E-commerce is buying and selling products and services on the Internet. Almost everything can be sold through e-commerce. So, it is highly competitive. The e-commerce business industry is growing more and more. 

With the COVID-19 pandemic, it has gained popularity. Many brick-and-mortar stores had to shut down during the lockdown. They may never open again since e-commerce mostly took over. Although, some businesses choose to have both. 

E-commerce provides cheaper and more effective distribution media for products and services. Thus, it helps small businesses grow and have a bigger market presence. Similar to other businesses, starting an e-commerce business is not an easy job. Depending on your goals, you need to pick an e-commerce model. Then, you need to follow a set of steps. This article guides you through the e-commerce models, and the steps to start your own e-commerce business. 

What Are E-commerce Business Models?

An e-commerce model is your business plan on how to make money out of your sales. You can achieve this in different ways. Here are 4 e-commerce business models:

Business-To-Consumer (B2C)

In B2C, a business sells its products or services to consumers. This is the most common e-commerce business model. This model often involves digital marketing to succeed in the e-commerce industry. Clothing and household supplies retailers are examples of a B2C model.

Business-To-Business (B2B)

B2B involves a business selling its products or services to other businesses. This model is often used for high-end products in industries where the revenue is made from business purchases. Amazon is an example of B2B. Amazon.com sells many products such as electronics to businesses. Then, these businesses sell the products to consumers. 

Consumer-To-Business (C2B)

C2B is another common and effective model. In this model, consumers sell their products or exchange services with businesses. As consumers, most of us conduct this business unconsciously. For instance, when you shop online, websites ask you to leave a review or participate in online surveys. In return, they offer you vouchers or free products. This is an example of C2B since you exchange your service with a business. 

Consumer-To-Consumer (C2C)

C2C, aka peer-to-peer (P2P), involves consumers selling their products to other consumers. This is also a very common e-commerce business model. With this model, business owners can expand their customer portfolio and reach more audiences. The most popular example of this model is Facebook Marketplace. This is a sub-platform of Facebook, and it allows customers to sell their products to other customers. 

How Can You Start Your Own E-commerce Business?

Understand The E-commerce Space and Find A Suitable Business Model

First things first, you need some research about eCommerce culture. To choose what is needed for your business, you should consider the e-commerce areas you are interested in. That is, you need to decide what you are going to offer. Do you want to sell products or services? Which business model do you want to use? 

Then, you need to consider how you will get your products or services to the customers. Your startup costs are also important in the beginning. Always check the legal regulations on what you are selling. If you can establish these in the beginning, you can define your business goal. It will also help you set more specific goals. To achieve this, you need to find your niche. This is an important part of any e-commerce business. 

Find Products to Sell Online

To make an impact, you need to find profitable and trending products to sell. With the development of e-commerce business every day, people think every possible product or service is already in the market. Therefore, it is tricky to find one. Have no worries, and start discussing your ideas with enthusiastic hobbyists. They can give you creative ideas about what is trending currently.

Consider what you are passionate about. You’re a consumer, too. What you are interested in now can be a trending product to sell. 

Try to capture new trends earlier. This way, you have more chances to find a product since people are not fully aware of it yet. 

Go and read customer reviews for existing products and services. What can shape your ideas better? You can read from different e-commerce websites, or you can read some for other products on your website if you have one. 

If you are interested in making more profit, research products with a higher profit margin. Don’t waste time with other products. However, keep it in mind that higher profit might mean higher risk. So, you need to play big. 

After defining the business plan comes choosing a business name. Like every other business owner, you want to find a unique name. As well as being unique, it also needs to signal what your business provides. Before deciding on a name, check if that name was claimed by another business. For further steps, you can already check if the domain name for a website is available or not. This may help you pick a name more easily. 

Then comes choosing a legal structure. The business entity you chose will bring you legal and financial responsibilities. For e-commerce businesses, people often pick a sole proprietorship. Although, there are different entities and each has advantages and disadvantages. So, it might be better to consult a legal professional on what is best for your business. 

Get an Employer Identification Number (EIN) and Business Licences

For an e-commerce business, you need to apply for an EIN. This is not a must for all business entities, but it is a plus to have it. This number will help you keep your personal and business finances apart. 

Apart from an EIN, you need to consider what kind of licences and permits you need to obtain. Since the majority of e-commerce businesses are home-based, they require fewer licences and permits than brick-and-mortar stores do. Anyway, you need to find out what your area requests. For instance, the most commonly requested permit is a home occupation permit. This allows home-based e-commerce businesses to operate legally. 

Pick an E-commerce Platform and Create a Website 

When the legal steps are done, the next step is to find a platform to sell your products or services. Many platforms allow you to launch your online store, receive and ship orders, receive payments, and so on. Some popular platforms are Shopify, Bigcommerce, and SquareSpace.

When building your own website, it becomes the face of your business. So, this is an important step in starting your e-commerce business. Customers will use this website to purchase your products. Make sure that it is attractive enough. 

Come up with a logo and design idea. Choose the colours that suit your niche and brand message. Don’t make it too dull or too colourful. Stick to two or three-colour combinations. 

Choose The Best Shipping Options For Your Customers

Many successful online stores enable customers to choose among different shipping options. Include more than one way to ship the products, and let your customers decide it. Here are some ideas for you:

Free in-store pickup: if you also have a brick-and-mortar store, let your customers come and pick up their orders from the store. This way, they won’t wait for the shipping process, and it will be a free delivery. 

Free shipping: customers don’t like it if the shipping is not fast and free. Offering  free delivery is not only a shipping option but also a marketing strategy, since you will attract more customers. Although, don’t forget that covering all shipping expenses might not be very beneficial in comparison to your sales rate. 

Flat Rate Shipping: though it’s not as common as free shipping, flat rate shipping is also beneficial. In this type of shipping, the size, shape, or weight of the product doesn’t change the shipping cost. That is, whatever you buy, shipping costs the same. The only downside is that if a customer buys a product at a very low price, the shipping costs might stand out, and they might cancel the order. 

Apart from these shipping options, pay attention to the shipping companies you choose. Start with postal services such as UPS or FedEx. These companies offer great deals for business owners to track the packages, schedule pickups, and so on. Depending on your location, research the best customer-friendly shipping company, and work with them. 

Advertise Your E-commerce Business

The last, but still critical step is advertising your business. Now that the website is ready, the products are in place. It is time to promote the business. To advertise your business properly, there are many strategies such as Google and social media ads. A very basic and effective way to promote your business is through Search Engine Optimisation (SEO)

If you use an effective logo and a web design as mentioned in the relevant section, you don’t even try hard to advertise your products. It will happen naturally. 

Your strategies might change over time. Start with basic steps. Once you receive orders and your business grows, you can decide on the strategies that fit you best. 

The Bottom Line

The e-commerce business industry is exploding these days. It is very likely that online stores will replace most physical stores in the future. If you want to start your own e-commerce  business, do not hesitate to take action. Due to the paperwork, it may seem challenging, but it is not impossible. Learn the business models and follow these steps. The rest will unfold in time. 

About the author

EWOR is a place where the most extraordinary people find the education, network, and capital to solve the world's biggest problems. Our unique combination of an entrepreneurship academy and early-stage VC (up to €150K investment) firm was built for founders by founders, creating an unparalleled community for like-minded entrepreneurs and over a dozen unicorn founders who are building impactful tech companies.