In recent years, ecommerce businesses worldwide have collectively created an industry that's expected to pull in $4.11 trillion worth of revenue in 2023, with a projected annual growth rate of 11.51%. If you've got a great idea for an online shop, this is a great time to jump in on the action!
But not so fast - before you quit your day job and sign up for an Etsy account, it's essential to take the time to create an effective, comprehensive business plan. While some people write a business plan designed to attract potential investors, there are plenty of reasons to draw one up, even (and perhaps especially) if you plan to finance your own ecommerce business.
Simply filling in an ecommerce business plan template can help you familiarize yourself with the ecommerce business model, set goals, and make plans to help you avoid unfortunate surprises. We'll show you how to create a solid business plan that details everything from your target market and company description to your sales channels and marketing strategy.
An ecommerce business plan is a valuable asset that can help you avoid the common pitfalls of online retail.
From selecting the perfect target market for your products and services to nailing down which marketing channels to utilize, starting an ecommerce business involves plenty of considerations.
We'll walk you through what you need to know to create an ecommerce business plan to help you achieve long-term success.
Few of us would select a random destination we'd like to travel to, hop in the car without knowing how to get there, and hope for the best. Yet plenty of would-be ecommerce business owners fall prey to the same mentality when attempting to start an online store.
Don't let it happen to you! We'll walk you through everything you need to consider when mapping out ecommerce business plans designed to chart your route to success as an online business owner.
While you'll usually find the executive summary on the first 1 -3 pages of an ecommerce business plan template, don't feel pressured to nail it on the first draft. Some people even wait until after filling in the other sections to come back and draft an executive summary.
An executive summary is a collection of highlights from your business plan. It will include an overview of things like:
Your mission statement.
The products or services your ecommerce company plans to sell online.
An overview of your target market (who your products and services are designed for).
Your market research and competitive analysis.
Any unique market gaps your business idea is designed to fill.
An overview of your business model, including a logistics and operations plan.
The sales and marketing channels you plan to utilize.
The short and long-term business goals you hope to achieve.
If you create a formal business plan to attract potential investors, you'll also want to include information on your funding requirements. Additionally, ensure you introduce your management team or business partners if you have them.
A company overview is all about the business aspects of your ecommerce store. This is where you'll get incredibly specific about exactly how your ecommerce business will work by nailing down several key considerations.
What do you plan to call your online business? Try to come up with a business name that's catchy, memorable, and relevant to your target audience.
What type of products and services do you plan to sell, and to whom? What are the defining characteristics of the potential customers who make up your target market?
What will give your company a competitive advantage over other ecommerce companies and brick-and-mortar business competitors? Taking the time to find a unique selling proposition can be one of the key elements to success.
If you haven't already, this is where you'll develop a mission statement that summarizes why your business idea is an awesome one. Explain your company's purpose, goals, and values briefly and concisely.
Feeling stuck? Wix has a great collection of example mission statements from real companies to help give your creative gears churning.
At this point in your business plan, take some time to think about the type of values that are important to you and your company. At Gelato, for example, sustainably is at the heart of everything we do.
Throughout our business plan, we explored ways to make the print on demand (POD) business model more environmentally friendly for creators and entrepreneurs worldwide. What are your values, and how will you work them into your business model?
Now it's time to think about your business structure and model. If you plan to make a significant income from your online store, you may want to set up shop as an LLC or S-corp for tax purposes.
Do you plan to go it alone or hire employees to help? If you intend to hire employees, you'll definitely want to look into registering as a business, which you can do online through companies like IncFile or ZenBusiness.
Now it's time to get into the product section of your ecommerce business plan. This is where you'll describe what type of products and services you intend to offer.
Do you want to sell custom t-shirts or turn your original artwork into wall art or custom phone cases? Consider the type of products trending among your target audience and start to think about the price points at which you'll offer them.
Taking the time to get to know your target audience will provide essential clues for success when it comes to everything from product selection to marketing strategies. Conduct market research into a few key areas to get to know your ideal customer and your direct and indirect competitors.
Your target market, aka "target audience," is simply the type of people most likely to be interested in your product. They generally share specific traits such as age, life stage, occupation, interests, common challenges, or other demographics.
For example, if you decided to sell performance tank tops, your target audience might be "female athletes who live in warmer climates." If your shop focused more on "urban-dwelling parents who care about the environment," you might choose to offer custom organic t-shirts for kids instead.
A buyer persona is a fictional representation of your ideal customer that you develop to help you get to know them better. For instance, say you created a persona called "Jan the yoga fan" who was in her mid-20s, lived in an urban environment, and cared about doing eco-friendly shopping.
By targeting this persona, you might offer products like reusable water bottles, custom tote bags that Jan could use for shopping or even 100% biodegradable phone cases. Hubspot has a great persona creator that you can use for free!
Now it's time to do a little competitive analysis to determine who you're against! Conducting a competitive analysis involves studying other businesses that sell products similar to your own to get an idea of what they're selling, at what prices, and how they're attracting customers.
By studying everything from their marketing strategy to their product, you'll be able to analyze what's working and what isn't. This can give you valuable insights into everything from potential gaps you may be able to fill to what is and isn't working among your shared target market.
If there's one section you don't want to skip when writing a business plan, it's this one. No matter how much better your product is than your competition's, it's unlikely to matter if potential customers have never heard of you.
Marketing efforts are incredibly important when it comes to getting the word out about your business. A marketing plan includes a detailed summary of all the marketing strategies you plan to use to reach your audience and may include ideas like:
Using your own blog or webpage for content marketing.
Using search engine optimization (SEO) to rank higher in search engine results.
Your ecommerce business plan should also detail your sales strategy, such as whether you plan to offer subscriptions or operate on a traditional sales model. Equally important is deciding where you're going to set up shop.
Do you plan to start an ecommerce business on an online marketplace like Etsy or build your ecommerce site using tools like Shopify or WooCommerce? Take the time to research here, as each approach comes with its own business and financial considerations.
Now comes one of the most potentially tricky parts of starting an online business - figuring out how to source materials, fulfill orders, and deliver them to your customers. Do you and your staff plan to handle all business operations and shipping aspects, or do you plan to work with a print on demand service like Gelato?
In case you're unfamiliar, print on demand is a business model that involves partnering with a reputable POD provider like Gelato. After you sign up for a free Gelato account, you simply upload your custom designs and let us know which of our high-quality products you'd like to feature.
Use one of our easy integrations to connect your Gelato account to your online store, and when a customer makes an order, we'll handle everything from order fulfillment to delivery. POD can be a cost-effective way to launch an ecommerce business without ever having to worry about managing inventory, dealing with shipping, or investing in pricey product creation tools.
Now that you've got a better idea of your ecommerce business plan, it's time to make a financial plan. This is where you'll take into account everything from the cost of your company's digital storefront and marketing plan to any overhead costs or POD service charges.
By outlining realistic costs and financial projections, you'll avoid surprises on your income statement down the line. While it tends to cost much less to launch an ecommerce business than a traditional retail store, it's vital to ensure you can factor your overhead costs into your retail prices.
Creating your business plan is the first step in becoming a successful online retailer. Want to launch a competitive online store with minimal startup costs?
Learn more about how partnering with Gelato can help you make your business plans a reality. We make it possible for creators everywhere to launch their own online business without ever having to buy any materials until a product is already sold.
While market research indicates that ecommerce will make up 24% of all retail sales by 2026, how much profit each retailer can make is a little trickier to nail down. Much like traditional businesses, the profit margins of individual sellers can vary widely.
How much money you're able to make from your ecommerce business will largely depend on everything from your business plan to your marketing strategy. That's why developing detailed ecommerce business plans is important before launching your online business.
While there are no rules that say you must create a business strategy before launching an ecommerce business, it will make your life a lot easier. Making important decisions in the early stages will save you a great deal of time and money, not to mention help you dodge potentially costly mistakes.