It’s no secret that ecommerce is a growing field — in just the past decade, this market has experienced explosive growth that has proven fruitful for online merchants.
In this guide, we’ll lay out all important aspects to consider and the steps to take to get started as an online seller.
Let’s dive in!
If you don't already have a good idea of the niche you want to operate in, this is something you should start brainstorming ASAP.
As an online seller, there are many niches to explore, including:
When choosing a niche, it's a good idea to consider your own professional expertise and interests.
For example, if you're passionate about eco-friendly household products, that could be an excellent niche for your business.
In either case, consider the market size you're trying to address and whether it's a practical choice for your business.
Additionally, it is crucial to determine whether selling your intended products online is a viable option.
For instance, if you plan to market alcoholic beverages, it may not be permissible on specific platforms due to legal restrictions.
Ultimately, it's crucial to find a field you're interested in and ensure it's experiencing growth to support your business's long-term growth.
Offering product details at this early stage is unnecessary.
However, having a general idea of what you want to sell is important, and you can refine your focus later.
When starting an ecommerce store, it's crucial to identify your target audience within your niche.
This should be one of your top priorities in the early stages of your business.
Your target audience is the group of individuals or demographic that you want to sell products to.
Why is this necessary?
Creating a business plan will guide your entire business, including selecting the specific products to sell, developing marketing strategies, and other important decisions.
And while identifying a target audience requires research, if it's a niche you're interested in, you may already have a good idea of your buyer persona.
For instance, if your selected niche is home goods, some of the target audiences in this space could include:
From here, you may easily consider the specific home goods products that cater to their needs and interests.
Furthermore, when you have a target audience in mind, making informed business decisions for your future customers will be easier.
This can be very helpful for new store owners who have a lot of decisions to make in the beginning parts of their business and need to make such decisions quickly.
How to achieve this?
✔️ Research your target audience.
✔️ Offer products that align with audiences’ needs and preferences.
✔️ Tailor your products, messaging, and other details to a specific target audience.
Now that you have a clearer understanding of your market and target demographic, you can think of some niche-specific products you might sell them.
Of course, you'll need to conduct some research throughout this process to think about 2 things:
Even if your research shows fierce competition for your chosen product, this could be an indication that there is a substantial market demand for the particular product.
For instance,using the above example of Millennial women interested in home goods that promote relaxation, you could sell candles infused with relaxing essential oils.
Here are some examples on how to do that:
For starters, you should think about where you will get your products from.
Although some online vendors may manufacture their own products, it's more likely that you'll be buying items in bulk and reselling them with a markup.
There are a variety of options for suppliers to choose from, depending on the specific product you'll offer.
However, keep in mind that each supplier might additionally have their own specifications for orders, such as a minimum order quantity or value.
Additionally, you should request samples if you can so that you can assess the quality of the products before you start selling them to customers.
After choosing a supplier, consider how you'll ship orders to customers.
Fulfillment has its own advantages and disadvantages, so it’s important to consider all the available choices and select the one that’s right for you.
Let’s take a look at the pros and cons of each.
It allows you to sell your goods directly to Amazon customers by utilizing the retailer's warehouses, delivery networks, and return processing services.
Dropshipping allows you to put up products on your storefront with a mark up, and let a dropshipping partner take care of everything else, including supplying, storing and shipping the goods.
While this is the least time-consuming fulfillment option, it gives you little to no control over the product quality and the customer experience.
When merchants open their shops, many of them keep their inventory in their homes or garages.
Self-fulfillment, also known as internal warehousing, allows you the most control in the fulfillment process but is time-consuming and difficult to scale.
When you work with a 3PL, they will store your inventory and ship your orders directly to your customers.
If you're looking to save money in the long run, it might be worth it to invest heavily up front in a third-party logistics (3PL) warehouse.
Although setting up a legal entity for your web store may seem like a huge hassle at first, it is a necessary step in opening a business.
This is required before you can do anything like:
Although these features may seem extremely far-fetched for your brand-new ecommerce store, you should still plan ahead to get to them as your business expands.
You may consider hiring a professional at this point to help you ensure each element is done correctly, though many choose to complete the following steps on their own.
First thing’s first, you need to select a name for your ecommerce store.
Again, you don’t have to overcomplicate this step too much, and you can always change it later if you’d like.
Here are some important things to remember when setting the name for your ecommerce store:
✔️ The shorter the name, the easier it is to pronounce and remember.
✔️ Make sure the name reflects your specialty or the services you offer.
✔️ Find a way to make the name stand out.
✔️ Verify that there are no trademarks or copyrights associated with the proposed name.
After deciding on a name for your shop, you should register it with the appropriate authorities.
While it's common for online retailers to start out as sole proprietorships or partnerships, eventually most choose more legally secure business structures like:
Although the LTD requires more administrative work and is more expensive, it is usually the best option because you are protected from personal liability in business failure.
However, if you run your business as a Sole Trader, you are the business and must take responsibility for its actions and debts.
If your business structure is an LTD, you must maintain separate books and a separate business bank account from your personal finances.
The next step is to launch the website that will serve as the "transaction engine" for your business.
Many online merchants who aren't web developers may view this as an impossible challenge, but it doesn't have to be.
Nowadays, there are so many options for selling goods online that you might not even need your website.
Consider some of the following aspects of your online store that you'll need to define to expand your business, regardless of whether you sell through Amazon's Fulfillment by Amazon (FBA) or Shopify.
While setting up your online store, you’ll need to set the pricing for your goods.
Correctly defining the prices for your products can be the difference between earning a profit and suffering a loss.
Even still, there are some simple ways to calculate a price that will be profitable for your business.
Consider the scenario where you’re selling relaxing candles, and the supplier you selected will charge you €4 per unit to source them. However, to experience a 60% margin, you must assign at least €10.40 per candle to make your desired profit.
Also, remember to include add-on costs like software, employee payroll, or marketing.
You’ll need to adjust your pricing accordingly to maintain that same level of profitability.
The good news is that you can always revise your pricing on your website later on as you evaluate performance and profitability.
The last step before going live is to order your inventory.
Even if you're using Amazon FBA or 3PL companies to store and ship customer orders, you'll still need to monitor inventory levels and make sure they have enough stock.
For instance, when placing an initial order with a supplier, you should get enough product to cover at least $1,000 in sales.
This will require an initial outlay of funds, though the price is usually much lower than people anticipate.
Let’s consider a situation where you’re planning to have enough inventory for your first €2,000 in sales.
If you’re selling each candle for €10.40, you’d need to sell at least 193 units to hit this level.
And at a per unit sourcing cost of $4, this means you’ll have to order at least €772 worth of inventory to fulfill your first €1,000 in sales.
To ensure that you have sufficient stock, it is important to keep track of your sales and inventory so that you can make necessary orders when required.
Now that you have a functional storefront where customers can make purchases, you should begin to promote your ecommerce store.
There are many channels to market your products, including on your personal social media profiles, through paid advertising, on marketplaces like:
Each online seller may have their own background in marketing or have access to certain resources to help them promote their goods at reasonable rates.
But, it’s important to note that some of the aforementioned sales channels are free, while others can require some marketing spend in order to be effective.
Also, depending on the products you sell and the audience you serve, one channel might be more effective than others.
Thus, feel free to test out your marketing channels and materials to find what’s most effective for your ecommerce store.
Once your store has been open for some time and you have proof of concept showing it is gaining good traction, you can look for outside funding.
In other words, once your ecommerce store shows signs of success, lenders may be more open to providing you with funding.
By gaining access to external funds, businesses will have more options for fostering the expansion of ecommerce through initiatives like hiring new staff members and launching new product lines.
Let's look at some key financing options online store owners consider when looking for outside financing.
Asset-based funding is a rapidly growing financing option for ecommerce businesses.
Unlike other methods requiring a personal guarantee, this approach uses the goods sold as collateral.
When applying for a loan, lenders may use data from your ecommerce platforms to evaluate the potential sales of your retail products.
The loan decision will be based on your future potential rather than your history.
Furthermore, asset-based lenders differ from middlemen or finetraders as they do not involve themselves with your suppliers or customers.
This means that you maintain complete control over your business.
Online retailers can quickly access funding from Myos, a market-leading asset-based lender, regardless of their personal or corporate credit histories.
Because they judge your business based on the potential of the products you sell rather than your credit history, Myos does not require personal guarantees for funding.
In addition, you have access to various fulfillment options thanks to their relationships with reputable warehouses throughout Europe and the UK.
Fundamental Conditions for Funding With Myos?
Many business owners opt for equity financing to fund their growth.
This method involves receiving a significant amount of capital from investors in exchange for a portion of ownership in the business.
The funds don't require repayment, but the business owner's control over their company may decrease depending on how much equity the investors hold.
Bank loans are a traditional form of business financing, but can be difficult to secure for ecommerce businesses due to strict requirements.
Merchants must make a personal guarantee and have a formal business plan, loan proposal, and performance history.
The finetrading method can be a helpful way for ecommerce store owners to access funds for urgent financial needs quickly.
However, it's important to note that a personal guarantee will be required for financing, similar to bank loans.
Many online sellers turn to revenue-based financing to obtain funds, whereby lenders offer an initial payment and recover it with a set percentage of their monthly sales.
The payment plan is adaptable and proportional to the sales generated by the business, and the repayment period can be extended if sales decline.
Typically, lenders do not demand a formal business plan, pitch deck, or extensive business background to authorize the financing.
You can start your ecommerce business off on the right foot and move it toward expansion by adhering to each of the steps mentioned above.
However, even though you've finished the process successfully, you should still continue your efforts to ensure the growth of your company when getting started in ecommerce.
As we mentioned in the previous step, many ecommerce businesses need financing once they are up and running to take advantage of growth opportunities.
Asset-based funding remains one of the best options, giving merchants many advantages, including:
✔️ Because the ecommerce industry moves quickly, asset-based lenders make quick lending decisions.
✔️ You can have full control over your company and flexible repayment terms.
✔️ Asset-based lenders like Myos allow online sellers to apply with minimal documentation and business experience.
So, what can you expect from Myos?
🎯 We offer loans ranging from €10,000 to €2,500,000 without requiring personal guarantees.
🎯 We only use your goods as collateral and base transactions on their current market value.
🎯 You can change payment schedules without extra charges.
🎯 Our application process is quick and easy and offers a fast response time.
🎯 We are a reliable financial partner committed to helping you grow.
Get your non-binding offer from Myos to start boosting your store growth today.