Money Matters

How to start an e-commerce business and website

Starting an e-commerce business involves more than building a website. From validating your product to choosing a platform, setting up payments, and marketing your online store, learn the key steps to getting your online business off the ground.

18 June, 202123 min read Share

Starting an e-commerce business begins with a strong idea, something you can shape into a successful online venture through careful planning, testing, marketing, and measurement. 

It can feel overwhelming at first, but the process becomes manageable when you focus on the core steps: choosing the right product, validating demand, building your site and launching with a clear plan. 

Here’s what we’ll cover:

How do you prepare for launching an e-commerce business?

Before you launch your e-commerce business, figure out your product, your audience, and the practicalities of running your business. 

That doesn’t mean having every detail perfected from day one, but it does mean stepping back and making sure the basics are in place before you move into action. You’ll need: 

• A clear idea of your product and the problem it solves. 

• A sense of who your target customer is. 

• A realistic estimate of the time, cost, and commitment involved in building an online business. 

• A plan for sourcing, selling, and delivering your product. 

Without this foundation, later decisions become more difficult, and problems become harder to fix.

What are the key steps to starting an e-commerce business?

Start an e-commerce business by choosing a product, verifying demand, sourcing it, building your website, and launching with a marketing plan. 

These 10 steps can take you through the process from idea to launch:

1. Choose your product

Choose a product that solves a clear problem or meets proven demand and that you can realistically source and sell online. 

If you already have a product or concept you’re passionate about, that passion can help to carry you through the road bumps on the path to success. 

Consider the example of Andy Dunn, who founded the online men’s clothing company Bonobos after seeing a pair of turquoise corduroy trousers. 

As he told Business of Fashion: “There was so much more joy and thoughtfulness in that product than I ever thought there could be in a pair of men’s pants.” 

Dunn set his business apart in a saturated market by going entirely online at a time when most retailers were physical, offering retail locations that acted solely as showrooms. 

Michael Dubin, meanwhile, began the razor subscription service Dollar Shave Club after seeing a pile of razors that needed to be sold in a friend’s warehouse. He married a basic product that’s always needed with the convenience of a subscription, and the result was a rousing success. 

Consider whether you can also succeed in a busy sector by differentiating on experience or application, rather than innovation in product. 

Perhaps you can offer a subscription service like Dollar Shave Club did for razors or VetBox did for flea treatments. 

Or you might have an exciting type of packaging in mind. For example, Tea Drops sells tea in tablet form to avoid wastage and mess of tea bags. If you do have something like that in mind, you’ll need a product designer to create a sample, as well as a roadmap for finding a manufacturer and bringing it to market. 

Don’t have a product in mind yet? 

If you don’t yet have a product in mind, you can identify opportunities by looking at: 

Industry reports. Retail market outlooks from big-name consultancies such as Deloitte and Bain & Company will give you an idea of strong sectors. 

• Google Trends. See the level of interest in a search term over time as well as useful related searches. For instance, entering “dog lead” into Google Trends shows that interest in the term has steadily increased over the past five years, and related terms include “anti-theft dog lead” and “extra-long dog lead”, both potential products you could sell. 

• Statista. This site produces reports, forecasts, dossiers, and statistics on a wide range of topics that can be filtered by industry. 

The goal is not just to find a popular product but to identify where you can offer something better, clearer, or more relevant to a specific audience.

2. Evaluate your idea

Evaluate your idea by checking whether it is practical and profitable to produce, store, and deliver. 

Keep in mind the following factors:

Design 

Are you making your own product, instructing a manufacturer, buying from a supplier, or drop shipping? Think about the pain points of each option and what works best for your product both now and in the future. 

If you need someone to help you design your product, here are some places to start: 

• PeoplePerHour: a good option if you’re just looking for a few hours of work, rather than a full collaboration. Freelancers give upfront prices and timelines and offer services that include technical drawings, custom packaging, and 3D renders. 

• TopTal: used by companies including Airbnb and Shopify, TopTal has a rigorous screening process. Of the 100,000 people who apply to join the TopTal network each year, fewer than 3% are accepted. You can be matched with a freelancer and begin a two-week trial to see if they’re the best fit for your product. 

• Coroflot: freelancers need to submit an application before they can appear on Coroflot, which means that generally, you’re getting reputable industrial and physical designers who are specialists in their field. 

• Behance.net: chances are good that if a designer is in the UK, they have a Behance profile. There’s a lot to wade through on the site, but the creativity is inspirational.

Product dimensions

What weight and size will your product be? 
 

Historically, larger purchases, such as furniture, have tended to be made in-store. But online retailers such as Wayfair are proving that customers are growing increasingly comfortable with making these sorts of purchases on the internet. 

However, take into consideration that storage and shipping will cost more, and think about how much of that you should pass on to your customer.

Type of purchase 

Is your product likely to be a repeat purchase for your customers, or is it a one-off? Is the product seasonal, such as sunscreen or barbecue equipment? 

This will help you decide how to store, ship, and restock your product.

Shipping and storage 

Product dimensions will play heavily into shipping and storage costs, but it’s also worth considering whether your product needs special packaging or handling. 

Perhaps your product needs to be refrigerated or is particularly fragile. Account for these details so that you can plan and price accordingly. 

Price 

Check out your competitors and think about what your price point should be. 

If the market is saturated or your item is fairly common, you may think about lowering your price to attract customers. Alternatively, if the product will be rare and expensive to source, customers will expect a higher price point. 

At this stage, it’s also a good idea to start working out rough calculations of your profit margins, taking into account design, shipping, and storage costs for your product.  

A small or non-existent profit after factoring in ongoing costs may mean you have to rethink your product or your price. 

3. Validate the target market

Validate your idea by confirming that a specific group of customers wants your product and will pay for it. 

Consider the following points when thinking about the commercial potential of your product: 

Customer viability 

Who is your customer? 

The more focused your customer profile is, the better your chances of success will be. 

Their age, gender, location, and disposable income will be crucial data when you’re pricing and advertising your product, but don’t discount less tangible factors. Emotion, for instance, will play a strong part in purchasing from a small brand. 

Sector viability 

Questions you will need to answer of the sector or market in which your product exists include: 

• Is the sector strong? 

• What is its market size? 

• Who are my main competitors, and how are they faring? 

• Have they been around for a decade or more, or is the sector relatively new? 

• Is my industry naturally competitive, meaning I may need a higher advertising budget to stand out, or is there a vacuum? 

• How can I ensure demand? 

Some experts recommend creating a few different landing pages for your site to gauge interest in your product. 

You can always put a button on the site for pre-orders and/or offer to contact potential consumers when you go to market. 

4. Source your product

Source your product by choosing between manufacturing, suppliers, or drop shipping based on cost, control, and complexity.

Using a manufacturer 

If you’ve decided to create a product that is entirely your own, you’ll need a manufacturer who can produce it on a larger scale. 

One of the biggest decisions is whether to go local or not. 

UK manufacturers are typically pricier, but the volatility of global shipping has narrowed the price gap. 

Don’t be shy to ask around for recommendations when sourcing a manufacturer as well as looking through directories.

Working with a supplier 

You may also decide to source directly from a supplier, which means buying an existing product from a wholesaler (which can also be a manufacturer). 

You can go to well-known names such as Etsy Wholesale for this, or you can search for suppliers yourself on directories such as The Wholesaler. 

If you decide to work with an overseas supplier, it’s often a good idea to hire a manager local to the area who can ensure a smooth supply chain and solve any issues on the ground. 

Drop shipping

Perhaps the easiest and cheapest option is drop shipping, which means you don’t own, store, or ship the products you sell on your website. 

If you’re more interested in marketing products and anticipating trends than in the actual creation of a product, then drop shipping from sites such as Alibaba or Oberlo might be for you. 

Downsides of drop shipping include low margins as well as no control over stock. If you sell an item in your online store but your drop shipper has a six-week delay in shipping, you’ll be faced with a very unhappy customer. 

5. Assess the competition

Assess competitors to understand how your product can stand out and where opportunities exist. 

Though you don’t want to directly copy from another brand, it’s useful to see what your competition’s strengths and weaknesses are and if you can improve on their offerings. 

Critical reviews of a rival product’s quality could lead you to source a more durable finish for yours, for example, or a large amount of YouTube views might persuade you to create your own video content. 

Examine at least 10 competitors, evaluating their products as well as their website and marketing efforts. 

Website 

• What is their aesthetic? 

• Is their homepage product-heavy, or do they have a more streamlined look? 

• How big are the pictures of their items, and how many pictures do they offer for each item? 

• Do they offer video of the product in use? 

• What kind of specs do they use to describe their product? 

• How easy is their checkout process? 

• What are their shipping times, and do they offer any click-and-collect options?  

Marketing 

• What social media platforms are they most prominent on? 

• Are most of their posts promotional material, or are they more content-based? 

• Do they have an influencer programme in place? 

Useful links to check out your competitors 

• Spyfu: From around £30 a month, you can search for any domain on Spyfu to see keywords that have been purchased on Google Ads, as well as organic ranks and ad variations over the years. 

• Built With: Built With allows you to see the tools your competitors used to build their sites, like analytics platforms, web hosting providers, and extra plug-ins you might also want to invest in. 

6. Write a business plan

Create a business plan to clarify how your e-commerce business will make money and operate day to day. 

Business plans can be anywhere from five to 30 pages, but they should contain these sections: 

• Sales and marketing: a description of all of your sales channels, as well as marketing activities and goals. 

• Financial projections: graphs are useful for your financials. Make sure to include initial investment, regular outgoings, and predicted sales to create projections of profit, loss, and cash flow. Good cloud accounting software for e-commerce businesses can help you stay on top of these numbers. 

• Market and competition analysis: an evaluation of your industry sector as well as your competition. 

• Logistics: name the key suppliers in your chain as well as terms of these relationships and current statuses. 

Summary: sum up the rest of the plan, then create overarching goals across all sections that you can refer back to every month.

Sage’s downloadable business plan offers a fuss-free, comprehensive template to work from that can make setting out your business strategy much easier. 

7. Name your business

Choose a business name that is distinctive, easy to remember, and available as a domain and trademark. 

Naming your business is one of the most fun parts of this whole process, but you should keep a few points in mind when choosing a name for your online business:

Don’t be too obvious

Think of some of the great e-commerce sites of the past 20 years, like Amazon, a river, or Alibaba, a person who acquires a large fortune. 

Or consider individual e-commerce brands, like Patagonia, Goop, or SkullCandy. You can reference what you’re selling, but most successful brands hint at their offering, rather than making it too direct.

Make sure to brainstorm 

You may already have a name in mind, but creating a business plan and thoroughly researching your industry can often lead e-commerce founders to rethink their original name. 

Compile a list of terms that come to mind when you think of your product (these can be both practical and whimsical), and start to free-associate.

Get feedback 

Once you have a few names in mind, it’s worth taking a straw poll of friends, family, and business contacts (consider a LinkedIn poll) for feedback. 

Ask them how they would spell your product name, what it immediately brings to mind, and if there are any negative connotations of which you should be aware. 

Cross check 

Do a quick check to see if your domain in .com or .uk is available.  

It’s also well worth running a few internet searches for your company name as well as checking the UK’s Intellectual Property Office to see if a trademark exists under your proposed brand. 

And take a look at the company name availability checker on the Companies House website, too. 

If you’re struggling to land on a name, these generators can help: 

• Business Name Generator: a free site that offers names that you can filter by keywords, industry, and character count. 

• Frozen Lemons: pay a £49 fee and name ideas for your business will be sent to you after 48 hours. 

8. Choose your sales channels

Pick sales channels based on where your customers are and how you want to sell to them. 

Amazon and eBay dominate the UK e-commerce landscape, but there are other options than these kinds of marketplaces. 

Direct to Consumer (DTC) selling through your own website is attractive to owners, as profits are not eaten up by a third party. However, marketing can require a significant budget. 

A third option is to go wholesale, selling your products online in bulk to other e-commerce stores.  

But bear in mind that this normally requires previous wholesale experience as well as a lot of warehouse space.

Understanding SEO

Understanding and using Search Engine Optimisation (SEO) is one of the most important things you can do as an e-commerce business owner.  

Vital for driving organic traffic, SEO will cut down your marketing budget and help you get more sales for free. 

Keywords are among the most important things Google takes into consideration when ranking websites.  

There are a couple of easy rules to remember when applying them: 

• Use phrases, not just words: Using common single words such as “shoes” guarantees you will get lost in the shuffle. Make sure to use multiple keyword phrases to give your website a better chance of appearing high in the rankings. 

• Write naturally: Keyword phrases shouldn’t be obvious. Integrate them into the content on your site so they sound natural, and don’t repeat the same phrase over and over again. 

• Don’t just publish once: The more fresh, high-quality content you populate your site with, the more naturally and frequently you can insert keywords. If you don’t want to keep up with a blog, consider incorporating customer reviews or updating a resource list on a regular basis. 

Here are a few SEO resources that could be helpful: 

Ahrefs: this backlink checker gives an overall view of who’s linking to your site, which can give you an idea of how trustworthy Google finds you. 

• Wordtracker: find new keywords for your market with this free tool. 

9. Set up your business and your e-commerce website

Getting your business up and running starts with registering your enterprise with the government and buying a domain for your website. Then, it’s time to choose a platform, set up the nuts and bolts of your site, and ensure a smooth checkout experience. 

Registration 

Should you register yourself as a sole trader or a limited company? 

A lot of e-commerce start-ups in the UK are set up as sole traders, as it’s free to set up and you can change things, such as your company name, with little fuss. 

However, you’re also required to register for Self-Assessment to pay tax, so make sure you keep track of all your receipts, or employ an accountant if this is not your strong suit. 

It might take a bit more time, but don’t discount the benefits of becoming a limited company. 

Any company debt won’t affect you personally, and your business will look more professional.  

Some e-commerce owners say manufacturers will give them better prices, and it is easier to get outside funding. 

If you’re unsure which option is best, it’s worth speaking to an accountant. 

Your brand 

You can register your brand as a trademark at gov.uk. This means you can sell and license it as well as take legal action against anyone who uses your brand without your permission. 

Buy your domain name 

Most experts recommend buying a .com or .uk site to increase customer trust. It’s also easier to remember. 

If you can, buy up domains similar to your brand name, too, just in case you want them later on. 

Your domain name doesn’t have to be just your brand name, and for SEO purposes, it’s often worth adding your product sector into the name (think “ExcaliburElectronics” rather than just “Excalibur”). 

Make sure not to use any numbers in numerical format, as they will look spammy and are thought to decrease consumer trust. If you must use numbers, spell them out. 

Choosing the right e-commerce platform

As well as using third parties such as Amazon or Etsy to sell products, e-commerce founders often prefer to have their own platform to sell their products direct to consumers.  

But how do you know which is the best fit for your business? 

In recent years, a host of platform options have sprung up.  

Many have their own payment systems and features such as inventory management already incorporated, which will make your website simple to put together. 

Here are four of the best e-commerce platforms for your business:

Platform	Pricing	Pros	Cons
Wix	From £13 to £22, depending on what features you choose; £22 gets you more video hours, more storage space, and priority customer support	Good selection of attractive, professional-looking templates. The drag–and-drop function is intuitive and easy to use. Custom domain and free domain for one year. Can integrate PayPal and Etsy as well as a host of extra apps and services.	Not as specific to e-commerce business as some other platforms. You can’t change your template after you choose it. You can’t export your site to a new host if you decide to change platforms. Expensive recurring prices.
BigCommerce	From £21.30 to £178. The more expensive plans will allow you to custom-filter your products as well as accommodating up to £285,000 a year in sales (you will need to upgrade to a custom site if you anticipate more sales than this).	Some free templates to use. Integrates with Amazon, Google Shopping, and eBay. Tracks inventory. Stock management. Abandoned cart recovery settings. No transaction fees.	The theme editor is tricky and non-intuitive to use. Templates can be expensive. There is no multilingual option for your store. The content editor can be difficult to use. Yearly sales threshold.
Shopify	From £21 to £213. The pricier options will allow you to assign inventory to more locations as well as show calculated rates with your own account or third-party apps at checkout and set individual product prices for different countries.	Easy to start. Good option for physical retail owners that wish to go online. Web hosting. Unlimited products. Staff accounts. Free SSL certificate. Many third party apps.	The number of additional services can be distracting and expensive. Shopify’s own payments gateway is only available in select countries. Paying for transaction and payments provider fees can be costly.
WooCommerce	From around £7 to £700. As a plugin of WordPress, WooCommerce is free, but you pay extra for extensions such as shipment tracking, PayPal, and an SSL certificate.	Good flexibility, as there is no set plan; you just pay for each add-on you need. Free to use and with free updates. Easy to use. All payment gateways can be integrated, including PayPal, Stripe, and Square.	No built-in drag –and-drop design builder. It’s a self-hosted platform, so you are responsible for maintaining updates, backups, and security of your website. Can be slow if you don’t invest in a good web host. Can have coding conflicts when using other plug-ins.

 

E-commerce website functionality

Now that you have a platform to sell your products on, it’s time to get into the practical details of making your site work. 

Get your SSL certificate 

The SSL certificate converts your website URL’s prefix from HTTP to HTTPS and tells your customers that their details are secure and that they can trust your site. 

For an e-commerce business, an SSL certificate is non-negotiable. 

Some platforms will include an SSL certificate within their features, or you can purchase one separately. Tech Radar has a good list of options. 

Get a hosting package 

Many of the e-commerce platforms will already include free website hosting, which can store more data. 

However, if you’re looking at getting a separate host, PCMag has a good rundown of your hosting options.  

Get an internet merchant account 

If you’re going to accept credit card payments from customers of your e-commerce site, you must have an internet merchant account. 

This is a business service set up with a financial institution, normally a bank, that authorises payments and transfers collected funds into your account. 

Some e-commerce platforms will already offer their own merchant accounts, which avoids the hassle of setting up a third party payment provider. 

However, you should still have a look at your options, as fees vary according to which provider you choose. 

Choose a payment service provider (PSP) 

A PSP is a service that allows a merchant to accept a variety of different payment types through a single channel. 

Stripe, Square, and PayPal, for example, are all PSPs. 

You can install PSPs on your e-commerce platform rather than using their own proprietary payment gateways. 

Sort out payments 

Payments are one of the most important parts of your site. 

You want to make sure your customers can make payments easily, safely, and quickly when they reach checkout and that they have a few different ways to pay. 

Around 70% of online shopping carts are abandoned, so you need to make sure the checkout process is as simple as it can be. 

Are there too many pages on the way to checkout? 

Do you require customers to create a guest account? 

What are your shipping rates? 

Having the right answers to these questions can be crucial to making sales.

10. Launch your online store

Launch day is not just about pressing publish and hoping for the best. Before you announce anything, check that:  

• Your site is live.  

• Your checkout works.  

• Payments are processing correctly. 

• Order confirmations are being sent. 

• Key pages such as delivery terms, return policies, and contact details are easy to find. 

Once that is covered, focus on visibility: publish your launch announcement across your chosen channels, direct people to your site, and be ready to answer questions quickly. It is also worth keeping a close eye on traffic, basket activity, and any early issues so you can fix problems before they affect too many customers. That way, launch day becomes a managed first push rather than a passive go-live.

Marketing your new e-commerce business

Post-launch, once your site is live, it can be tempting to ease off the accelerator but this is the best time to really push and guarantee maximum engagement.  

Make a LinkedIn announcement, start fulfilling your pre-orders if you have any, and begin link-building. 

You won’t have an email list yet, but you should be able to gather a selection of contacts, whether it be friends or industry connections.  

How long they spend on your site, how likely they are to buy your product, and how likely they are to purchase your product again are three important questions that will help inform your selling strategy and product choice. 

Create a personalised newsletter highlighting what your business offers and why your offerings can add value and send it to all of them using a tool such as MailChimp. 

Even though your product is based online, think about using offline promotional channels, too. Speak to a local radio station or newspaper, for example, if you have a unique product or business story, and advertise in trade magazines. 

After your first big push, you’ll need a long-term marketing strategy. Use industry research to figure out what the best platforms are going to be for your product, whether it be Google Shopping, Google Ads, social media such as Pinterest or Facebook, or newsletters. 

Make sure there’s a good mix of organic and paid traffic coming to your site regularly. This might require the services of a SEO marketing agency, a PR agency, and/or an affiliate programme. 

Talk to those in your sector about what works best for them. 

Measuring performance

In the beginning, it can be a challenge to measure performance, as a limited amount of data makes it hard to derive any actionable insights about your customers. 

However, it’s crucial to collect all the information you can from your store’s visitors.  

If your abandoned cart rate is high, you’ll know your products are appealing but something is going wrong when it comes to the final step. Perhaps there’s a high shipping fee or a lack of payment options. 

Or maybe you’re getting a lot of visitors to the site through a certain platform, but they don’t actually buy anything. That may be an indicator that you need to cut spending on that platform and redistribute it somewhere that has better conversion rates. 

The more data you gather, the better informed you’ll be to make decisions that positively affect your e-commerce store and ensure a steady stream of customers. 

How to take your business online-only

 Need some help starting your e-commerce business? This free guide will provide you with the inspiration and top tips to support you in your bid to build your online company. 

Frequently asked questions about starting an e-commerce business