How To Start an Ecommerce Business Online in 2023

Ecommerce businesses sell goods and services to buyers over the internet, usually via a website. Money is transferred digitally to pay for products, with transactions completed entirely online. With the global market expected to reach $5.7 trillion in 2022, a figure expected to grow over the coming years, online retail can still be a highly lucrative venture.

Perhaps you’re a skilled craftsperson, maybe you have a service to provide, or are just a budding entrepreneur looking to capitalise on this fast-growing market. There are so many opportunities in the realm of website retail, so how do you set up an ecommerce business?

Here’s a step-by-step guide on how to get into ecommerce and start selling, including choosing your company name, obtaining permits, and creating a website.

There are a few similarities between setting up a brick-and-mortar business and an online one, especially regarding legalities and planning. For example, you’ll still need to do market research, find your niche and choose a company name and legal structure. However, when choosing your online platform and building your website, there are a few key differences to consider.

1 Research the Ecommerce Space and Find Your Niche

As with any new business, you need to do your research before you get started. Think about the different areas you might be interested in and what types of products and services you want to sell. Find something that differentiates you from the competition and helps you stand out in the crowded online marketplace.

Whether you’re selling products or services, you’ll also need to consider whether these will be physical or digital. If you don’t make or provide these yourself, where will you source them? And, of course, how will you get them to your customers?

You should also think about which category you’re going to set up, as well as your business model. The four main categories are: business-to-business (B2B); business-to-consumer (B2C); consumer-to-business (C2B); and consumer-to-consumer (C2C). You can learn more about these categories and the different types of models in our guide to ecommerce business models.

Other things to research are start-up costs and any legal or regulatory requirements for your company, product, or service. If you’re looking for more information about what’s involved in setting up a company, you can read more in our guide on how to register a business which talks you through some of the legal requirements.

Finally, create a solid business plan and set some realistic goals. Your research should help provide more insight into the web retail space and competitors relevant to you, giving you a better understanding of how you’ll make an impact and build a successful, profitable enterprise. Be clear about what you want to achieve and how you plan to get there so that you’re always focused, motivated, and accountable.

2 Select Your Business Name and Choose a Legal Structure

Once you’ve created your plan and know where you’re heading, it’s time to choose your company name and legal structure.

Let’s start with the fun bit. Choose a unique name that accurately represents what your brand does and sells. You’ll need to consult Companies House to make sure the name isn’t already taken by another company, and if you’re planning to set up a website, it’s worth checking out available domain names too.

Avoid choosing a name that could be easily misinterpreted or mistaken for something else, as well as anything that might be considered offensive. Remember, this is usually the first thing people come across when interacting with your brand, so you want to make a good first impression.

Once you’ve decided on a name, you’ll need to decide on a business structure. This will influence how your company runs, from daily operations to taxes, paperwork, and funding ability. There are four main structures in the UK:

• Sole trader
• Partnership
• Limited Liability Partnership
• Limited Company

Each of these structures has its benefits and drawbacks, so if you want to learn more about these, have a look at our article on how to decide which company structure to choose.

One of the most common structures for new companies is sole trader, due to the low barrier to entry. It’s the simplest form of company you can register and doesn’t require you to inform Companies House. However, you will need to tell HMRC. If you want to learn more, read our guide on how to register as a sole trader.

Starting an ecommerce business in the UK and need some help with registration? The experts at Osome can prepare and file all the necessary documentation, so you’re all set within a a day. Register your ecommerce business with Osome today in three simple steps.

3 Apply for an EIN

To own any business in the UK, you’ll need an EIN (Employer Identification Number), so you can register your company. Not everyone will require an EIN, but it can be helpful to keep your company finances separate from your personal. You can apply for an EIN free from HMRC, and can easily do it online.

There are other requirements regarding VAT registration that you should also be aware of, so make sure you know whether this applies to you. While you might not need to be VAT registered immediately (this only applies once your turnover is more than £85,000 per year), there are some benefits to voluntary registration.

You can find out more about VAT registration in this helpful article on the pros and cons of registering your ecommerce company for VAT.

4 Obtain Business Permits and Licences

Once you’ve applied for your EIN, the next step is obtaining the necessary licences and permits to operate legally in the UK. In the UK, you don’t actually need a licence to sell common goods on the web, as long as you’re only trading within the UK. However, there are rules and regulations you need to abide by, and certain products which do require a licence.

While you don’t need a business licence to trade as an online retailer in the UK, you do need to make sure your company is properly registered with HMRC. You’ll need to do this within a three-month timeframe after you start your operations.

If you’re selling restricted items such as alcohol, there are specific licences you’ll need to obtain to trade legally. These include a personal licence and a premises licence which you can find out more about and apply for on the UK government website.

There are additional rules regarding selling on the web, as set out by the UK government, which apply from before an order is placed until after it’s received. Applicable rules before an order is placed include making it clear how customers can pay and that payment is required, allowing customers to make corrections to their order, and making sure terms and conditions are available and reproducible.

After customers have placed their order, there are more rules, including how and when you provide a contract, as well as the fact you must deliver the product/service within 30 days unless otherwise agreed before the purchase.

6 Build Your Online Shop

So you’ve chosen your preferred platform and created your website — now you need to build your shop, source your products and list them on your site. Hopefully, you’ve already thought about how to source your products or services, or the materials and tools required to deliver these yourself.

If you’re selling a service such as consultancy, it might be as simple as describing these and listing them on your website. If you’re selling products, this is more complex and will require you to create an inventory, list pages for each product and, of course, consider the costs associated with sourcing these products to sell.

It’s not as simple as adding a product to your site and hoping it will sell. The online retail market is competitive, and you’ll need to do more to get your product noticed. Think carefully about the customer journey and experience on your website, the searchability of your products, and other helpful information which may encourage customers to make a purchase.

7 Market Your Business

Once you’ve created a great website and made your products as appealing as possible, how do you get your name out there and let potential customers know that you’re selling the product or service they’re looking for? To start serving customers and making money from your venture, you need to do some marketing.

There are several strategies you can employ, ranging from paid ads to free search engine optimisation (SEO) and organic social media marketing. Depending on how much you want to spend, the possibilities are almost endless! There may also be marketing tools available within your online retail platform.

The first stage of marketing is brand building and awareness, which is all about getting your name out there and letting people know what you can offer them. Once they know who you are and what you do, you can focus on your products and services.

As your enterprise grows, you’ll learn what does and doesn’t work for you and can adapt your marketing strategy as you go.