Launching an E-Commerce Business in 2024: A Comprehensive Step-by-Step Manual
Set up your e-commerce business, source your products, build your website and start making sales.
An e-commerce business sells goods, services and funds over the internet. Starting an e-commerce business is a lot like starting any company: You’ll need to create a business plan, get licenses and permits and set up dedicated finances. You’ll also need to choose an e-commerce website builder, source your products and market to online customers.
1. Define your e-commerce business idea
The first step in starting any business is to hone your idea. Online business ideas can include selling physical or digital products as well as professional services. Whatever you choose, you’ll want to define your e-commerce business model and write a business plan that outlines your niche.
During this process, you’ll start to ask a lot of questions: How will you get your products or services to your customers? What sort of licenses or permits do you need? How much will it cost to get your business up and running — and how will you foot that bill? Your business plan should answer these questions and provide a road map for the coming months.
2. Set up your business
Once you've solidified your e-commerce business idea, the next step is to set your company up for success.
This includes back-office steps like:
- Choosing a business structure. There are benefits and drawbacks to each of these entity types, so talking to an attorney may be helpful as you choose the one that’s right for you.
- Naming your business. 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 name that belongs to another company. Check to see if your potential business domain name is available as well.
- Applying for an employer identification number (EIN). You can get an EIN from the IRS for free online or by mail, fax or phone. Not all businesses need an EIN, but having one can help you separate your personal and business finances.
- Opening a business checking account. NerdWallet recommends all business owners have a dedicated bank account for their business.
- Getting licenses and permits your city or state requires. This probably includes a business license, and if you perform services, you may also need an occupational license. Check your state or local government website for requirements for your area.
3. Source or develop your products
Next, you'll need to source the products you're going to sell. If you’re selling physical products, you may need to make them yourself or work with a manufacturer.
A key decision at this point: Are you going to order products in bulk and keep inventory in stock? If so, you’ll need to think about storage space and raising capital to order goods upfront. However, you’ll have the power to ship items yourself.
Other businesses choose to rely on dropshipping, in which products are manufactured or sourced at the time the order is placed. In general, dropshipping may keep your overhead costs lower, but it can be more difficult to manage since inventory levels and shipping will be out of your hands.
Other options for sourcing e-commerce products include:
White-labeling, or ordering items in bulk from a manufacturer and then branding them with your company’s identity.
Print-on-demand, or paying a third party to print your company’s designs on merchandise like T-shirts, mugs and posters. Print-on-demand normally functions like dropshipping, in that a customer places their order, then the manufacturer creates the product and ships it directly to the customer.
Retail arbitrage, or buying discounted items from retail sellers and listing them in your own store at a markup.
If you're selling professional services, you might just have to describe and list what you offer on your business website. Still, you’ll need to figure out how much to charge and decide how many clients you can see each day or week.
5. Figure out order fulfillment
Order fulfillment is the process of getting customers’ purchases in their hands.
Most e-commerce website builders offer shipping label printing, which is the first step in the fulfillment process. Some also offer the ability to add shipping costs onto customers’ orders at checkout.
If you choose to handle order fulfillment yourself, research shipping rates so you have a sense of how much it’ll cost. Look for an online store builder that can help make the shipping process easier or research shipping software providers like Shippo.
Note, too, that e-commerce may connect you to customers across the world. If there are places you’re not willing to ship to, make that clear on your website.
If you don’t want to manage order fulfillment, you can outsource it to an e-commerce fulfillment center or use a service like Fulfillment by Amazon. Fees for fulfillment services vary depending on the size of your products, how far they’re traveling and how much you’re shipping.
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6. Market your e-commerce business
Now that you've started your online store, you're ready to start serving customers — as long as they can find your products.
Your small-business marketing strategy might include:
Omnichannel commerce, in which you list your products on third-party marketplaces like Amazon and Instagram. Some e-commerce website builders can help facilitate this.
Influencer marketing, in which you pay popular social media creators to plug your products.
Social media content or paid social media ads.
Optimizing your business website for search engines.
Sending email campaigns to past and future customers.
Many e-commerce website builders include some marketing features, which can help you do things like create social media ads or send emails to customers when they’ve abandoned their carts.
But if you want to develop more sophisticated campaigns, consider investing in marketing software. These tools can help you create email templates and campaigns, text customers, keep track of how individual customers are responding to your emails and more.