Did you know? According to Boston Consulting Group, “Global e-commerce is poised to capture 41% of global retail sales by 2027—up from just 18% in 2017.” This anticipated growth is not just a trend. It will produce long-term results and will transform the way people shop online. 

This also means that launching an e-commerce business will provide benefits if it is done innovatively. But the question arises, how do you stand out from the current market competition and become a successful e-commerce business? 

Well, let’s take you through the basic steps of establishing your e-commerce business and setting up the foundations for growing a successful online store.  Let’s start right away!

Steps To Build A Successful E-Commerce Business From Scratch

Discover Your Niche 

If you want to start an e-commerce business, the starting point would be finding a niche. It can be achieved by identifying the niche you want to work in, leveraging your existing expertise, and honing your marketing abilities.

It’s extremely important to have a clear vision of the kind of business you want to run. So start by researching the market. Look at other businesses in your sector and see what they’re doing right or wrong. If you observe a really successful e-commerce business in your industry, you may ask yourself:

• How are they reaching customers?
• What appeals to you about their website?
• What’s their business model?

Other logistical questions you’ll need to answer when finding your niche include:

• Is your product physical or digital? Decide what type of products you want to sell.
• If it’s a digital product, how will you source it?
• Can you handle production yourself, or will you need help?
• Will your business focus on one-time orders, bundles, or a subscription model?

Since the e-commerce market has grown rapidly, competition is now at its peak, so think thrice before launching into the e-commerce market.

Example:- If you’ve been working as a freelance writer for a while, why not start a blog to share your knowledge and show people you’re an expert in your field? You could even take it a step further by setting up an online store to offer things like editing services, custom print products, or online courses based on what you know best.

Research

Research is essential in understanding your market and competitors. Find the best players in your niche, know their backgrounds, and try to understand their business models. Research the trending products so that you can get ideas of what to offer. You can start by asking yourself, “ What are they doing well that I can replicate?” 

Understand the barriers to entry in your market and find a way to overcome them. For example, figure out if you want to invest in ads, e-commerce software, or good photography equipment. If your budget is small, what low-cost alternatives can you explore to get you started? 

Another important element of research is finding market gaps. Even if you are selling a product that already exists, think about how you can market it differently than what’s already available. Find unique selling points or areas where your competitors are not doing so well. It may be in terms of pricing, features, customer service, or delivery methods, which will allow you to stand out. 

Brainstorming 

A major activity that you can do while brainstorming is drawing from your own experiences.  Think of industries that you have either worked in or where you’ve specialized knowledge. This in-house view gives you something that other market players may not have and will enable you to stand out. 

Another useful tactic is to know the trend. Trends refer to patterns or changes in consumers’ behavior indicating that there will be a need for a given product or service. Awareness of these trends can make one a leader in the market. Conversely, a fad is usually a short-term trend and remains in demand for only a few months. A business created based on a fad will witness decreased profits. 

You can note down some of the below points to have a better understanding of what a trend is: 

Social Media Awareness: Engage with social media platforms where your target audience hangs out. Look for posts and discussions within your industry to see what people are talking about. Monitoring trending hashtags or using social listening tools can help gather insights about emerging trends.

Follow Search Trends: Tools such as Google Trends can show you what products or topics are picking up steam based on the search volume. It is what people are looking for and thus what to sell.

Shop E-Commerce Sites: Popular e-commerce sites like Trend Hunter or relevant subreddits can show trends before they peak. These are platforms that often highlight new products and innovations.

Customer reviews: Searching for customer reviews about products like the ones you plan to sell is a good way to identify unmet needs. You can spot some problems that customers are facing and complain about very frequently, thus identifying an opportunity to create a product.

Keyword Research: Don’t limit keyword research to Google. Amazon and eBay, as an online marketplace, also provide a search function that may show popular search terms. For example, if you sell kitchen knives, typing in the name on the Amazon search bar will pop up keywords like “kitchen knife sets” or “self-sharpening kitchen knives with block.” This knowledge will direct you to what the customers are searching for and how to modify your product.

Following these strategies will enable you to gather valuable insights. This will help you choose a product with long-term appeal. By focusing on trends rather than fads, your business can easily stand out in the crowded market.

Identifying Your Target Market

As you gather information about your product, focusing on your target market is pretty important. You can ask the following questions to ascertain that you are on the right track:

• Who is an ideal customer for your product?
• What is their fundamental behavior?

You can also take the help of customer personas. Now the question arises, what are customer personas?

Customer personas are fictional profiles of your ideal buyers. They help you predict how potential customers will behave and allow you to design a product or service that caters to their specific needs. To build a persona, consider asking yourself questions such as:

• How old is this person?
• Where do they live?
• What is their income level?
• What causes or values matter most to them?

All this information will make it easy for you to predict your target audience’s location as well as the type of message they will respond to. Knowing your audience will also help with effective marketing once you are all set to launch your e-commerce business.

Deciding How You’ll Source Your Product

Once you’ve validated your product, the next step is figuring out how to obtain it and fulfill customer orders. Several options exist, each with its pros and cons:

Make it Yourself: This option is best for low-cost products that can be created oneself, such as homemade soap or pottery. You produce entirely, at your own expense. You control the production cost and all risks. However, your potential margin might be rather less until you can scale up.

Partner with a Manufacturer: If your product requires some special tool or expertise, then a good idea would be to partner with a manufacturer. This however usually demands bulk orders. You, therefore will need enough resources to sustain large-scale production costs. The model fits best for mass products.

Wholesale Reselling: You buy pre-made merchandise from the producer at wholesale and sell it in your store at markups. This is pretty easy, but it limits your power to set prices since it is what the manufacturer sets. Moreover, the market will decide how much you can sell the product for, so you will retain a margin of around 50%.

Dropshipping: You can partner with another business through a dropshipping service, and that company can ship and deliver the merchandise. Because you wouldn’t need to hold any inventories, it saves a lot on start-up costs.

Digital Products: You can sell digital products such as ebooks, online courses, downloadable templates, or even writing and designing. Such products usually have lesser overhead costs.

Create a Business Plan

Now that you’re done with most of the steps, it’s time to work on a business plan that will make sense for your business case. It will give you an outline of how to stay the course and focus on goals. Additionally, if funding or partnerships are in your line of sight, investors and lenders will expect you to have a well-thought-through plan. Here’s what you can include in your plan:

• Business Overview: What your business does and what products you offer.
• Revenue Model: How you plan to generate income.
• Team Overview: Key employees and executives.
• Funding Plan: Where the financing for your business will come from.
• Operations Plan: How your business will run daily.

When creating your plan, make it relevant to the intended audience. If it’s for investors, make sure to prove your market knowledge and strategy. When targeting potential members of your team, provide your company with values and how you would treat employees. 

Set Up and Promote Your Online Store

Now that your e-commerce business is finally ready for a launch, it’s time to develop your e-commerce website. Select the best platform based on the needs of your business, with the most crucial tools and features helping scale your venture. You can also consider e-commerce app development for reaching your customers in a more engaging manner. You set up the store after you integrate email marketing into your services. Mailchimp could be useful to engage customers in making personalized offers or remarketing, which may help them maintain customers and receive repeat business.

Once the store is live, the word has to be spread. Use knowledge learned about your target audience to choose the best marketing channels. Tap all of these digital marketing channels: social media, blogging, affiliate marketing or you can also go for offline marketing. Create appealing content and use platforms like Instagram marketing or transactional landing pages to drive traffic and increase conversions. A multi-channel approach not only builds brand awareness but also helps in acquiring new customers for the store.

Also Read: eCommerce Development Companies in India

Cost of Building an E-Commerce Business

An individual can start an eCommerce business by investing just $500-$1,000. However, the cost is usually between $12,479 and $39,800 to become successful and to market and advertise the business effectively. Let’s take a closer look at the costs incurred. 

Average Costs for Starting an eCommerce Business

Before diving into the details, check out this comprehensive eCommerce startup cost checklist. It will help you effectively plan your startup budget and understand how much financing you need to get started.

Item	Average Cost
One-time Expenses
Website Development	$2,500 – $10,000
Annual Web Hosting & Domain Registration	$100 – $500
Inventory & Product Costs	$1,000 – $5,000
Licenses & Permits	$500 – $1,000
eCommerce Plugins & Apps	$100 – $500
Hardware & Software	$500 – $2,000
Payment Gateway Setup	$50 – $300
Packaging & Shipping Materials	$200 – $500
Initial Marketing	$3,000 – $6,000
Initial Photography & Product Images	$500 – $1,000
Annual Insurance	$500 – $2,000
Professional Fees	$500 – $1,000
Total One-Time Expenses	$9,450 – $29,800
Recurring Expenses (Per Month)
Inventory Restocking	$500 – $1,500
eCommerce Platform Subscription	$29 – $500
Website Maintenance	$100 – $1,000
Marketing & Advertising	$2,000 – $5,000
Utilities	$200 – $500
Software Subscriptions	$100 – $1,000
Customer Support	$100 – $500
Payment Gateway Fees	2.5% – 3.5% per order
Total Recurring Expenses	$3,029 – $10,000
Total Estimated Cost	$12,479 – $39,800

This breakdown will give a clearer picture of the upfront and ongoing costs of having your eCommerce business. By taking into consideration one-time and recurring, you can be sure of having the right budget when you start and sustain running your operations.

Conclusion 

It's an exciting journey of opportunities and challenges in opening up an e-commerce business. With a proper strategy and the right tools, you can convert your passion into an online success venture. Don't forget that the long-term secret to success lies in your understanding of the target audience, staying adaptable to change, and continuously modifying your approach. Now, go ahead, experiment with new ideas, learn from your experiences, and continually improve on the store's offerings as well as the marketing strategies. The world of commerce is ever-changing, with determination and creativity propelling your business to the greatest heights in the competitive landscape of digital marketplaces.