The world of eCommerce is abuzz these days, as more and more people choose to shop online rather than visit brick-and-mortar retailers. eCommerce is all about convenience — providing your customers everything they want with just a few clicks on your website.
However, it’s essential to understand that launching an eCommerce business is significantly more complex than placing an order on your favorite website.
I’ve helped countless entrepreneurs launch and develop their own eCommerce businesses over the years, and I’ve assembled a list of the seven key steps to start and grow any eCommerce company. Depending on the exact nature of your business, some of these steps may be more relevant than others. Still, in general, I think they’re all applicable to a wide variety of online business owners.
1) Figure Out What You Want to Sell — and How
This might seem obvious, but you would be surprised by how many eCommerce ventures get tripped up by entrepreneurs who don’t know what they want to sell. For most new businesses, you should try to establish a specific niche for yourself within your chosen industry. It’s not enough to say, “I want to sell t-shirts on Shopify.” There are thousands of eCommerce vendors who sell t-shirts. What will set your business apart from theirs?
The “how” is almost as important. When you’re first starting out, you might not want to get too involved with the manufacturing process. That’s why dropshipping is especially popular for eCommerce businesses. With dropshipping, you don’t actually keep products on-hand in your inventory. Instead, you buy products from a third party whenever one of your customers places an order and have that third party ship the products directly to your customer.
Meanwhile, for our example t-shirt business, a print-on-demand business plan could be a great way to get started. Instead of printing a bunch of shirts in different styles and sizes, then waiting for someone to order them, you print each item as it’s ordered. Like dropshipping, printing on demand can save you from having to invest a significant sum into maintaining an inventory, especially in the early days of your business.
2) Form a Limited Liability Company (LLC)
Before you ever make your first sale, you should form an LLC. If you start selling your products before forming an LLC, you will be operating as a sole proprietorship (if you’re a solo entrepreneur) or a general partnership (if you have at least one co-owner). These informal business entities provide no personal asset protection, which means that if someone sued your business, your creditors would be able to pursue everything you own. Your house, cars, personal bank accounts, investments, and other assets would all be at risk.
The LLC provides its owner(s) with a “corporate veil,” a layer of protection that shields your personal assets from a business lawsuit. If you properly form and maintain your LLC, any lawsuit against your business will only be able to pursue your business assets — your personal assets would remain safe and secure beneath the corporate veil.
For some assistance with this step, check out my comprehensive guide to forming an LLC in all 50 states. If you want to hire an affordable service to take care of this process on your behalf, I also have a list of the best services to form an LLC.
3) Use a Reputable eCommerce Hosting Platform
The popularity of eCommerce is a double-edged sword because there are now so many hosting platforms to choose from that it can be hard to tell which one is the right choice for you. In general, if you choose one of the “big names” in the industry — like Shopify, BigCommerce, WooCommerce, etc. — you can trust that they’ll help you host a legitimate business with plenty of reliable security features.
While I’m not against the idea of using niche eCommerce hosting platforms across the board, I do think there are some unnecessary risks involved. Smaller platforms might not have the reach that the big names have, but even more importantly, in my opinion, they often don’t have the comprehensive security features you’ll find with a major platform.
4) Trademark Your Business Name and Logo
The LLC business structure provides the exclusive rights to use your business name in your state. However, it does not give you exclusive rights nationwide. If you form an LLC in California and an entrepreneur in New York decides that they like your business name and want to use it as their own, they’re technically allowed to do so.
However, if you trademark your name, you will maintain the unique rights to its usage throughout the country. While you’re at it, you should also trademark your logo. LLCs don’t provide any protections for logos, so the trademark is even more of a necessity.
5) Market Your Business
This step is the one I probably hear the most questions about, which is probably because there isn’t one specific answer. How do you market an eCommerce business?
Social media, like Facebook and Instagram, are a great place to start because there’s a low bar to entry. If you really need to, you can market your business through your social media channels for free, although it’s certainly much easier if you use each platform’s paid promotional options.
Google Ads is another solid choice, as they provide a pay-per-click advertising method that enables you to control your marketing costs while still getting the word out. Another route I’ve personally had some success with is writing guest blogs for websites in my niche — like the one you’re reading right now!
Marketing strategies vary as much as the products and services we sell with our businesses. The most important point of this step isn’t about the specifics — it’s about simply doing it at all. I know way too many people who started and abandoned eCommerce businesses over the years due to a lack of interest from consumers. The bottom line? If you don’t take the time and effort to market your business, no one will ever notice it.
Tip: For social media ads using visual content like videos can establish a better connection with your audience. Just keep in mind that you have only a limited time to entice your audience before they hit the skip button that’s why video intros are vital for video ads.
6) Diversify Your Revenue
When you’re starting your business, it’s all too easy to put all your eggs in one basket. However, diversifying your revenue isn’t as tricky as it might sound. One simple way to do this is to sell your products on Amazon (or other popular online retail sites) in addition to your own eCommerce website.
Another method is to start producing products that complement your main offering. For example, let’s say that you sell purses and handbags. One way to branch out your business would be to also offer wallets and other related accessories. This diversifies your company’s revenue streams while also potentially increasing demand for your other products.
7) Maintain Your LLC
Not every part of the business ownership process is fun, and maintaining your LLC is unquestionably one of the “not fun” parts! However, if you don’t keep up with your LLC maintenance tasks, you could lose your compliant status with the state, opening you up to potential fines, lawsuits, and more.
The exact process of maintaining an LLC varies depending on your formation state, as each state has its own guidelines. However, for the most part, you can expect to do things like filing annual reports, paying franchise taxes, and updating important information about your business.
The eCommerce marketplace has made it easier for entrepreneurs to get their businesses off the ground due to the lack of brick-and-mortar retail space and inventory needed to launch a business in the pre-internet days. However, the relative ease of entry into the eCommerce space opened the floodgates for all sorts of poorly conceived and clumsily executed business plans.
If you follow the seven steps I outlined in this guide, I’m confident that your eCommerce business will survive and thrive in this crowded marketplace.