.

Recurring Costs:

  1. Website maintenance, hosting fees, and domain renewal charges.
  2. Subscriptions for e-commerce platforms.
  3. Expenses for inventory restocking and order fulfillment, including shipping costs.
  4. Marketing and advertising fees to promote your e-commerce venture.

By outlining these expenses upfront, you can better estimate your initial investment and ongoing budgetary requirements, facilitating smoother financial management as your business evolves.

How long does it take to have a successful e-commerce business?

While certain e-commerce businesses may enjoy rapid success, particularly if they target a high-demand niche, it’s essential not to measure success solely by profitability, particularly in the initial stages.

Instead, prioritize metrics that offer a more nuanced evaluation of your early performance, such as achieving specific website traffic milestones or establishing steady, but modest, sales figures.

Remember, building a successful e-commerce enterprise is a marathon, not a sprint. In reality, most e-commerce ventures begin to flourish and witness substantial growth after 2–3 years of diligent effort.

Thus, it’s essential to give yourself enough time for experimentation and gradual scaling, acknowledging that success often requires patience and perseverance.

Mock-up showing storefront of clothing e-commerce.
Source: Figma Community (Samuel Godis)

5 steps: how to build and launch an e-commerce business

Embarking on the journey to establish an e-commerce store includes considering various factors, such as product demand, competition analysis, and customer acquisition strategies.

To navigate this process effectively, here are five essential steps to help you achieve e-commerce success:

  1. Deciding what to sell and the market you will be selling in
  2. Considering logistics requirements (how you will get and ship your products)
  3. Writing a business plan and registering your business
  4. Creating your online store
  5. Launching and marketing your e-commerce business

Step 1. Research products to sell and find your niche

To thrive in the competitive landscape of e-commerce, it’s critical to define your unique selling proposition (USP) and identify your niche market.

Here are a few things to consider:

What expertise do you have?

How do these abilities align with the market?

What products do you aim to sell?

By answering these questions and focusing on a specific niche, you can differentiate your e-commerce business and carve out a competitive advantage in the market.

Physical versus digital products

When exploring products for sale, a big thing to consider is whether to offer physical or digital goods.

Digital products are items like e-books, software, illustrations, online courses, and templates, all consumed electronically.

Digital products offer an appealing route into e-commerce, requiring no physical materials or storage and offering instant delivery to customers via downloads or online access.

However, popular digital niches can be highly competitive and prone to issues like piracy and Intellectual Property violations.

Choosing your e-commerce niche

Strategic product and market selection is necessary. One common mistake made by rookie entrepreneurs is overlooking these factors:

Passion and expertise: Begin with what you’re knowledgeable and passionate about. Establishing a business around your existing interests and skills not only brings personal fulfillment but also sets you apart.

Visibility: Is your niche visible and in demand? Utilize social listening, trend analysis, and SEO tools to estimate the market’s visibility and potential.

Niche communities: A strong niche market appeals to a distinct audience with specific interests and needs. Investigate these communities to offer tailored products.

Profitability potential: While low competition is favorable, it may suggest limited profitability. Consider whether your chosen market has sufficient potential, including opportunities for upselling and cross-selling.

Step 2. Consider the logistics

Once you’ve identified your products and target audience, logistics become the next step.

How do you intend to source and deliver the items to your customers?

Decide how you will source your products

Dropshipping has emerged as a popular method for e-commerce businesses to sell products without managing inventory. In this model, you collaborate with a supplier who handles packaging, shipping, and order fulfillment.

However, despite its benefits, dropshipping also has drawbacks such as higher wholesale prices. While choosing this option make sure to assess sourcing options based on your specific needs and budget.

Other sourcing methods include:

  • Crafting your own products: Ideal for handmade items with simple materials like candles or pottery.
  • Partnering with manufacturers: If making products is not practical or costly, collaborating with manufacturers allows for larger-scale production.
  • Purchasing wholesale products for resale: While you don’t control pricing, this approach offers the advantage of obtaining products at lower costs and curating them for your online store.
Ways you can source products to sell in an e-commerce store.

Step 3. Write a business plan and register your business

Once you’ve solidified key elements such as your target market and sourcing strategy, it’s time to develop a comprehensive business plan.

A well-crafted business plan not only helps in organizing but also serves as a tool to attract potential investors.

For additional details, feel free to explore our article detailing how to craft a business plan that captures investor interest.

What should you include in the business plan?

Your business plan serves as a comprehensive guide, including various aspects from finances to marketing and operations. It’s advisable to structure it into different sections, each addressing key points.

Executive summary: This section provides an overview of your offerings along with your mission statement and unique selling proposition (USP), showcasing your values and distinguishing factors to stakeholders.

Marketing and sales strategy: Here, outline your approach to marketing and sales, how you plan to attract customers, drive website traffic, and convert leads into sales.

Operations and management: This part delves into the operational aspects of your e-commerce business, explaining how you’ll handle product provision and manage day-to-day operations.

Financial projections: Offer estimates of your financial performance spanning the next three to five years, while also addressing potential risks and challenges that could affect profitability.

Setting up your business name and legal structure

Starting an e-commerce shop requires addressing legal issues. Once you’ve settled on a business name, the next step involves registering your business by opting for a suitable legal structure.

Common options include a general partnership, limited liability company (LLC), corporation, or sole proprietorship.

Furthermore, depending on your business type, you may require additional licenses such as trade licenses for specific industries.

It’s also suggested to open a dedicated bank account to maintain separation between personal and business finances.

Step 4. Build your e-commerce website

Developing your e-commerce platform stands as a key step in establishing your online business.

In essence, an e-commerce platform refers to the software used to create your digital storefront along with its underlying functionality.

Off-the-shelf or custom e-commerce?

When launching your e-commerce site, the initial decision is around the aesthetic and functionality of your store.

Consider whether a pre-built solution suits your needs or if a custom-built platform is necessary.

Evaluate the time and financial investment you’re ready to dedicate to customization.

For small businesses or e-commerce beginners, an e-commerce website builder like Shopify, WooCommerce, Squarespace, or BigCommerce offers a convenient starting point. These platforms provide drag-and-drop tools and various templates, allowing you to create a professional-looking online store without extensive coding.

However, ready-made solutions come with limitations in customization, offering less control over design, layout, and features. Scaling can also be challenging, as additional functionalities often come with extra costs.

For example, while a standard Shopify theme typically costs around $120, custom themes may range from $5,000 to over $25,000 for complex requirements.

How outsourcing can transform your e-commerce business

As your business expands, you may need more intricate features and customization beyond what standard e-commerce platforms offer. In such cases, outsourcing the development of your online store can ease the burden and support smooth scaling.

Outsourcing software development frees up your resources, allowing you to concentrate on core activities like sales and business development. This streamlined focus accelerates operational growth.

Yet, outsourcing isn’t limited to software development alone. Depending on your requirements, you can delegate various functions, including order processing, customer service, security management, and ongoing technical assistance.

Key features and integrations for an online store

In today’s competitive market, the success of your e-commerce shop relies on its user-friendliness and seamless integration capabilities. A smooth user experience (UX) across the entire customer journey and strategic integrations are essential.

For modern e-commerce platforms, core features include cross-platform compatibility, responsive chatbots, quick loading times, and secure payment gateways.

To delve deeper into the necessary functionalities for modern online stores, check out this article.

Integrations play a huge role in improving your e-commerce ecosystem by connecting your store with different software applications. These integrations include:

  • Carrier integrations with leading shipping providers like UPS, FedEx, and USPS, helping customers to conveniently track their orders.
  • Payment gateway integrations with platforms such as PayPal, Stripe, and Square, ensuring secure transactions and offering diverse payment options to customers.
  • CRM system integrations assist in managing customer interactions and tailoring marketing strategies based on collected data.
  • Integrations with customer support software and chatbots enhance customer service by enabling quicker response times and improved engagement.

Step 5. Launch and drive traffic to your e-commerce online store

Congratulations!

Now that your e-commerce store is live, it’s time to attract customers and monitor your progress.

Use your initial market research to identify the best advertising channels and create compelling content tailored to your target audience. This research will guide your advertising efforts and content creation strategies, ensuring maximum impact and engagement.

Marketing your e-commerce business

To boost traffic to your e-commerce platform and enhance brand visibility, diversify your marketing strategies. Relying on a single method may limit your reach, so explore multiple channels to engage with your target audience effectively.

Consider the following options:

  • Social Media Platforms
  • Email Marketing
  • Search Engine Optimization (SEO)
  • Influencer Partnerships
  • Affiliate Marketing

Going from business idea to e-commerce success

If you’re considering enhancing your e-commerce platform, whether by building it from the ground up or extending its existing capabilities, collaborating with an external consultant can provide valuable insights and expertise.

As businesses grow, custom software development becomes increasingly appealing, offering tailored solutions beyond the limitations of off-the-shelf e-commerce options.

At ETEAM, we specialize in crafting e-commerce technologies that enhance customer experiences, including chatbots, omnichannel shopping solutions, digital wallets, and AI-driven product recommendations.

If you’re interested in implementing similar innovations in your e-commerce venture, we invite you to schedule a free consultation. Together, we can explore the technologies best suited to your unique needs and goals.

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Victor Grytsai
ETEAM
Editor for

Cofounder of eteam.io and sapience.io. I've been hammering out the nitty-gritty details that make a tech company work for the past 8 years.