Your Step-by-Step Guide to Launching an ECommerce Business

September 14, 2022


Are you looking to start your own eCommerce business? It’s a powerful way to reach customers worldwide, sell your products and services and develop a broad clientele.

While it can seem daunting to begin an eCommerce business, this step-by-step guide will help you develop a business plan and site to drive customers to your web business.

The global market for eCommerce is expected to see continued, sustained growth. According to Morgan Stanley, the eCommerce market could grow from $3.3 trillion today to $5.4 trillion by 2026.

Fueled by the increasing demand for online purchases during the pandemic, the eCommerce market is likely to reach 27 percent of retail sales by 2026, according to the Morgan Stanley report.

Markets for eCommerce continue to expand broadly and across all global regions. And technology has made it simpler for companies to develop, maintain and grow their online presence. These technologies allow not only for better websites but also richer data sets that allow for a clearer understanding of customers, demand, and opportunities.

Here is a look at the key steps to take to develop a strong eCommerce business.


1. Define Your Niche

To be successful at eCommerce, you’ll need to do some research. What is the product or service you’re looking to provide? What is the market for that business? Who are your customers? Are there competitors already in the space?

One key to success is to find your niche and focus on that uniqueness.

The business model you choose will be a key factor in determining the type of eCommerce site you use, the marketing you’ll need, and the messaging you’ll use. For example, will you offer physical or digital products? Will your business rely on subscriptions, packages, or single products?

The early thinking will go a long way toward eCommerce profits. Among the other issues to consider in the early phase of developing your business:

  • Startup Costs. Acquiring or creating your products, hosting your website, creating logos and marketing materials and other startup costs need to be factored in
  • Delivery. Define how you will get your products to your customers
  • Legal Considerations. What regulatory or legal factors come into play for your business? Seeking counsel from an attorney or financial advisor can help sort out these requirements


2. Choose a Business Name

Your name needs to convey many things – what your business is about, the customers you’re looking to attract, and what you’re offering. In an eCommerce space, you also want a name that’s memorable and can be found easily using internet searches.

Before selecting a name, you’ll want to check with your state’s secretary of state office and even the U.S. Patent and Trademark Office. Both have processes for checking if the name you have in mind is already in use by another business. You can also check to ensure that your name conforms with any state guidelines around business names.


3. Establish a Business Structure

Your business will need a formal, legal business structure. The structure you choose will have various advantages and disadvantages, especially around taxes and liability.

The simplest business structures are sole proprietorships and general partnerships. In a sole proprietorship, you alone have control of your business. Your profits and losses are carried on your personal income tax returns. However, you are also liable for any business debts or obligations.

A general partnership is used when two or more people run the business together. The owners are responsible jointly for the business debts, liabilities, and losses, including those due to the actions of another owner. Like with a sole proprietorship, in a general partnership, taxes pass through to individual tax returns,

A limited liability company (LLC) is the most common business structure for smaller businesses. An LLC allows you to protect your personal assets from personal liability. Your home, savings accounts, and car are protected from bankruptcies or lawsuit judgments. However, it’s a bit harder to set set-up than the structures mentioned above but there are websites that can help you register your LLC without jumping through all the hoops.

Any profits or losses pass through to your personal income without being taxed at corporate rates. However, in an LLC, members are considered self-employed and must pay Medicare and Social Security contributions.

Other business structures include C corporations and S corporations. C corporations are separate legal entities from their owners. The corporation can earn its own profits, pay taxes, and be held legally liable. For owners, the C corporation structure provides broad protection from individual liability but has higher formation costs. There are also more requirements for record-keeping, operational processes, and reporting mandates. C corporations do incur double taxes – the corporate taxes and individual taxes on dividends.

An S corporation avoids the double-taxation issue and allows profits and some losses to be passed through to personal income taxes.

Once you decide on your business entity, you will need to register your business within your state of operation. With a sole proprietorship or general partnership, this registration does not apply, but you will have to file a DBA (doing business as) form with your state or local government.


4. Obtain Relevant Licenses and Permits

Depending on the type of eCommerce business you choose, you may need to obtain business licenses or permits. These permits are necessary to operate and are governed by state and/or local requirements. For starters, if you’ve chosen a more complex business type, you will need to register with the state and obtain a license to operate within the state. In some locations, a local operating license is also required.

A physical store with an actual brick-and-mortar location generally has more licensing requirements. Since most e-commerce businesses are home-based, there are usually fewer licenses and permits required. Some locations may require a home-based business to obtain a “home occupation permit” that shows that your business does not adversely add traffic, noise, or other factors related to a residential setting.

Among the most common licenses and permits required by small businesses:

  • Sales tax permits
  • Health, safety, and environment permits
  • Building and construction permits
  • Professional and trade licenses (depending on the profession)
  • Signage permits

Checking with your state and local officials can help determine if you need any licenses or permits.


5. Build Your Website


For eCommerce businesses, the website is the most critical element. As you develop your website, you’ll also need to consider the eCommerce platform that you use.

The eCommerce platform needs to include multiple components to be successful. From design to functionality, the eCommerce solution is essential. Among the key elements to consider:

  • User-friendliness: Does the eCommerce platform provide templates and other tools that make it easy for visitors to navigate and find what they need?
  • Mobile Compatibility: Most users today navigate the web via a smartphone. Your website needs to be easy to use on mobile devices, including smartphones and tablets
  • Payment Options: Credit cards are still the most common option for online payments. However, today, consumers have many options. Your website should be able to accept payments via Venmo, Apple Pay, Google Pay, PayPal, and other alternative payment options
  • Product Information: Descriptions, dimensions, photos, videos, and other details are important for success. Giving buyers as many details as possible is important, so be sure your eCommerce platform can accommodate product information
  • Security: Ensure that transactions, financial information, and other sensitive information is secure and protected from potential cyberattacks.

However, most of the top ecommerce platforms like Shopify will come with all of these features out of the box.


6. Manage Your Inventory

Can you track your products, what’s been sold and what needs to be reordered? Seamless integration of inventory and sales is crucial for eCommerce success.

With an inventory management system, you can ensure that products are tracked at each stage. A robust inventory management system, for example, allows you to name products, track multiple variations of a product, such as size, color, type, scan SKU codes, and provide other features that make it easier to coordinate your stock. These systems can alert you when your inventory runs low, set pricing, and manage the details of your products.


7. Choose Your Shipping Solution

Shipping is a key differentiator for eCommerce companies. Customers expect affordable (or free) shipping and quick turnaround on order fulfillment. For your eCommerce business, you need to determine how you will ship your products and what services you will use.

Shipping services will manage your fulfillment, ensuring that orders are complete, shipping addresses are accurate and your orders are shipped properly. Some eCommerce companies choose to outsource all their shipping services, meaning inventory is sent to a third-party provider, which then sends bought items to your customers.


8. Develop an Online Presence

An eCommerce company needs outreach to be successful. Developing and growing your business means having a presence across channels. Consider what social media platforms your customers are on and develop a content strategy for those outlets.

In addition, you want to be sure that you optimize your presence by having accurate listings on Google and other search listings, generating the content, and ensuring you are doing all you can to leverage search engine optimization (SEO).

You also may want to consider selling across channels, too, including Amazon, Etsy, eBay, and other sites that may attract customers to your company.

An eCommerce business is a powerful way to generate income and sell products and services that are of interest or within your skill set. Taking these steps will help you develop the right eCommerce business and position your company for sustained success.


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