Whether you’re just thinking of setting up an online business or you’re moving your existing sales more into the digital space, you’ll find something helpful in this comprehensive guide on how to start an Ecommerce business. Setting up and running an Ecommerce store is a major undertaking, that takes a lot of work and commitment.
This article includes a full overview of why you would enter the world of Ecommerce in the first place.
Also covered are:
- Ecommerce platforms, including Shopify
- Deciding what products to sell
- SEO considerations for Ecommerce
- Copywriting for Ecommerce
- Setting up payment and shipping information
- Order fulfilment
- Key metrics to track and review
According to Concordia University-St.Paul, the first real ecommerce transaction took place in 1994 when a music fan in Philadelphia bought a Sting album via his computer. This kicked off the long and rich history of ecommerce shopping and selling, which has brought us into the age of Amazon, eBay, and online small businesses around the world.
In 2018 alone, according to a Statista report, U.S. consumers spent over $501 billion on physical goods online. That number is projected to go up to $740 billion by 2023. The report indicates that worldwide, consumers spent almost USD $3 trillion online. Ecommerce is big business for those wanting to reach a wide consumer base around the country or the world.
Benefits of Ecommerce
The many benefits of ecommerce for businesses include:
- Wider potential customer base
- Cheaper marketing (in some cases) compared to traditional methods like TV or direct mail
- More efficient workforce due to electronic, not manual, orders
- A/B testing of prices and offers
- Fewer customer inquiries about products via phone
- The ability to offer more products
- Lower overhead for employees if the business doesn’t have a physical store location
- Dropshipping and automated fulfilment options through platforms like Amazon
- Even though it takes significant effort to get an ecommerce store up and running, the benefits far outweigh the cost for most types of businesses. This is especially the case if you are in a niche industry where a lot of other competitors are not selling the same products or services.
- Having a quality ecommerce website that’s easy to use can draw more customers then attempting to sell products the old-fashioned way in person or through other communication methods. There are costs associated with an online storefront, such as hosting and development, but many ecommerce stores are now built on CMS (content management system) platforms that are easy to learn.
“Even though it takes significant effort to get an ecommerce store up and running, the benefits far outweigh the cost for most types of businesses” – Kaspar Noé van Dijk, Founder Advertik Media
What Ecommerce platforms are out there?
There are several different ecommerce website platforms available today that make building your own ecommerce site incredibly easy. The easiest (and best-known) is probably Shopify, as it has a simple checkout experience for customers and offers many layouts for business owners to choose from. Because the platform is so large, there are also different options available to owners, such as custom design services or enhanced checkout experiences.
Shopify has a general checklist for setting up an online store on their site and an FAQ page on adding products and making basic improvements to a site. Before adding products, fill out the applicable content pages, such as the home page, about us, and contact page. If a blog is going to be added, create one or two posts before launching so the blog doesn’t look quite as lonely.
Other platforms can work for ecommerce too, like WooCommerce (which is a WordPress plugin) or building a site using a custom design and process built by a web developer. In most cases, business owners can get by with using a pre-made solution that just needs a little customization and user set-up time. Squarespace and Wix are two other competitors to Shopify that are attempting to make it as easy as possible for anyone to build a site. However, unlike Shopify, they don’t specialize in ecommerce, so those types of sites may not have as many options or specific online shopping customizations available.
Product Offering - What to Sell
Most entrepreneurs already know what products they want to sell online. If you have already decided what you want to offer, it’s simply a process of choosing the right layout and options for your new site.
Conversely, if you’re not sure what products to offer, this can be difficult to pin down. There are some great resources that can help you drill down to which type of product is right for you:
- From BigCommerce: Learn Ways To Find Niche Products and Start Selling Online (Get Educated Before You Start)
- From Shopify: How to Find a Product to Sell Online
- From Cloudways: 43 Top Trending Products to Sell Online At Your Ecommerce & Dropshipping Store
- From Oberlo: What to Sell Online
There are a few things to consider when it comes to choosing what to sell online. First, most owners are more successful when they sell something they’re actually interested in or it’s in an industry that they are knowledgeable about. If you’re not a scientist, it wouldn’t make sense to sell chemical measurement supplies, since that’s not your background and you have no experience in terms of what your audience is looking for. The other thing to think about is the viability of the product online. For instance, if something has an extremely high price point, it’s less likely that somebody is going to buy it online.
Once you’ve chosen what to sell, it’s time to move more into the optimization and nuances of building your ecommerce site, such as figuring out the fulfilment process and writing product descriptions.
SEO consideration for Ecommerce
Doing ecommerce SEO is slightly different than a “traditional” website that doesn’t offer an online checkout experience because it has product pages and a different navigational experience. It may have a blog and contact and about us pages, but the main meat of the site is the product category and individual pages. Because of this, there are a few different components of SEO to take into consideration.
Meta Titles and Descriptions
Meta titles and descriptions are more important than ever for ecommerce pages. All product pages should have the product name and applicable descriptors listed in the title and description. For example, a cardigan product page might have the meta title “Women’s Rainbow Striped Long Wool Cardigan | Madewell” — which provides a lot of detail about the item based on what a user may have been searching for in order to find it in a search engine result page.
Conversely, simply having the title of “Madewell Women’s Cardigan” wouldn’t hit all of the applicable descriptors of the item that would lead customers into finding it. In this case there are no descriptors about color, sizing, or style so it makes it harder for users and the search engines to find the best products based on search queries.
Meta descriptions don’t carry as much weight as titles, but they do influence users when deciding what to click on. Descriptions shouldn’t be more than 155-160 characters or else they will get cut off by the search engines when they are shown in results pages (and titles shouldn’t be over 69 characters).
In this example, you can see that both the title and the description have been truncated and cut off by Google. If there is an ellipsis at the end of either of these sections, it means that it’s too long. Always rewrite and optimize meta titles and descriptions where possible. Don’t forget to include how it affects or solves the searcher’s problem. Any other descriptors, such as sizing, how or when to use it, are all helpful too.
Schema markup is structured data that tells search engines specific information about your site, business, and products. This includes your contact information, reviews, and product specifications, such as sizes and colours. Search engines like Google use this data to not only help them understand site content but to display rich snippets in search results:
A website isn’t required to have schema markup in order to get a rich snippet inclusion, but it can help in some cases. Follow best practices for schema for ecommerce and be sure to include as much relevant markup as you can in your product and category pages. Generally, you can mark up your products, your pricing, ratings & reviews, and availability, and if there’s a demo video for ecommerce. Sometimes these schemas are built into ecommerce platforms like Shopify and others you will need to get your web developer to code onto your website. You can use a free schema generator like Hall Analysis’ free JSON-LD schema generator to make this process simpler. You can review other types of schema that are available but may not be listed in a generator on Schema.org. A full list of all schema can be found here.
Keywords in Descriptions and Titles
If they will flow naturally in the text, add descriptive keywords to your product page titles and descriptions. This line of thinking is similar to what was mentioned in the meta titles and descriptions section, except you should focus on being more detailed for users that are looking for further information about a product. Try to use as many descriptors as possible.
Bulleted lists are useful to have in descriptions on product pages, especially if it makes it easier to share information that users can digest more quickly. Some of the keywords to include in a bulleted list would be identifiers about colour, pattern, sizing, pricing, target audience, purpose, and experience with using the product.
Adding keywords to titles and descriptions on product pages is a crucial element to good ecommerce copywriting. This is because search engines will match user search queries to your keywords in the title tag so you appear for what people are searching for. Furthermore, these keywords will be bolded in both the title and description when someone searches. When people see bold text on the search results page they tend to see it as more relevant and are more likely to click. The more bold keywords you have in your title and description, the better, so it’s important to make your wording relevant to the searches you want to appear for.
“When people see bold text on the search results page they tend to see it as more relevant and are more likely to click.” – Kaspar Noé van Dijk, Advertik Media
When they click through and land on your page, content on a site should be enticing and focus on how a customer’s life is going to be improved if they acquire the product. Focus on the action or what the product achieves, not what it is specifically.
For instance, if you were selling a set of silverware, you wouldn’t focus only on the fact that it’s stainless steel and has a 10-year warranty. While this information is important to include, the focus should be on the quality and how nice silverware makes the buyer’s life easier because it’s faster to clean and saves money because it lasts so long.
Good sales copy should focus on FOMO (fear of missing out) and appeal to the sense of urgency that online customers may feel when they are searching for a product. Highlight what they may be missing out on so it’s hard for them to resist buying the product. Include social proof that the product is loved by many people, such as customer testimonials or online reviews. Besides text content, add a video showcasing the product and/or several photos that allow a user to see everything from all angles. The ecommerce store Zappos does a good job of this:
Videos can allow users to experience a product in a more physical way, something that is very difficult when you’re buying online. Being able to see a person with the product can give users a better sense of scale and what it looks like when it’s worn or used. If it’s something mechanical, like a demo on how to use it, that is also helpful and gives customers more confidence when it comes to buying. If something is complicated or hard to show in photos alone, a video may be the best way to properly showcase the product.
Moz recommends using powerful action words in copy, such as “brilliant” and “dominate.” These emotion-evoking words can motivate the user to complete a purchase. Foundr magazine recommends telling an “origin story” through ecommerce copywriting by showcasing the brand’s history and expertise behind each product. The homepage and About page should reflect why the customer is the hero, but use the product pages to make an impact on why the user would want the product based on its (and the company’s) history.
It’s also important to not make your product pages too repetitive. Make each product page unique and don’t recycle the same copy over and over with just a few edits. Attempt to make each product page as unique and in-depth as possible in order to increase your chances of getting indexed and shown in search engine results.
As well as listing information about a product, pages can include recommendations of related products. This is something Amazon does especially well. They use a mixture of factors like the user’s personal purchase history as well as what other users have bought when they bought that specific product. This allows them to recommend a carousel of highly relevant products that a user is more likely to click on, as opposed to recommended products that were chosen at random. If possible, add a recommended product widget or feature on product pages that provides personalized recommendations. This type of functionality exists natively in Shopify and many other ecommerce platforms.
“…personal purchase history … allows them to recommend a carousel of highly relevant products that a user is more likely to click on, as opposed to recommended products that were chosen at random.”
Setting up Payment and Shipping Info
Next comes the best part about running an ecommerce store: getting paid and sending products to your customers! If your site is run on an ecommerce platform like Shopify, setting up payment processing information usually only takes a few clicks. However, depending on the country you’re in, you may also need to get a business tax ID number. In the Netherlands, this is called a KVK number, in the US this will be an EIN (employer identification number). Some payment processors require this information before allowing you to accept payments as a business. Look up the guidelines for your country (and, where applicable, state/province) to make sure you have all the information needed to start accepting payments on your site. Platforms like Shopify will list the information they require to start accepting payments.
In the Netherlands, payment processors like PayPal are required to submit records of the payments made through their platform if the revenue and transactions received hit a specific guideline. Be sure to set up your business properly with an accountant or tax professional before launching a store.
Many ecommerce stores use Stripe, PayPal, Square, and other payment processors to collect payments from transactions. Which is best for your site depends on your location and what fees you’re willing to pay. Many processors will collect a set amount per transaction, like $0.25, as well as a percentage of the total amount paid, usually from 2 to 5 per cent. There are a few factors to think about when it comes to choosing a vendor:
- Ease of use for customers and business
- Payment processing time
- Availability of different options for customers to pay
- Countries served (both where customers and the business are based)
- GDPR and other data protection regulation compliance
Many ecommerce website builders will walk you through this process, but it doesn’t hurt to do your own research to determine the best option for your site. Some possible resources to look at to compare credit card processors include PCMag, MerchantMaverick, and Fundera.
When to Collect Sales Tax
When should ecommerce stores be collecting sales tax from customers? According to TurboTax, the essential rule in the United States is that if you have a physical store or office in the state the customer is in, then you need to collect sales tax. If you don’t, then it’s not required. However, legislation brought in during 2018 sought to remove this exemption and many tax professionals are expecting businesses to have to charge sales tax for every customer, no matter where they are located. In The Netherlands, you should collect a 9% tax rate for common goods (food, drink, agriculture, medicines and books), and 21% tax on so-called high or general tariff, which applies to all other VAT taxable activities.
Be sure to check the laws in your state and country about sales tax and follow them accordingly. Not doing so could have major implications for your business, such as penalties and fines by the IRS or other governing bodies.
After orders have been paid for and processed, the fulfillment component of ecommerce begins – getting the product to the customer. Depending on the type of product, the fulfillment process is going to vary. There are a few different ways that ecommerce businesses get products to customers.
The first is dropshipping: this is where another company fills the order on behalf of the original company.
Essentially, they act as a fulfillment agent for all orders, and the original company does not have to do anything besides making sure that the orders are being properly transmitted to the dropshipping company. This is often a great option for business owners who don’t want to hold inventory or spend time filling orders. Of course, there are some caveats, such as shipping order errors and/or the cost of utilizing a fulfilment company versus doing it yourself. Oberlo is a good resource if you want to get started in dropshipping (note that it’s connected to Shopify). They are a dropshipping marketplace that allows you to browse products that are available for dropshipping to sell in an online store.
Another order fulfilment option is to do everything manually. Many business owners that are making products themselves or have handcrafted and manufactured it using their own design and prototypes will go with this option. They often start out with a small quantity of inventory and fulfil the orders themselves, choosing to scale as they grow. As more orders come in, owners will have to start looking for additional employees and a bigger space to fill orders. They will also need more space to hold inventory to make sure that they have enough products in stock for customer orders.
While it’s the dream of many ecommerce store owners to get to the point where they have a facility and their own employees, some business owners prefer to stay small. They make things in limited quantities and only produce what they are able to at a certain time. No matter which order production and fulfillment option you choose, make sure that it works best for you. You can always change your scale depending on the needs of your business.
Other things to consider when choosing a fulfillment option are:
- Shipping costs. Big Commerce states that a majority of online customers will abandon their online shopping cart and not make a purchase if the shipping cost is too high.
- Shipping time. Some customers may not choose to buy if they aren’t going to get the products soon enough or as fast as expected.
- Packaging and handling costs. The cost in time and resources to package and ship orders needs to play into a product’s overall cost and amount to ship.
- Inventory storage and handling costs. The cost in time and resources to package and ship orders needs to play into a product’s overall cost and amount to ship.
- Inventory storage and costs. Having inventory on hand isn’t a big deal if inventory moves quickly. However, if it doesn’t do so during certain times of the year, the costs to store the inventory start to add up to a loss.
- Ease of growth. It’s often easier to scale up or down when an external party such as a dropshipper or order fulfilment company is handling the orders for your business. If you rent or buy a warehouse, there is a lot more on the line as you can’t reduce or increase the size of your inventory easily. Adam Enfroy lists some of his recommended fulfilment companies in his blog post on the topic.
- Shipment tracking: many customers expect and appreciate being able to track where their order is in the shipping process. It’s also beneficial for businesses because they are able to verify whether something got delivered. No matter which fulfillment option is used to deliver orders to customers, it’s recommended to always use shipment tracking for every order.
Overall, when it comes to fulfilment, it is usually best for companies to start small and scale efficiently as they need to. There’s no need to buy more inventory or rent storage space over what is presently needed now and in the immediate future. It cuts down on risk and a potential loss or fluctuation in revenue.
Key Metrics to Track and Review
It’s crucial to track metrics about your ecommerce site and its sales. The reason for this is to determine what products are selling best on your site and see areas where you can improve. There are all sorts of metrics that can tell you different things about your site. Some of the key metrics to track and review include:
- Conversion rate. What is the ratio of people that come to your site and those who actually buy something?
- Cost per Sale. How much does it cost to sell a product on your site.
- Traffic Sources. Where is your website traffic coming from? Knowing this can tell you what channels to focus on most and where you may need to improve. For instance, if you aren’t getting many sales from social media, that may be an indicator that you need to spend more time improving your marketing presence there.
- Average order value. What is the average amount of your orders? This lets you know the average price point that customers are willing to spend on your site. This may influence what types of products you choose to carry in your store and which ones are going to work.
- Bounce rate. The bounce rate is a percentage of how many times users leave the website after only visiting one page. You want the bounce rate to be a low percentage.
- Time on site. The average amount of time in minutes that a user spends on your site. Studies have shown that the longer a user spent on the site, the more likely they are to convert into a paying customer.
- Average cart abandon rate. This percentage is how many of your website users are adding items to an online shopping cart but not completing a purchase. Ideally, you’d want this percentage to be as low as possible.
- Average CTR for any marketing (email, social). What is the average click-through rate (CTR) for any of the marketing that you’re doing, as with looking at your traffic sources, this lets you know if your marketing is paying off. For instance, if you see that you generate more sales through email then social media, it may be a better use of your time to focus more on email, especially if you feel like your social media presence has already been optimized.
- Promo and coupon code use. It’s crucial to track how often any promo or coupon codes are used on your site. Not only will this help you see which sources with coupon codes are sending paying customers to your site (so you can consider working with them more in the future), but also to identify the popular specific promotions or customers. This could include testing different types of discounts, such as a discount by percentage or by monetary value.
- New vs. returning customers. Look at what percentage of your customer base comprises new customers versus how many are returning customers. This can tell you a lot about customers loyalty and how often people are buying your products again. You’ll gain a good sense of the purchasing pattern of your customers so you can reliably predict lifetime value.
- Customer lifetime value. Customers lifetime value is the average euro or dollar amount of a customer who uses and buys things from your website over their lifetime. This is actually calculated by the average order rate of return customers and their order frequency, as well as a few other factors you need to track on each site (such as product life).
It’s important to note that you should look at many of these metrics on a channel, device and location level rather than all site averages. If you see an average conversion rate of 0.5% for the full website, a deeper look might reveal that Desktop conversion rate is 2%, NL conversion rate is 3% and organic search conversion rate is 6%. Lots of social media traffic or mobile traffic will drop your average conversion rate down so it’s important to view this and other metrics across channels, locations and devices to see where your conversion hot spots are and prioritize these areas. Likewise, you can pull back your investment or modify your strategy in areas where you are less successful.
For the most part, many ecommerce business owners prefer to look at report information monthly. For a site that does a large volume of orders, looking at metrics weekly may also be a good idea in order to spot potential trends or declines as they’re happening. For any reports that you do, make sure to include a summary of key takeaways that can be easily scanned before getting into the detailed data. Often, we can get so far into the weeds with our own data, we don’t understand how it can translate to someone else to best comprehend it.
“Lots of social media traffic or mobile traffic will drop your average conversion rate down so it’s important to view this and other metrics across channels, locations and devices to see where your conversion hot spots are and prioritize these areas.” – Kaspar Noé van Dijk, Founder Advertik Media
Creating and managing an ecommerce store is a major endeavor that takes a lot of work and dedication. No matter whether a business has already been set up or is just starting from scratch, a good ecommerce store needs an effective and easy-to-use CMS platform, preferred payment processing and fulfillment strategies, and a variety of interesting and useful products that appeal to their target customers
There will be another article published in the near future, that continues on the development of an ecommerce store. Sign up to our newsletter to stay updated!