What is an ecommerce business?
An ecommerce business sells products or services to customers over the internet. Ecommerce businesses can range from small, home-based operations to large, multi-million dollar enterprises. A successful ecommerce strategy can allow entrepreneurs to reach a global audience with minimal overhead costs.
Two common ecommerce business models are business to business (B2B) and business to consumer (B2C). B2B sellers focus on selling products that other businesses may need, while B2C focuses on selling products to shoppers (or the end customer).
B2B ecommerce examples:
- Wholesale suppliers
- Office supply stores
- Industrial equipment manufacturers
- IT services providers
- Software companies
- Business consultants
B2C ecommerce examples:
- Clothing retailers
- Electronics stores
- Home goods stores
- Grocery stores
- Health and beauty retailers
What does "ecommerce" mean?
The definition of ecommerce
is the buying and selling of goods and services over the internet. It’s a form of electronic commerce where businesses conduct transactions with customers online. With ecommerce, entrepreneurs have the potential to reach a broader audience, since they're not restricted to a local customer base.
Why start an ecommerce business in 2023?
Ecommerce is thriving and growing—and it’s not too late to be part of it. According to Morgan Stanley
, ecommerce makes up 22% of sales ($3.3 trillion) and is likely to reach $5.4 trillion by 2026.
You can pursue selling products online as a full-time career or a side gig if you want to:
- Earn money passively
- Set your own hours and be your own boss
- Work from anywhere with internet connection
- Have the potential to grow fast as more people shop online
- Expand into other products or categories to scale revenue and profits
Selling websites like Amazon are here to support your growth with tools, services, and the ability to reach millions of shoppers worldwide.
How Anker grew from a side business into a global brand
Did you know Anker Technologies
, the worldwide provider of phone chargers and power banks, started as a small ecommerce business in Amazon stores? Steven Yang and his wife initially ran a dropshipping business
that sparked the idea of selling portable charging devices; this became Anker. As sales took off, the couple went full-time with their business. Today, Anker is a global enterprise.
How to start an ecommerce business from scratch in 5 steps
Dreaming about turning your million-dollar idea into an ecommerce store
? You may already be thinking about what type of products you want to sell, who your audience will be, and how you’ll attract shoppers.
It’s a lot to consider, but don’t worry—to figure this out, let’s look at five basic areas to help set your ecommerce business up for success:
- Researching and validating your business idea so you know what’s likely to sell
- Procuring products or sourcing them from reliable suppliers
- Choosing selling channels to connect products with shoppers
- Setting up an online store and listing products
- Marketing and promoting products to raise sales
Step 1: Research and validate your business idea
What problem or challenge are you seeking to solve? Who is going to be most excited about the solution you come up with?
Some ideas—however innovative—can fail if they don’t have customers to support them. As you zero in on product ideas
, here are some prompts to help you make decisions:
- What are the common problems people face in your industry?
- Why are they facing these problems?
- What products can you offer that will solve these problems?
- What trends have you noticed in the world that you can capitalize on?
- What activities do you enjoy? What products would improve those activities?
Answering these questions can bring you closer to finding a product people want to buy. Here are a few other tactics to try:
Find a way to improve a product that already exists
Read customer reviews of similar products to find out where your competitors fall short. Tally the complaints and look for patterns. Next, research how much it might cost to solve the issue.
For example, glassware comes in many gorgeous designs, but families may avoid purchasing them out of fear their children will break them. So you could create a line of shatterproof glasses that are just as attractive, but more resilient.
Talk to potential customers about their frustrations
What comments or complaints do you hear from friends or family about products they use? Reach out to a small group of people to understand if they face the problem you’re trying to solve, and find out how they currently deal with this challenge.
Here’s one approach:
- Offer to buy 5-10 people a cup of coffee in exchange for 30 minutes of their time.
- Use your meeting to talk about the challenge and see if the pain point is something they would pay money to solve, or if it doesn’t bother them much.
- Avoid bringing up the product you have in mind, as this may influence the answers you get. Instead, focus on how they feel about the challenge, how they currently deal with it, and whether they would pay to solve the problem. If so, how much would they be willing to pay?
Asking these questions can help you figure out if there might be an audience for the product.
Spot opportunities with competitor research
Before you open your virtual doors, it’s a good idea to check out the competition. A simple approach to competitor research can involve browsing results in Amazon search for product categories that interest you. Pay attention to the following:
- Product features and benefits
- Price ranges
- Customer reviews
The more time you spend validating the product, the better your chances of succeeding in ecommerce.
Step 2: Source products
Once you’ve figured out what you will sell, and who the products will serve, the next step is to find the right source for the products.
Good products will help your new online business thrive. The key is not only choosing the right product, but also the right source for products. Here are a few options for sourcing ecommerce products.
Resell existing products
Reselling is a popular choice for Amazon selling partners, as it can be cost efficient and relatively easy to get started. Online directories and listings can help you find suppliers for products. You will need to contact the vendor, order products, and ship them to your business or storage location. Then, ship them out to customers once the products sell. Finding and building relationships with suppliers can not only lead to more affordable procurement, it can also secure a steady supply chain for your business in the future.
Create or build products
Building products gives you control over quality and design. However, this method may be hard to scale up. Some sellers prefer to create small batches of handmade products. This helps keep operations manageable. Given the perceived higher quality of handmade products, this option also allows sellers to price products at a premium.
If this is the route for you, explore artisanal or custom ecommerce selling options like Amazon Handmade
Use dropshipping or print-on-demand (POD)
is a business model that might be appealing if you don’t want to keep any inventory in stock. Instead, when a customer places an order, you purchase the item from a third-party supplier who then ships it directly to the customer. This can allow you to offer a wide variety of products without investing in large amounts of inventory.
Similar to dropshipping, print-on-demand is where you print products only after a customer places an order. If you offer custom designs or unique products that would be difficult or expensive to produce in bulk, POD might be a good model for your business.
Work with a manufacturer
Partnering with a manufacturer can take time and resources, but the investment might be worth it if you want to build your own brand
. The right manufacturer can build prototypes to your specifications.
Locate a few manufacturers and ask for samples. Then narrow it down to two or three and order a small batch to test the manufacturer's speed, quality, and communication.
It doesn't hurt to have a backup supplier in case something goes wrong. For instance, having a supplier in another country or region can help you avoid going out of stock if there are delays in the supply chain.
Step 3: Choosing an online selling channel
If you’re new to ecommerce
, you may want to start small and scale up. Selling on your own domain is one option if you have the time, resources, and skills to customize a website, create a seamless online experience, and compete on the internet to get customers to your store.
Other options include starting out on an established ecommerce website, or selling through social media sites like Facebook, Instagram, or Pinterest. Whichever route you choose, keep in mind you can start with one and add other channels as you scale. You can also drop a channel if it isn’t serving your needs.
Sell on an existing ecommerce website
Selling websites that already have traffic can help you connect with customers, expanding your visibility and reach. Plus, this strategy gives you a chance to learn about what works for other sellers, get reviews, and generate revenue before investing in your own website.
Try social selling
Social selling is a way for entrepreneurs to share about products and allow shoppers to buy during a live show. Customers can see the products, ask questions, and get personalized product recommendations in real-time. Social selling can take place on social media or on live-streaming destinations like Amazon Live
, an interactive way to build relationships with customers.
Selling in Amazon stores
Amazon is a powerful channel in terms of reach, with over 300 million customers worldwide. Amazon’s suite of tools
can help new and existing business owners reach those customers with its product-focused infrastructure.
Benefits of selling on Amazon for new and existing ecommerce businesses include:
- Speed: Get a store up and running quickly thanks to the minimal work involved in setting up the store.
- Scalability and efficiency: Selling in Amazon stores frees you up to create and sell great products—you don't have to solve every business problem. Use Amazon’s infrastructure, tools, and customer reach to grow your business.
- Reach: A listing in Amazon stores has the potential to reach more than 300 million active customer accounts.
- Ecommerce support: Use Amazon’s tools for processing payments, collecting reviews, running promotions, and even A/B testing of product pages at scale.
- Built-in SEO: Amazon product pages are built to serve search engines the right content and show up competitively in search results. When you launch products in Amazon stores with well-written product pages, you’ll be primed to rank competitively for the keywords and product searches relevant to your brand.
- Market awareness: Customers come to Amazon to shop for products. That’s why it’s the go-to for product search.
Step 4: Set up an online store and list products
Once you’ve figured out what to sell and who you’ll sell to, it’s time to get your business up and running.
Building your online storefront
The Amazon Stores builder
allows you to customize an ecommerce storefront for free. An Amazon store comes along with built-in technology to provide a seamless customer experience—from browsing to payment processing.
If you have a brand, you can also enroll in Brand Registry
to use tools like A+ Content
that can help create a state-of-the-art shopping experience complete with lifestyle imagery, video content, and more.
Creating competitive product listings
You can manually list products with an Individual seller account, or use the Inventory Loader template with a Professional seller account to upload a spreadsheet of products. Bulk uploading will work once you have products with ASINs on Amazon. The template will grab data from those ASINs to pre-fill a product's specifications so you don't have to.
Product descriptions are what customers will read to decide if the product will fit their needs. Write a thorough description and include everything the potential buyer needs to know to make an informed decision.
Incomplete or inaccurate descriptions may lead to complaints, increase returns, and hurt your reputation, so be thorough, clear and upfront. However, descriptions don’t have to be dry. Put yourself in customers’ shoes and come up with fun and engaging descriptions of how they can use the products.
Step 5: Market and promote your business
There’s a wide variety of ecommerce marketing tactics
that can help you start and grow a business. Running marketing and promotional campaigns will help you reach a broader audience no matter which selling channel you use.
There are so many channels available to promote products, choosing one can feel overwhelming. Here is a brief introduction on each of the options available to ecommerce businesses.
If people can’t find your product, they’re not going to be able to buy your product.
Advertising and promoting an online storefront
Online store owners can run advertising campaigns in Amazon stores to get in front of the right shoppers. The following options all help to get the product in front of as many people as possible:
- Sponsored products show up within Amazon product listing pages and can give new products a boost in visibility to Amazon’s 300 million shoppers.
- Sponsored brands (available to brand owners) show a headline, logo, and up to three products at the top of a product search results page.
- Lightning deals and coupons drive immediate sales and boost viability, especially when you’re trying to boost awareness of your brand.
- Advertising can turbocharge product sales by encouraging reviews and driving sales from interested shoppers.
Social media marketing
Does your audience hang out on social media? Adding one or two social media channels to promotions and outreach could help drive brand and product awareness. To make the most of your time and effort, build a social media strategy
for how you will promote your business, engage with social media users, court social influencers, and post content. Start with a plan to set yourself up for success.
6 tips for running your online business
1. Avoid common pitfalls when choosing products
- Are easy to package and ship
- Have branding potential
- Are affordable for customers
- Have a long shelf life
Products that may be difficult for a new entrepreneur to sell are:
- Food and perishables
- Products with a low profit margin
- Heavy or bulky items, or products that are expensive to ship
- Highly competitive products (check the amount of customer reviews)
- Complex items or electronic products
- Patented or trademarked products (unless you own the patent/trademark or are certified as a reseller)
- Restricted products. Depending on the selling channels you use, there may be restrictions on the types of products you can sell. It’s a good idea to check the restricted products list before you start buying inventory to make sure you won’t run into any unexpected challenges.
2. Invest in your brand image
To brand or not to brand? It’s a common question among first-time online sellers. At the beginning, you might not create a brand because you’re still testing product ideas. But once you find traction with products in a niche you enjoy, consider creating and registering your brand.
Amazon simplifies the process through Brand Registry
, a service which helps protect the brand you build and gives access to a suite of brand management tools. If you don’t have a trademark, and would like to file one, IP Accelerator
can help speed up the process with access to IP law firms and application assistance.
A simple and cost-effective form of branding? Your business name. Be sure to choose something memorable and simple for customers to type and recall. Get inspiration by looking at other brands in your industry and brainstorm original business names.
Building a brand can take investment, but it can help create a memorable impression and win repeat customers. Once you’ve enrolled in Brand Registry, you get access to Sponsored Brands
advertising to help convey your business image and show customers what your brand is all about.
3. Create a plan for ecommerce fulfillment
When you start building your online business, consider how you’ll store, ship, and handle returns for products.
To keep things simple, it might be best to find a space that is accessible and cost-effective to store and ship products. Some sellers use a place in their home (such as a garage) to store products. As your business grows, you may consider using third-party solutions to take care of fulfillment processes on your behalf.
Learn more about ecommerce fulfillment options in this guide
You can store and ship products through Fulfillment by Amazon
With FBA, you send inventory to Amazon fulfillment centers, and when a customer places an order, Amazon fulfillment specialists handle packing, shipping, and even returns and refunds, so you don't have to. You can also get access to discounted shipping rates and free two-day shipping through Amazon Prime.
4. Optimize user experience with A/B testing
What will appeal to customers? What titles or descriptions will catch the attention of buyers? A/B testing allows you to try out different value propositions and offers to find the best combination for products. For registered brand owners, Amazon's new A/B testing capabilities in the Manage Your Experiments
tool allows you to run experiments on product pages to find out what content will drive the most sales. This can help you figure out the right combinations of titles, images, descriptions, and bullet points to help convert customers quickly.
5. Capture and show reviews
Reviews can be a powerful ecommerce tool. Ideally, try to display reviews so they’ll be visible to search engines like Google, as well as customers who are shopping for products like the ones you offer.
Amazon automatically requests customer reviews on behalf of online sellers because reviews can have a positive impact on future sales. Brand owners selling in Amazon stores can also use a tool like Amazon Vine to get feedback on new products through a pool of Amazon Vine reviewers.
Vine reviewers are Amazon customers with a reputation (according to other shoppers) for leaving helpful product reviews. Through the Vine program, vendors send a free product to a selection of Vine reviewers in exchange for a review. When you’re starting a new branded product, these reviews can help drive initial sales. This in turn can help future customers make informed buying decisions.
Amazon product reviews are the single most important input to our new product development process. We make sure our new products start from the need that customers express.
Steven YangAnker Technology
6. Track business performance with ecommerce analytics
Analytics give you insight into how people engage with your store and products. Want to know who's viewing items? Review the demographics. Curious about how people find the products you offer? Look up the top search terms they use.
You can access data like this in Brand Analytics
after you become a registered brand owner selling in Amazon stores. Use the advanced reporting within the Brand Dashboard to see:
- Products winning the most clicks and conversions on strategic search terms
- Products or brands that customers are reordering
- Top products most commonly purchased alongside specific products
- Breakdowns of customers by age, income, education, gender, and marital status
Launch an ecommerce business in Amazon stores
Starting an ecommerce business can feel overwhelming. It doesn’t have to be.
When you launch in the Amazon store, you join a community of sellers and shoppers with support
to help you learn how to succeed in online selling. For example, you can:
- Find free courses and online tutorials through Seller University
- Plug into a network of driven entrepreneurs through Seller Forums, an online discussion board for Amazon sellers
- Tap the Service Provider Network, a source for vendors and experts who can assist with daily operations, scaling, and more
Refer back to this guide if you get stuck at any stage—from coming up with ideas for your business model and brainstorming products, to creating and optimizing listings, fulfilling orders, and growing sales. You can also learn more in this beginner’s guide
Ecommerce business FAQs
Is it too late to start an ecommerce business?
Not at all. According to Morgan Stanley
, ecommerce already makes up 22% of sales ($3.3 trillion) and is likely to reach $5.4 trillion by 2026. You can take part in the dramatic growth ecommerce is experiencing right now by building an online store
. Start by testing the waters in Amazon stores to find out if your idea has potential—after all, access to millions of online shoppers can give you a lot of opportunities to interact with potential customers and adjust product offers, pricing, or descriptions quickly.
How profitable is ecommerce?
show ecommerce business continues to grow year-over-year. For aspiring entrepreneurs and growing businesses, ecommerce can be a very profitable model to adapt either as the sole focus of your business or as an additional selling channel.
What is B2B ecommerce?
B2B sellers focus on selling products other businesses may need. Often, this could include hardware, software, and office supplies. While the potential pool of customers may be smaller than in the case of a business that sells to consumers, the average order tends to be larger: B2B sellers commonly benefit from a larger order value per purchase.
What is B2C ecommerce?
B2C sellers focus on selling products to the end customer. They evaluate the pricing, marketing, and shipping of the product to incentivize product sales. While in the end customers may not buy in bulk the way a business does, the volume of the audience makes up for the fact that each sale is smaller by comparison.
Is Amazon B2B or B2C?
It’s both. While Amazon is typically thought of as a B2C channel, over 1 million businesses
source their products through our stores, including 80 of the top Fortune 100 companies
. If you are a B2B vendor, adding Amazon to your selling strategy can help you reach a wide pool of business buyers.
Businesses of all sizes—from sole proprietorships to large enterprises, government organizations, schools, and healthcare organizations—find the products they need on Amazon Business.
What is A/B testing?
A/B testing enables you to determine what user experience will help convert more customers. A/B testing involves running two variations of a web page at the same time to measure which one performs best. Eligible brand owners can A/B test the content on Amazon product detail pages
, and will soon be able to test different product titles and feature bullets.
What is search engine optimization?
Search engine optimization (SEO) is the process of enhancing the quantity and quality of traffic to your website through organic (non-paid) search engine results. People use search engines to find what they are looking for online. Many factors go into SEO, but here are the three fundamental aspects your online business should have:
- Content that search bots can process—mainly, words and images.
- A website experience that loads quickly on both desktop and mobile so search bots can access and find content that will help search engine users.
- Authority—your domain is not spammy and does not include spammy content. Your website has a good reputation, with other websites pointing to it, validating its credibility.
How much does it cost to start an ecommerce business?
The cost of starting an ecommerce business varies depending on factors such as the type of business you’re starting, the products you plan to sell, and the services you need. Some common costs associated with starting an ecommerce business include:
- Website hosting and maintenance costs
- Payment processing fees
- Shopping cart software
- Inventory costs
- Shipping and fulfillment fees
- Advertising and marketing costs
You can reduce or eliminate costs like these by creating an Amazon store
and using programs and services. For instance, you can use Fulfillment by Amazon
to send inventory directly to Amazon fulfillment centers, where specialists manage the entire fulfillment process for you (including processing returns and refunds).
Apart from fees associated with factors like fulfillment and inventory, the Individual selling plan
is $0.99 per item sold, and the Professional selling plan
is $39.99 per month to sell unlimited products. Plus, you can get discounted rates for shipping products via Amazon Prime, which provides customers with free, two-day shipping.