What is an ecommerce business?
An ecommerce business sells products or services to customers over the internet. Ecommerce businesses can range from small, home-based operations to large, multimillion-dollar enterprises.
A successful ecommerce strategy can allow entrepreneurs to reach a broader, global audience with minimal overhead costs because you’re not restricted to a local customer base.
In this guide, we’ll cover:
- How to start an ecommerce business in 5 steps
- 5 tips for running your online business
- How much it costs to start an ecommerce business
How to start an ecommerce business from scratch in 5 steps
Dreaming about turning your million-dollar idea into an ecommerce store? You may already be thinking about what type of products you want to sell, who your audience will be, and how you’ll attract customers.
It can be a lot to consider, so let’s look at five basic areas:- Researching and validating your business idea so you know what’s likely to sell
- Procuring products or sourcing them from reliable suppliers
- Choosing selling channels to connect with customers
- Listing products and optimizing content to drive sales
- Marketing and promoting products to attract customers
Step 1: Research and validate your business idea
What problem or challenge are you seeking to solve? Who’s going to be most excited about the solution you come up with?
Some ideas—however innovative—can fail if they don’t have customers to support them. As you zero in on product ideas, here are some prompts to help you make decisions- What are the common problems people face in your industry?
- Why are they facing these problems?
- What products or improved features can you offer to solve these problems?
- What trends have you noticed in the world that you can capitalize on?
- What activities do you enjoy? What products would improve those activities?
Answering these questions can bring you closer to finding a product people want to buy.Find a way to improve existing products
Read customer reviews of similar products to find out where your competitors fall short. Tally the issues and look for patterns. Next, research how much it might cost to solve the issue.
For example, glassware comes in many designs, but families may avoid purchasing glasses out of fear their children will break them. So if you create a line of attractive, shatterproof glasses, it could be lucrative.Talk to potential customers about their frustrations
What comments or complaints do you hear from friends or family about the products they use? Reach out to a small group of people to understand if they face the problem you’re trying to solve, and find out how they currently deal with this challenge.
Here’s one approach:- Offer to buy 5 to 10 people a cup of coffee in exchange for 30 minutes of their time.
- Use your meeting to talk about the challenge and see if the pain point is something they would pay money to solve, or if it doesn’t bother them much.
- Avoid bringing up the product you have in mind, as this may influence the answers you get. Instead, focus on how they feel about the challenge, how they currently deal with it, and whether they would pay to solve the problem. If so, how much would they be willing to pay?
Asking these questions can help you figure out if there might be an audience for the product.Spot opportunities with competitor research
Before you open your virtual doors, it’s a good idea to check out the competition. A simple approach to competitor research can involve browsing results in Amazon search for product categories that interest you. Pay attention to the following:- Product features and benefits
- Price ranges
- Customer reviews
The more time you spend validating the product, the better your chances of succeeding in ecommerce.Step 2: Source products
Once you’ve figured out what you will sell and who the products will serve, the next step is to find the right source for the products.
Good products will help your new online business thrive. The key is not only choosing the right product, but also the right source for products. Here are a few options for sourcing ecommerce products.Resell existing products
Reselling involves procuring products and reselling them to the end customer for a profit. Online directories and listings can help you find suppliers for products. You can contact vendors, order products, and ship them to your business or storage location. Then, ship them out to customers once the products sell. Finding and building relationships with suppliers can lead to more affordable procurement, and it can help secure a steady supply chain for your business in the future.Create or build products
In contrast to other forms of procurement, making products can give you greater control over quality and design. But this method may also be harder to scale up. Some sellers prefer to create small batches of handmade products to keep operations manageable, then price products at a premium.
If this is the route for you, explore artisanal or custom ecommerce selling options like Amazon Handmade.Use dropshipping or print-on-demand
Dropshipping is a business model that might be appealing if you don’t want to keep inventory in stock. Instead, when a customer places an order, a third-party supplier ships it directly to the customer. This can allow you to offer a wide variety of products without investing in large amounts of inventory.
Similar to dropshipping, print-on-demand is where you print products like T-shirts or books after a customer places an order. If you offer custom designs or unique products that would be difficult or expensive to produce in bulk, print-on-demand might be a good model for your business.Work with a manufacturer
Partnering with a manufacturer can take time and resources, but the investment might be worth it if you want to build your own brand. The right manufacturer can build prototypes to your specifications.
Locate a few manufacturers and ask for samples. Then narrow it down to two or three and order a small batch to test the manufacturer's speed, quality, and communication.
It doesn't hurt to have a backup supplier in case something goes wrong. For instance, having a supplier in another country or region can help you avoid going out of stock if there are delays in the supply chain.Is Amazon B2B or B2C?
It can be both. Individual customers and businesses of all sizes shop for products and place purchases in the Amazon store.Step 3: Choose an online selling channel
If you’re new to ecommerce, you may want to start small and scale up. Selling on your own website is an option if you have the time, resources, and skills to customize a website, create a seamless online experience, and compete on the internet to get customers to your virtual doorstep.
Other options include starting out on an established ecommerce website like Amazon.com, or selling through social media sites like Facebook, Instagram, or Pinterest. Let’s explore the details of a few different routes.Sell on an existing ecommerce website
Selling websites with established traffic can help you connect with customers, expanding your visibility and reach. This strategy also gives you a chance to learn about what works for other sellers, get reviews, and generate revenue before investing in your own website.Try social selling
Social selling is a way for entrepreneurs to share about products and allow customers to buy during a live show. Customers can see the products, ask questions, and get personalized product recommendations in real-time. Social selling can take place on social media or live-streaming destinations like Amazon Live, an interactive way to build customer relationships
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