How to start a successful ecommerce business
You’ve likely heard about the success stories of people generating a ton of money through ecommerce. Conversely, 90% of all online ecommerce businesses fail within the first 120 days.
So how do you start a successful ecommerce business?
A successful ecommerce business idea combines many factors: an attractive and trustworthy website, in-demand products, and excellent customer support. Each is working together to get more traffic and maximise conversion.
This guide will detail the driving components behind a profitable, thriving ecommerce business to help you take your first solid steps to make your ecommerce business a roaring success.
Are ecommerce businesses profitable?
When you start an ecommerce business, there’s no guarantee you’ll make money – but there’s also no limit on how much you can earn.
Ecommerce is expected to generate a staggering €5.3 trillion in sales a year by the end of 2022. What’s more, experts anticipate it’ll account for 20.4% of all global retail sales.
So yes, ecommerce businesses can be profitable, but you need to do it right. As long as you’re taking the initiative to run your business effectively, you can reach whatever financial goals you set for yourself.
Common ecommerce business models
- B2C (business-to-consumer): A company sells directly to the general public.
- B2B (business-to-business): A business sells its products or services to another business.
- C2C (consumer-to-consumer): An online marketplace like eBay connects consumers to exchange goods and services and makes money by charging a transactional or listing fee.
- C2B (consumer-to-business): Individuals or agencies sell goods and services to companies (Think: freelance marketplaces like Upwork and Freelancer.com).
- D2C (direct-to-consumer): A business that sells directly to consumers without intermediaries or third parties.
- B2G (business-to-government): Businesses whose clients are the government. (Think: security contractors).
How do I decide which ecommerce business to start?
Whether you’re starting an ecommerce business from scratch or having trouble scaling an existing one, you’ll find the steps below helpful in building a successful new business.
Phase 1: name, concept, market research, brainstorm
What product do you want to sell in your online store? What will be your ecommerce niche?
Figuring out what product to sell is often challenging for entrepreneurs. Therefore, you need to think on a broader scale when preparing a list of new product categories. Ideally, you want something that checks the following boxes:
- On-trend to attract customer attention
- Lightweight to ensure minimal shipping costs
- Cost-effective with high perceived value
- Something you’re interested in or passionate about
Follow search trends on search engine result pages (SERPs) and analyse trending hashtags on social media. Social listening tools like Brand24 and Facebook Ads Manager can also help you collect valuable insights.
Due diligence and competitor research
Aid your brainstorming efforts by checking out your competition. This will help you anticipate shifts in the market, identify new trends, and avoid common and costly mistakes.
Evaluating your competition’s market positioning is a good place to start. Find out:
- Who are their target customers?
- What are their products or services’ unique selling points (USPs)?
- What is their general price point?
- Do they highlight any specific features or key benefits?
- How do they approach payments and shipping?
Don’t be afraid to deep dive into the more specific elements of competitor research. For example, you can analyse their website features (product images, website design/layout, search tools), study customer experience elements (customer support, checkout workflows, mobile UX), or marketing tactics (frequency of discounts, promotion style, content marketing).
Performing a SWOT analysis (strengths, weaknesses, opportunities, and threats) can help you find your competitive edge and understand your ecommerce business’s potential.
Define your market
How would you describe your ideal customer? What are their likes and preferences?
Answer these questions by creating a customer persona for your ecommerce business. Paint a picture of the person you think would be best served by your product or service.
The following questions can help you get started:
- How old is this person?
- Where do they live?
- How much money do they make?
- What are their biggest pain points?
- What causes matter to them?
Based on your answers, figure out how to appeal to this ideal person. For example, think about which platforms they’re more likely to use and what messages they’re likely to respond to (this will come in handy when promoting your ecommerce store).
Phase 2: budget and business plan
Here, we’ll break down ecommerce startup costs by discussing expenses you cannot avoid and nice-to-haves (avoidable costs but can help you improve sales and conversions).
Ecommerce startup costs you can’t avoid
Here are examples of ecommerce startup costs you’ll have when starting an online business:
- Domain name – Anywhere from €1- €14 per year
- Hosting – €3.25, but can go up to €230 per year
- Inventory – An initial investment of €0 to €930 to start
- Payment processing – About 2 to 3% of your revenue, but if you opt for Mollie, you only have to pay per successful transaction (just €0.10 to €1, plus additional fees based on percentage of transaction value)
Based on these figures, you can expect ecommerce startup costs between €130 and €970 (with inventory)
Of course, costs will vary depending on factors like added services, support, duration of registration, or whether you need to buy your desired domain from a private seller. Ecommerce platform WooCommerce, which integrates with Mollie, suggests that you can get started with a site and store for about €983.
Nice-to-have ecommerce startup costs
If you’re looking to gain an edge over the competition, consider investing in a few nice-to-haves like premium themes (paid, customisable themes designed by experienced professionals) or professional photography, all of which will have a range of costs depending on who you hire.
You’ll need to spend money on marketing as few shoppers will find your online store by chance. While marketing costs vary, marketing spending growth is more than 10% for the first time in a decade, with experts predicting further growth.
We also recommend investing in cutting-edge ecommerce tech, like payment service providers (PSPs), analytics tools, and customer relationship management software (CRM).
These nice-to-have expenses aren’t mandatory, but investing in a few is worth it to drive sales and conversions.
Phase 3: creating your store and build your audience
Build your online store
You need an ecommerce solution, such as Magento or PrestaShop, to easily build your online store. There are several platforms to choose from, so you’ll have to consider your needs and preferences to find a perfect fit.
Each is a good option, but you should compare pricing and features to ensure you’re getting the best platform for your money.
Brand awareness, marketing, getting customers
Post-launch is when the hard work of marketing your own products and creating brand awareness begins.
Leverage the power of search engine optimisation (SEO) to acquire your first customers. Add relevant keywords and search terms on each product page, product description, and other online content to attract new visitors.
Don’t be afraid to use multiple channels to market to your target audience. For example, you can promote your blog on multiple social media outlets or partner up with affiliate marketers and Instagram influencers.
Phase 4: sourcing your products
This is where you build your supply chain. Source the vendors, activities, and resources you need to create your product and get it into the customer’s hand.
- Make the product yourself
- Partner with a manufacturer
- Purchase wholesale products and resell
- Offer a digital product
Don’t forget to factor in related aspects like shipping, storage, and warehousing while you’re at it.
Phase 5: taxes, business structure
Choose your business name and business structure/type
This is where you set up your ecommerce business as a legal entity.
Choose an original and creative brand name and a domain name for your business. Then register your business as one of the following:
- Sole trader
- Limited Liability partnership
- Limited company
Be careful when picking a business entity type for your business. Each choice has important legal and financial implications for your ecommerce operation.
We recommend consulting with a lawyer to help you make the right decision.
What are the best ecommerce platforms?
The best ecommerce platforms make starting and running your own ecommerce website easy.
They easily accommodate sellers in every category, regardless of the industry, sales volume, or inventory size. Some popular ecommerce platforms that integrate with Mollie are WooCommerce, Chargebee, Wix, and Ecwid.
Learn more about how Mollie integrates with these ecommerce platforms.
How does VAT work with ecommerce businesses?
Currently, ecommerce sellers need to have a VAT registration in each EU country where they have a turnover above a certain overall threshold, which varies from country to country. The European Commission lists the tax rates for each country.
In 2021, a new standard threshold of €10,000 took effect in the EU, above which the VAT must be paid in the member state where the goods are delivered.
Online sellers may now register for an electronic portal called the One-Stop-Shop (OSS) to simplify transactions and enable them to sell into other member states seamlessly. There, companies can take care of all of their VAT obligations for their sales across the EU.
This €10,000 threshold is already applicable for electronic services sold online since 2019.
Rather than grappling with complicated procedures in other countries, they can register in their own member state and in their own language.
Once registered, the online retailer can notify and pay VAT in the One-Stop-Shop for all of their EU sales via a quarterly declaration.
The One-Stop-Shop will take care of transmitting the VAT to the respective member state.
How do I collect payment for ecommerce purchases?
When it comes to online payments, customers demand convenience. In ecommerce, you have to take this a step further and make the payment checkout as seamless and secure as possible to sell more products.
The following are the top options to collect payment for ecommerce purchases:
- Through an online payment gateway like PayPal
- Through credit cards and debit cards like Visa and MasterCard
- Domestic bank credit or debit card
- Through online bank transfers like SEPA
- Through a digital wallet like Apple Pay
Want a unified digital payment processing solution that offers all four options?
Mollie supports a wide range of payment methods on behalf of merchants, allowing you to tie together payments from customers in multiple countries.
What’s more, Mollie has a Klarna integration that enables you to offer your customers to pay for products in instalments. Considering recent ecommerce trends suggest more and more customers will opt for flexible payment options like buy now, pay later (BNPL).
For more information, visit our payments page.
Marketing your ecommerce business
Ecommerce marketing is a different ball game altogether. Your priority here is to:
- Reach more prospective customers by driving traffic,
- Convert that traffic into paid customers, and
- Turn these customers into brand loyalists.
While this may sound too much, having a holistic ecommerce marketing strategy can help you check all three boxes. Here are our top five tactics to help you get started:
Social media marketing
With over 4.62 billion people using social media, you’ll surely find your target market on popular social networking sites like Facebook, Instagram, Twitter, and YouTube.
Show off your products on your social media handles to get the word out about your ecommerce business. Create shoppable content that lets visitors buy your product immediately by eliminating friction from the buying process.
You can also use these platforms to encourage customer feedback and build a loyal fan base by sharing user-generated content and consistently engaging with your followers.
Creating and sharing valuable content is a sure-shot way to enhance your reach. Search engines love quality content, and putting up exactly that will boost your rankings.
Experiment with different types of content. In addition to writing blog posts, create engaging infographics, shopping guides, and buyer’s guides to get some street cred and, in turn, loyal customers.
Email marketing can assist your content marketing efforts and other digital marketing strategies to boost traffic to your ecommerce site. But before that, you’ll need to capture more email subscribers.
Encourage people to sign up for your email list by giving them an incentive, such as a discount or a gift. You can also add an option for visitors to subscribe to your email as they check out.
Once you start getting email subscribers, consistently send them personalised emails that inspire action.
Pay-per-click (PPC) ads
PPC ads are one of the best ways to drive traffic to your site, especially at the start of marketing your ecommerce business.
Using Google Ads, you can set your ads to display specific keywords that people commonly search for. PPC ads often pay for themselves faster if you target the right keywords. Also, you only pay when people click on your ads.
Affiliate marketing is a tried-and-tested ecommerce marketing strategy, but we think employing influencer marketing can be a faster way for you to reach out to communities and create awareness for your ecommerce business.
Be sure to team up with genuine influencers who have a loyal follower base who trust their recommendations.
Tools and software needed for operating your ecommerce business
Ecommerce is a challenging niche, and jumping headfirst into it can be tricky. You must prepare yourself with the right tools and services to sell online to avoid missteps.
Ecommerce tools and software you need to launch and grow your small business successfully:
- An ecommerce platform like Shopify or Amazon (besides the ones we’ve already discussed) that’s packed with advanced tools to help you manage your business
- A digital payment processing system like Mollie to securely collect payments from customers
- An email marketing platform like Mailchimp to create a loyal customer base for repeat sales
- Advanced analytics and tracking tools, such as Google Analytics, to understand your target customers at a more granular level
- Shipping service integrations to automate order generation and marketplace fulfilment like Shipping Easy
- A social media management solution like HootSuite or Oktopost to automate content posting and organise your content
- A CRM tool like Zendesk to deliver the best customer experience
Getting started with these tools will let you engage and connect with your customers on a greater level, giving your ecommerce business a boost and a real competitive edge.
Lay the groundwork for a successful ecommerce business
Starting an ecommerce business is more affordable and easier than a brick-and-mortar store. But becoming the next ecommerce success story involves taking important steps and making useful investments.
We hope this article helps you lay the groundwork for a successful ecommerce business – and scale it to the pinnacle of success.
Want to offer your customers seamless checkout to reduce cart abandonment and improve sales?
When you’re ready, check out Mollie’s custom API to transform complex and time-consuming checkouts into a professional and easy experience that adheres to high-quality security standards.
We also offer one-click payments that let you safely store your customer’s payment details and remember their payment preferences.