How to Start an Online E-Commerce Business

how to build an ecommerce business

The e-commerce space has been booming in the last few years and especially, after the onset of the dreaded coronavirus. Nowadays, people prefer to shop online from the comfort of their homes and with the convenience of cards and other virtual payment modes. e-Commerce also offers budding entrepreneurs more flexibility, opportunity and affordability. However, shopping online might look easy but setting up an e-commerce business is quite a tedious task. In fact, it is as big a challenge as setting up an offline store or business. It involves setting up, launching, and maintaining the site along with having viable payment gateways.

If you are planning to start an e-commerce business systematically, here is a step-by-step guide to getting your portal up and running in no time at all.

  1. Research and study

The first thing to do before starting any venture is to do a thorough study about it. It would involve what kind of business you would want to do? Would it be products or services? If you are selling products, will they be digital or physical? What will be the source of the products? What business model would you like to employ, like having a single product or offering bundling of products or something hybrid? All these are pertinent questions to be thought through before venturing into an online business.

Once you have answered these questions, you can broaden the scale and check how you will reach your products to the customers? What are the legal rules and regulations you will have to keep in mind?

All these questions will be integral before starting the business. They will help you create and write the business plan. They will give you an understanding of your goals and how you are going to attain them. One of the essential parts of an e-commerce business is finding a niche and creating your own identity in that space.

  1. Competitor analysis

It would be a good idea to do a competitor analysis after researching and deciding on your niche. It can help you find better products and widen your knowledge about how to launch the business. You can avoid mistakes that other entrepreneurs may have made during their initial stages. Lastly, it will tell you what kind of online businesses are doing well and what type of marketing strategies are helping them. 

  1. Choose a business name and legal structure

Once you have decided on what niche you will venture into, it is time to decide a business name. Choose a name that is unique and gives a clear indication of the business. Always consult the local secretary of state’s website and the U.S. Patent and Trademark Office to ascertain that another company does not already have your business name.

While researching on the business name, it will be a good idea also to check if the potential business domain is available.If another is using it, you might want to have a different name or structure. For instance, instead of having “” you can go in for “”.

Once the name is decided, look into the legal structure. The business entity type you choose will have legal and business ramifications on the operations of the business. You can choose between sole proprietorship, corporation, general partnership or LLC. Each entity type has its own share of benefits and drawbacks. Always consult a legal professional for advice on the best business option.

If you have opted for a corporate or LLC business, you will need to file tax returns and have a tax ID number. In the online business model, you will need you to have an Employer Identification Number (EIN). This will help you open a business bank account for you to file business taxes in the upcoming financial year. You can apply for the EIN for free from the IRS. For a sole proprietorship, you will not need to have a tax ID number.

  1. Permits and licenses

Once you get the EIN, you will need to apply for business licenses and permits to operate within the city or state. In case of a sole proprietorship or general partnership, you do not have to register your business with the state. For all the other types, you will have to register the business with the state and get a general operating license. You might also need a local operating license based on your location. You will need to find out more specific details about permits and licenses from the state or local government website, as these will vary depending on the region. Some of the business permits you might require are:

  • Professional and trade licenses for some sectors.
  • Signage permits.
  • Building and construction permits.
  • Sales tax permits.
  • Health, safety, and environmental permits.
  1. Create a website

After completing all the legal formalities and deciding your niche, it is time to give a face to the business. Unlike a brick and mortar business where the retail outlet is the face of the business, in an e-commerce business, it is the website that works as the showstopper.

It is the first thing your prospective customers will see in the business. They will form an impression about the company based on the website. Hence, it is pertinent that you do a good job of it. Here are some points to consider while creating a website and developing an online store:

  • Firstly, think of a domain name. It should closely match your business name and hence, it is a must to choose an e-commerce portal. You could have an all-in-one software like Shopify or go in for an open-source portal like Magento.
  • The majority of the e-commerce platforms will create and launch the online store as well as personalize the design, do inventory management, ship orders, handle payments, and a lot more.
  • Once the platform is decided, you need to work out the aesthetics of the website. You will need to plan out the organization and layout of the products, design, colours, and more. You can create and launch the website or hire a professional designer to do so.
  1. Product management

Now that the website is up, you need to work on the products. Think about where you will source the products from and if you are going to produce them yourself. If you are into services, then you will have to only list your services on the website.

However, if you are selling a product, you will need to look into many things. Firstly, plan out the inventory you want to begin with and their costs. Work out the entire process from sourcing till the customer finally gets the product. It would involve product content creation, SEO, discounts and offers, payment methods, shipping and more.

  1. Payment gateways

To access all the payments for the products and services sold, you will need to have a robust payment gateway. It will allow processing debit cards, credit cards, net banking, cash card transactions through the website.

To have a payment gateway for your e-commerce portal, you will need to submit some documents:

  • Bank account
  • Business PAN card
  • Articles of Association
  • Identity proof
  • Certificate of Incorporation
  • Memorandum of Association
  • Address proof
  • Website terms of use
  • Website privacy policy

On submitting these documents, you will be given a payment gateway for the online business that can be used for all online payments. Some of the popular ones are RazorPay, PayU and PayPal.

  1. Logistics Management

It is one of the most crucial steps for an e-commerce business. It includes shipping the product to the customer or sending an inventory to a merchant. You will need to find and partner with distributor companies. It is ideal to outsource the logistics to a third-party company involved with storage and transportation.

The logistics and shipping process includes getting a notification once a customer finishes his order on the website and you will need to ship the product to the address. You can tie up with a company that deals with supply and distribution to dispatch the product quickly. If you are a startup and have a small business, then you can do this process on your own and send the product in question to the customer directly.

Dropshipping is a viable option for shipping for your e-commerce portal. It has lower investment and is less risky that you need to find suppliers and stock the inventory yourself. In this method, you find suppliers of products you would like to sell on a dropshipping platform like Oberlo and then you get these products to your store. When a customer buys one of those items, you give an order to one of your suppliers and they will ship it directly to the customer. This means you don’t have to handle any merchandise and you can also get products as per the latest trends with ease.

  1. Marketing Strategies

Marketing any business is of utmost importance, be it offline or online. There are many different kinds of marketing strategies that you can use to be successful.

  • SEO Marketing

At the fundamental level, you will have to optimize your website for SEO and use marketing tools that are a part of your e-commerce platform. SEO marketing is key to smart marketing. SEO helps put you high up on the search engine map. There are thousands of keywords being searched every minute and hence, it is essential that you come high up in the searches. A targeted keyword list will help you do that. You can use tools like Google Keyword Planner, Keyword Dominator, SEMrush to find these keywords.

  • Advertisements

This is an effective way to grab the eyeball of the customers. You can go in for ‘paid ad’ platforms like Instagram and Facebook to promote your daily on the users’ daily feeds.

  • Promotions

Sales and promotions are a great way to attract customers though this may not be the best way to start a new business. It is an excellent way to publicise posts and get more sales.

  • Retargeting

This is an expensive form of marketing but shows positive results. In this strategy, cookies are placed on the gadgets of those people who visited your portal but did not buy anything. When the same people visit another website that shows ads from the re-targeting networks, your advertisement will appear.

  • Word of mouth

This is the oldest marketing practice and works wonders even now. You can ask friends and families to spread the word around about your website. You can use professional bloggers to write and review your brand too. This will look more professional and garner more traction.

  1. Website performance analysis

Once your website is up and running and people come to it to purchase products, it is good to do a website analysis check. Look at how the traffic is flowing. Look at how the traffic is flowing. Are the targeted audiences coming to the website? Are you losing customers? Is there cart abandonment? If the traffic is coming to the portal, but sales are slow, you need to fix the bug. You need to take a closer look at each page and the product listings. A good tool to help out with this issue is Google Analytics. It can monitor and optimize traffic and sales.

The Bottom Line

The e-commerce space is ushering in the latest wave of change in the business sector. It is seeing wide acceptability amongst people and processes are being put into place to make it a feasible form of business.

However, starting an e-commerce business can be quite challenging. From choosing the business line, evaluating its feasibility to set up the online portal, putting in place marketing strategies and making it a hit. Use the above-mentioned guidelines as the gospel truth and you will have a flourishing e-commerce set up in no time.

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