Deciding to start a new eCommerce business is an exciting event – however, as you get into the process of setting up you may be wondering what you need to consider and if you are missing anything. To help you with the process of starting your new business, here is the ultimate guide checklist of topics to think about.
1) Choose your Business Model
eCommerce is a broad field, but the two main business models are Direct to Consumer brands (D2C) and online retailers. D2C brands will develop and promote their own product directly to buyers on their website. Online retailers will stock a variety of brands and promote them to buyers.
Stocking products vs drop-shipping
Both D2C and online retailers can choose to stock products or try take advantage of drop-shipping where the products are held by a supplier and sent only once the items are sold.
If you choose drop shipping, you can enjoy more convenience and less start up costs as you do not need to buy stock or warehouse it. However you will need to be willing to sacrifice control of the shipping speed and reliability as you are not in control of the amount stocked by your supplier and how quickly they handle orders. Typically drop-shipping also offers lower margins.
If you choose to stock products, you will likely have stronger margins and full control over the shipping speed of your products. You can engage a Third Party Logistics (3PL, TPL) provider to store your products for you and send them when they are sold, directly to your customers to achieve a similar setup to drop shipping. However 3PL providers will charge you for monthly warehousing costs, product receiving fees and fees for each order fulfilled.
2) Choose a Legal Structure and Register Your Business
None of this article should be considered legal advice and it is provided for informational purposes only.
Before getting into the nitty gritty, you will want to consider your business legal structure. Get advice from a lawyer who deals with small businesses to get proper advice.
Business.gov.au explains that the main choices are typically:
- sole trader
Generally speaking, many businesses operate as a sole proprietorships while their their financial resources are small or as a company when they have more resources and want to limit liability.
Be sure to read the full explanation of each type of structure from Business.gov.au here.
Once you have spoken to a legal professional and chosen your business structure, you will be able to register your business online on the Australian Government business registration service website:
3) Decide your Business Name
As part of the process of registering your business name – you might need to create a name for your business. Before getting too attached to your new business name, check out ASIC’s register of business names to make sure it is not taken:
ASIC suggests that you will need your ABN in order to register a business name. The process is quick to do online (about 10 minutes) and payment processing takes 2-5 days. You can register you business name here.
You may also want to check that your domain name is available at this time. We suggest doing a quick search on Kompanion Domains to see that your domain is available:
4) Open your Bank Account
Now that you have an ABN, generally you will be able to open a business a bank account to keep your finances separate. Choosing the best business bank is a whole topic unto itself which we will cover eventually however you may want to first consider the bank you are most comfortable using to begin with.
Most banks, like NAB for example, will simply require you to provide:
- Your ABN number
- Business address
- 100 points of ID, or passport and or drivers license and Medicare card
Having opened your bank account, you will now be able to deposit funds into the account and use this for running your business separate from your personal finances.
5) Register Domain Name and Get Hosting
With funds in your account, you can begin purchasing essential assets for your business. A quick one to grab will be your domain name and hosting (if you are not using a hosted eCommerce solution.
Australian .com.au domains require your ABN so have that handy. Otherwise there is no ID needed for international .com domains.
Domains cost around $5-25 on average per year.
If you intend to use a hosted eCommerce solution like Shopify, Squarespace or Wix you will not need to get hosting. If you are using a self-hosted solution like WooCommerce you will need to get your own hosting.
Hosting packages come in different levels. Usually cheap shared hosting is enough to start, but may offer you less security and speed than having a dedicated server.
Hosting will cost you about $5-15 per month.
7) Develop a Logo and Branding
Your store will need some level of logo (even if it is only text) and brand colours in order to look professional. To develop a logo and mini brand you can use a logo generation tool, freelancer or agency.
Logo generation tools have varying qualities these days but will enable you to create a few logos to choose from in seconds and buy them online. Other DIY options including using a tool like Canva to design your own.
Note that these tools provide more than just your logo’s symbols but also a set of colours. These colours you can use to make sure that when you create your website and marketing materials that they are branded in your colours.
Working with design freelancers and agencies
Freelancers can be a good option for a mix of quality and price. You can find freelancers on freelancing platforms like UpWork, Fiverr or even in Facebook groups where hungry but professional freelancers congregate.
To get the best work out of your freelancer, you will need to provide a decent brief. A good brief will cover:
- Required elements (icons, words, etc)
- Where the logo will be used
- Target market
- Your brand values
- References to logo styles you like
- How many rounds of revisions (or changes) you would like
A good logo for a small business or start up can can take up to 4-8 weeks to design and complete.
6) Pick an eCommerce Platform and Build Your Store
eCommerce platforms provide the mechanism for your website to list and sell products to the public. Your major options will be:
Shopify, WooCommerce and Magento are the most popular eCommerce platforms.
The platform that you choose will be related to your particular resources and technical capabilities. A short summary of your options are as below:
- Shopify – easy to start, monthly cost and % transaction fees, some limitations for features and can get expensive with many plugins
- WooCommerce – requires a basic level of WordPress knowledge, no fees (free), requires many plug ins to have the functionality you like, cheaper
- Magento – usually an enterprise solution, requires developers to start and improve, expensive
If you are completely new to websites and online retailing, we suggest choosing a ‘hosted’ solution like Shopify to begin which will handle the installation and security of your store. You will simply need to connect your domain settings to your new website.
For new sellers, Shopify provides a decent range of free off-the-shelf themes that you can apply right away to make your store look and function fairly professionally.
Self Hosted Options
If you choose a ‘self-hosted’ solution like WooCommerce or Magento, you will need to install these applications on your hosting. WooCommerce will require you to install WordPress first, then add the WooCommerce plugin.
With both WooCommerce and Magento, you will likely need to either design and build your own store design on top or buy a theme to apply to your store. Themes are not expensive and may range from $10-$50 USD.
Building your store
After setting up your eCommerce platform, building your store is usually quite a straight forward project if you are doing one yourself for a small scale store.
- Start by selecting a theme for your store to give your store the desired appearance.
- Then add the pages, products and shipping options to your store.
- After this, connect your payment options to the store.
- Finally, polish your store by checking that all the small details on the theme have been customised for your brand and test a few purchases.
You will want to add a few key pages that help users understand your business and contact you. Key pages to add are:
- Shipping Information
- Privacy Policies
- Returns Information
- Contact Page
- About your business
Note: Do not skip testing a few purchases on your store otherwise you may encounter lost sales
Using a Website Development Agency or Freelancer
If you are using a website development agency or freelancer to build your website, it would be helpful for them for you to provide the following:
- A list of all pages and what you want on each page (Sitemap)
- Photos of products, your business, and lifestyle images of your brand
- Email and contact information
- A list of references of websites that you do like in terms of style
- Your brand fonts and colours
- Any logos or other branding assets that you have
7) Setup Tax Settings
Globally, as the eCommerce industry develops different countries are beginning to tighten their controls on tax obligations when selling internationally.
Discuss your tax obligations with an accountant or professional advisor. It is worth noting that you may have to register for GST as an Australian seller once you meet a certain revenue threshold.
For international sales, there may be tax collection requirements that you will need to abide by but these are best defined and explained by a professional advisor.
8) Connect Payment Gateways
Payment gateways are accounts that allow your eCommerce platform to take payments by credit or debit card online. If you use a platform like Shopify, your payment gateway will be built in if you select to use Shopify Payments (How much does it cost?). Otherwise, you can leverage other solutions to provide payment options for customers online.
Popular choices include PayPal and Stripe. Both require some level of ID verification of your business before payments to be taken online.
Many payment gateway solutions will charge 1-3% of the transaction value + an approximately 30 cent transaction charge.
For a full like of payment gateway options, check out ChargeBee’s list here.
9) Plan for Returns and Exchanges
Returns are a fact of life for many eCommerce business, particularly in the fashion industry. Think through ahead of time what your return policy will be for your business and how you will take returns.
Key concepts to make sure you have covered are:
- Returns window
- What is returnable and what is not
- Who pays return fees
- Where should people send returns?
- Cash vs store credit refunds
- Your obligations under the Australian Consumer Law
10) Prepare for Customer Service
Soon you will be selling products and there will be questions, comments and complaints. Prepare a customer service plan to mark out:
- How you will take customer enquiries (phone, email, live chat)
- At what times will you be comfortable
- Whether you will have a dedicated service email
Make sure to update your website and email notifications from your eCommerce platform so that you are promoting your customer service contacts.
If you intend to build traffic and orders very quickly, you may want to explore options for plugins or services that help you manage customer service enquiries. Popular solutions here include, for example, Zendesk or HubSpot, which can charge monthly subscription fees of approximately $15-$50 USD per user, per month.
The major advantage of using these platforms is that it enables you to route customer service enquiries to a support specialist, track each enquiry via a ‘ticket’, and request reviews on your customer service performance.
11) Build your Support Network
Congratulations! As a new eCommerce business owner, you will have have questions and comments as you grow your business. We encourage you to start building your support network which can include:
- Legal professionals
- Accountants and tax advisors
- Marketing contractors
- Other entrepreneurs
Facebook groups and Slack channels can be a great way to connect with other entrepreneurs for some quick advice and comradery.
12) Market your Store
With your store set up and running, you can now begin to grow your store! While it is tempting to begin firing on all cylinders, there are likely going to be a few key marketing channels for your business, including:
- SEO for long term, low cost, unpaid traffic from Google
- Facebook and Instagram advertising
- Google Ads and Shopping Ads
- Email marketing
For most D2C eCommerce businesses and online retailers, these channels will form the bulk of your online sales traffic. However other notable marketing channels can inlcude:
- Affiliates and partnerships
- Listing on marketplaces such as Amazon and eBay
- Social media influencer marketing
- Public Relations