Ecommerce Business: What Is It & Step by Step to Start

The advancement of technology has made widespread Internet access possible. Now, it is available to more than 5.3 billion people globally. So, not beyond expectation, ecommerce has become an essential part of how we live, work, and shop.

But despite its ubiquity, many still ask: What exactly is an ecommerce business? And more importantly, how do you start one successfully?
ArrowTheme will help you understand the basics of ecommerce. We find the ecommerce business definition, the simplest steps to launch your own online store.

What Is an Ecommerce Business? 

An ecommerce business is a company or individual that sells products or services online to earn income. It supports customers to browse, purchase, and pay for items directly through a website or app. This model brings us solutions quickly, conveniently, and from anywhere in the world.

Ecommerce also makes shopping easier. It offers multiple payment options, such as credit cards, digital wallets, and even cryptocurrencies. It’s all about creating a smooth, secure experience for buyers.

What Are The 4 Types of Ecommerce?

There are four main types, each with its own characteristics, strategies, and customer relationships.

B2B – Business-to-Business Ecommerce

B2B (business-to-business ecommerce) occurs when a company sells products or services directly to other businesses. The characteristics of this model are bulk orders, longer sales cycles, and higher transaction values.

One of the best-known examples of a B2B ecommerce success story is Alibaba. This global marketplace connects manufacturers (mostly in Asia) with businesses around the world. Alibaba has low prices. Then businesses will resell at a profit.

The B2B model is popular for companies selling raw materials, equipment, software, or large-volume products. It builds long-term client relationships based on trust and efficiency.

B2C – Business-to-Consumer Ecommerce

B2C (business-to-consumer) is the most familiar ecommerce model and likely the one you interact with daily. B2C happens when a business sells products or services directly to individual customers online.

If you’ve ever ordered clothes, gadgets, or groceries from a website, you’ve participated in a B2C transaction. Platforms like Amazon, Zalando, or smaller niche online stores are all examples of B2C businesses in action.

This model is also where most first-time ecommerce entrepreneurs begin. If you’re launching your online store, chances are you’ll be selling to individual shoppers. There are many advantages that B2C possesses; we must mention lower barriers to entry and the potential to grow a loyal customer base.

After the pandemic, more people are shopping online than ever before. This space offers massive opportunities for growth, but also fierce competition.
You should pay attention to user experience, branding, and fast customer service. The cause originates from the fact that consumer expectations are higher and decisions are often emotional or impulse-driven.

C2C – Consumer-to-Consumer Ecommerce

C2C (consumer-to-consumer ecommerce) is all about individuals selling directly to other individuals, no business entity required. This model thrives on platforms like eBay, Craigslist, Facebook Marketplace, and Etsy. Those are all places where users can buy and sell anything.

In C2C transactions, one person can resell items they no longer need or sell unique, small-batch goods.
This model has grown thanks to the rise of peer-to-peer (P2P) platforms and growing interest in sustainable, secondhand shopping. According to Statista, the global secondhand apparel market alone is expected to reach $350 billion by 2027. It is the result of the development of C2C.

C2C ecommerce facilitates individuals to take part in online commerce on their terms. However, it does come with challenges about trust and quality control. This is why many platforms offer ratings, reviews, and buyer protection systems.

C2B – Consumer-to-Business Ecommerce

C2B (consumer-to-business) flips the traditional buying process on its head. In this model, individuals offer products or services to companies. Think of freelance designers, photographers, consultants, or influencers who pitch their services to brands. They create C2B.

How to Start an Ecommerce Business? Step by Step Guide

Here’s a clear roadmap to help you start your online business the right way.

Step 1. Find Your Niche in the Ecommerce World Through Smart Research

Before anything else, you need to figure out what to sell, who to sell to, and how you’ll do it differently from the rest.
Exploring areas you’re passionate about or industries you’re curious to learn more about. Then narrow it down: Will you offer physical products or digital goods? Services or subscriptions? Will you create your own products, dropship from suppliers, or curate existing items?
To do this well:

• Study your market. What trends are shaping consumer behavior in your chosen field?
• Analyze competitors. Who else is selling similar products? What are they doing well, and what can you do better?
• Spot gaps. Are there underserved audiences or product categories? This is where your opportunity lies.

Besides, think about your business strategy. Will you sell one-time purchases, bundles, memberships, or something else? Also consider logistics: How will you handle delivery? Will you sell locally or internationally?

Don’t overlook legal or regulatory concerns, especially if you’re dealing with health, food, data privacy, or intellectual property.

This early step will shape your business plan, influence your branding, and help clarify your goals and growth path.

Step 2. Choose Your Ecommerce Business Name and Legal Structure

Your business name is your brand’s first impression. Your name should be unique, memorable, and hint at what you do.

Before you fall in love with a name, make sure it’s legally available:

• Check the U.S. Patent and Trademark Office (USPTO) or your local business registry to confirm it’s not already taken.
• Do a quick domain name search to see if your desired website address is available. If your ideal “.com” is taken, you might consider variations like “.co”, “.store”, or even country-specific domains like “.us” or “.uk”.

Once you’ve nailed your name, the next big step is deciding on your legal structure. Here are your main options:

• Sole Proprietorship: Easiest to set up, but your business and personal finances are legally the same.
• Partnership: Similar to sole proprietorship but with two or more owners.
• LLC (Limited Liability Company): Flexibility and protects your personal assets.
• Corporation (C-Corp or S-Corp): Better for businesses seeking outside investment, but more complex to manage.

Each structure comes with its pros and cons, so consider speaking with a legal or financial advisor to pick the one that fits your vision, risk tolerance, and long-term goals.

If you’re using a name that’s different from your legal name (especially for sole proprietors), don’t forget to file a DBA (Doing Business As) with your local government.

Step 3. Register an EIN

Think of EIN (Employer Identification Number) as a Social Security number for your business. This nine-digit number is issued by the IRS for tax reporting purposes.

Even though not every type of business is legally required to have an EIN (sole proprietors can sometimes operate without one), getting an EIN is highly recommended for ecommerce businesses. Why? Because it helps you keep personal and business finances separate. You can easily open a business bank account, hire employees down the line, and handle sales tax compliance across multiple states.

Step 4. Obtain the Necessary Permits and Licenses for Your Ecommerce Business

If you’re a sole proprietor or operating under a general partnership, you typically won’t need to register your business with the state. You must register when you’re using a trade name (also known as a DBA, or “doing business as”). However, if your ecommerce store is structured as an LLC or corporation, most states will require you to register your business and obtain a general business license.

Beyond that, requirements can vary significantly depending on your location. For example, some cities or counties may need you to have a local business license or home occupation permit, even if you’re running your store from your living room. According to the U.S. Small Business Administration (SBA), over 70% of small businesses in the U.S. require at least one federal, state, or local license to operate legally.

Compared to brick-and-mortar stores, ecommerce businesses face fewer regulations. Because they don’t have a physical storefront. But you still need to do your due diligence. Check with your state’s business portal or your local chamber of commerce to understand the exact rules in your area.

In addition, depending on your products or services, you might need:

• Professional or trade licenses (e.g., for selling cosmetics, alcohol, or health supplements)
• Sales tax permits (particularly if you sell in multiple states)
• Health and safety permits (for food or beauty-related goods)
• Environmental permits (if your business has any environmental impact)
• Home-based business permits (if working from home)

Step 5. Select a Suitable Ecommerce Platform to Build Your Store

Your storefront will be your website, and that’s what your customers will see first. In many cases, it’s what shapes their first impression and influences their decision to buy (or leave).

That’s why choosing the right ecommerce platform is one of the most important decisions you’ll make. Your platform supports you in managing your products, processing payments, and scaling your business over time.

Most platforms today offer essential features like inventory management, customizable themes, mobile optimization, and secure checkout systems. But every platform is different, and the best one for you depends on your needs, budget, and technical skill level.
Let’s take a look at some of the most popular ecommerce platforms you might consider for your business.

Shopify

Until now, Shopify is known as the most common ecommerce platform that attracts a large number of vendors to use all over the world. It provides an all-in-one, user-friendly solution with a variety of add-ons. Shopify subscriptions are available in four different options, starting at $9 per month for Shopify Lite (which does not contain a full online store).

For instance, you can refer to some best-selling Shopify themes in the global market to get more ideas: Lusion – multipurpose ecommerce theme. 

Woocommerce

Luckily, you are able to download WooCommerce to start selling on your WordPress site if you’ve already created one or are familiar with the platform. WooCommerce has a lot of outstanding features as well as great performance.

First and foremost, it is open-source, free to download, and comes with a comprehensive set of e-commerce functionality. WooCommerce, on the other hand, is perfect for business owners with some technical experience who want to take advantage of its open-source nature.

Magento

Moving to another ecommerce platform that you should know to create your own ecommerce business – Magento. In reality, the open-source version of Magento is the best choice if you want complete control over every part of your online store.

You can change any element and design your site with this e-commerce platform. However, you’ll need technical knowledge, or you must pay for it to do so. What’s more, with newbies, Magento is not the perfect method for them. Nevertheless, if you have the technical know-how or the funds to hire a developer, you’ll find that Magento offers the most features of any open-source solution on the market. Best of all, it’s free to download. Then, you should explore several must-have Magento themes HERE. 

Squarespace

Squarespace is well recognized for its modern layouts and as a website builder. It also has e-commerce capabilities. Squarespace offers two eCommerce-specific plans: Basic and Advanced. Similar to Shopify, Squarespace is easy to use and can accommodate business owners of various technical skill levels. However, because Squarespace is primarily a website builder, it may not have as many features, tools, or add-ons as some other options.

To sum up, as you can see, before choosing the right ecommerce platform for your store, you must consider a lot of factors, including cost, features, usability, etc. Not only that, you also need a working system that allows you to run quickly and manage your operations on a daily basis. Furthermore, after you’ve determined which ecommerce business is best for you, you’ll need to get to work customizing and launching your website. Besides, you can either build and launch your website yourself or hire a professional designer or developer to help you, depending on your platform and budget.

Step 6. Source or Develop (and List) Products

If you’ve done thorough market research in Step 1, you’ve probably already mapped out how you plan to obtain or create your offerings. Depending on your business model, you might be:

• Creating products yourself (handmade goods, art, digital content, etc.)
• Working with manufacturers or wholesalers
• Dropshipping products from third-party suppliers
• Offering services, such as consulting, coaching, or freelance work

For service-based businesses, this part is relatively simple. You’ll just need to clearly describe each service, include pricing (if applicable), and create dedicated service pages to help visitors understand the value you provide.

If you’re selling physical or digital goods, this step will take a bit more planning. You’ll need to determine:

• How much inventory to start with
• Your initial investment or production costs
• Fulfillment methods (in-house, third-party logistics, dropshipping, etc.)

Once sourced, you’ll also need to list your products on your ecommerce website in a way that’s both visually appealing and optimized for SEO.

Moreover, don’t overlook the customer journey. From the moment someone adds a product to their cart to the second it’s delivered, the experience should be seamless. A smooth backend operation paired with a great user experience will set your ecommerce business up for long-term success.

Step 7. Promote Your Ecommerce Store

Marketing is the final (and ongoing) step that determines how many people discover your store, explore your products, and ultimately make a purchase.

There’s no one-size-fits-all strategy when it comes to ecommerce marketing, but the goal is clear: increase your brand visibility and attract the right customers. You must build a strong foundation with search engine optimization (SEO). Your product pages, homepage, and blog content should be optimized with the right keywords to rank higher on Google.

From there, you can explore a range of digital marketing tactics, including:

• Google Ads: Appear at the top of search results when customers are actively looking for products like yours.
• Social media advertising: Platforms have highly targeted ad tools to reach your ideal audience.
• Email marketing: Build relationships with your customers by sharing updates, promotions, and new products.
• Content marketing: write a blog or make videos to share helpful tips, product guides, and stories that connect with your audience.
• Influencer and affiliate marketing: Partner with creators or bloggers in your niche to build trust and generate buzz.
• And don’t underestimate the power of word-of-mouth. Let’s encourage happy customers to leave reviews, tag you on social media, and refer friends.

Most importantly, track what’s working and what’s not. Use analytics tools to measure your traffic, conversions, ad performance, and more.

What Is the Cost of Starting an Ecommerce Business?

The cost of starting any ecommerce store will be extremely difficult to estimate exactly. The type of e-commerce business you run, the ecommerce platform you use, and how you source your products, among other considerations, will all influence your initial expenses. With this in mind, you should carefully consider your budget when you first start off and keep track of all of your spending as you go. Then, you should think about the following costs in particular:

Business Licenses and Permits

Business licenses and permits are two of the first essential elements you should consider when starting an ecommerce business. The cost of them varies depending on your business type, region, and what you’re offering. Besides, some states have low fees, ranging from $10 to $50. Others can charge a few hundred dollars for incorporating.

Cost of Ecommerce Platform 

While an open-source platform may be free to acquire, there will be additional costs connected with this type of solution, such as developer fees, hosting, add-ons, etc. On the other hand, if you’re looking for an all-encompassing platform, you’ll be able to locate some of the most basic solutions for a cheap monthly fee. What’s more, more advanced and broader solutions will come at a higher price.

Domain Name and Hosting’s Cost

Some ecommerce platforms provide a domain name or hosting as part of the platform’s price. Others allow you to buy your domain name directly from them. However, if you require your own domain name and hosting, you can expect to pay anything from $1 to $15 per year for the domain and an average of $30 per month for hosting.

Payment Processing

The next cost you should consider is the payment processing. You’ll need to engage with a payment processor like Square or Stripe to accept payments online. Some e-commerce software packages incorporate payment processing as part of the platform. Others help you to link with your preferred payment system. In general, each transaction at your store will cost you roughly 2.9 percent plus $0.30.

Cost of Inventory and Shipping

The expenses of inventory and shipping vary greatly depending on what you’re selling. Nonetheless, among all the charges, your initial inventory investment will almost certainly be the most significant. In particular, if you’re just getting started in an ecommerce business, you have to buy inventory carefully. Because you don’t want to waste money on items you won’t be able to sell.

Of course, your shipping prices will be determined by your sales and the shipping providers you utilize. Besides, the quantity of the products you’re sending, and the delivery speed options you provide to clients.

Marketing and Advertising

Marketing and advertising should account for roughly 6% to 7% of your gross sales. This can be tough to estimate when you’re first starting out. Hence, you will want to take advantage of any free marketing and advertising opportunities you have.

Conclusion

Arrowtheme hopes this blog will bring you the most detailed and comprehensive overview of ecommerce business. In particular, it is a quick and effective guide for you to start a profitable online store with ease, step by step. In order to dig deeper for useful information about Ecommerce, let’s follow us to explore more. 

Read more: How to Build an Ecommerce Website? Essential Pages & Tips