Checklist for Starting Your E-commerce Business

There are so many benefits with selling products or services online. Relatively easy to start, flexibility, scaling, data-tracking, working remotely and so much more. With that being said, it may be easy relative to starting a physical brick and mortar business, but there is still a lot to learn and it is definitely still hard work. So, where do you begin? What needs to get done?

When you begin with your e-commerce idea, it does not matter if you are selling a physical product and shipping it in the mail, or selling a digital product like software, an e-book or training series, the very first thing you need to do is run through the basic steps of a business model. This is by far the most crucial step and it shouldn’t cost you any money, but it may take a good chunk of time to do. I would recommend following the “Business Model Canvas.” It’s a free exercise you can find online. To summarize, you must ask yourself these questions:

  • What am I selling and what value does it have to a customer?
  • How do I know that this is something a customer wants?
  • Who am I selling it to?
  • How much would a customer willingly pay for it and what will I price it at?
  • Is this a one-time purchase or a recurring purchase?
  • What will it cost me to buy/create my product? Including shipping materials and shipping cost.
  • Is there a production capacity limit? How many can I build/buy at once?
  • How much profit will there be on each sale?
  • How many units of my product need to be sold to break even?
  • How will I find and target customers?
  • What might it cost me to acquire each customer?
  • Where are my customers currently purchasing this product? What competitors are there?
  • What are methods I can use to get customer feedback as fast and cheaply as possible?
  • And lastly my absolute favorite question: How do you know the answers to all these questions? Did I make assumptions or are these answers based on researched facts? If you don’t know the answer to each question that is completely fine, but you should spend a lot of time researching it until you have the best understanding you can have. One boring truth about being an entrepreneur is that a LOT of time is spent online reading and learning.
Business Model Canvas

Business Model Canvas

Do NOT rush through this process. It’s possible that some of these questions may kill your idea. But it’s better to kill the idea before sinking a ton of time into something only to find out that you won’t be able to make a profit. I know that by far the most exciting part is brainstorming a logo, coming up with a name, building a website, designing details of the product, but if you don’t take the time to really understand the basics of your business model you may end up spending a lot of time all for nothing (I say this from experience).

So, let’s assume you run through your business model and you have a product you’re ready to sell. Now there is another set of questions and exercises to ask yourself:

  • Where will I sell this? Will I have my own website and brand or will I sell it on an existing platform like eBay or Amazon?
  • Related to the previous question, is my product a commodity type product like a no-brand plain plastic phone case, or is it a premier product where the brand name and quality really matter?
  • Am I purchasing this product in bulk and keeping inventory at home? Or am I drop-shipping this product and having it shipped straight from the manufacturer to the customer? What are the pros and cons of both? Are both even possible?
  • Am I making this product on my own from scratch? If so how much would it cost me to someday hire somebody to make it for me?
  • Assuming I get my first order, what is the process for the customer from beginning to end? Pre-purchase experience, purchase, payment received, shipping logistics, product received, post-purchase experience. Mentally run through the whole process.
  • What are all of the tools, both physical and digital, that I will need? And how soon will I need them? Think about website software, shipping software, boxes, scale, printer, tape, tools to make my product (if any), software to create my product (if any), and whatever else is needed to achieve the customer purchase cycle.
  • What are the important metrics that I should and shouldn’t be tracking with my online business and why? (think Google Analytics, advertising data, etc.)
  • How will that data help me make decisions?
  • How can I do all of these things as cheaply as possible? Remember, I haven’t quite validated my idea just yet, so it might not be worth it to purchase anything expensive just yet.

Your first few customers will be very important, and you’ll almost certainly run into problems you didn’t foresee. That’s expected. If everything ran absolutely flawless you might have waited too long to launch. At this point the work has really just begun and you will continue to get feedback and make adjustments to your idea. Or, it’s possible you won’t get any customers for a long time, and you’ll have to make the difficult decision to move on, persist or pivot with your idea. Hopefully, you can avoid this by going through the business model exercise at the beginning.

Once you start getting customers you really will get a boost of motivation and possibly a little bit of added stress depending on how many you get. Now that you have revenue and customers your idea begins to form into a living and breathing business, and you will no doubt have a new set of questions to ask yourself and new decisions to make.


About the Author:

Jaron Hall

Jaron Hall is a University of Utah student and runs the Opportunity Quest and Utah Entrepreneur Challenge at the Lassonde Entrepreneur Institute. He is currently working on two businesses, UtahMaids.com and TheUtahBox.com.


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