The history of commerce is a long and fascinating one, but in its simplest form, it’s the exchange of goods and services between two parties. It has remained largely unchanged for centuries – the parties met in person, haggled over a price, and completed a hand-to-hand transaction. Since the advent of the Internet, e-commerce business has arrived, changing commerce more in three decades than it did in the three centuries prior.
Technology has completely revolutionized how we buy and sell goods and services, and there’s no going back. One of the most significant changes that the Internet has brought about is the rise of e-commerce business. From freelancers offering their various services to businesses shipping physical products worldwide, more and more e-commerce business is being conducted every day.
These e-commerce businesses all benefit from the same advantages: 24/7 operation, global reach, and low overhead costs. If you’re opening up shop in the modern world, web presence is no longer optional – it’s essential. Luckily, starting an online store has never been easier.
This guide will go through the basics of getting your e-commerce business up and running in no time.
Choosing a Platform
The first step in setting up your e-commerce shop is choosing a platform, also known as a website builder. This software will power your website and allow you to set up your store, take payments, and track inventory.
There are a few different choices regarding platforms, but the most popular ones are Shopify, WooCommerce, Squarespace, and Wix. Each has its own strengths and weaknesses, so choosing the logical option for your business is crucial.
Shopify is recognized for its robust e-commerce features and ease of use. You can create a professional-looking website without any prior web design experience, and the platform handles all the back-end work for you. The platform also has built-in payment processing, so you don’t have to worry about setting up a third-party provider.
It is mainly used by businesses selling physical products, as it offers powerful inventory management features. Even with thousands of products and customers, Shopify can help you stay organized and keep track of your sales. As a result, we recommend Shopify for businesses that sell physical goods and need a user-friendly platform with powerful features.
Their lowest price tier starts at $29/month, but plugins and themes can quickly add to that cost.
The most popular content management system on the planet, WordPress is an excellent choice for those who want complete control over the look and feel of their website. With WordPress, you can choose from thousands of different themes to customize your site, and there are plugins available for just about anything you can think of. If you can dream it, chances are someone has already created a plugin that will do it.
Freelancers benefit most from WordPress, as it’s easy to use and highly customizable, especially if you learn the basics of coding. Blogging is also a breeze with WordPress, and you can use the built-in tools to manage your content and keep track of your posts.
WooCommerce is the most popular eCommerce plugin for WordPress, and it allows you to turn your site into a fully functioning online store. While WooCommerce isn’t as robust as Shopify, it works well for small businesses and is much less expensive (free to download).
Squarespace is a relative underdog to the website builder scene, primarily attracting artists and creative professionals. However, it’s quickly become one of the most popular choices for those who want an easy-to-use platform with beautiful templates. These templates are akin to WordPress themes, allowing you to create a professional-looking website in minutes.
Square also offers built-in payment processing and eCommerce features, so you can start selling your products immediately. The only downside to this website builder is that it’s not as flexible as other platforms on this list. If you want to add features outside of the scope of what Square offers, you’re out of luck.
Finally, we have Wix, one of the most popular website builders on the market. Wix saw a meteoric rise in popularity thanks to its simple drag-and-drop interface and pre-built templates. Wix is a great choice for those who want an easy-to-use platform that takes care of the heavy lifting for you. Just choose a template, add your content, and you’re ready to go.
You can also use Wix to create an online store, accept payments, and manage your inventory. With an ever-growing community of users, Wix also offers plenty of support if you need help with anything. You can find answers to common questions on the Wix Forum, or you can contact customer support for more specific issues.
Determine Your Pricing
No matter what you sell, chances are you aren’t the only one selling it. So, how do you determine what to charge for your products?
Research Industry Standards
The first step is to research the competition and see what they’re charging for similar products. For example, if you sell handmade jewelry, take a look at what other designers are selling their jewelry for. You can also use sites like Amazon and Etsy to get an idea of what people are willing to pay for similar products.
In the case of services, you’ll need to research the going rate for the type of service you provide. If you’re a freelance writer, you’ll find that rates begin at around $0.03 per word and go up from there. It all depends on the quality of your work and the type of clients you work with.
If you need inspiration for pricing your work, professional photographer Tomayia Colvin has insightful tips on how to price your work.
Once you have a general idea of what to charge, you’ll need to determine your pricing strategy. The are infinite possibilities when it comes to pricing strategies, but here are a few basic ones you can use:
Penetration Pricing: This is when you charge a lower price than your competition to attract customers and grow market share. Once you have a larger share of the market, you can begin to increase your prices.
Skimming pricing: The opposite of penetration pricing, skimming is when you charge a higher price than your competition. This strategy is often used with new products to maximize profits.
Value-based pricing: This is when you charge a price based on the perceived value of your product or service. For example, if you sell luxury goods, you’ll be able to charge a higher price than if you sell more mundane items.
Competition-based pricing: As the name implies, this is when you base your prices on those of your competition. This is often used as a starting point for setting prices and can be adjusted based on other factors.
Once you know what people are willing to pay for similar products, you’ll need to calculate your operating costs. These will depend on the type of business you’re promoting and how you plan to sell it.
Physical products will have costs for materials, shipping, and packaging. If you’re selling a service, you’ll need to account for your time and any costs for resources you use (like software or stock photos). You’ll also need to consider payment processing fees, typically around 2.9% + $0.30 per transaction.
But that’s not all! You should also consider marketing, website hosting, and other business expenses when setting your prices. Ideally, it would be best to calculate these costs before starting your business, but many entrepreneurs only realize them after they’ve already started selling.
Once you have a clear idea of your costs, you can go back and adjust your prices accordingly. Remember that your goal is to make a profit, so don’t be afraid to charge what you’re worth.
Last but not least, don’t forget about Uncle Sam! Most countries have some form of sales tax that you’ll need to collect and remit to the government.
In the United States, sales tax varies from state to state. You’ll need to research the sales tax rate in the states where you have nexus (a physical presence like a brick-and-mortar store or distribution center) and charge customers accordingly.
If you don’t have nexus in any states, you may still be required to collect and remit sales tax in some cases. For example, freelancers earning more than $400 in a given year must declare that income. Though you may not owe anything until you earn a lot more, it’s important to be ready for tax season.
Licensing and Incorporation
There’s no one-size-fits-all answer when it comes to licensing and incorporation. The best way to figure out what you need is to consult with a business lawyer in your country or state.
That said, there are a few general things to keep in mind. If you’re selling physical products, you’ll likely need a business license (or several licenses if you’re operating in multiple states or countries). And if you’re selling products that require special permits (like alcohol or firearms), you’ll need to obtain those as well.
As for incorporation, this is usually only necessary if you’re running a larger e-commerce business. Incorporating can help protect your personal assets if your business is sued. It can also make it easier to raise capital and hire employees.
Many new e-commerce business owners choose to wait until they’re sure their business will be successful before incorporating. This is perfectly fine, but it’s something you should keep in mind for the future.
Learn More at CreativeLive
There is so much more to learn about e-commerce! It wouldn’t be possible to fit everything into one blog post.
If you’re interested in launching an e-commerce business, be sure to check out our courses on the subject. Taught by successful entrepreneurs, these courses will walk you through everything you need to know to get your online business off the ground.
And if you’re a freelance artist not quite ready to start selling, brush up on your creative skills with our courses on everything from photography to web design. No matter what your plans are, we wish you the best of luck in your entrepreneurship journey! Subscribe today to get started.
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