How to Start an E-Commerce Bussiness in 2024

  

There has never been a better time to start an e-commerce business. Every aspect of running a retail operation—sales, inventory, CRM—is now supported by easy-to-use cloud software. With a dropshipping model, your upfront costs are limited to a solid idea and a few hundred dollars a month. The simplicity with which you can launch today is the result of 30 years of e-commerce evolution. To truly grasp how far e-commerce has come, it’s helpful to look at its origins.

  

                         Pre-launch prep guide

There’s no denying that starting a retail e-commerce website is far less risky than opening a traditional brick-and-mortar store. Without the need for a physical space, you save thousands of dollars each month. You also avoid hefty upfront costs like securing a location, paying for utilities, and furnishing the interior. With an all-digital storefront, you can even reduce the number of employees you need, or potentially eliminate the need for any at all. Depending on your business model, you may not even have to purchase, store, or manage inventory in advance.

However, there is still plenty of planning to do and important decisions to make. In fact, it may be more challenging to plan an online store because many entrepreneurs aren’t familiar with things like virtual servers, data usage, cloud-based shopping carts, or ICANN-approved domain registrars. These aspects of your online store aren’t as intuitive as concepts like “1,000 square feet” or “hardwood floors.”

While you won’t have to spend time touring different physical storefronts, you’ll still need to put in some effort to ensure you’re setting your store up in the right place. This includes registering a memorable domain name, finding a service to host your domain’s website and email, and choosing the software that will power your online store.

There are many decisions to make, and they are all interconnected. Let’s take a look at these three essential components of your business. While this process differs from finding a physical location, thinking of it in those terms may help those who aren’t technically inclined.

            E-commerce Platform Buyers' Guide

In the first chapter of this guide, we discussed everything you need to consider and do to set up your corner of the internet for hosting your online store. Now, we’ll focus on the store itself: your website. More specifically, we’ll cover the software that powers the shopping experience.

At its core, e-commerce software is essentially the shopping cart. It’s where customers add items, and it’s where they enter their shipping preferences and payment details. However, today’s e-commerce platforms offer far more than just this basic functionality, and figuring out exactly what you need can feel overwhelming.

Since this Buyers’ Guide is part of a broader guide on starting an e-commerce business, we’ll make a few assumptions: you’re starting from scratch, you don’t have extensive technical skills, and you’re likely not hiring someone with those skills. And that’s perfectly fine. In today’s world, where cloud-based software (Software as a Service, or SaaS) can be accessed and operated directly from a web browser, hiring a full-time IT person is often an unnecessary expense.

         Other Software to Grow Your Business

Beyond the essential need for shopping cart software, there are several other software solutions you'll want to consider for your e-commerce business. While the shopping cart is responsible for the core function of processing payments for items, what about managing inventory, customer relationships, and marketing? Just because these areas don’t directly generate revenue doesn’t mean they’re any less critical.

In this section, we’ll explore the various types of software that can help you in these areas. We’ll dive into each category and highlight the key features to look for so you can choose the right solution. Keep in mind that some of these functionalities may already be included with your shopping cart platform, but they should be evaluated with the same level of scrutiny as any third-party options you might consider. Sometimes, the appeal of add-on features is that they’re already available—but that doesn’t necessarily mean they’re the best option.

Take a look at these peripheral aspects of your retail business to get an idea of what you’ll need to address moving forward.

               To Inventory or Not To Inventory

One of the advantages of running an e-commerce store is that you don’t always have to make a significant investment in inventory, or any inventory at all. In fact, nearly a third of all online stores—27%, to be exact—rely on drop-shipping to fulfill their sales. For those unfamiliar, drop-shipping is a model where the seller partners with a third-party distributor who ships the product directly from their warehouse to the customer.

Unless you’re an artisan or “maker” selling handcrafted items, there’s a good chance that drop-shipping can save you a considerable amount in upfront costs and overhead. In fact, there are even customized products—like mugs and t-shirts— that you can sell and create on-demand, without ever needing to invest in inventory. Think platforms like Cafepress, where products are made to order. With this kind of flexibility, it’s worth considering drop-shipping as a viable business model. It’s not for everyone, of course, but it might be the right fit for you.

                 Marketing Guide

In 1975, one of the year’s top-selling products was an idea that, at first glance, seemed utterly ridiculous. But when you looked closer and tried to understand it... well, it still seemed profoundly absurd. It was called the Pet Rock—literally a rock in a box. To be fair, it was a nice rock, shiny and smooth, and for $4, you got the rock, its "carrier" (a box with air holes), and a 30+ page guide on how to care for your new, perfect pet—one that never leaves your side, never needs feeding, walking, or cleaning. It was a product driven purely by marketing, and its inventor—an advertising executive, of course—became a millionaire in less than a year.

Here’s the harsh reality: your e-commerce business is essentially a Pet Rock. No one needs it, and no one is actively searching for it. While this might sound brutal, it’s mostly true. Unless you're in one of the rare exceptions, online retail, like the one you're starting, has probably already been done. Selling tech products? Thousands of others are already doing it. Have a keen eye for fashion? So do countless other companies. Even unique products have numerous competitors. If you’re selling t-shirts with original designs or a new type of subscription box, you’re competing with all the other vendors offering similar items. And, ironically, you're also competing with those selling subscription boxes of original t-shirt designs.

The only thing you truly own that’s unique to you is your brand identity—and that needs to be carefully nurtured. Think of your business as a Pet Rock. Even if someone genuinely wants what you're selling, they can likely find it cheaper or more conveniently elsewhere. So, your marketing becomes the real value: it’s the quirky pet carrier, the humorous manual, and, above all, the feeling of being "in on the joke." This is why marketing is so crucial—it’s what grabs and holds attention. And to do that, you need to work on two fronts.

                                       Your Website

If your business is a Pet Rock, then your website is the carrier, complete with air holes. It’s the first impression of your brand and plays a key role in how your business is perceived. If you’re not completely confident in your ability to create a website that will engage visitors, it’s worth considering hiring a professional. Even if you’re using themes and templates from your e-commerce platform, having a trained eye for design is essential—especially since your website should align with the brand story you’re telling.

1. Your website’s design should be visually appealing, but also reflect your brand story: it should showcase the story, not just explain it.

1. Your brand story needs to be consistent throughout all elements of the design and the website.

          Here are two important rules to follow:

Social Media

Back to the Pet Rock analogy: if your business is the rock and your website is the box it came in, then your social media presence is the 32-page guide to The Care and Training of Your Pet Rock (true story). This is where your store’s full personality comes to life—where you can interact with your audience and customers, and encourage them to engage with you as well.

There’s no right or wrong personality to adopt, as long as it aligns with your brand identity.

While you'll need to develop a unique personality and identity for your brand, there are some universal rules to follow if you want to get the most out of social media marketing.

1. Set clear goals and revisit them regularly. Social media can serve multiple purposes, such as building brand awareness, fostering customer loyalty, promoting sales, and more. When you set specific goals, it becomes much easier to figure out how to achieve them.

2. Understand your customer base and target a relevant audience. If you’re just starting out, research to identify the audience you should be targeting. Social listening tools are extremely helpful here, as they allow you to track what competitors are doing and gain insights into the broader landscape. Make sure the software you use has powerful reporting and analytics tools to analyze your data.

3. Post consistently engaging content. This is easier said than done, and it may take some time to figure out what resonates with your audience. However, it’s important to stay visible and be a regular presence in people’s feeds, especially in the early stages. Even if your content isn’t perfect initially, it helps remind people of your brand.

4. Engage with other accounts’ content. Like, comment, share, and repost as if you weren’t a business. Sometimes, your engagement with others’ posts can attract new followers more effectively than your own content.

5. Collaborate with influencers or notable accounts. Whether you pay influencers to promote your products or organically connect with more well-known accounts, engaging with influencers can help you reach a broader audience. A simple mention can give you a significant boost, as there are usually more eyes on those accounts.

You might be wondering when to start advertising your products. The key is that your business shouldn’t be the sole focus of your social media presence. People tire quickly of constant ads and product promotions. Instead, your goal should be to add value to their feeds, not just push sales.

                   It’s A Marketer’s World

Like it or not, doing business online is often more about the marketing behind the products than the products themselves. A hundred and fifty years ago, someone could invent something like a toothbrush, and it would practically sell itself. There was no need for social engagement with potential customers—just point out their bad breath and explain what the toothbrush does. If they had the money, they’d buy it.

Today, entrepreneurship is just as much about marketing as it is about the business idea itself. In online retail, it’s almost entirely a marketer’s game. Unless you have a groundbreaking invention, you won’t succeed in sales without a strong marketing strategy. However, it's important not to get too cocky about your marketing skills and think that’s all you need to make a living. You still need a well-rounded business plan that accounts for costs and other key details to show how you’ll achieve profitability.

That’s exactly what we’ll dive into in the next chapter.

               Creating a Business Plan

Because e-commerce businesses require significantly less capital upfront, many owners can start on their own without needing outside funding. While it's great to begin your business without incurring debt, many online entrepreneurs mistakenly believe this means they don’t need a business plan. There’s a common misconception that a well-documented business plan is only necessary to convince investors that you've thought everything through and can provide concrete numbers to back your idea.

This is a dangerous assumption.

Even if a business plan were purely for accountability, it's still crucial for setting a solid operational foundation. Just because you know your destination doesn’t mean you can navigate the journey expertly—you still need a map and an understanding of the terrain to minimize risks. Your business plan acts as that map, and you’ll need to refer to it regularly. Even with a map, you can get lost—perhaps you miss a turn or get distracted—but without one, you'll struggle to find your way back to the planned route.

Think of writing your business plan like planning a long road trip. You might stray from the plan if a better route presents itself or if you come across a landmark you hadn’t considered, but the plan is a solid reference when you get off track. Just like with a road trip, you can’t just get directions and go—you need to prepare for the journey and plan for every need along the way. Each section of your business plan is you preparing for the trip ahead, figuring out what you’ll do at each stage and how you’ll support yourself to reach your destination.

Company Information
This section should provide a general background on your company and its owner(s), along with any other key people involved. Highlight the skills and expertise of everyone to show how you're equipped for success. Clearly define each person’s role in the business. If applicable, mention past entrepreneurial ventures and describe what you’ve learned from them that makes this time more likely to succeed. While this part isn’t strictly necessary if you’re not seeking funding, it’s always helpful for two reasons: first, you may want funding in the future, so it’s best to get this section out of the way. Second, by defining roles clearly, you avoid confusion down the road about who is responsible for what.

Product Details
Here, you’ll provide specifics about your product line. You don’t need to list everything you plan to sell, but it’s helpful to define your core products from a high level and explain what makes them unique compared to competitors. Emphasize anything that sets you apart (e.g., "We only use organic cotton in our shirts"). This is also the place to describe how you will source your products and what you expect your costs and revenues to be.

Define Your Target Market and Marketing Strategies
By now, you should have a clear understanding of your target market. Use this section to describe it in detail, including demographic and psychographic information. Discuss your methods for reaching this audience, including tactics that have worked for your competitors and areas where they’ve failed, which you plan to fix. Outline how your website and social media presence will drive sales. Detail your SEO strategies to ensure people will find your site, as well as any paid search or other advertising tactics you’ll use. Be specific about the strategies you will implement to engage your customers.

Finances
How much capital are you starting with? What are your upfront and recurring costs? How much revenue do you expect in the first year? The second? While a “bird’s eye view” can work for some parts of the business plan, the financial section requires meticulous attention to detail. List every expense: web hosting fees, product costs, warehousing, office supplies, etc. Include your assets, project profit and loss, and ensure your projections are based on realistic assumptions. Don’t make overly optimistic forecasts just because you believe in your business; it’s important to be grounded in reality. Your financial plan will likely be the part of the business plan you refer to most often, as financial missteps are a common reason businesses fail.

Operations
In this section, describe how you’ll achieve the goals laid out in the business plan from an operational standpoint. Who will be your suppliers? What does the process look like from receiving an order to shipping it? Imagine that in a few years your business is running smoothly and profitably—what does the day-to-day operation look like? What systems and processes are in place to ensure everything runs efficiently? Be as detailed as possible about the logistics of the business to ensure you can execute your plan successfully.

There’s a well-known saying that originates from a Robert Burns poem: “The best laid plans of mice and men often go awry.” Two things stand out about this quote. First, its meaning serves as a reminder that there’s only so much we can control, and we need to be flexible when the unexpected happens. The second interesting point is that this isn’t even the exact quote. Written in the 18th century, the original line ends with “gang aft a-gley,” rather than “often go awry.” The meaning stayed relevant, though, and over time, the words evolved to suit modern language, while keeping the essence intact.

Your business plan is much the same.

What you write at the start may not hold up as the business grows, so you need to stay flexible and adaptable. The core goals of your plan will remain the same, but the methods for achieving them may change. That said, if you don’t clearly document your plan in the beginning, it will be difficult to know what needs to change when the time comes. Not every business with a plan succeeds, but every business without one is facing long odds.

                     Payment Providers

Taking credit and debit card payments—or any form of non-cash payments—has never been easier. As with anything that becomes more accessible, the number of choices can be overwhelming. We’re here to help you navigate these options so you can make the right decision for your business.

You’ve probably heard the saying, “It takes money to make money,” and nowhere is that truer than in the business of accepting payments. Another popular saying is, “Cash is King,” but if that’s true, cash is quickly losing its relevance. In 2022, cash accounted for just 19% of consumer transactions in the U.S.

Since you’re starting an e-commerce business, cash doesn’t even come into play. Online, cards reign supreme, though new payment methods like Apple Pay, Venmo, and others are gaining popularity. Still, these alternative options aren’t essential for success in the same way accepting credit or debit cards is. In fact, 86% of online transactions are done with cards.

The good news is that accepting card payments has become much more accessible thanks to technology. In the past, setting up credit card processing for a brick-and-mortar store involved a lengthy application process with a payment processor. Today, it’s easier and more affordable than ever to accept cards online. Signing up with a payment gateway (an online payment processor) is quick, and the process is far less cumbersome. The biggest challenge you’ll face is simply deciding which payment processor to choose.

Which One Better Have My Money?

The first factor you'll likely consider is the cost per transaction. But let’s make no mistake about this: when you choose a payment gateway, you’re entrusting every penny your business earns to that company. Essentially, they’re your cashier—standing over the cash register, responsible for handing over your earnings at the end of the day, with clear receipts to match.

Don’t let price be your sole deciding factor. This is a crucial decision, so let’s emphasize it once more: don’t choose based on price alone.

Fees: A Few Cents Can Make a Big Difference

Processing fees tend to be fairly consistent across providers, with only minor variations per transaction. If you come across a company offering prices that seem suspiciously low compared to the market, be wary. Who else offers to watch your register for half the price of everyone else? A thief.

Fees can be structured in several ways. Some providers charge a flat rate, others base it on “Interchange” rates set by the credit card companies (which fluctuate regularly and vary by processor). Some have tiered pricing where rates decrease as you hit higher transaction volumes. In general, expect to pay around three cents for every dollar you earn. Some payment gateways may be a little lower, while others may charge slightly more, but anywhere between 3% and 3.5% is typical.

Customer Service: The True Measure of Quality

When it comes to payment processors, reputation matters just as much as service offerings—and far more than price. While expert reviews can help you compare what you get for what you pay, consumer reviews should be your primary guide. Real customers will give you the inside scoop on what the actual experience is like. You can start by looking at reviews and narrowing down your options, or begin by identifying the features you need and then checking which companies are the highest-rated from that shortlist.

Fulfillment and Customer Service

Pay close attention to reviews regarding both service fulfillment and customer service. When it comes to fulfillment, you're primarily concerned with the reliability and timeliness of money deposits into your bank account. It's less important for a processor to send you payouts quickly, but it's critical that they do so consistently and without errors.

For customer service, see how responsive the company is. Do they resolve issues or errors promptly? Are they proactive in handling potential fraud, such as identifying suspicious transactions and reaching out to customers for verification? What are their support response times like? Remember, all the money you earn through your online store will pass through their system, so you will need to contact them at some point. Make sure to understand how they handle customer support before committing.

Other Features You Should Know

Payment gateways now offer more than just facilitating payments. Thanks to increased competition in the industry, you can often get more value for your money than ever before. Just 15 years ago, accepting credit cards was an exclusive club with a rigorous application process. Today, merchants have a range of options, and you’ll need to evaluate each one carefully to make the best decision for your business.

Key Features to Look For:

• Security, Security, Security – This is non-negotiable. Your payment gateway needs to have robust security measures in place to protect both you and your customers. While it’s not essential for you to know all the technical details, you must confirm that the gateway supports the following security standards:

  • SSL (Secure Sockets Layer): This ensures that your website and its transactions are secure.
  • PCI DSS (Payment Card Industry Data Security Standard): Your provider should be Level 1 certified under PCI DSS.
  • Tokenization: This means that sensitive customer data should never be stored in unencrypted form.
  • 3D Secure: This is an additional layer of security to prevent fraud. Each card issuer has its own version of this protocol:
    • Visa: Verified by Visa/Visa Secure
    • MasterCard: SecureCode
    • Discover: ProtectBuy
    • American Express: SafeKey

  If you want to prevent fraud, make sure the payment gateway supports these security protocols.

• Fraud Prevention Tools: These tools help detect fraudulent transactions and protect both you and your customers. Most payment gateways and card issuers have their own fraud prevention features, such as activity monitoring that flags suspicious behaviors or transactions. Be sure to review the fraud prevention features offered by the gateway you're considering to ensure they align with your security needs.

• Shopping Cart Integration
  If the e-commerce software you've chosen for handling purchases allows you to bring your own payment processor, make sure the processors you're considering integrate seamlessly with the software.

  Accounting Integration
  Your life becomes infinitely easier when all income and operational costs are directly linked to your accounting software with the appropriate codes, keeping your financials up to date automatically.

  Payment Window
  How long until you get your money? Typically, payments are batched and processed together, with deposits taking anywhere from one to three business days. Make sure you're clear on the payment timeline before committing.

  Reporting/Analytics
  While payment data is generally presented in terms of date, time, and amounts, the way it's organized can provide valuable business insights. If you're already getting solid reporting from your e-commerce platform, this might not be a major concern, but some payment processors offer additional analytics that could give you a fresh perspective on your sales and trends.

  Optional Hardware
  As an online shop, you don't need physical hardware like card swipers, chip readers, or receipt printers. However, if you plan to expand into the physical world—whether that means opening a brick-and-mortar store or doing pop-up events at trade shows or festivals—you'll need a way to take payments in person. Most payment processors offer basic hardware from major manufacturers, so be sure you're not being overcharged (you can often find things like receipt printers on Amazon). Also, ensure any card readers they provide use the latest security technology, like EMV, which is now an accepted standard, but some people still neglect it.

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  Now that you're equipped with the knowledge to choose a payment processor, it’s time to start shopping. Your e-commerce platform is a good starting point—check whether it satisfies these requirements or see which processors it supports for integration.

  Once you’ve set everything up, your online shop will be ready to go! We've covered everything from idea conception to making your first sales. Now it's time to look at how to boost your revenue with some clever retail apps—our final chapter in this guide.

•           Boosting Sales with Third Party Apps

• From delivery services to loyalty programs, there’s a vast range of third-party apps you can integrate to expand your audience. This guide will explore the top options available.

  Now that your online store is up, your marketing efforts are running, and sales are coming in, you might feel like you're done with the setup phase. But are you really finished? Of course not. Even if your revenue is surpassing expectations, there’s always potential to grow, especially in the online space.

  Why especially? First, your customer base isn’t limited to the local area—there are billions of people online, and it’s just as easy for them to visit your site as it is for someone in your community. Second, you have technology working in your favor. Numerous apps are designed to integrate seamlessly with online stores, aimed at boosting sales in various ways. Let’s dive into some categories of apps that can help.

  Social Proof

  You may not be familiar with the term "social proof," but you’ve likely experienced it. Essentially, social proof is the psychological effect where people feel more confident making a purchase because they see others doing the same. Think of it like choosing between two clothing stores at a mall: one is bustling with shoppers, while the other is empty. You’ll likely be drawn to the busy one, right? The same concept applies online, albeit with some differences.

  For an e-commerce store, social proof often appears in the form of pop-up notifications. For instance, while browsing a product, you might see:

  Michael S. from Scranton, PA just bought 15 bottles of Vodka!

  These notifications provide reassurance to potential buyers that your store is legitimate and that others are making purchases. When several of these messages appear during a shopping session, it can create a sense of FOMO (Fear of Missing Out), prompting customers to act more impulsively before they miss out on a deal.
  

• Loyalty, Rewards, and Referrals

  You invest time and money to acquire new customers, so it's crucial to ensure they keep coming back. And when they’re satisfied enough to return, you want to make sure they’re spreading the word to their friends.

  Modern loyalty apps offer a range of options to help achieve this:

  • Virtual Punch Card — Buy X amount of an item, get one free. This is ideal for low-cost, non-essential items.
  • Points System — Customers earn points with each purchase, which can later be redeemed for rewards. This system works well for stores with higher-priced items.
  • Social Posting — Reward customers for checking in, sharing purchases, or tagging your business on social media through a loyalty app.

  In addition to these loyalty features, there are simple Referral Apps that allow you to offer incentives through referral codes. You can encourage customers to share those codes with their network at the point of purchase, or any time after, to earn rewards.

  Upselling and Cross-selling

  With the right app integrations, you can enhance your sales strategy by recommending complementary products or suggesting upgraded/newer versions of items. When a customer adds something to their shopping cart, your store can automatically make relevant product suggestions, much like Amazon’s “Customers Who Bought This Also Bought” feature. This can include alerts for upgraded versions or items that complement what’s already in their cart, effectively boosting your sales while providing value to the customer.

• Integrating your Facebook and Instagram profiles with your e-commerce store opens up multiple channels for selling at once. Each platform offers distinct advantages. Instagram tends to have the highest average item prices for sellers, while Facebook boasts a much broader reach—and a more complete infrastructure for sales. In fact, 70% of B2C businesses have gained customers through Facebook, making this statistic hard to overlook.

• Customer Service / Live Chat

• In a physical store, customers with questions can approach employees for answers. But with an online shop, people are often left to navigate on their own. While email works well for less urgent inquiries, it doesn’t help in a real-time sales situation. A phone call is more immediate, but let’s face it—who actually uses their phone for talking anymore?

  A live chat feature adds a human touch to an otherwise automated experience, which is valuable in itself. Even better, it ensures that customers won’t abandon their carts because they’re unsure about something.

• Finding the Right Apps

• As you might expect, there are hundreds—maybe even thousands—of apps you can integrate with your store, each offering various benefits beyond just boosting sales. Not every app will be compatible with your e-commerce platform, so you might need some time to find the right ones.

  As with any software, it’s important to do your due diligence. Be sure to verify what level of support is available, if any. Many plug-ins are free but come with limited support, while others may charge a fee without guaranteeing responsive customer service.

  User reviews are an excellent place to start when evaluating the reliability and effectiveness of each app. You’ll be integrating these tools into your business, so you want to ensure they work as advertised and function smoothly. The last thing you want is to install an app that doesn’t perform as expected or, worse, causes disruptions in your store’s operation. After all, you’re looking to increase revenue, not decrease it.

  Once you've found the right apps for your needs, you can consider your online store officially set up. While the work doesn’t stop there, at least you won’t have to leave your house to keep it running smoothly.

• More Resources and Information

• We’ve also compiled detailed reviews of shopping cart software for businesses looking to do more than just process payments.

  • Shopify
  • BigCommerce
  • WooCommerce
  • Square Online

  With over 70 years of collective experience in e-commerce, digital marketing, and growth hacking, we’ve put a lot of effort into these guides. That expertise, combined with thorough research, has led to this comprehensive guide on starting an e-commerce business. So, dive in—and happy researching!

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