Essentials Of An eCommerce Business Plan

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E-commerce is now a way of life and a part of our daily life. The reach and influence of e-commerce in our lives can be roughly estimated by just considering the fact that every single person must be using a minimum of one digital media application or an e-commerce platform every single day for their shopping and business needs. E-commerce is thus an integral and important aspect of how business is done in the present times and is most likely to shape the future methods of carrying out business too. Therefore, entrepreneurs looking to how to start an e-commerce business must look at the right business idea which is rewarding and is also in sync with the current trend and demand, as it embraces technology as well as convenience. 

E-commerce business typically covers all the businesses that are conducted over the internet where the transactions between the consumer and dealer are also carried out online. It could include websites, e-stores, certain service applications but chiefly it refers to platforms that allow dealers to conduct their business. As compared to traditional businesses, an e-commerce business has several advantages, thus encouraging more entrepreneurs to consider it as a business opportunity. Some of the benefits of an E-commerce business include-

  • E-commerce business provides goods and services at a comparatively lower cost. The lowered cost is partly because the cost of procuring a physical location, investing in a property, maintaining stock, day to day expenses like electricity, salaries, maintenance, repairs, etc are saved when the business is online and these savings can then be passed on to the consumers.
  • An e-commerce business has a worldwide reach and overcomes the physical and geographical barriers that can restrict a physical shop. The reach of the business throughout the world also increases the target audience and the customer base of the e-commerce platform and business, thus benefiting the business.
  • An e-commerce business provides the users or customers with complete information regarding the products, which might not be possible for a physical store to provide, given the space and display restrictions. In comparison, E-commerce businesses can make additional information easily available to customers. Also, most of this information is provided by vendors who use the e-commerce platform to display and sell their products and therefore it does not cost the e-commerce business itself anything to create or maintain the information and data. Customers can thus make informed decisions while purchasing products or services via e-commerce businesses.
  • E-commerce platforms allow consumers to compare and choose from a wide variety of options for the same type of products. This choice and ability to compare is not possible in a physical store, thus making e-commerce platforms even more popular and in demand.

These are just some of the benefits of starting an E-commerce business, both for the entrepreneur and for the consumers. 

However, before starting the business, it is important to plan the business. Business planning involves having a written document with the goals, objectives and the vision of the business. A business plan also outlines the methods and steps that will be undertaken to achieve the goals as well as a rough time frame within which the business plans to achieve these goals. Further, an e-commerce business plan is especially important, given that an increasing number of shoppers are conducting their business online.

An ecommerce business plan defines and directs the various factors that go into an online business platform’s launch and continued growth. Also, an ecommerce business plan helps the entrepreneur remain organized and is also useful when seeking investors who need to understand the company and its business method. Many entrepreneurs believe that since the e-commerce business is operated via a platform and all the transactions happen online, procuring funding is the major factor to be concerned about and be included in the business plan but for most ecommerce businesses, the management of startup funds plays a surprisingly minor role in the overall plan. Instead, there are several other aspects that need to be considered while starting an e-commerce business and in order to be aware of these vital factors, a business planning checklist can be referred to for guidance while devising an e-commerce business plan. 

ecommerce business plan

Essentials Of An Ecommerce Business Plan

ecommerce business plan

The core framework of every business plan, including the business plan for an ecommerce startup consists of

  • The executive summary
  • The company or business description
  • The management and operations description
  • The market analysis
  • The competition analysis
  • The marketing and sales description
  • The financial summary

All the information regarding the e-commerce business will be included under the above-mentioned topics for the business plan. However, what is the vital information regarding the e-commerce business that needs to be included under these topics in the e-commerce business plan also needs to be known. To answer the primitive question,  ‘how to start an e-commerce business?’ here are some of the essential details that need to be included in the business plan are discussed here.

Business And Sales Model

An ecommerce business is a broad term that encompasses a number of business models under it, but basically it is an online platform, that is started by the entrepreneur, that provides a channel to all vendors and dealers to sell their products and services through it. It can further include an e-store or a mobile application or a subscription site, etc. The model types can either be delivery of stocked goods or drop-ship items or manufacturing made-on-order products or even digital downloads, as there are plenty of selling options in an ecommerce business. Thus, entrepreneurs starting an ecommerce platform must decide which types of product or products they wish to sell via the ecommerce business. If not produce the items themselves, then entrepreneurs must identify suppliers, who can either be wholesale, drop-ship, or print-on-demand vendors. Further the entrepreneurs even need to consider the budget in upfront and ongoing manufacturing, wholesale, or other production costs where applicable. In case of digital products, the entrepreneurs need to identify software needed to produce digital files for distribution. 

Additionally, the sales of an ecommerce business can either be done in the form of an online store on an ecommerce platform or through an online store on a blogging platform or through a marketplace such as those provided by sites like Amazon (which sells variety of products) or Etsy (which sells artisanal or handmade products) or eBay (which sells products via auctions) or selling products via social media accounts, which is known as social selling. 

Entrepreneurs must therefore decide on the business as well as sales model for their ecommerce business and mention it explicitly in their business plan.

Marketing Model

An e-commerce platform needs to plan their marketing strategy in greater detail considering that several other vendors might also be relying on the marketing and advertising plans of the business. Since the e-commerce business is primarily online, the marketing plans for the business must also be strategized via online channels. It could be either via emails, social media advertising and posts, search based advertising such as

Google advertising, and also print advertising can be employed. The marketing plan, the launch and estimated timeline of the program and the budget for the marketing plan must be included in the business plan. 

Capital Requirement And Procurement

The business plan for an e-commerce startup must include information regarding the capital required for starting the business as well as how the required capital will be procured. The chief requirements of the e-commerce business include investment to set up the digital platform- the coding, the programming, the interface, the connectivity, the data creation and storage and various other technical aspects which will make the platform easy to use for the suppliers and the customers alike. Similarly, entrepreneurs need to enable a secure and reliable payment gateways as well as handle other aspects of selling their products (or services) or those of other vendors on the platform. The marketing and advertising plan also requires funding. There are several other miscellaneous expenses while setting up an e-commerce business platform. 

The funding for all these expenses can be sought via bank loans or loans from non-banking financial institutions or even through investors. The exact capital requirement, along with a detailed break-up of the costs must be included in the business plan, along with the plans to procure the funding. The business plan is also presented to lending institutes thus the financial requirements and the plans must be mentioned explicitly in the business plan.

Irrespective of what the ecommerce dreams of the entrepreneur include and where they take the entrepreneur, a sound business plan helps map the entire process. Some ecommerce business plans might involve startup costs and funding distribution, while other plans, such as those for digital sellers and drop-shippers, might focus on sales channel and marketing outreach, where the operating costs are a minimal factor. Whatever may be the path that the e-commerce business platform takes, a sound plan provides solid footing and to design a solid business plan, assistance from deAsra Foundation can be sought. The experts at deAsra along with the entrepreneur’s vision will help the e-commerce business take off on promising note.