An ecommerce store is a store on the internet where products are bought and sold. Examples of ecommerce stores are eBay, Shopify and Amazon.com. These businesses connect product-seekers with the items they need to improve lives, businesses, and organizations of all varieties.
Start an ecommerce store by following these 10 steps:
Plan your Ecommerce Store
Form your Ecommerce Store into a Legal Entity
Register your Ecommerce Store for Taxes
Open a Business Bank Account & Credit Card
Set up Accounting for your Ecommerce Store
Get the Necessary Permits & Licenses for your Ecommerce Store
Get Ecommerce Store Insurance
Define your Ecommerce Store Brand
Create your Ecommerce Store Website
Set up your Business Phone System
There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your ecommerce store. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Exploring your options? Check out other small business ideas.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
What are the startup and ongoing costs?
Who is your target market?
How much can you charge customers?
What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening an ecommerce store?
This business requires the creation of a website, the use of servers, inventory, relationships with shipping companies, employees and marketing. Building a polished ecommerce store website that is secure enough to permit the safe transmission of bank account and credit card information will cost several thousand dollars. Plan on spending thousands more on marketing to increase the public’s awareness of the ecommerce store. Computers, servers, and inventory will likely cost tens of thousands of dollars. Employing web experts to launch the store will require paying salaries in the range of $30,000 to $50,000 or more.
What are the ongoing expenses for an ecommerce store?
The business requires computers, a high-speed web connection, printers, servers, office supplies, employees, insurance, a space to operate, a space for inventory and marketing. Plan on spending $30,000 to $60,000 per year for website designers, user experience designers, marketing gurus and other professionals. Office administrators who handle clerical duties and customer service will likely make $10 to $15 per hour. The cost of your office and warehouse for inventory will hinge on the economics of your particular location. Budget in at least several thousand dollars to pay for the monthly rent and utilities of these spaces. Budget another $500 to $1,000 each month at a bare minimum for marketing. Plan on spending the same amount for servers, computer-related equipment and office sundries.
Who is the target market?
The target market is those who are looking for specific products that can be purchased and delivered in an affordable manner. Just about everyone is willing to order products online from ecommerce stores. As long as your prices are at or below those of competitors and your delivery times are reasonable, people will consider shopping at your ecommerce store.
How does an ecommerce store make money?
This business makes money by selling goods or services on a website. Customers pay with credit cards, bank accounts, Paypal, Bitcoin or another means. The product is then delivered to the paying customer.
How much can you charge customers?
Customers can be charged anywhere from a couple dollars to thousands of dollars for goods and services purchased on your ecommerce store. The exact cost hinges on the product in question, the supply/demand and competitors’ prices.
How much profit can an ecommerce store make?
The potential for profit ranges from a few thousand dollars per year to billions. Build your ecommerce store into a powerhouse like Amazon.com and your business will rake in billions of dollars per year. However, entrepreneurs should not lose sight of the fact that Amazon.com lost money for years before turning a profit. Be patient, perfect your ecommerce store and your business will eventually make good money.
How can you make your business more profitable?
Sell advertising space on your ecommerce store website. If you have a contract with shipping companies for product deliveries up to a certain monthly/weekly volume but do not reach this limit, consider charging other companies for deliveries with the remaining volume. Consider establishing a members’ rewards club in which repeat customers receive price discounts or faster shipping. This style of offer encourages increased spending on your ecommerce store and further enhances customer loyalty.
