How to Start an E-Commerce Business in 7 Steps

How to start an ecommerce business-sm

Running an online business can allow you to be your own boss, set your own schedule, build something truly meaningful to you, and delight customers near and far. According to KommandoTech, there are approximately 300,000 direct-to-consumer e-commerce sellers in the U.S. alone. And that number quickly grows to more than 1.3 million companies when you include resellers. 

Around the world, millions of entrepreneurs are running e-commerce stores—and customers are loving them. OptinMonster suggests 93.5% of global internet users have purchased products online. Worldwide retail e-commerce sales are expected to reach $4.9 trillion by 2021, Shopify Plus says. And by 2040, as much as 95% of shopping will be through e-commerce, according to Nasdaq

The opportunity is real and the possibilities are endless. However, as with any business, e-commerce requires some legwork in order to get your online shop up and running. The process tends to look like this:

  1. Find Your Niche

The great thing about e-commerce is you have the capability to access a large-scale and far-reaching customer base. The challenge is that the internet has become extremely saturated with search results, ads, and social media. To give yourself a chance to succeed, you may consider approaching your e-commerce ideas through the lens of meeting a need or solving a problem. 

An e-commerce business can center on a new and innovative product, or on a familiar product with a simple value proposition surrounding pricing, service, or any other competitive edge you might find. Choose something you are passionate about, that you can make or obtain at scale, and that you truly believe can be profitable. Your gut can certainly guide you, but you can also examine the potential of your prospective product through market research. If you already have your own blog and a base audience, consider how you might also be able to turn your blog into an e-commerce business.

  1. Write a Business Plan

When you’re ready to move forward with your product idea, the next recommended step is to develop a business plan. Business plan templates may include an executive summary, market analysis, company overview, product overview, marketing strategy, logistics, financial strategy, and other sections that might vary from one template to the next. 

Writing a business plan can be a long and grueling exercise. It’s helpful to go into it with the realization that you have the freedom to revise your business plan at any time. Complete your selected template to the best of your ability, review it, revise it, and ask your friends and family to review it as well if you feel comfortable sharing it with them. Your business plan will serve as a valuable tool for you to measure your success and adapt to your learnings as an e-commerce owner.

  1. Form a Business Entity

Running an e-commerce company as a sole proprietor can be risky business. Without a separate business entity, you might find yourself mixing your personal and business finances, which could potentially create headaches surrounding your accounting.. Additionally, as a separate business entity, you can apply for business insurance, which may offer you protection. A quick-start sole proprietorship without business insurance may leave the business owner unprotected. 

The entity that is best for your business will depend on your product, industry, location, and other factors. Some e-commerce owners opt to create a limited liability company (LLC) because it’s a relatively easy process. However, there are other options to consider, such as an S Corp or C Corp. Consult an advisor for assistance with selecting an entity type and completing the necessary steps to successfully form a business.

  1. Fund the Business

E-commerce businesses do bring financial considerations. Between inventory, logistics, operations, marketing, and the many other aspects of running an online store, you should consider how you will fund your business. Fortunately, there are many options, including business loans, lines of credit, crowdfunding, investors, family, and friends. 

If you’re starting small, bootstrapping your business with personal funds may be a realistic option without breaking the bank. In one survey, two-thirds of all small business funding came from entrepreneurs’ personal finances. The benefit of bootstrapping is that it may keep you out of debt and in sole ownership. If you need a large volume of product and/or equipment upfront, that’s when other financing options may come into play. Read more about the basics of funding a business.

  1. Choose a Platform

There are many platforms to consider. They serve different needs and offer distinct features. One platform, Shopify has become one of the leading e-commerce platforms, with more than 1 billion businesses across 175 countries, according to the company’s data. In the U.S., Shopify is the third-largest online retailer behind Amazon and eBay. Other popular e-commerce platforms include BigCommerce, WooCommerce, Wix, Squarespace, Weebly, and GoDaddy. Each platform has its own fees, pricing, support, and accepted payment types. Compare and select the platform that you feel best suits your needs. 

If you’re unsure of which platform to choose, you might consider reading and posting in forums; the e-commerce industry has many entrepreneurs who are willing to share tips, tricks, and takeaways.

  1. Build Your Website

Your vision is close to becoming reality! Once you’ve signed up for an e-commerce platform, it’s time to build your online store. Many platforms offer intuitive interfaces allowing business owners to build their own websites from templates or “themes.” If you have the time and patience to build your site by yourself, great. If not, you can always hire a freelancer to build the site for you under your direction. 

  1. Open a Business Bank Account

Some e-commerce entrepreneurs prefer to work on the product side first, while others choose to develop the business before committing to a first order of inventory. Either way, it’s advisable to open a business bank account prior to officially launching your e-commerce business, so you can track expenses, manage cash flow, and keep your personal and business expenses separate. 

Remember that somewhere along the way, you will need to secure inventory and logistics. We did not place that step in this guide, because your timing for tackling the task should not impact the necessary steps for starting your business—so long as you know that you can acquire the inventory you need at a price you feel comfortable paying. 


Hi there! This post exists to offer you (hopefully) useful information but it cannot take the place of personalized professional advice. Please consult a qualified expert if you have questions about your business. Also, Azlo doesn’t endorse any third-party sites that are linked here.

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