eCommerce as a business venture is a trending topic right now and for good reason. The number of internet users worldwide has grown steadily over the past two decades. As of April 2023, it sits at 5.18 billion (64% of the world’s population). What’s more, over half of these internet users (2.64 billion) are online shoppers.
This trend represents an attractive business opportunity for anyone interested in starting an online store to cater to these internet users.
Let’s go through the different types of eCommerce business, why you should consider starting your own online store and how to get started without investing a lot of money.
What is an eCommerce business?
An eCommerce business is one which derives profit from selling products or services to online customers. These could be physical goods like clothing, digital goods like music or services like business consulting or web hosting.
The key factor distinguishing eCommerce from traditional retail commerce is that the transactions occur through digital media like desktop computers, laptops, tablets and smartphones.
Amazon, eBay and Craigslist are examples of popular eCommerce businesses. You also have the likes of Best Buy, Walmart and Target, which are brick-and-mortar stores that also have eCommerce businesses.
What are the types of eCommerce business models?
Before starting an eCommerce business, it’s crucial that you know what different kinds of eCommerce models are out there. Depending on who’s on the buying or selling side of the business, there are four major models you can use for your eCommerce business:
- Business to Consumer (B2C) model
- Business to Business (B2B) model
- Consumer to Consumer (C2C) model
- Consumer to Business (C2B) model
Business to Consumer (B2C) model
This is a direct-to-consumer model where your business offers products or services through an online store to consumers. These consumers are your average person that wants to purchase products or access services for their everyday needs.
This model operates similarly to how the shop on your street works, selling products to you and your neighbors, except it happens online. Most people think of the B2C model when they hear the word “eCommerce.”
Business to Business (B2B) model
With the B2B model, both the buyer and the seller of products and services are business entities.
Because of the nature of both entities involved in this model, the transaction volumes and pricing are much larger than those seen in the B2C model. Recurring transactions are also common in this model, especially between businesses with a vendor-client relationship.
An example of the B2B model would be a software vendor selling licenses for its products to businesses that use this product for their operations.
Consumer to Consumer (C2C) model
In this model, rather than a business offering goods or services directly to consumers, it provides a platform for consumers to buy and sell products from each other.
These platforms act as an online marketplace where anyone can sell their own products to other customers. Examples of these platforms include eBay and Etsy, which allow anyone to create an online account and start selling products.
As the platform owner, you generate revenue by charging customers a fee for listing their products or taking a cut from each successful transaction.
Consumer to Business (C2B) model
The C2B model has business on the receiving end of the exchange of goods and services for payment. It’s similar to the C2C model, where you provide a platform for this exchange to happen. The difference is that businesses are the customers here.
A great example of the C2B model is a freelancing platform where individuals can offer their skills to companies that need someone to meet a short-term business gap. Upwork and Fiverr are platforms that use this eCommerce model for their business.
Why should you start an eCommerce business?
You now know what an eCommerce business is and the different models you can use to start one. But why should you get involved?
Here are a few reasons why starting an eCommerce business is a great idea.
Constantly growing eCommerce market
eCommerce has grown from being a novel alternative to traditional retail to becoming the norm. By 2020, over 80% of global consumers had shopped online.
Online retail grew from 5.8% of total retail sales in the United States in 2013 to 16.1% in 2022. If this trend continues, it’s projected to reach 21.9% by 2025.
The revenue generated from eCommerce sales is also on an upward trajectory, with over $398 billion generated in the U.S. in 2017 and more than $1.4 trillion predicted to come from eCommerce in 2027.
Access to an international customer base
Most brick-and-mortar stores are restricted to serving customers within their immediate area. Even the ones with branches can only cater to customers in those locations. This limitation is partly because only people in those areas can see or access their physical locations.
When these traditional retail businesses decide to go online, they can offer up their products to a much larger audience that isn’t restricted by geography. With a combination of digital marketing, modern logistics and fulfillment options, they can even reach customers on the other side of the globe.
With online shopping, an Australian customer can order products from a U.S.-based eCommerce business without worrying about how they will receive their order.
Lower barriers to entry
Depending on the eCommerce model and what you choose to sell, your online business can be up and running for a relatively small amount of money.
For example, if you want to sell homemade baked goods online using a B2C model, you can start selling your products for as little as $9.95/month. From a web host like Bluehost, that gives you access to a WooCommerce hosting plan with everything you need to have your business online and reach customers.
In contrast, doing the same thing with a physical store would cost a lot more when you consider paying rent, setting up a store and managing all the utilities involved in a physical location.
Easier to manage
With an online store, the eCommerce application running your store handles most of the daily operations without your intervention. You don’t need someone at the counter to receive customers and answer their questions about products.
Everything a customer needs to make a purchase decision is available on your website or eCommerce app. When a customer makes a purchase, the order fulfillment process is also automated to ensure they promptly receive what they paid for.
And depending on the web host you choose, your eCommerce website may have additional things taken care of automatically, like backups, software updates and other hosting maintenance tasks. This arrangement is perfect for startups that don’t have the capacity to handle all the moving parts of an eCommerce operation.
How to start an eCommerce business without money
Now that you know the benefits of starting an eCommerce business, let’s take a look at what you need to do to get one up and running on a budget.
Here are the processes you need to complete to turn your dreams of a successful eCommerce business into reality. This step-by-step approach applies regardless of whether you have an existing business you want to take online or start from scratch:
- Figure out what you want to sell
- Decide who you want to sell to
- Choose how you want to sell
- Build your business operations
- Set up your online store
- Start your marketing and promotional activities
- Launch your eCommerce business
Figure out what you want to sell
One of the reasons you decided to start an eCommerce business is to sell things online, so what do you want to sell? Products or services?
There’s a lot of research that should go into choosing the focus of your business. You could offer niche products catering to a small but dedicated customer base or generally available products targeting a larger audience.
The same goes for services. Your priority should be creating something that solves your target audience’s problems or pain points. For example, someone who worked for several years as a graphic designer could start an online business selling their services.
Decide who you want to sell to
Who are the potential customers for your eCommerce store? The research for finding an answer to this question goes hand in hand with figuring out what you want to sell. If you have some expertise in a particular field, then that can influence what you’re trying to sell and who your target market is.
If we continue with our example of a graphic designer, they, as the business owner, need to find clients. Based on their experience with previous customers, they could target small businesses that don’t have an in-house designer and individuals that need design services for personal use.
The type of customer your online business caters to also influences the way you offer your products and services.
Business clients for our graphic designer may be more interested in creating branding elements or marketing material for their company, while individual customers may want designs for posters, t-shirts or fashion accessories.
Choose how you want to sell
This step involves choosing the right eCommerce model for your business. Your decisions from the previous steps will influence the model you can apply to your business.
For our graphic designer, based on what service they selected for their eCommerce business and the customers they will target, they could offer their services to either consumers (B2C) or other businesses (B2B).
They could also choose to combine both models and target their services at both businesses and consumers. These models also apply to a products-based eCommerce business.
Another factor that’s crucial when starting an eCommerce business is how you intend to charge customers for your services. The two most popular options to consider here are:
- Fixed cost: This is the standard option where products or services have a fixed price attached to them. Once a customer pays this price upfront, they get access to what they paid for.
- Subscriptions: Customers pay a recurring fee for products/services and either receive regular delivery of products or maintain their access to your services. This usually requires that the eCommerce business have access to the customer’s credit card so they can charge it regularly.
Build your business operations
Once you’ve figured out the core of your eCommerce business, it’s time to start building out the operations that will support it.
This includes the following activities:
- Registering your business with the relevant authorities and regulatory agencies and getting the permits necessary to run your business.
- Defining and staffing the different roles that are required for your business to be successful. These may include an inventory manager, customer support, IT technicians, content creators and marketing.
- Sourcing your products. You could either manufacture them yourself, buy from suppliers or wholesalers or get someone else to manufacture them. If you want to run a dropshipping eCommerce business, then you need to create an arrangement with your supplier.
- Define your brand. Your branding is the key to getting your business noticed when it launches. Your branding includes your business name, business logo, typography and color palette.
Set up your online store
Now that you’ve completed the preliminary steps of starting an eCommerce business, it’s time to create the primary point of interaction between your business and its customers: the online store.
Setting up your online store involves getting a domain name, choosing a web hosting plan and selecting an eCommerce platform. Some web hosting providers like Bluehost offer all three of these elements together in one package.
The choice of an eCommerce platform is also an important one, as there are many options, each with its own advantages and disadvantages. A popular choice is WooCommerce, which allows you to build a WordPress-based eCommerce website.
Whatever option you go with, you will need to incorporate your branding elements into the design templates for the platform and add your product information while building your website.
You may also need to configure functionality for order fulfillment, shipping management and integration with marketing or enterprise resource planning (ERP) platforms.
Start your marketing and promotional activities
Marketing is a necessary element of starting an eCommerce business as it lets your customers know that your online store exists and can meet their needs. This is especially important for new businesses that have no existing customers.
You can employ a mix of traditional and digital marketing mediums to ensure that you reach the right audience. That means television, radio, newspapers, billboards, social media ads and online advertising. There are also platforms you can use to get started with email marketing, like Mailchimp.
As part of your content marketing strategy, you can also employ tactics like search engine optimization (SEO) to improve your website’s online visibility. The goal of all this is to put your eCommerce business in a position to attract new customers, keep existing ones and even compete with established brands.
Launch your eCommerce business
Once you’ve laid the groundwork, all that’s left to do is launch your business and start selling.
Your team should be primed to handle the different parts of the operation required to keep things humming along. These include order fulfillment, inventory management, customer engagement and marketing.
If you’re running this business as a sole proprietorship, then you will need to keep an eye on these aspects of the business to ensure nothing falls between the cracks.
If you nail all these elements of your eCommerce operations, you will leave customers with a great shopping experience that can turn them into repeat customers or ambassadors of your brand.
Final thoughts: How to start an eCommerce business on a budget
Now that you know all the steps you should follow to become a digital entrepreneur, there’s nothing to stop you from starting your eCommerce business.
It’s as easy as picking a product, defining how you want to sell it, choosing an eCommerce platform and model and deciding who your target customers will be.
If you already have the operational side of your eCommerce business sorted out, and you’re looking for a platform to host your online store, Bluehost has several options for you to consider.
Our WooCommerce hosting plans come with a free domain name for the first year, a free SSL certificate, daily backups and automated WordPress updates.
Contact our 24/7 support team today to find out how Bluehost can help get your eCommerce business up and running in no time.
Frequently Asked Questions (FAQs)
Yes. eCommerce is a profitable business venture and that profitability is one of the reasons why it continues to grow at a rapid pace. The profitability of your own eCommerce business will depend on how you manage its operations.
Compared to other business ideas, starting an eCommerce business is not that difficult. Once you follow the steps outlined above, you’ll be up and running in no time.
Also, depending on what you’re selling, you can start small and scale your operations as the demand grows.
You don’t have to hire anyone to build your eCommerce website for you. Most web hosting services make it easy for you to launch your online store by providing everything you need in an affordable hosting package.
There are also eCommerce software-as-a-service (SaaS) platforms like Shopify and BigCommerce that provide an alternative path to starting an eCommerce business.
Yes, it’s possible to become an eCommerce business owner for free. If you already have a WordPress website, then you can install the free WooCommerce plugin and start selling products from that website at no extra cost to you.
If you’re starting from scratch with no pre-existing website, there are eCommerce platforms like Gumroad and Ecwid that allow you to start selling products with a free account.
However, these platforms usually have some limitations you have to deal with when you use their free plans. These include higher transaction fees, advert placements on your product pages and restrictions on selling certain product types.
If you already have your business idea ready, you can start your eCommerce business in a day. Simply pick an eCommerce platform, set up your online store and you’re good to start offering products and services to your customers.
For a larger-scale eCommerce business, you may need more time to set up your online store and add product descriptions and product images, configure payments and design your storefront.
