Are you struggling to build an e-commerce Business and trying to make an extra income online?
That’s okay, You are not alone, I have been there as well.
Having spent a lot of time on the internet figuring out how to build a sustainable income and over years of failure, mentors that haven’t delivered their promises, spending hundreds of dollars on courses.
Years ago If I knew what I know now on e-commerce. I would have started an Online Store a long time ago.
Today I will show you step by step on how to build a dropshipping e-commerce business from scratch.
What is E-commerce?
E-commerce is a Massively crowded Online Market selling goods and service with the help of Internet in exchange for money without a physical location.
Let’s take an example of a physical store and an Online store, In a physical store you walk in explore products and buy what you are looking for, the same works with an online store where you buy from the comfort of your couch.
E-commerce is a booming business and keeps growing it was expected to reach 1.7T$ by 2020. And overall of 78% growth in sales. However, e-commerce store will fail if you aren’t driving traffic to your store.
What is dropshipping?
Dropshipping is a Business model where you don’t hold a physical store or inventory, All you do is create an Online store displaying products when a customer visits your Online store and buys products which in turn you will be placing the order to your supplier and the supplier will ship the product directly to your customer.
Let’s look at the steps on how to build an eCommerce store step by step.
Step 1: Finding a Niche
Doing this right will save you a lot of time and money. I knew this is a great nightmare for most of you and this is the most important thing you need to do before you get started.
However, There is no concrete one way where you can stick to land on finding a profitable niche. I would say gathering data and doing an analysis would help you figure out how to land on a profitable niche.
I have personally experienced this method and it worked so go ahead and give it a try.
you can read more about on how to find a profitable niche.
- Brainstorm ideas – List out all the items you bought from a retail store for $200 or more. If you find it hard you can go over to Amazon.com or ebay.com and click on departments or category you can find a lot of categories to list out your ideas.Now go over to google.com and search for the product. While choosing product ideas choose the product that retails more than $200 as you will be selling products to a market that has high demand expecting a huge potential income.
Once you have come up with the product ideas document it in an excel.
- Research your niche competitors
Competition is good, if you don’t have competition you are landing in a dead niche or you are trying to reinvent the which might take a lot of time.
So who is your niche competitor?
Someone who is selling the same product which you want to sell online but have no physical location or warehouse. Your competitor can give you a lot of insights and save you a lot of time.
There are two ways you can do find your niche competitors.
- Search through google – Imagine you want to sell hammocks, for example, I would go over to google.com type hammocks and explore a few results. And see if they have a physical location or warehousing products. I would document that on a sheet and update the brands they are carrying.
- Google Shopping – This is a great place where you can find the saturation of your product you want to sell online.
Use this 3 filters to find the profitable niches product in Google Shopping.
- The product shouldn’t be sold in more than 25+ stores if it is sold more than 25+ stores then it is a Saturated niche.
- Walmart is everywhere you, if Walmart carries that product then you might want to stay out of it as your customer can walk-in and buy for himself.
- Find a product that sells for $200 or more as you want to sell huge income potential.
- Organize your results
By now you might have brainstormed ideas and found your niche competitors. If a competitor is carrying products online without having a physical location you can consider selling the same products online.
You need to find a minimum of 10 niche competitor document them on a spreadsheet on what products and brands they are are carrying. Moving forward research the suppliers your competitors are carrying on their website and contact them and start building your business from there.
Step 2 – Registering your business
Operating a business online does require an initial setup there are legal procedures and tax benefits for incorporating a company so don’t skip it,
You can follow the 7 steps to get your business up and running.
- Pick a store name – By now you might have found your niche you want to get into, It’s time to find a name for your store. You can try www.leandomainsearch.com to search for a domain name.P.S- when finding a name see if you can add shop or store at the end of the domain for SEO purpose.
- Get a Physical Address – To register a company you need a physical address to receive your mail, you can google it or try www.physicaladdress.com I have personally tested.
- Get a US phone number – It’s not that difficult to get a US phone number, you can find a plenty of providers who give you a US phone number but you can get one from Google voice for free.
- Set Up an LLC – By now you might have selected a Business name, a physical address, and a US phone number,
let me dive deep into it and explain getting your business set up in the USA as most of the supplier we are working are from the united states.
First, let’s discuss the business type and which business type will suit you the best.
Every state in united states has different requirements and regulations, Although most of the process will be the same I would recommend you to google the “business name+setup” to know more.
While there are many business types for you to choose the most common are
- C & S – Corporation – Both are almost similar with S-Corporation has a sub-level, however, to start an E-commerce business it’s not a recommended option. It requires a business license and tax filing while it differs from state and county that you are setting your business, one great advantage is you can have more than one owner or partner.
- Sole Proprietorship– While this seems to be the best options in all ways this has a major con when your entity is sued You may be held responsible for the entire loss.
- Limited Liability Corporation – I would recommend you to go with this option as this has limited documents for processing, you can have more than one owner or director for your business and it gives you liability protection.
Nevada and Delaware are the most popular states to set up an LLC.
I have set up my LLC in the state of Nevada-Clark county, as the Nevada States has got less or no tax with a lot of benefits.
Understanding the complete process will seem to be a nightmare while this is easy with LegalZoom as I have personally tested establishing an LLC,
LegalZoom did my business setup, provided me with a registered agent, an attorney, and a tax consultant while I can focus completely on building my business.
It’s always recommended that you set up a company and register in the U.S for tax purpose.
- Get your EIN(Employer Identification Number) – EIN is otherwise called as Tax ID which is required by IRS for tax purpose you can get one by applying it directly by calling IRS or filling an online form.
If you are selling products to the U.S no matter if it’s an online or offline purchase you are allowed to charge sales tax and to do that you need a Tax Id you may also need to check with the state on what sales tax you need to charge to your customers.
Any business located in the U.S selling goods requires a tax id which you can get it for free, you can call IRS at (800-829-4933) or visit their website https://www.irs.gov and apply online answering few questions.
If you are outside the U.S you may need to talk an attorney to get your Tax id from IRS.
- Open a Business bank account – If you are in the USA opening a bank account if far most the easiest thing ever, Just walk into any preferred bank you wish and provide them with your Social Security number and Identity proof and you are good to get an account the same day.
For most of the residents outside the U.S, this seems more challenging after the 9/11 attacks, It was now required for any Non-U.S citizens it is mandatory to verify the identity.
It is impossible to open a U.S.bank account If you are from Iraq, Iran, Afghanistan, Pakistan, North Korea, Sudan, Burma or any blocked countries from the office of Foreign Assets Control.
To open a U.S. bank account you need your Business incorporation documents, EIN or Tax id and 2 copies of photo identification.
Although its hard for Non-U.S Citizens to open a bank account in the U.S here are 4 options that I recommend for you to try.
- Option 1- Find a bank that has a local presence in your country and open a dollar account, talk to the bank in the U.S and tell them that you will verify your identity here in your home country. While I haven’t tried that It’s good to give it a try. The bottom line for doing so is to verify your identity.( Banks like Citibank, wells Fargo, and bank of America have a worldwide presence)
- Option 2 – Fly to the U.S while this is the foremost easiest and quick way to open a Bank account without any hassle. Visit the U.S and visit any bank of your choice and open a Business bank account.
- Option 3 – While LegalZoom claimed that they can open a Bank account for your it’s for U.S Citizens only, however silicon valley banks give you a virtual bank account without a Debit card where you can carry your transactions online ( Be aware and do your research before getting in touch with such banks you might be scammed) I personally don’t recommend this option.
- Option 4 – Your LLC setup has an option to have more than one owner you can form a U.S.subsidiary which will be easy to open a bank account.
(P.S- All Bank requires EIN to open a Bank account)
- Payment processor – If you have your business setup ready with all the above documents you are good to get approved by any payment processor, If you are outside the U.S you can try Stripe Atlas.
Step 3 – Build your Store
By now I presume that you might have found a name for your store it’s time to build a store.
In today technology improvement building a store is way more easy than you think, You can build one on your own if you are a techie, or you can use any platform that provides all the features.
There are hundreds of platforms to build your store Online When I started my e-commerce store I tried various platform like WordPress, Magento, Bigcommerce, woo-commerce, Shopify and so on.
Some platforms are amazing some are horrible. I have tried those platforms extensively and transferring stores and data from one platform to other is a big pain. Today I will share with you the 2 most popular e-commerce platform to consider for your dropshipping business.
WordPress vs Shopify
WordPress powers about 70% of their market share. Without focusing more on WordPress lets see what best can WordPress do for your business.
Let’s discuss some pros about WordPress.
Pros of using WordPress
- WordPress is free all you need is a hosting service from a reliable provider.
- WordPress hosting is reliable and affordable as low as $9/month, you can have unlimited stores.
- You have more privacy, control, and flexibility in your store.
- The knowledgebase is huge, anytime you are stuck with a problem you get great support or you can google it and find it yourself.
- You need an SSL for your store and mostly you will get one free if you are using WordPress.
Cons of using WordPress
- WordPress does require technical knowledge. Using WordPress means you need to get familiar with the platform and plugins.
- No 24/7 support- since its an open source and built by thousands of contributors there is no live support. There are other forms of support where you can access how to’s through google and youtube.
- You need your own CDN(content delivery network) A CDN is a server that delivers data of your store to load your website faster. You can read more on CDN here.
Now, let’s talk about Shopify.
Shopify being the most trendy e-commerce platform have become most popular in recent days. However, Shopify comes to us with a monthly plan it’s still reliable.
Pros on using Shopify
- It’s a 3rd party all in one e-commerce platform which is easy to set up, you can do the setup in just a few clicks as if you are completing a signup process.
- 24/7 customer support- you can call, email or chat with a live agent anytime whether it’s day or night.
- Payment processor integration is very easy as Shopify themselves has got recommended payment gateway build it.
- Free SSL certificate to secure your store so you can receive payments and collect data securely.
- They have their own CDN so they take care of your loading time fastly.
Cons of using Shopify
- If you want more than one store you may have to pay an additional $29/month for a basic plan.
- Although Shopify provides free themes if you would like to go for a premium theme you need to pay more.
- Shopify will provide you an URL with your (storename.shopify.com) so you need to buy a domain name.
- If you want to build an authority to an e-commerce store you need a business email which is not provided by Shopify.
To wrap things up both the platforms are amazing it depends on your requirement and how soon you want to launch your store. As I have used both the platforms extensively choosing either one would be a great choice. You can try Shopify here.
A final word
Over years I have helped a lot of people and your success is important to me.
Building an e-commerce business requires time and hard work, follow the steps involved and you can build a sustainable e-commerce business with dropshipping products.
I hope this post answered all the questions on How to build an e-commerce store from scratch. Give it a share if you like it or leave a comment below and subscribe to my future blogs.
Was there anything to be added I would love to hear from you.