How to start an e-commerce business
Although there are notable differences in starting an e-commerce business compared with starting a brick-and-mortar business — there are also a number of similarities. As we’ll discuss below, many of the planning and legal steps you’ll need to take will follow the same process (more or less) than any other business. However, once it’s time to start your operation, you’ll see how different starting an e-commerce business can be.
Step 1: Research the e-commerce space and find your niche
The first step in learning how to start an e-commerce business is performing the necessary research. Just as if you were starting a restaurant and looking into different locations, food options, and themes, you’ll want to investigate the e-commerce area you’re interested in and make some decisions with regard to your specific business.
Step 2: Select your business name and choose a legal structure
Once you’ve solidified the plan for your e-commerce business, the next step is to choose a name. Like any other business, you’ll want to choose a name that’s unique, but also that clearly indicates what your business is or does. You’ll likely want to consult your local secretary of state’s website, as well as the ensure that you’re not choosing a business name that’s already claimed by another company.
Step 3: Apply for an EIN
Next, you’ll want to apply for an EIN, or employer identification number, for your e-commerce business. Although not all business entity types are required to have an EIN, this nine-digit number can be useful to help you separate your personal and business finances. Plus, you can apply for an EIN from the IRS, for free — either online, by mail, fax, or phone. Since you’re learning how to start an e-commerce business, you’ll very likely want to apply for this business tax ID online, and once you do, you’ll receive your number instantly.
Step 4: Obtain business permits and licenses
After you’ve applied for your EIN, you’ll now want to obtain any business licenses or permits needed to operate legally within your city and state. As we mentioned above, if you’ve established your e-commerce business as a sole proprietorship or general partnership, you don’t actually need to register your business with the state — unless you’re filing a DBA to legally operate under a specific business name. For the other business entity types, however, you will need to register your business with your state and receive a general operating license. Depending on where your business is located, you may also need to acquire a local operating license as well.
Step 5: Choose an e-commerce platform and create your website
At this point, you’ve completed the paperwork required to register and legally start your e-commerce business. In this way, the majority of our steps thus far have mirrored the process of starting a brick-and-mortar business. Now, however, instead of searching for a location and preparing to set up up your physical store, you’ll start creating your website and online store.
Step 6: Source or develop (and list) products
After you’ve chosen your e-commerce platform and started your website, you’ve almost reached the end of the process. At this point, you’ll need to actually source the products you’re going to sell. You should have already thought about how you’re going to go about this process when you performed your research in step one. You may make your own products, source them from distributors, or — if you’re selling your own services, like as a consultant, for example, you may simply have to describe and list these services on your business website.
Step 7: Market your e-commerce business
There you have it — you’ve learned how to start an e-commerce business. Now that you have your products or services prepared and listed on your online store, your website is up and running, you’re ready to start serving customers. In order to do this, of course, you’ll need to properly market your e-commerce business.There are a variety of marketing strategies you might decide to utilize — Google ads, social media ads, word of mouth, and more. At the most basic level, you’ll want to optimize your business website for SEO and take advantage of any online marketing tools that are included within your e-commerce platform.
