7 Steps to Start an Ecommerce Business from Scratch
By TOI Team September 13, 2023 Update on : September 13, 2023
Did you know that the global ecommerce industry was estimated to be at $16.6 trillion in 2022 and is forecasted to reach $70.9 trillion by 2028?
That’s a huge opportunity for entrepreneurs like you to get a piece of the pie.
The COVID-19 pandemic further boosted the industry as more and more people started buying online, instead of visiting their local stores.
Given the current trend of a booming ecommerce industry, it’s the perfect time to start your own ecommerce business. This guide will help you navigate the complexities of starting an ecommerce business in the US.
Let’s get started.
A Step-By-Step Guide to Starting an Ecommerce Business
Starting a new business is a tedious process fraught with regulatory hassles and potential pitfalls. That’s why you should consider hiring the services of a business formation company like Inc Authority.
It offers free LLC or Corporation formation service, along with a plethora of free and paid add-on services to help make the process easier for you. Check out this Inc Authority review by GovDocFiling to see if it’s the right choice for your business.
If you prefer to do it yourself, here’s the step-by-step process you can follow.
1. Pick a Niche and Come Up with a Business Idea
Every business starts from an idea and starting an ecommerce business is no different.
Given the vast scope of things you can sell and the ecommerce models you can follow, it’s essential to decide on what kind of ecommerce business you want to start.
First, choose what products you want to sell through your ecommerce store. There are unlimited options, so you need to choose based on your area of expertise, interest, and feasibility.
Next, choose a shipping model based on your chosen products, whether they’re physical or digital products. You can choose between direct-to-customer (DTC), dropshipping, print-on-demand, and wholesale businesses.
2. Conduct Research and Create a Business plan
Study the level of competition in your industry, key players, and market demand before you start your ecommerce business. This will help you test the feasibility of your business idea and if it’s not feasible you can stop at this step and start again with another idea.
If your idea passes the feasibility stage, you can then use the insights gathered from your research to create a solid business plan.
Here are some things to include:
- The reason for your business
- Who are your target customers?
- What is the market need your business will meet?
- Your product offerings and pricing plan
- Your plan for procurement and supply chain management
3. Choose a Business Name
Next, you need to choose a unique business name that’s not used by any other business within your state. You can use the state database to check for name availability.
Your chosen business name should be short and memorable, so your customers can easily remember it. If your state’s naming conventions make your business name complex, you can file for a DBA to use a fictitious name for your business.
4. Register Your Business
The fourth and most crucial step in the process is to register your business legally with the concerned authority, usually the Secretary of State.
For this, you should first choose a business structure, such as LLC, Sole Proprietorship, and Corporation. If you plan to run an ecommerce business in multiple geographies, then a Corporation is the best option for you.
Once you decide on a structure, you need to submit the application, the required documents, and the state filing fees to register your business. You can submit an online application or download and fill out the physical copy and send it via mail or fax.
Please note that submitting an online application is the easiest and fastest way to start your new business.
5. Get an Employer Identification Number
An EIN is used by the Internal Revenue Service to identify your business for tax purposes. It is also useful for a variety of business purposes.
You’ll need an EIN to:
- Hire employees and pay taxes
- Open a business bank account
- Easily secure funding for your business
These are just some of the many areas where having an EIN is helpful, so get one.
6. Acquire Licenses and Permits
Even after your business is officially registered, you can’t start operations till you obtain all required licenses and permits for your business.
These will depend on the type of business and the state where your business is registered. For starters, you may need an ecommerce business license.
Some other licenses and permits you may need include:
- Seller’s Permit
- Sales tax license
- Business operation license
- Occupational licenses (if applicable)
7. Create an Ecommerce Store
Last, but definitely not least, you should invest in an SEO-friendly and user-friendly ecommerce site.
You can use specialized website design sites like Shopify or WooCommerce or go with the classic, more popular options like WordPress.
Compare the features and costs to choose the best option for your business. Pay special attention to your product and checkout pages and make sure the buying process is easy and quick.
Ready to Launch Your Ecommerce Business?
There you have it—the complete step-by-step process you can follow to start an ecommerce business. Follow these steps and ensure you don’t skip any steps to register your business without any hiccups.
You may choose to use third-party services or do it yourself, the choice is yours.
Does that mean your job is done?
Far from it. This is where your entrepreneurial journey begins. Using this guide will give you an advantage and help you start your business successfully, but it’s up to you to grow it further. Good luck!
Brett Shapiro is a co-owner of GovDocFiling. He had an entrepreneurial spirit since he was young. He started GovDocFiling, a simple resource center that takes care of the mundane, yet critical, formation documentation for any new business entity.