by trangnq
July 29, 2021

Ecommerce business: Definition and step by step to start

Nowadays, ecommerce becomes more and more developed and occupies a very large market share in the worldwide economy. With the development of technologies and the internet, ecommerce is one of the most indispensable parts of our lives. In fact, maybe you’ve heard a lot about the term “ecommerce”, but what is Ecommerce business? In this blog, Arrowtheme will help you make clear about ecommerce business. Specifically, about its definition and instruct you the most simple way to start a successful ecommerce store. So, let’s explore right now! 

What is an Ecommerce business? 

Ecommerce business can be runned by an organization or individual that sells goods/ services via the internet to make money. Besides, it enables customers to buy quickly and select from a variety of payment options while conducting an e-commerce transaction. Moreover, depending on the model you choose, it will provide you with a lot of distinct types of ecommerce enterprises. Now, we will review some popular ecommerce business models you should know to get more ideas for your online store.

Ecommerce business

#1. B2B – Ecommerce store 

B2B stands for the business to business model that mentions when an ecommerce business sells to other ones. Then, you can refer to one of the most prime examples about successful ecommerce business following that model – Alibaba. In fact, Alibaba’s pricing is extremely low since they are wholesale prices, allowing businesses to profit from their goods.

#2. B2C 

B2C is one of the most common ecommerce models all over the world. Exactly, it is the business model where ecommerce companies sell goods to consumers. What’s more, in case you create your own online retail store, you’ll most likely be selling to individuals rather than businesses. 

B2C Ecommerce business

#3. C2C – Ecommerce business

Coming to another popular ecommerce business model you should know – C2C. When consumers sell to other consumers, it is referred to as the C2C model. Moreover, online selling sites such as eBay, Craigslist, and Etsy are commonly used by consumers to do so. In fact, there are many vendors that utilize those sites to sell items they possess, whether used or new. 

#4. C2B 

When a consumer sells their own products or services to a business or organization, this is the C2B model.

Step by step to start profitable an ecommerce business

1. Find your niche in the e-commerce world by doing research

The first also the most important step you must implement if you want to get success in doing ecommerce business is researching the ecommerce market in order to find your niche. Simply speaking, you should explore the e-commerce field you’re interested in and make some judgments about your unique business. For instance, you’ll want to think about what your e-commerce business will provide. Are you planning to sell goods or services? Are your products physical or digital if you’re selling them? Where will you get your supplies? Along these lines, consider the type of business strategy you want to use – will you sell individual products, packages, subscriptions, or something else?

Furthermore, during this process, you’ll also want to consider the big picture. This is how will you deliver your items or services to your customers? What will your initial setup costs be? Are there any legal or other rules that apply to your product or service that you should be aware of?

These lines of questions will be crucial at the outset of your business and will aid you in developing and writing your business plan effectively. Best of all, this method will help you understand your precise objectives and how you plan to achieve them. Finding your specialization is a crucial component of this phase, especially in the e-commerce world.

With the dramatical development of ecommerce, regardless of doing business in any field, you will surely have numerous competitors. So, this is the reason why you should conduct competitive analysis and identify a market in which you believe you can create your brand and sell items and services.

definition of Ecommerce business

2. Decide on an ecommerce business name and legal structure.

The next step can’t lack in the process of starting an ecommerce business successfully is choosing the business name. To put it plainly, you will want a name that is both unique and clearly identifies what your company is or does, just like any other firm. In addition, to make sure you’re not choosing a business name that’s already been claimed by another company, you have to check the websites of your local secretary of state and the US Patent and Trademark Office.

Besides, maybe you don’t want to spend too much time on a website just yet. However, it’s worth checking to see whether the domain name you want for your business is available. In case the domain name you expect is already used, let’s try using a different business name or a different structure, such as “yourbusinessname.co” rather than “yourbusinessname.com”.

Not only domain name, but you must also focus on the legal structure of your ecommerce store. In reality, the legal and financial ramifications of the business entity type you choose for your e-commerce company are significant. In most cases, you’ll form a single proprietorship, general partnership, LLC or corporation. Nevertheless, each of these entity kinds has advantages and disadvantages. Hence, you may want to seek legal guidance from an attorney or another legal professional to determine which is the best option for your company. 

On the other hand, you won’t have to register in the state where you’re doing business if you create a sole proprietorship or general partnership. In that case, your ecommerce business will be legally associated with your personal name, which means you’ll need to file a DBA application with your local government if you wish to operate under the name you’ve chosen.

3. Register an EIN

Then, for your e-commerce business, you’ll need to apply for an EIN, or employment identification number. While not all types of businesses are required to acquire an EIN, this plays an essential role for your ecommerce store. This is because it can help you keep your personal and business finances separate. Best of all, you can obtain an EIN from the IRS for free by applying online, by mail, fax, or by phone. Furthermore, you’ll also probably want to apply for this business tax ID online at the first time to start an e-commerce business, and luckily, you’ll get your number almost immediately.

4. Obtain the necessary permits and licenses for your ecommerce business

As soon as you finish the step of applying for an EIN, you’ll need to secure any necessary business licenses or permissions to operate legally in your city and state. As you probably know, unless you’re seeking a DBA to legally operate under a certain business name, you don’t need to register your e-commerce firm with the state if you started it as a sole proprietorship or general partnership. Nonetheless, you must register your firm with your state and obtain a general operating license for the other business entity categories. Furthermore, you may also need to obtain a municipal operating license, based on the location of your ecommerce store. 

Additionally, as you know, most e-commerce enterprises do not require as many business licenses and permissions as brick-and-mortar establishments. This is because they are operated from home. You’ll need to figure out what the precise criteria are in your area, which you can generally find out by visiting your state or local government’s website.

Furthermore, you may also require the following sorts of business licenses and permits:

  • Certain industries require professional and trade licenses.
  • Sales tax exemptions are available.
  • Permits for health, safety, and the environment.
  • Signage is allowed.
  • Permits for construction and building.
online store

5. Select the suitable business ecommerce platform to build your store

You’ve finished all of the documentation necessary to register and legally start your e-commerce firm at this point. Then, the next stage is choosing the right business platform. Instead of looking for a place and planning to open a physical store, you’ll instead focus on building your website and online store. In reality, this website, like a real storefront, will be the face of your company. So, this will decide a lot on the purchasing decisions of customers in your store. With this in mind, one of the most crucial aspects of launching your e-commerce business will be developing your website.

As previously discussed, you will want to consider your domain name first. At the very least, your domain name should be a close match to your company name. With this reason, and maybe most importantly, you’ll need to choose an ecommerce platform. Moreover, the ecommerce platform, whether it’s all-in-one software like Shopify as well as an open-source platform like Magento, will be the foundation on which you construct and develop your online business. Best of all, most ecommerce platforms let you modify your design, add your domain (or buy one), manage inventory and so much more. Furthermore, in the market, there are a variety of ecommerce platforms, however, in this topic, we only mention several popular ones. Let’s refer to them below. 

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. For more detail, 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, GemMart – Marketplace multipurpose theme, etc. 

Woocommerce

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. In fact, Woocommerce includes 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 very perfect for business owners with some technical experience who want to take advantage of its open-source nature.

Magento

Moving to another ecommerce platform you should know to create your own ecommerce business – Magento. In reality, the open-source version of Magento is the most ideal choice if you want complete control over every part of your online store. First of all, you can change any element and design your site with this e-commerce platform. But, 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

start an Ecommerce business

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 for $26 per month and Advanced for $40 per month. In addition, similar to Shopify, Squarespace is really 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 get up and run quickly and manage your operations on a daily basis. Furthermore, after you’ve determined whatever 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.

6. Source or develop (and list) products – Ecommerce business

Coming to the next step of the process of starting profitable online stores – find source or develop items. When you did your research in step one, you should have already thought about how you’re going to approach this process. You can produce your own products, purchase them from wholesalers. Or, if you’re offering your own services, such as as a consultant, just need to describe and list them on your business website.

As you might expect, in case you’re selling goods, this stage will be more difficult. This is because you’ll need to think about how much inventory you’ll need to start, as well as what your initial expenditures will be. In addition, you will want to take the time to list your inventory on your online store. Not only that, you also have to consider the customer experience, SEO. And, how the process will operate from the time a consumer orders a product to the time they receive it.

7. Promote your ecommerce store

The final stage in this process is marketing for your ecommerce business. As a result, you will effectively increase your brand awareness and approach more and more potential customers. Amazingly, you can take advantage of a variety of marketing tactics. For instance, Google AdWords, social media ads, word-of-mouth marketing, etc. At the most basic level, you’ll want to optimize the website of your business for SEO and use any online marketing tools that your e-commerce platform provides. Moreover, you will wish to keep track of which marketing tactics are working and which aren’t once your e-commerce business is up and running and you start receiving orders. Best of all, it allows you to tweak and change your marketing strategy as time goes on to see what works best for your ecommerce store. 

What is the cost of starting an ecommerce business?

In fact, the cost of starting any ecommerce store will be extremely difficult to estimate exactly. For more detail, 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.

guide to start a successful ecommerce business

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. For instance, with Shopify Advanced’s monthly fee capped at $300.

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. While, others allow 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. This is 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, 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 – Ecommerce business

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.

In conclusion

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

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