There are many reasons to start an e-commerce business. One of them is that the e-commerce market is growing rapidly. According to Statista, global e-commerce sales reached $4.9 trillion in 2022 and are expected to grow to $8.1 trillion by 2026.

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Additionally, an e-commerce store can be very profitable despite requiring relatively little investment compared to other, more conventional businesses. This is especially true now that online platforms make it easier and more cost-effective to source inventory, arrange shipping and market to potential customers.

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However, only some e-commerce startups become profitable. To help increase your business’s chances of success, you need to start it the right way.

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This article provides some excellent tips on starting an e-commerce business and avoiding the common pitfalls of new online companies. If you’re considering starting an e-commerce business but worried about making costly mistakes, read on for a checklist of the things you need to do to help ensure a thriving and profitable e-commerce startup.

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A Step-by-Step Guide to Starting Your Own E-commerce Business

1. Choose a Business Model

There are various business models, but the most common are dropshipping, wholesale and private label.

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Dropshipping

Dropshipping is popular among those new to online retail and those with limited capital because it requires a relatively small upfront investment. With this business model, you don’t have to carry any inventory. Instead, whenever a customer orders from your store, you purchase the product from a third-party supplier and then ship it directly to your customer.

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Wholesale

Many large and established businesses prefer wholesale because of its potential for increased profit margins and access to a broader range of products. With this business model, you purchase products in bulk from a manufacturer or distributor and resell them to customers at a markup.

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Private Label

With private labeling, you design your products from scratch or have an in-house or outsourced designer design them. You then have a manufacturer create your products according to your specifications. Doing so allows you to offer products that are unique to your business. However, private labeling can be an expensive business model, especially for those who are just starting out.

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The best business model for your e-commerce startup depends on your goals, target market and budget. Dropshipping may be a good option if you’re new to e-commerce because it does not require as significant an investment as other business models. At the same time, it allows you to sell a large selection of products.

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2. Find Your Niche

Offering too wide a variety of products puts you up against huge companies like Amazon, Best Buy and Walmart, against which a small startup would find it difficult to compete. For this reason, beginners in e-commerce should instead find a product niche and focus on it.

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A product niche is a subset of a larger market. For instance, the market for clothing is huge. However, there are many niches within it, such as women’s activewear, men’s formalwear and children’s clothing.

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When choosing a niche, consider the following factors:

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• The size of the market: You’d want to choose a niche that has a market large enough to support your business. If it’s too small, you won’t be able to generate enough sales to be profitable.
• The competition: On the other hand, you should steer clear of overly crowded, competitive niches. It can be difficult for a startup to break into these.
• The growth potential: Ideally, the products you offer should not only have an existing demand but also potential for future growth.
• Your budget: Some niches are costlier than others. For instance, if you want to sell designer shoes, you’d need a large budget for product sourcing and marketing.

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3. Choose an E-commerce Platform

There are several e-commerce platforms available. Some examples are:

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• Shopify
• Amazon
• eBay
• Etsy

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Each has its pros and cons, so it’s crucial to reach them all to determine which one is the best fit for your business. Some factors to consider when choosing an e-commerce platform for your business include:

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Cost

E-commerce platform pricing varies widely. Some platforms offer their services for free. Others charge monthly subscription costs on a tiered pricing model, while still others charge a fee per item sold. It’s crucial to factor in not just the costs of using the platform but also associated expenses, such as:

• Hosting
• Fulfillment fees
• Marketing
• Listing fees
• Transaction fees
• Website design
• Point-of-sale software
• Credit card fees

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Features

Before choosing a platform, figure out which features you need. For instance, if you plan to sell more products in the future, you’d want to pick a platform that can scale with you as you grow. Meanwhile, if you want to provide 24/7 customer service, a platform with the tools necessary to give you this functionality would be the best choice.

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Other features you should be on the lookout for are:

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• Payment security, such as fraud protection and SSL certificates
• Product management tools to help you manage your inventory
• Marketing tools to help you promote your products
• Reporting tools to help you track and monitor your sales and marketing efforts

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Target Audience

Certain e-commerce platforms appeal to specific target audiences. To increase your chances of reaching customers likely to be interested in your products, choose an e-commerce platform whose target audiences align with yours.

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Amazon is an excellent option for most e-commerce businesses as it has a vast, global target audience. Meanwhile, Etsy is ideal for those who wish to sell handmade, unique and vintage products, while eBay is a good choice for stores whose target customers are looking for rare items and bargains.

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4. Set Up Your Online Store

Now that you’ve chosen an e-commerce platform, setting up your online store is the next step. This involves:

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• Choosing a domain name
• Choosing a web hosting provider
• Developing and designing a website
• Adding products to your website
• Creating a checkout process
• Setting up payment options
• Marketing your online store

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It might seem like a long and complex process, but it is crucial to starting an e-commerce business. Fortunately, you do not have to go through this alone—Expert help is available.

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How to Start An Online Business During a Recession

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