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, multimillion-dollar enterprises.
A successful ecommerce strategy can allow entrepreneurs to reach a broader, global audience with minimal overhead costs because you’re not restricted to a local customer base.
In this guide, we’ll cover:
A successful ecommerce strategy can allow entrepreneurs to reach a broader, global audience with minimal overhead costs because you’re not restricted to a local customer base.
In this guide, we’ll cover:
- How to start an ecommerce business in 5 steps
- 5 tips for running your online business
- How much it costs to start an ecommerce business
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 customers.
It can be a lot to consider, so let’s look at five basic areas:
It can be a lot to consider, so let’s look at five basic areas:
- 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 with customers
- Listing products and optimizing content to drive sales
- Marketing and promoting products to attract customers
Step 1: Research and validate your business idea
What problem or challenge are you seeking to solve? Who’s 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
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 or improved features can you offer to 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.
Find a way to improve existing products
Read customer reviews of similar products to find out where your competitors fall short. Tally the issues and look for patterns. Next, research how much it might cost to solve the issue.
For example, glassware comes in many designs, but families may avoid purchasing glasses out of fear their children will break them. So if you create a line of attractive, shatterproof glasses, it could be lucrative.
For example, glassware comes in many designs, but families may avoid purchasing glasses out of fear their children will break them. So if you create a line of attractive, shatterproof glasses, it could be lucrative.
Talk to potential customers about their frustrations
What comments or complaints do you hear from friends or family about the 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:
Here’s one approach:
- Offer to buy 5 to 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.
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 involves procuring products and reselling them to the end customer for a profit. Online directories and listings can help you find suppliers for products. You can contact vendors, 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 lead to more affordable procurement, and it can help secure a steady supply chain for your business in the future.
Create or build products
In contrast to other forms of procurement, making products can give you greater control over quality and design. But this method may also be harder to scale up. Some sellers prefer to create small batches of handmade products to keep operations manageable, then price products at a premium.
If this is the route for you, explore artisanal or custom ecommerce selling options like Amazon Handmade.
If this is the route for you, explore artisanal or custom ecommerce selling options like Amazon Handmade.
Use dropshipping or print-on-demand
Dropshipping is a business model that might be appealing if you don’t want to keep inventory in stock. Instead, when a customer places an order, a third-party supplier 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 like T-shirts or books after a customer places an order. If you offer custom designs or unique products that would be difficult or expensive to produce in bulk, print-on-demand might be a good model for your business.
Similar to dropshipping, print-on-demand is where you print products like T-shirts or books after a customer places an order. If you offer custom designs or unique products that would be difficult or expensive to produce in bulk, print-on-demand 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.
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.
Learn the lingo:
B2B ecommerce and B2C ecommerce
Business-to-business (B2B) ecommerce refers to businesses that sell to other businesses, in contrast to business-to-consumer (B2C) ecommerce, where a business sells products to individual customers, sometimes called the end customer.
Is Amazon B2B or B2C?
It can be both. Individual customers and businesses of all sizes shop for products and place purchases in the Amazon store.
Step 3: Choose an online selling channel
If you’re new to ecommerce, you may want to start small and scale up. Selling on your own website is an 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 virtual doorstep.
Other options include starting out on an established ecommerce website like Amazon.com, or selling through social media sites like Facebook, Instagram, or Pinterest. Let’s explore the details of a few different routes.
Other options include starting out on an established ecommerce website like Amazon.com, or selling through social media sites like Facebook, Instagram, or Pinterest. Let’s explore the details of a few different routes.
Sell on an existing ecommerce website
Selling websites with established traffic can help you connect with customers, expanding your visibility and reach. This strategy also 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 customers 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 live-streaming destinations like Amazon Live, an interactive way to build customer relationships
Create an Amazon storefront
The Amazon Stores builder allows you to customize an immersive, multi-media experience to help customers connect with your brand. In addition to getting a custom URL, you can design a homepage and additional content to let customers explore your brand’s catalog.
Whichever route you choose, keep in mind you can start with one sales channel and add others as you scale. You can also drop a channel if it isn’t serving your needs. One of the perks of operating an ecommerce shop is that you can use a mix of channels.
Whichever route you choose, keep in mind you can start with one sales channel and add others as you scale. You can also drop a channel if it isn’t serving your needs. One of the perks of operating an ecommerce shop is that you can use a mix of channels.
Step 4: List and optimize products
Once you’ve decided where you’re going to sell your products, it’s time to get your business up and running. Listing products online is a way to help customers around the world connect with what you’re offering. You can manually list products or use systems with templates and spreadsheets to manage your inventory in bulk.
The challenge? Helping products stand out from the competition in a sea of offerings. Here are some tips for crafting competitive product listings:
The challenge? Helping products stand out from the competition in a sea of offerings. Here are some tips for crafting competitive product listings:
- Write descriptively and include critical information to help customers make informed decisions.
- Make sure the listing is complete and accurate in order to minimize returns and avoid negative customer feedback.
- Put yourself in the customer’s shoes and think about what words or phrases someone might type into an online search engine to find the product. Then use search engine optimization (SEO) to weave in keywords.
If you have a brand with a registered or pending trademark, you can enroll it in Amazon Brand Registry, a free program that helps you build and protect your brand. Enrolling in Brand Registry allows you to access tools like A+ Content, which you can use to enhance product listings with videos, lifestyle imagery, and other media.
Step 5: Market and promote your ecommerce shop
There’s a wide variety of ways to get products in front of the right eyes, win over customers, and convert them into buyers. Running marketing and promotional campaigns can help you reach a broader audience based on the selling channels you use.
Here’s a brief overview of several options:
Here’s a brief overview of several options:
- Use targeted cost-per-click (CPC) ads like Sponsored Products or Sponsored Brands (if you’re part of an enrolled brand), to spread the word about specific products.
- Offer special deals, like seasonal sales, lightning deals, and digital coupons.
- Try social media marketing to tap into active online communities or engage social media influencers.
- Upsell or cross-sell products to show customers an upgrade or an alternative based on the product they viewed.
- Build a blog or email list and send marketing campaigns to grow a loyal audience.
For more ideas, check out this guide to ecommerce marketing strategies.
Quiverr
"If people can’t find your product, they’re not going to be able to buy your product."
Ryan Mulvany
Founder
Get customer reviews
Reviews can be a valuable form of social proof and go a long way in winning the trust of customers. To get positive reviews, focus on improving the customer experience, and consider participating in Amazon Vine to get insights from a community of trusted reviewers. Vine reviews have been shown to boost sales by up to 30%.
Anker Technology
"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 Yang
Founder and CEO
5 tips for running your online business
1. Avoid common pitfalls when choosing products
When picking a product to sell, there are a few key considerations you want to keep in mind.
Products might be good candidates for ecommerce if they:
Products might be good candidates for ecommerce if they:
- 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
Products to avoid are:
- Patented or trademarked products (unless you own the patent/trademark or are certified as a reseller)
- Restricted products
Depending on where you want to sell products and the selling channels you use, there may be restrictions on the types of products you can sell. If you’re planning to sell in the Amazon store, check the restricted products list before you start buying inventory.
2. Invest in your brand image
To brand or not to brand? It’s a common question among first-time 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.
Building a brand can take investment, but it’s a great way to create a memorable impression and win repeat customers. 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.
Amazon simplifies the process through Brand Registry, which gives you access to a suite of brand management tools and programs. 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 legal service providers and application assistance.
Building a brand can take investment, but it’s a great way to create a memorable impression and win repeat customers. 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.
Amazon simplifies the process through Brand Registry, which gives you access to a suite of brand management tools and programs. 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 legal service providers and application assistance.
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.
It’s key to find an accessible and cost-effective space to store and ship products. Some sellers use a place in their home like a garage or spare room. As your business grows, you may consider using third-party solutions to take care of fulfillment processes on your behalf.
Learn more about your options in this guide to ecommerce fulfillment.
It’s key to find an accessible and cost-effective space to store and ship products. Some sellers use a place in their home like a garage or spare room. As your business grows, you may consider using third-party solutions to take care of fulfillment processes on your behalf.
Learn more about your options in this guide to ecommerce fulfillment.
Did you know?
You can store and ship products through Fulfillment by Amazon (FBA)
With FBA, you ship products into Amazon’s fulfillment network. When a customer places an order, we pick, pack, and ship on your behalf, in addition to handling customer service and returns. As part of Supply Chain by Amazon, FBA can help you save time, reduce operational costs, and grow your business.
4. Optimize user experience with A/B testing
What will appeal to customers? What titles or descriptions will catch the most attention? A/B testing allows you to try out different value propositions and offers to find the best combination for your products.
If you’re part of a brand enrolled in Brand Registry, Amazon's Manage Your Experiments tools allows you to run A/B tests to find out what content drives the most sales. Then you can make data-driven decisions about product titles, images, and other forms of content based on what resonates most with customers.
If you’re part of a brand enrolled in Brand Registry, Amazon's Manage Your Experiments tools allows you to run A/B tests to find out what content drives the most sales. Then you can make data-driven decisions about product titles, images, and other forms of content based on what resonates most with customers.
5. Track business performance with ecommerce analytics
You can use a range of analytics tools to get insight into how people engage with your brand and products.
Want to know who's viewing your products? Review demographics. Curious about how people find the products you offer? Look up the top search terms they use.
Get this kind of data to grow your business with Amazon Brand Analytics, a source for aggregated customer search and purchasing data. It contains multiple dashboards that brands enrolled in Brand Registry can use to explore:
Want to know who's viewing your products? Review demographics. Curious about how people find the products you offer? Look up the top search terms they use.
Get this kind of data to grow your business with Amazon Brand Analytics, a source for aggregated customer search and purchasing data. It contains multiple dashboards that brands enrolled in Brand Registry can use to explore:
- Key metrics like impressions, clicks, cart adds, and conversion rates
- Repeat ordered product sales and units, as well as the number of repeat customers
- Aggregate customer demographics like age and income
- Top search terms customers use to find your products
- Products customers frequently purchase together
- Different customer loyalty segments and how you may want engage them to help increase sales
Why start an ecommerce business in 2024?
Ecommerce is thriving—and it’s not too late to be part of it. More than 60% of sales in the Amazon store come from independent sellers—most of which are small- and medium-sized businesses. In 2022, US-based sellers sold more than 4.1 billion products to customers worldwide, and averaged more than $230,000 in sales.
You can pursue selling products online as a full-time career or a side gig if you want to:
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 an 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 solutions for ecommerce automation and more.
How much does it cost to start an ecommerce business?
The cost can vary greatly depending on factors like the type of business and the products you sell. Some common costs associated with starting an ecommerce business include:
- Website hosting and maintenance
- Payment processing fees
- Shopping cart software
- Inventory, fulfillment, and shipping
- Advertising and marketing
You can sometimes reduce or eliminate costs like these by creating an ecommerce storefront on an established selling website and making the most of the tools, programs, and services they offer.
If you want to sell in the Amazon store, you can choose between selling plans. The Individual selling plan is $0.99 per product sold plus applicable selling fees, while the Professional selling plan is $39.99 per month plus applicable selling fees to sell unlimited products. You can also take advantage of optional resources like FBA, which have additional costs.
To compare costs and fees for different scenarios and estimate your margins, try these sales calculators.
If you want to sell in the Amazon store, you can choose between selling plans. The Individual selling plan is $0.99 per product sold plus applicable selling fees, while the Professional selling plan is $39.99 per month plus applicable selling fees to sell unlimited products. You can also take advantage of optional resources like FBA, which have additional costs.
To compare costs and fees for different scenarios and estimate your margins, try these sales calculators.
Launch an ecommerce business in Amazon stores
Starting an ecommerce business can feel overwhelming. It doesn’t have to be.
In addition to a variety of incentives for new sellers, benefits of launching an Amazon storefront can include:
- Speed and efficiency: Get a store up and running using Amazon resources for sellers.
- Scalability and reach: Focus on selling great products and lean on Amazon’s infrastructure and optional programs to help your business grow.
- Awareness and trust: In 2022, Amazon was ranked the most trusted brand by US customers. Start selling in a store that customers already know.
When you launch in the Amazon store, you’re not alone. You join a community of sellers and customers and gain access to support to help you learn how to succeed in online selling.
Sign up for a selling plan to get started with a Seller Central account and tap into the Service Provider Network, a source for experts and specialists who can assist with daily operations, scaling, and more.
Sign up for a selling plan to get started with a Seller Central account and tap into the Service Provider Network, a source for experts and specialists who can assist with daily operations, scaling, and more.
Helpful resources
Whether you’re looking to start a new brand, expand an existing brick-and-mortar business, or increase ecommerce sales, here are some resources to help support your path to success.
Ecommerce business FAQs
Is it too late to start an ecommerce business?
Not at all. In 2022, brand owners’ sales grew more than 20% in the Amazon store compared to the previous year. You can test the waters with an Amazon storefront, find out if your product idea has potential, interact with customers, and adjust your offers to make more money.
How profitable is ecommerce?
Ecommerce can be very profitable, either as the sole focus of your business or as an additional selling channel. In 2022, US-based sellers sold more than 4.1 billion products to customers worldwide, and averaged more than $230,000 in sales.
What are common ecommerce business models?
Two common ecommerce business models are business-to-business (B2B) and business-to-consumer (B2C). B2B sellers focus on selling products other businesses may need, while B2C focuses on selling products to customers (or the end customer).
What is B2B ecommerce?
B2B sellers focus on selling products other businesses may need. Examples of B2B ecommerce include wholesale supply, office or industrial equipment, and information technology or software providers. B2B ecommerce can also take the form of business consulting. Learn about bulk buying and selling.
What is B2C ecommerce?
B2C sellers focus on selling products to the end customer. Examples of B2C ecommerce include clothing retailers, electronics shops, home good stores, grocers, and health or beauty specialists. With this model, you might source products from suppliers, then sell them individually.
