The eCommerce industry is booming, with many direct consumer brands showing record revenues during 2021. According to statistics, there are currently 7.9 million online retailers globally, and 2.1 million are in the United States.
In this article, you can find an ultimate guide on how to start an eCommerce business, things to consider before, the best eCommerce platforms, and how much does it cost to start an online retail business in 2022.
Is eCommerce profitable?
eCommerce is a Business Model that allows businesses and individuals to buy and sell things over the Internet.
The digital economy is gaining popularity every month: about 8 billion people live on our planet, while 7 billion devices are connected to the Internet. Experts predict an increase of Internet connections to 50 billion devices in 2022. Now eCommerce has taken a significant part in the global financial market.
Small, medium, and large businesses can benefit from eCommerce for the following reasons:
- Large geographic coverage. A company can sell its products all over the world. For stable operation, you need a well-functioning interaction with delivery services;
- Cost reduction. To organize an online store, you only need a room for a warehouse and a small space for an office that can process orders;
- The possibility of round-the-clock work. You can receive orders from buyers all day long. It is only necessary to establish feedback with clients.
- Improvement of the customer experience.
- Low cost of distributing digital products.
- The use of multichannel promotion of goods and services by e-commerce companies. It determines what, where, when, how, and why people buy.
To maintain a good balance between the demand for your products, your costs, and your profits, you need to monitor and evaluate every aspect of your business finances constantly.
Is it hard to start your own eCommerce business?
The first step to starting an eCommerce business is defining your product. It is often the most challenging part of starting a new online business. Getting stuck on this is a serious reason people hesitate to start their eCommerce business.
Starting a small online retail business involves some essential steps and mistakes to avoid. However, it can be extremely challenging to know precisely how to start an eCommerce business that can be successful enough to generate income. There is so much information and many eCommerce terms to analyze, so creating an action plan is essential to prioritize your resources.
Here are some critical stages you need to consider before starting your eCommerce business:
- Explore the eCommerce market and find your niche. Determine how you will deliver your products or services to your customers.
- Determine your product, retail and online store business plan, evaluate your product idea, your target audience and explore the market demand.
- Find a name for your product, create the logo, and find your Search Engine Optimization.
- Choose an eCommerce platform with a good reputation, customer support, and applications.
- Prepare to launch, create a delivery strategy, set your rates and shipping methods.
- Create your marketing strategy and maintenance of the product.
- Provide excellent customer service. Create self-service content and a detailed FAQ page, offer live chat support, encourage product reviews, and build trust with your customers.
- Test a few different tactics on conversion optimization and try to figure out which one works best for your business.
- Constantly look for new ideas to attract customers, test new product ideas based on Google Trends.
Once you've validated your business idea, make sure you continue to optimize your eCommerce business as you progress. Here are some additional tips that you might want to consider when starting your eCommerce business.
What are the different types of eCommerce?
There are several main types of eCommercial activities. They are classified according to the kinds of parties involved on both sides.
- B2B. Business to business. A form of relationship between commercial enterprises and organizations. In terms of funds, B2B is the largest eCommerce category.
- B2C. Business to consumers. Initially, eCommerce targeted the delivery of services to the end consumer, so this form has long been the largest in terms of turnover. A simple example of a B2C system is an online store where customers can select any product pay for it using online payment options.
- C2C. Consumer to consumers. This form implies a commercial relationship between individuals. On specially organized platforms, individuals offer goods and services without intermediaries.
- E2E. Exchange-to-Exchange. This term refers to the exchange of information or transactions between websites, that can exchange goods and services between businesses. An example can be a transaction from an electronic wallet to a bank card.
- B2G. Business to government. A rapidly developing form of commercial relations that includes various tenders or public procurement services.
In addition, business models work in the opposite direction (C2B or G2B) to support the business or offer its services. These forms of relationship don’t yet have broad coverage and are at the stage of development.
What is the best eCommerce platform for a small business?
The most famous example of an eCommerce platform is Shopify. It is a simple and convenient service for launching commercial projects of any complexity - from a simple store with several trading positions to marketplaces like eBay and Amazon. A basic Shopify subscription costs $29, while you can choose a plan with quality online store options that costs $200 and a domain purchase that starts from $15 per year.
Shopify isn't the only option, as there are many other eCommerce platforms on the market that you can use to launch your online store. Here's a comparison of the most popular ones.
Comparison of eCommerce platforms
|Type of Cooperation Model||Pros||Cons|
|Fixed Price||* fixed cost for offshore software development services after a detailed estimate;|
* allows customers to pay the pre-agreed price;
* suitable for projects with limited deadlines and budgets;
* the absence of additional supervision due to the strictly defined details.
|* poor project flexibility;|
* changes can be done only after estimation;
* possibility of miscommunication;
* bad for long-term projects.
|Time and Material||* makes the development process gradual and continuous;|
* allows different types of payment (hourly, weekly, biweekly);
* involves regular payments for completed work;
* transparency allows monitoring the progress of the development flow.
|* the exact final price is unknown until the development is finished;|
* uncertain deadlines;
* management of every step of the development process.
|Outstaffing||* ability to hire required professionals for the project but not the whole team;|
* offshore software developers can be hired on a remote basis.
|* long search and recruiting process;|
* be ready to spend some time on the onboarding of the outstaffed developer.
|Dedicated Team||* a team works only on the client’s project;|
* offshore development firm assigns the design and development teams on its own.
|* the client is not involved in the recruitment process;|
* communication with the team is performed between the project manager and the client.
Choosing the right eCommerce platform is like choosing a physical address for your store. There are many things to consider, from a site's reputation to the kind of support you can expect when implementing your business.
For some companies, the right platform will be one that will allow them to create something creative for their eCommerce store. For example, you might need an open-source website builder with a user-friendly interface where you can experiment with inventory management, cart recovery, and various types of web hosting.
On the other hand, if you are new to eCommerce business management, you may want to consider migrating an open-source commercial platform to a host solution.
How much does it cost to start an eCommerce business?
The cost of launching an eCommerce business can range from $500 to $100,000 depending on the niche, the complexity of the website development, the location of the business, and many other factors.
Small business website - $100 to $3,000. It can be a simple online store that requires minimal setup and less than 20 pages with stock images and no unique functionality or design.
A site for medium-sized businesses - $1,000 to $20,000. It includes a marketplace with 70 pages, custom layouts, a content management system (CMS), and some additional features and unique design.
Multi-vendor marketplace - $5,000 to $40,000. It usually includes a store where customers can buy and sell products. In addition to the basic functions of an online store, you also need a seller panel and the ability to communicate between users.
Large, corporate projects - $25,000 to $ 100,000. Large-scale platforms with unique designs, several hundred pages, custom layouts and images, content management system, unique functionality, and additional features.
To run a profitable eCommerce store, you need to make many decisions, including choosing the right product, development, marketing strategy, great branding, and many more. Many of these decisions can have long-term financial implications for your operations and profitability.
While calculating the cost of the potential eCommerce site, you should consider the following expenditures:
1. Domain purchase - starting from $5 per year
2. Hosting purchase - starting from $12 per year.
3. Development of an eCommerce site that may include:
- Website templates - free to $500
- Website builders - $10 to $ 30 per month
- E-commerce platforms - $30 to $300 per month
- Development from scratch - $300 to $50,000
3. Marketing strategy that includes:
- Search Engine Optimization (SEO) - $200 to $500 per month
- Pay-per-click (PPC) advertising - $100 to $1000 per month
- Conversion Rate Optimization (CRO) - $300 to $600
- Social Media Marketing (SMM) - $250 to $2,500 per month
- Content Marketing - $500 to $5,000 per month
4. Email marketing - $0 to $ 5000 per month
If you are not sure where to start, we recommend hiring a professional IT consultant who can help you figure out the process of development and eCommerce strategy.
Contact RabbitPeepers to get qualified assistance.