e commerce platform business plan

How to Write an Ecommerce Business Plan [Examples & Template]

Published: April 03, 2024

If you have a promising idea for an online e-commerce business , it’s important to create an e-commerce business plan to ensure your vision has enough stock to be profitable.

Having a business plan for your online store will help you define your target market, establish your monthly and quarterly sales goals, and increase the likelihood of long-term e-commerce success.

In this post, we’ll go over an online store business plan and how you can create one for your e-commerce startup. Let’s get started.

What is an e-commerce business plan?

An e-commerce business plan is a document that outlines your business and its goals, analyzes your industry and competitors, and identifies the resources needed to execute your plan. It also lists the e-commerce retailers you’ll use to distribute your products and the marketing strategies you’ll use to drive sales.

Whether a company operates as a startup or has years of operations and growth under its belt, an e-commerce business plan is essential for evaluating a business and determining areas of improvement.

An e-commerce business plan is essential, with increasing numbers of shoppers conducting business online. It's estimated this number has reached over 2 billion . An e-commerce business plan keeps you organized and is useful when seeking investors who need to understand your company.

So, let’s dive into some examples of e-commerce business plans and what goes into writing one using our free template .

Free Business Plan Template

The essential document for starting a business -- custom built for your needs.

• Outline your idea.
• Pitch to investors.
• Secure funding.
• Get to work!

You're all set!

Click this link to access this resource at any time.

E-commerce Business Plan Template

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How to Make an Ecommerce Business Plan for Your Startup

Darren DeMatas

February 28, 2024

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In addition to receiving commissions generated through affiliate marketing, we are able to fund our independent research and reviews at no extra cost to our readers. Learn more.

So you’ve decided that you want to quit your day job and start your very own ecommerce empire. That’s great!

But before you become the next Jeff Bezos  (and definitely before you quit your job!), it’s worth spending some time thinking about a business plan. In this article, we’ll dive into the key elements of an ecommerce business plan, which is very different than writing traditional business plans.

Why You Should Create a Business Plan

We know that starting an ecommerce business is exciting, and it can be tempting to jump right in without constructing a business plan. READ: PLEASE DON’T DO THIS.

If you haven’t put your ideas, questions and concerns on paper, then you haven’t given your business model enough thought .

Taking the time to write a business plan might seem like a lot of work, but it can save you a lot of time and money in the long run by better preparing you for potential challenges and opportunities that you’ll face as a first-time entrepreneur. Think of it as a roadmap for your new business venture.

It’s exciting to start your own ecommerce business. However, you want to be well prepared and not jump into anything without having a solid, foolproof ecommerce business plan in place.

After all, you wouldn’t jump out of a plane without a parachute, so why start a business without a safety device in place? That safety device is your business plan.

The business plan is the brainstorming process that ensures your concept and goals are realistic.

This is more than just mental notes. True business plans take your ideas , questions, and concerns and put those in writing.

As you start creating your business plan, you’ll soon understand that it’s more than a single piece of paper with handwritten details on it. It’s a clearly constructed format of how your business will be created, how it will operate, and what you hope the future holds in terms of a successful ecommerce business.

When you write your business plan, be sure to have a target audience in mind. Are you going to look for investors or put a Kickstarter campaign into motion and use this as your descriptive platform? If so, make sure that your business plan contains everything the audience would want to know about your business (and more!). Many traditional funding solutions require a business plan in order to give you capital. However, there are alternative solutions, such as  Payability  that specialize in ecommerce and don’t require credit checks, a business plan, or any complicated paperwork. They can also get you approved in as little as 24 hours.

When your business plan is completed, you should have achieved the following goals:

• Knowledge:  A greater sense of knowledge of the business aspects.
• Resources:  The resources you’re going to need to make your business successful, such as partners, money, employees, etc.
• Road Map: Have clear set goals to take you from the very beginning of your business and onward.
• Viability: In other words, is your business possible? Will you have enough profit margins to keep the doors open long-term?

Now that you know why you should create a business plan, it’s time to move on to how you can create your business plan and get started putting your ecommerce business into motion.

How to Start an Ecommerce Business Plan

At the very beginning of the planning stages, it’s a good idea to develop a framework for your business model. This business model will continue to evolve as you create each section of your ecommerce business plan, so don’t strive for a perfect completed plan on the first try. You will be making tweaks to the plan of certain steps along the way.

There are many ways to sell products online and different business models  to pursue. Research and learn from successful ecommerce business examples in the market. The exact business model you follow will be one that makes the most sense with your resources, skills, and interests.

In order to create the best online business plan with your product in mind, you need to figure out the following things:

What are you selling?

The first step to creating an online business is to learn the absolute basics of what you can sell.

• Physical products: Clothing , shoes, home goods
• Digital products: Software as a Service products, ecourses, ebooks
• Services: Consulting services, home cleaning

Who are you selling to?

• Business-to-Business (B2B): You are selling to organizations, corporations, and non-profits rather than individual customers
• Business to Consumer (B2C): This means you are selling to individual consumers rather than businesses
• Marketplace: You are acting as a middleman by bringing businesses and (B2B or B2C) customers to one website.

How are you sourcing your product?

• Manufacture in-house: You make your product or service in-house
• Third-party manufacturer: You outsource the manufacturing of your product or service to a third-party manufacturer
• Dropship: You partner with a dropship manufacturer. Basically, this means that they make your product, package it and ship it directly to your customer while your company handles the entire customer relationship.
• Wholesale : You buy goods or services from other companies in bulk and re-sell those products on your online store

Additional References

• Entrepreneurship: Business & Marketing Plans
• Small Business and Entrepreneurship
• Entrepreneurship Resources
• Business Plan Resources

Executive Summary

The executive summary will be written according to your goals, and it’s recommended that this is done at the very end of your business plan completion. This will ensure that you include all of the important factors about your business and present your ideas in a concise and complete way.

Some of the features you’ll include in the executive summary include information showing that you’ve done your research, you have concrete sales forecasts, and the main details about your brand.

Business Model

When you’re figuring out your business model, you have to consider four different areas:

• Monetization strategy
• Product/industry
• Target market
• Sales channel

Monetization Strategy

The monetization strategy delves into the methods you are going to use to sell your products.

This strategy will look at different product monetization methods, including white label, private label , affiliate marketing, wholesale, dropshipping, and even selling ads.

Product/Industry

The product industry section is where you summarize your main niche.

For example, “Vegan Skincare Products.”

Target Market

In the target market section, you will write a sentence or so on who your target market, or ideal customer, is in the community.

If you’re selling vegan skincare products, your target customers might be women who embrace the vegan lifestyle and use natural skincare products in their daily beauty regimen.

Sales Channel

The sales channel refers to where you’re going to sell your products.

For example, you might be selling your products on your own website, and this should be entered in this section.

Business Overview

This next section covers your company overview.

This section of your business plan will cover various features of your company, including the following:

• Company type
• Domain name
• Value proposition
• Brand traits

The brand name section lists your business name or brand name.

This is an extremely important aspect of your business plan as it’s what will set the tone for everything that follows.

Pick a brand name that’s simple yet unique and is something that can be used in a wordplay manner, if desired, but not pun-worthy.

Company Type

The company is how your business operates. For example, you might label your business as an LLC , S-corporation, sole proprietor, or some other type of business organization.

The best way to determine how you should categorize your company is to speak to your accountant. There are various tax and legal aspects to forming your business in a certain way.

Speak with the professionals in the company and corporation formation field to determine how to label your company and which company type best benefits your business in a variety of ways.

Domain Name

This section is where you list your domain name.

Choose a domain name that is memorable and embraces the overall traits and features of your business.

And, when choosing a domain name, be sure to think of SEO aspects when doing so. You’ll find out just how much all of these things tie together and ensure a frequently-visited website is the end result.

Keep in mind that with ecommerce, the domain name is just as important as the brand name. Maybe even more so!

Value Proposition

A value proposition is a short, crisp statement that will gauge how clear your idea is. Write this section as if you had one minute to explain your business to a potential investor or customer and then practice it over and over again.

The value proposition can be used on your ecommerce store as your company description.

Here’s a good example: Say you’re looking to start a hiking company called Atlas Hiking Co. which sells premium performance hiking shirts. A possible company description could be the following:

Atlas Hiking Co. is a lifestyle hiking company that produces high-performance hiking shirts for outdoor lovers. Our proprietary SPF40 fabric is one of the lightest fabrics on the market, providing mountain lovers with maximum comfort, both from a breathability and sun-protection standpoint. Our product is made in the U.S.A. and a portion of our profits are donated to preserve national parks around the country.

Pay special attention to all the sensory words !

The mission statement in your business plan is the “why” of it all.

For example, why you started the business, why you are selling the products you are selling, etc., can all be added to this section of your business plan.

You can make this portion as simple or detailed as you like. Just make sure to properly and clearly explain your business mission.

The vision part of the business plan is your “how” in the grand scheme of things. It is the dream you have for your company and the path you’re going to take to realize that dream.

When you write the vision portion of the business plan, think long-term. What are you hoping to achieve, not just in the near future but for the long haul of the life of your business?

Look into the future and plan out where you see your business in 5, 10, even 20 years from now.

This will help you construct the rest of your business plan if you know where you want your business to head, now and in the future.

Brand Traits

The brand traits section is a short section in your company overview.

Basically, in the brand traits section you’re going to want to list three to five words that describe your brand.

Think of your brand personality and describe it using a few separate powerful words.

The personnel section lists all individuals, including yourself, who will be involved in the daily operations of your business. You can create a separate section for a full operations plan or add that later.

Some business owners choose to handle all duties on their own or with a partner, while others will hire individuals to fill the following roles:

• CEO (usually the business owner)
• Management team
• Customer service/logistics
• PR/Social media specialist
• SEO manager
• Advertising manager

Competitive Market Analysis

Here’s a fact you can bank on: there has never been a successful e-commerce entrepreneur that didn’t understand his/her target market cold.

That’s why this section is one of the most important in the entire business plan. It will force you to understand the industry in which you operate, the overall industry analysis and outlook, the existing competition, and your target customer demographic.

Market Segment

The market segment portion of the business plan will help you to put your ideas down on paper, make them more focused, and get your team together.

This area will include your niche selection, target market, and competitive analysis.

Niche Selection

The niche section  provides an overview of your niche, why you selected it, whether there’s a micro niche included, and the type of niche you’ve chosen.

The purpose of this section is to crystalize the ideas that you have and make sure they are understandable and viable.

The target market section covers an overview of your target market plus describes your market segments.

Ask yourself who your  target customer  is (population size, age, geography, education, ethnicity, income level) and consider whether consumers are comfortable with buying your product category online.

When listing the target market information, make sure to mention your target audience size as this is important for ensuring that your audience will be adequately covered.

Competitive Analysis

With the competitive analysis portion of your market analysis, you want to list your market leader and direct and indirect competitors.

After you mention who these entities are, you need to list the characteristics of each one, such as domain name, business model, monthly traffic, and pricing range.

However, before you even get started in writing this section, you need to spend several hours researching your target market.

Here are some of the most efficient ways to research a particular market:

Industry reports

Google is your best friend. Look for any recent industry reports on your market of choice. This will give you a good sense of how much growth the industry is experiencing, why this growth is happening, and what are the largest customer segments. In our example of Atlas Hiking Co., we should research the outdoor apparel market.

Let’s say that through our research of the outdoor apparel industry, we discovered that there was a huge boom in youth hiking apparel. Perhaps parents were increasingly concerned about their kids’ exposure to UV rays while hiking, so they began to spend more money on their kids. We could use this valuable information to guide our business strategy.

There’s only so much you can read online. Go to a nearby store that sells similar products to yours and interview the store representative. The store rep has interacted with hundreds of interested customers, which can lead to thousands of valuable insights! It’s amazing how these insights can translate into a meaningful business opportunity.

Here’s an example:

If I were going into Billy’s Outdoor Store to research the outdoor apparel market, I would probably ask Billy the following:

• What are your best-selling products?
• What are your worst-selling products?
• Find products similar to yours and ask the representative his/her favorite features on products similar to yours.
• How much are customers generally willing to spend on these types of products?
• Do customers make repeat orders of any of these products?
• Do you get a lot of customers that are looking to buy last-minute hiking gear before they go on a hike?

Competition

Create an Excel spreadsheet of all of your competitors. In your spreadsheet, you should have the following columns:

• Competitor Name
• Price point
• Product Description
• Key Features (e.g., fabric, waterproof, slim fit, etc.)

What is the competition missing? Is there a gap in the offering? Where you can add some additional value?

After conducting the competitor analysis, Atlas Hiking Co. might find that the competition’s hiking shirts offer very few features at a low price point, but no one offers a luxury hiking shirt with additional features at a higher price point.

This is just an example of the types of insights one can gain from market research which can drastically alter your business model.

Keyword Research

By using Google’s keyword planner  and trends pages, you can get a good sense of how in demand your product is and whether it’s trending upward or downward. Google is great for a general idea, just don’t bank on it.

Some other keyword tools you can use for keyword research include Ahrefs, JungleScout, and Viral Launch. Check out this list  for more ideas.

Trade shows

Are there nearby trade shows that you can go to? Again, creating connections with other people in your industry is a surefire shortcut to countless hours of reading on the internet. Trade shows are also a great opportunity to talk to competitors, meet manufacturers, and better understand where things are heading in your industry.

Once you finish researching the relevant industry, you should summarize your findings by answering the following questions:

General Industry

• How big is the overall industry?
• How big is the specific sub-industry in which you intend to operate?
• Where has most of the historic growth in the market come from?
• Why is this the right time to enter this market?
• What are the sub-segments that are poised for future growth (e.g., youth apparel)?
• How crowded is the product category with competition?
• How is your competition distributing its product (online, retail, wholesale, etc.)?
• What’s missing from the competition’s product offering?

Products and Offers

So we know we want to sell hiking shirts, but how do you research specific products?

But for some of us, we’re not quite sure what we should sell. To succeed in online retail, you need a product that is trending upwards in a growing niche.

Different types of products

Some of the different types of products include the following:

• Convenience products: Frequent purchase products, little effort on buying
• Shopping products: Less frequently purchased in between purchases, little more effort and planning, shop around
• Specialty products: Strong brand preference and loyalty, will buy no matter what the price

The various types of niches include the following:

• Hobby niches
• Lifestyle niches
• Problem niches
• Weird/embarrassing niches

Existing products

Come up with detailed specifications for each product or service you intend to sell. If it’s a hiking shirt we’re selling, we would want to have:

• Detailed sketches of the shirt
• Fabric weight, materials, type
• Key features (e.g., pre-shrunk, water-proof, SPF 40)

Future product pipeline

What are other products that you have in the pipeline? Perhaps once you’ve successfully sold hiking shirts, you’re able to leverage your manufacturing relationships to provide hiking socks and shorts. Include that information in this section.

The products and services section will cover the various selling categories of items.

These product offerings will include the following:

• Core product

Each product group will have its own purpose in your sales catalog. For example, tripwire is the product that brings customers to your ecommerce store or online marketplaces  while the core product is your main seller.

Knowing what products you’ll include within each section allows you to have a firm grasp on what your main product will be and how the other types of products will work alongside your main product.

This section will also cover the search volume and Amazon pricing range.

You’ll need to calculate your true costs. You have to make sure you don’t overestimate your margins.

To tabulate your total true costs, you need to write down the costs in the following areas:

• Target price
• Supplier cost of the product
• Total cost per unit
• Net profit per unit
• Profit margin per unit

Once you complete the pricing portion, you’ll have everything on one sheet and readily accessible whenever you need it.

Marketing Plan and Operations

So, now you’ve concluded that you have a great business idea, and it’s in a growing market. That’s fantastic – but how are you going to drive traffic to your ecommerce website and get customers to buy it ? And how much can you afford to spend on your product?

Marketing  is everything. It’s important that your marketing efforts match your business model.

If you have a website and no marketing, your site won’t have any visitors. With no visitors, you will make no sales. Then how do you grow and sell your ecommerce business (if that’s your long-term goal)? Even with the best possible products, nobody will buy them if they aren’t directed to them in some way.

In order to come up with a marketing strategy, you need to first know your customer inside out. You should be able to answer such questions as:

• How old is your customer?
• Where does your customer live?
• What is the population of your customer base?
• What is their education level?
• What is their income level?
• What are your customer’s pain points?

With so many channels to reach your customer, which one is best for you?

Once we know pretty much everything there is to know about our target customer, we can shift focus to our marketing strategy. You want to choose marketing strategies that equal positive conversion rates. What channels should you use to grab the attention of your customer demographic? Some of the key marketing channels include:

Paid Marketing

• Pay-per-click – this online marketing typically involves using Google Shopping campaigns  and managing a product data feed.
• Affiliate sales networks – Allowing other blogs and websites to sell your product for a cut of the revenue. List the different affiliate sale networks that you plan to promote through.
• Facebook ads ⎯ Ads posted on Facebook to draw in buyers through social media means.
• Influencer marketing ⎯ Hiring industry influencers to get the word out about your product through their social media platforms and contacts.

Organic Marketing

• Social media (Facebook, Instagram , Pinterest, etc.): What is your strategy for social media, and where will you dedicate your attention?
• Search Engine Optimization : Create and promote awesome content so people find your product organically through search.
• Content marketing: Figure out how you’ll use content marketing in your business. Consider various article topics that will persuade your target audience to buy your products.
• Blogger networks: could be organic or paid through affiliate sale programs.
• Key bloggers: Develop a list of the key bloggers in your product category. For Atlas Hiking Co., this might be an influencer that blogs about the best hiking trails in America.

Finding the optimal mix of these advertising tools depends 100% on your customer segment as well as your product type. For example, a SaaS product targeting millennials will require an entirely different marketing strategy than an e-commerce physical product targeting baby boomers. Perhaps that should be a post on its own for another day!

How much should you spend to acquire a customer?

In order to understand this, we need first to discuss a concept known as customer lifetime value or LTV. In essence, this is a formula that helps you better understand how much an average customer will spend over time.

Here’s  a good read on how to calculate LTV.

It’s important to remember that for new businesses, you don’t have a lot of data on customer purchase habits so it’s a good idea to be more conservative with your assumptions in calculating LTV.

Let’s say, for Atlas Hiking Co., I determine that the average LTV per customer is $300. This means that over time, the average customer will spend $300. Let’s say, on average, if I receive $300 in revenue, $100 of that will translate to gross profit before I factor in my marketing costs (basically, I’m just subtracting the cost of making the shirts).

Knowing that my gross profit is $100 per shirt is a critical piece of information because it tells me that I can spend up to $100 in marketing to acquire a customer and still be profitable!

Some of the marketing options include social media marketing and content marketing.

Think about your business model and then line up your marketing budget. Your marketing budget may include the following items:

• Sales/branded content
• SEO/blog content
• Facebook/Instagram ads
• Influencer marketing
• Marketing tools
• Niche advertising

Choosing The Right Technology

With so much technology and SaaS products out there, it’s important to understand the various moving parts and diagram how they all integrate with one another.

Some of the different elements include:

• Shopping Cart Platforms  – e.g., Shopify , BigCommerce , WooCommerce , or any open-source platform
• Hosting – Nexcess , BigScoots , Kinsta , WPX
• Payment Processo r – e.g., Stripe, Paypal
• Fulfillment Center – e.g., Amazon, ShipBob
• Apps – e.g., Zipify, BuildWooFunnels, Gelato
• Accounting & Taxes  – e.g., Quicken, Xero
• Marketing Automation – e.g., Klaviyo , Mailchimp
• Marketing Tools – e.g.  Buzzstream, Ahrefs
• Customer Loyalty Programs  – e.g., Antavo, Smile

Come up with a detailed list of the different products and services you need to run your business as well as the monthly and per-transaction cost of each of them. This will be important in understanding the impact of these services on your margins.

Matching your business model to your technology is essential, too. Certain website platforms are better suited for specific sales models.

Email marketing is another type of technology that should be carefully considered and matched up correctly with your business model.

Keep in mind that it takes, on average, 6-7 interactions with a brand before someone makes a purchase, so you need to keep using technology to get them back to your website.

As you explore the technology options and find out ways to draw potential customers in and keep them happy while they’re there, here are some key points to keep in mind:

• What you say about yourself and your products with your website content
• How you respond to questions on live chat and email support
• How to make use of chatbots
• How you connect on social media
• The information you send through email marketing
• What bloggers and influencers say about your brand
• How existing customers review your company
• How you advertise
• How you establish loyalty beyond sales

After you figure out your technology methods, you have to come up with a technology budget.

The business plan must also include the operations side of things. Determine who will be your manufacturer, secondary manufacturer, and shipping and fulfillment  provider.

When looking at supply chain costs and options, ShipBob  is an ecommerce fulfillment provider you can consider.

Financial Plan

When figuring out your financial plan, evaluating and pinpointing your startup costs  is essential.

The focus of the financial plan is how long it will take for you to make your money back. You also need to figure out if you need a business loan .

Traffic and conversion rates will help you determine how long it will be until you start making money back.

You’ll also want to use an income statement to detail financial information.

This section is used for financial projections, such as forecasting sales, expenses, and net income of the business. Ideally, you’ll want to create a monthly Excel balance sheet showing the following:

• Projected revenue:  First, come up with your projected number of units sold and then come up with your projected revenue (Projected Revenue = # of Units Sold * Average Sales Price).
• Fixed expenses:   these are expenses that are fixed no matter how much you sell. Typically, these relate to monthly SaaS subscriptions, employee salaries, or rent.
• Variable expenses  – these expenses change in direct proportion to how much you sell. Common examples include the cost of goods sold and credit card payment processing fees.

This helps business owners better understand what they need to achieve to hit their profit goals. In reality, projections are usually always off the mark, but it’s good to give yourself some measurable goals to strive for.

This section should aim to answer the following questions about your product offering:

• How much product do you need to sell per year to meet your income goals for the business?
• What are the margins on your product? If you sell one hiking shirt for $50, how much do you make after paying your supplier, employees, and marketing costs?
• What is the lifetime value of a customer?
• How much can you spend to acquire customers? If you conservatively project that the average customer will spend $300 over time on your shirts, then you can afford to spend an amount less than $300 to acquire that customer using the paid marketing channels described previously.
• Do you have any big capital expenditures early on that would require you to need to bring in investors?
• Can you improve gross margins by making bigger orders from your suppliers?

There are various acquisition channels that will help your traffic to convert including:

Your revenue plan will contain a 12-month revenue forecast plan to help you map out each month of earnings.

There are different business earning models you can go through to determine how much you can make with your business.

You want to calculate how much traffic costs. This all depends on the methods you use to gain traffic to your site.

As you determine what your profit might be with your ecommerce business  or ecommerce businesses, there are certain math formulas to use:

• The profit equation
• Break-even analysis
• Units needed to achieve the profit target

You should also consider how you will use fintech companies in your ecommerce business.

What are the key elements of an ecommerce business plan?

The main components of an eCommerce business plan include the executive summary, company description, market analysis, organization and management structure, product line or service, marketing and sales strategy, financial projections, and funding request, if applicable.

How do I create a budget for my ecommerce business?

Start by estimating your initial startup costs and ongoing expenses. Consider costs like website development, inventory, marketing, shipping, taxes, and any necessary licenses or permits. It’s also important to factor in a contingency plan for unexpected costs.

How do I find the right product to sell?

Research is fundamental. Look at market trends, customer needs, and competitor products. Use tools like Google Trends or social media platforms to understand what customers are currently interested in. Always consider your passion and knowledge about the product too, as this can drive your business forward.

How can I differentiate my product from competitors?

Differentiation can come from unique product features, superior customer service, better pricing, or a compelling brand story. Understand what your competitors offer and how you can do it differently or better.

Wrapping Up Your Business Plan

Careful planning is crucial to get your e-commerce business from the planning phase to the launch phase and to ensure its successful future.

Going through the exercise of writing a business plan will cement your own understanding of your business and your market. It will also position you to take advantage of lucrative opportunities while mitigating harmful threats to your business down the line.

Your turn! Have you written a business plan for your online store? Do you have anything to add? Tell us about it in the comments below!

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Ecommerce Business Plan Template

Written by Dave Lavinsky

Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their ecommerce businesses. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through an ecommerce business plan template step-by-step so you can create your plan today.

Download our Ultimate Ecommerce Business Plan Template here >

What is an eCommerce Business Plan?

An ecommerce business plan is a detailed and comprehensive document that outlines the strategies, objectives, and operational blueprint of an online business. It serves as a roadmap guiding the company’s operations and growth within the dynamic and competitive digital marketplace. The plan typically covers various aspects, including market analysis, target audience identification, product or service offerings, marketing and sales strategies, competitive analysis, financial projections, and risk assessments.

Why You Need a Business Plan for an eCommerce Business

If you’re looking to start an ecommerce business or grow your existing ecommerce business you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your ecommerce business in order to improve your chances of success. Your ecommerce business plan is a living document that should be updated annually as your company grows and changes.

Source of Funding for Ecommerce Businesses

With regards to funding, the main sources of funding for an ecommerce business are bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.

The second most common form of funding for an ecommerce business is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan.

Venture capitalists will fund an ecommerce business but not in its infancy. You will need to first achieve sales traction. Once you do that venture capitalists might invest $2 million to $100 million into your business over time.

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Below are the 10 sections a sample ecommerce business plan should include:

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of ecommerce business you are operating and the status; for example, are you a startup or do you have an ecommerce business that you would like to grow further.

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the ecommerce business industry. Discuss the type of ecommerce business you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.

Company Analysis

In your company analysis, you will detail the type of ecommerce business you are operating.

For example, you might operate one of the following types of ecommerce businesses.

Ecommerce businesses based on businesses model:

• Drop Shipping: you sell the product on your website and the product’s supplier fulfills it
• Wholesaling And Warehousing: you sell the product on your website and the fulfill it yourself (through your own warehouse and systems)
• Private Labeling And Manufacturing: you sell the product on your website and you manufacture it yourself or have someone manufacture it for you
• White Labeling: you sell the product on your website and have someone manufacture it for you (but unlike private label, your product is not unique; the manufacturer is also creating the product under other brand names)
• Subscription: you sell the product or service on your website on a subscription basis (customer pays you every week/month/year)

Ecommerce businesses based on customer model:

• Business-to-Business (B2B): your business is selling to other businesses
• Business-to-Consumer (B2C): your business is selling to consumers
• Consumer-to-Consumer (C2C): your business provides a platform for consumers to sell to other consumers (e.g., ebay)
• Consumer-to-Business (C2B): your business provides a platform for consumers to sell to businesses
• Business-to-Government/Administration (B2A): your business is selling to governments or administrative agencies
• Consumer-to-Government/Administration (C2A): your business provides a platform for consumers to sell or communicate with governments or administrative agencies

In addition to explaining the type of ecommerce business you operate, the Company Analysis section of your business plan needs to provide background on the business.

Include answers to question such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include sales goals you’ve reached, customer milestones, etc.
• Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the ecommerce business.

While this may seem unnecessary, it serves multiple purposes.

First, researching the ecommerce business industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards subscription businesses, it would be helpful to ensure your plan calls for offering subscription options.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your ecommerce business plan:

• How big is the ecommerce business (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your ecommerce business. You can figure out your relevant market size by multiplying the amount of target customers by the amount they might spend on a product or service like yours each year.

Customer Analysis

The customer analysis section of your ecommerce business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: college students, sports enthusiasts, soccer moms, techies, teens, baby boomers, manufacturing plants, state government agencies, etc.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of ecommerce business you operate. Clearly baby boomers would want a different offering and branding than teens or government agencies.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other ecommerce businesses.

Indirect competitors are other options that customers have to purchase from you that aren’t direct competitors. This includes offline stores or other ecommerce companies that offer similar products or services. You need to mention such competition to show you understand that not everyone who needs the products or services you provide will frequent a business like yours.

With regards to direct competition, you want to detail the other ecommerce businesses with which you compete. For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

• What types of customers do they serve?
• What products do they offer?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And check product review websites to learn what your competitors’ customers like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide superior ecommerce services?
• Will you provide ecommerce business products/services that your competitors don’t offer?
• Will you make it easier or faster for customers to acquire your products/services?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For an ecommerce business plan, your marketing plan should include the following:

Product/Service : in the product section you should reiterate the type of ecommerce business that you documented in your Company Analysis. Then, detail the specific products and/or services you will be offering.

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the menu of items you offer/will offer and their prices.

Place : Place refers to the location of your ecommerce business. In general, the place for an online business is well, online. But if there is a physical component to your business, document that here.

Promotions : the final part of your ecommerce business marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

• Search engine optimization
• Search engine marketing
• Traditional public relations
• Reaching out to local bloggers and websites
• Advertising in physical newspapers, magazines, radio and television
• Partnerships with other websites and/or organizations

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your ecommerce business such as warehousing, invoicing, serving customers, procuring supplies, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your 10,000th customer, or when you hope to reach $X in sales. It could also be when you expect to hire your Xth employee or launch a new product or service.

Management Team

To demonstrate your ecommerce business’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally you and/or your team members have direct experience in the ecommerce business. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in ecommerce businesses and/or successfully running retail businesses.

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you serve 100 customers per day or 200? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets : While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $100,000 on building out your ecommerce business, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a company approached you with a massive $100,000 contract, that would cost you $50,000 to fulfill. Well, in most cases, you would have to pay that $50,000 now to fulfill the contract. But let’s say the company didn’t pay you for 180 days. During that 180 day period, you could run out of money.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing an ecommerce business:

• Website and technology buildout
• Payroll or salaries paid to staff
• Business insurance
• Taxes and permits
• Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include agreements you’ve negotiated with developers, manufacturers and/or employees.

Ecommerce Business Plan Summary

Putting together a business plan for your ecommerce business is a worthwhile endeavor. If you follow the online store business plan template above, by the time you are done, you will truly be an expert. You will really understand the ecommerce business, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful ecommerce business.

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Creating a Stellar Ecommerce Business Plan for Your Online Store

Choose the Right Ecommerce Platform

For years, you’ve purchased items from online businesses or marketplaces like Etsy, eBay and Amazon and thought to yourself, “I could do something like this, too.”

Starting your own ecommerce business may seem intimidating — writing a business plan, even more so.

However, a business plan allows you to validate your business idea, assess your financial position and create a concrete action plan for how you’ll deliver a product from the original source to the end consumer.

In other words, while the business plan might seem like it’s ultimately meant for other people’s benefit — potential investors, business partners or well-meaning family members who keep pestering you to write one — in reality, the business plan benefits you, the business owner, the most.

You’ll shape the vision and mission for your business and map out how you’ll get there. One study by Harvard Business Review found that entrepreneurs who write a formal business plan are 16% more likely to achieve viability than those who don’t.

An ecommerce business plan is a document that outlines your business purpose and goals, analyzes your industry and competitors and identifies the resources needed to execute your plan.

For example, which suppliers will you work with? What types of products will you stock? Who is your ideal buyer? How will you advertise your business? Can you afford to provide free shipping and still make a profit?

Here’s a step-by-step primer on how to write a business plan for your ecommerce store, what elements to include and how to use your own business plan to increase your chance of success.

How to Create An Ecommerce Business Plan

Business plans help entrepreneurs maintain focus on their goals and shape the day-to-day running of a new business. The key elements of an ecommerce business plan template describe blueprints for growth, projected timelines and financial goals — clarifying topics like cash flow, expenses, marketing tools and distribution channels.

Draft an executive summary.

An executive summary provides a concise rundown of the key points in your business plan. In short, it should summarize your chosen industry, business purpose, competitors, business goals and financial position. Executive summaries average 1-3 pages and are ideally under two pages.

What does your business do?

Explain the raison d’être for your startup. What problem will you solve for your customers? Who is the target audience? Where do you want your business to be in one, five, or 10 years?

Here are the main elements of an executive summary:

The problem statement or business opportunity : Describe a pain point or gap in the market that you are uniquely qualified to fill. (“As someone who used to own a convenience store, I heard many of my customers complain about the lack of healthy food options while traveling domestically.”)

Your business idea : State how you plan to approach the problem (“XYZ is a ready-to-eat meal company that lets travelers order and pack healthy meals ahead of trips so they can avoid eating fast food.”)

Company history : Describe what milestones you have achieved. Are you already working with suppliers? What is your current revenue? (“In 2021, XYZ fulfilled over 10,000 orders, generating $150,000 in revenue.”)

Industry and market analysis : Outline the trends in the market that affect your business, market size, and demand for your product. (“In 2022, the global health and wellness food market was valued at $841 billion and is projected to increase to one trillion by 2026.”)

Competition : Explain who your competitors are, outline their strengths and weaknesses, and make it clear how you will differentiate.

Timeline for key milestones : Project when you plan to achieve goals like breaking even, launching an IPO, or other key milestones.

Financial plan (if you are seeking funding from investors or banks).

What goals does your business want to achieve?

Set short- and long-term goals for your business, such as achieving a certain amount of revenue or testing a new product idea. Business goals can be general and high-level or they can focus on specific, measurable actions (SMART goals).

The most realistic goal-setting approach is to set short-term goals as stepping stones to your long-term goals. For example, your short-term goal to decrease website bounce rate by 25% within 12 weeks might help you reach the long-term goal of growing conversions by 50% within one year.

Timeframes for short-term goals can range from a few hours to a year, while long-term goals generally take 1-5 years to achieve.

What products do you sell?

Outline your product offerings and specify where you’ll source each item. Some ecommerce businesses manufacture products in-house. Others work with wholesalers, manufacturers or print-on-demand businesses to resell their products.

Curate a tight product line that demonstrates your value proposition. Why should someone buy from your online store rather than another brand? Why would someone choose your products over a substitute if you don't produce goods in-house?

Ecommerce companies sell three types of products: goods, services and digital products. Tell your readers what you intend to sell and why. List each item and its purpose. For each, you want to answer the question “why?” Why are you choosing to offer these specific products and services? How do you plan on fulfilling orders?

If you’re offering a service, explain what you do and where. Are you local? Do you travel to your customers? Will you partner with similar service providers in other areas?

How will customers access the item if you're offering a digital product? Will they download software or education videos from your site? Will they pay a subscription or usage-based fee? What about licensing requirements? Mention intellectual property ownership (if applicable) including trademarks, patents and copyrights.

Who is your audience?

Describe your ideal customer. Define your product or service from their point of view. What problems does your product solve for them? What benefits or features do customers look for when shopping for that product type?

Create customer profiles that summarize your target audience in terms of demographics (age, location, gender, etc) and psychographics (pain points, interests, buying patterns). Consider creating customer segments based on shared characteristics if you cater to a wide audience.

Demographic data should include the following points:

Education level.

Relationship status.

Occupation.

Meanwhile, discover your target customer’s motivations, needs and wants as much as possible. Psychographic data should include the following points:

Where are you going to sell your products?

Outline your sales channels, both future and existing. For example, your main point-of-sale might be your ecommerce site. Be sure to include stats on site traffic and conversions so readers know how your site is performing.

Still, you might also offer your products online on marketplaces like eBay, Amazon and Etsy. Explain how each of these channels is performing and how you’re optimizing them for product discoverability and conversions (eg: following SEO best practices, using high-quality images, highlighting user-generated content).

Identify your company overview.

Tell your brand's story , its purpose, and how the company was founded. In addition to the company description, provide details on how you currently run the business. List your business partners and employees and describe the business's legal structure.

The best brand names are memorable and communicate the essence of your business. Brand names gain icon status because they represent an excellent product or service, so don’t obsess over it.

That said, the right brand name can be your brand’s most valuable asset, driving differentiation and speeding acceptance. In fact, 71% of consumers prefer to buy from brands they recognize.

If you’re struggling to come up with a name, try using an online brand name generator as a jumping-off point. Remember, you’re not locked into a single brand name forever.

Business structure

Describe the legal structure of your business. Is it a sole proprietorship, LLC, an S-Corp or a partnership? Consider speaking to an accountant if you’re not sure. Who is in charge of the business? List founders and officers and their contributions (both capital and expertise) to the company. Who works for the company? Include an org chart that illustrates who currently works for the business and the roles you plan to hire for . List their responsibilities, salaries and terms of employment (freelance, full-time, part-time).[

Your business structure]( https://bristax.com.au/business-articles/business-structures/ ) affects how much you pay in taxes, your ability to raise money, the paperwork you must file and your personal liability in the event of business bankruptcy, so this information is important to lenders. Also mention if you have filed or plan to file for any applicable licenses or permits.

Domain name

Register a unique domain name for your business. A catchy brand name is essential because the domain is less likely to have been claimed by another business. Keep your domain name as short as possible and ensure it includes your brand name for SEO purposes.

Your mission describes the fundamental purpose of your business. It should tell people why the business exists and how it benefits its customers. For example, LinkedIn’s mission statement is “connect the world’s professionals and make them more productive and successful.”

However, be careful not to exaggerate. An overly aspirational mission statement is disingenuous and wishy-washy — no single corporation or small business will single-handedly “change the world.”

A vision statement is a declaration of what you want your business to achieve in the future by fulfilling its purpose. It describes your company’s “why,” while the mission statement describes the “who” and “what” of the business.

Your vision statement should define your values as a business (eg: reducing waste generated by single-use toiletries) and future goals (achieving a zero-waste world by implementing a circular economy).

Background information

Tell the story of how you conceived your business idea. Say you’re a former school teacher who discovered your artistic flair from making handmade pottery in your garage on weekends. Describe how your business has grown and changed since you first started it.

Your team and key people

List the key personnel in your company. Aside from the founders and executive team, who keeps the business running each day? Here are a few examples:

Company owner — that’s probably you.

CEO — that’s probably also you.

Management team.

Customer service manager.

Logistics manager.

PR and social media specialist.

Advertising manager.

SEO manager.

Copywriters.

Conduct market research.

Ecommerce businesses face intense competition and are liable to market disruptions because they rely on third parties (suppliers, shipping companies, wholesalers) to deliver a product or service. Knowing the market in and out will help you build a more resilient business.

A market analysis considers your ideal customer (their purchase habits and behaviors), competitors (their strengths and weaknesses), market conditions (industry trends and long-term outlook), and how your business fits into this landscape.

The point of a target market analysis is to:

Identify the most and least valuable markets.

Develop buyer personas.

Find gaps in the market to fill.

Assess the viability of a product or service.

Improve business strategy .

Market opportunities

The first step to identifying your target market is determining your total addressable market (TAM) — the maximum market size for your product or service. Who are your customers? What are their demographic and psychographic traits? When and how often will they buy your product?

The best way to obtain a high-level overview of your customer base is to consult your social media and web analytics. These dashboards show where your customers live, their age, gender, general interests and more. You can also use U.S. Census Bureau data to pad up this information.

Competitive analysis

Analyze the strengths and weaknesses of your current and potential competitors. First, find out who your direct and indirect competitors are. You can perform a Google search of businesses that sell similar products or scope out rivals in your local area.

Here’s what you need to know about your competitors:

What markets and segments they serve.

What benefits they offer.

Why their customers buy from them.

Details of products and services, including pricing and promotional strategies.

Search for publicly available information about your competitors. Aside from that, do some of your own primary research. Visit their website and complete an order or visit their physical outlet.

Next, analyze the information. Is there a segment of the market your competition has overlooked? Is there a product they don’t supply? Did you have a bad customer experience when you walked into the store?

Detail your competitive advantage in your business plan. Don’t just list things that your competitors do — that’s not analysis. The competitive analysis section aims to persuade the reader that you are knowledgeable about the competition and that your business idea has a significant advantage over the competition.

Products and services

List the products and services you provide and how customers will access them. If you’re selling digital products, will customers have to stream or download the content? Do they pay a subscription fee to access a content platform or do they pay for each individual content piece? If you’re providing a service, will you provide it on physical premises or will you travel to customers’ homes? Will you sell physical products in a physical store or online? What is your website like? List each product, including a short product description and pricing information.

Develop a marketing plan.

You need a go-to-market strategy if you haven’t already launched your business. How will you spread the word about your business? How and where will you advertise and what is your budget? If you run social media ads, for example, what platforms will you use and who is your target audience? Will you do content marketing and SEO? A thorough marketing plan answers all of these important questions.

Marketing channels

Define which channels match your consumer demographic. Do your potential customers spend time on Facebook or do they prefer YouTube? First, figure out where your potential customers are. Next, create attention-grabbing marketing strategies and use them to reach your customer base.

Paid marketing channels

PPC advertising : Advertise on Google’s search engine and pay only once someone clicks on your ad. You can bid for ad placement in the search engine’s sponsored links when someone searches a keyword related to your business offering.

Affiliate marketing : Embed links to another business’s products in your content and receive a commission when someone makes a purchase using your unique affiliate link.

Social media ads : Run paid ads on social media apps and platforms like Facebook, Instagram and YouTube to reach targeted audiences. Ads can use different creatives such as images, videos and GIFs.

Influencer marketing : Work with a popular influencer who will promote your products to their followers. Influencers are paid based on conversions or reach.

Organic marketing channels

Brands must use an organic marketing strategy to build brand awareness and engagement and drive website traffic.

Examples include:

Search engine optimization (SEO) : Optimize your website, web pages and blog posts for maximum discoverability on search engines. This involves doing keyword research for your industry, creating high-quality content that attracts and converts and using keywords in the right places.

Social media posts : Organic social media posts build brand awareness and humanize the brand by providing a behind-the-scenes look at the company and allowing you to share engaging visual content to inspire, educate and entertain.

Blogger networks : Collaborating with trusted bloggers on link exchanges can help you build website backlinks, improving your search engine ranking.

Content marketing : Organic content includes blog posts, white papers, SEO pages, and more. This gives you content to post on social media and improves the discoverability of your website. Websites that publish high-quality content consistently rank higher in search results.

Email marketing : Create email templates for new and potential customers, cart abandonment, promotions and announcements and more.

Logistics and Operations plan

This portion of the business plan covers what you physically need to run your ecommerce company. Basically, it outlines how you’ll manage the flow of goods from the supplier (you or a third party) to the consumer. You cannot start a business without an established supply chain.

Your logistics and operations plan should cover the following:

Suppliers : Where do your raw materials or products come from? Do you work with a manufacturer who produces your product idea or are you reselling products from a supplier, wholesaler or distributor? What is the minimum order value? Do they require payment upfront or after the sale? Do you have a backup supplier in case demand spikes or there is a problem with fulfillment?

Production : Will you create your own products or use a third-party manufacturer or dropshipping company? If you’re creating your own products, where will this be done? What assets and equipment do you need? What are your operating costs?

Shipping and fulfillment : Outline how the product will reach the end consumer. How long will it take you to pack and ship products to customers? Will you use a third-party shipper? Will you ship internationally?

Inventory : How much inventory will you keep on hand and where will you put it? How will you track incoming and outgoing inventory? Do you need warehouse storage space?

Establish a financial plan.

The financial section of your business plan is where you prove the feasibility of your business idea and calculate your startup costs. It includes financial projections and statements that show your business’s current financial position and project where you hope to be in the future. This is one of the essential components of the business plan, particularly if you are seeking investment funding, a bank loan or a business partner.

Income statement

In this document, you’ll forecast the company’s revenues and expenses during a particular period. Total revenue is the sum of both operating and non-operating revenues while total expenses include those incurred by primary and secondary activities.

If you subtract your expenses from your revenue sources, you’ll come up with your bottom line (profit or loss).

Balance sheet

A balance sheet helps you calculate how much equity you have in your business. It summarizes your company’s assets (what you own), your liabilities (what you owe) and equity (money invested into the business plus profits).

A balance sheet enables you to calculate your net worth. All of your assets (machinery, inventory, business premises, etc.) go in a column on the left and your liabilities (accounts and wages payable, business loan repayments, business credit card payments, taxes) go in a column on the right. If you subtract your liabilities from your assets, you get your business’ shareholder equity.

Cash-flow statement

This document shows how much cash is generated and spent over a time period. Cash flow determines whether your business is primarily gaining or losing money. Positive cash flow and profit margins are important because it enables your business to repay bank loans, purchase commodities and keep the lights on.

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The Final Word

Writing a comprehensive business plan is crucial not only for staying on track in the first year or so after launching your business but also for securing funding, finding a business partner and evaluating the viability of your business idea.

FAQs About Ecommerce Business Plans

Who needs an ecommerce business plan, what are the benefits of creating a business plan, how do i start an ecommerce business with no money, browse additional resources.

May 24, 2022 | 9 min read

How to Write an E-Commerce Business Plan (Step-by-Step)

Dream of being your own boss? So do lots of other people, including 64 percent of the UK workforce and 65 percent of Americans . And I’m sure you’d see similar figures across a bunch of other countries.

I get it—after all, I did it myself.

But sadly, not every business is destined to become the next Amazon, Google, or Sleeknote.

Much-quoted data from the US Bureau of Labor Statistics show that about one in five new businesses survive for 12 months or less , while only half make it to the five-year mark:

So what separates the successes from the also-rans and the never-weres?

While some people will tell you the secret to “making it” lies in adopting a rise-and-grind mentality , truth is there is any number of reasons why some businesses thrive and others fail. 

But I can categorically tell you there’s one thing every successful startup has in common, and that’s a killer e-commerce business plan.

Basics of Writing an E-Commerce Business Plan

What is an e-commerce business plan, why do i need an e-commerce business plan, how to write an e-commerce business plan.

E-commerce business plans are roadmaps that plot the route to achieving your business goals. They set out who you are, what products you sell, and how you plan to operate (among many other things).

Just like a real roadmap, e-commerce business plans also highlight potential hazards, helping you plot alternate routes well in advance.

No one expects you to stick precisely to your original plan throughout the entire lifespan of your business. But by gathering business-critical information like cash flow, sales projections, and marketing budgets in a single place, your business plan can help you build a persuasive pitch to win backing from investors, which can be absolutely vital at the start of your journey.

And even if you’re not looking for external funding, figuring out your strengths, weaknesses, and objectives early on will save you a lot of pain down the line.

I know what you’re thinking: “I’ve got a to-do list as long as my arm; why should I spend days or weeks writing a business plan? Why can’t I just get on with it?”

You’re not completely wrong. Honestly, if you think buying a house or having a baby is stressful, try starting a business.

One study claims the biggest challenge founders face in the first three months is building a customer base, but there are countless others.

From dealing with suppliers to building a website and chasing invoices, it’s one headache after another, and you never feel like you have enough time to give each problem your full focus.

But you really can’t afford to overlook your e-commerce business plan. Here are five benefits to creating one.

1. Understanding the Competitive Landscape

You might like to think of yourself as a visionary, but I can pretty much guarantee that someone, somewhere has had a similar business idea to yours.

They might have been doing it for years, or they might be gearing up to hit the market at the same time as you.

Either way, you need to know about them, and the research you carry out while building a business plan will naturally help you do that. Which means you’ll be better placed to differentiate yourself through marketing.

2. Getting to Know Your Audience

Another key element of creating a business plan is assessing the market you’re trying to reach. That means digging into who you’re selling to, where they hang out online and “in real life”, and what they’re looking for in a product like yours.

Why would they buy it? When would they buy it? How much would they spend on it?

All of that will help inform your messaging .

3. Locating Potential Investors

Unless you have a metaphorical (or literal) gold mine to fall back on, money is definitely going to cause you a few headaches in the early days of your business.

Even successful e-commerce companies struggled to keep the lights on when they were just starting up.

Building a business plan will help you identify potential sources of financial backing, like angel investors, business loans, venture capitalists, or wealthy business partners.

4. Finding Your Niche

There’s a reason Amazon started out as an online bookstore, rather than immediately selling every product you could ever imagine.

As an e-commerce startup, you need a niche . Ideally, you need to go further and find a niche within a niche. Rather than founding a womenswear e-commerce site, launch one that’s 100 percent sustainable and carbon-neutral. Or instead of selling regular sunglasses, sell sunglasses made from hemp (I don’t know, I’m just spitballing here).

My point is, all the other research you’ve done at this stage—studying your competitors, understanding your audience, figuring out your pricing strategy—will naturally guide you toward the best niche with the biggest opportunities.

5. Sourcing Fresh Talent

Admittedly, recruitment might not be on your immediate agenda.

But if things go well, you’re going to need a little help in the not-too-distant future. You might need people in the warehouse, a customer success agent or two, a marketing team, a developer, someone to handle the finances… The list is huge.

Problem is, a lot of other businesses want to get their hands on those people, too.

If you don’t want recruitment to constrain your growth, start reaching out to potential candidates early, using the information in your business plan to get them bought into your project.

Hopefully, by this point, I’ve demonstrated the value of creating an e-commerce business plan. Now, let’s dive into how to do it.

There are no hard-and-fast rules to how long a business plan should be. The more complex the business, the more in-depth the plan. But as a minimum, your business plan should include these seven sections:

• Executive summary
• Company overview
• Market analysis
• Products and services
• Marketing plan
• Logistics and operations plan
• Financial plan

You might want to add a few more too. For instance, if you’re entering a largely untapped niche, you might want a section dedicated to the audience you’ll be targeting.

But for most e-commerce businesses, those seven categories should do the job.

Section 1: Executive Summary

Think of this as the “elevator pitch” element of your business plan.

Your goal here is to sum up the rest of your business plan in no more than one page, communicating key information to time-poor reviewers, and (hopefully) tempting them to read on.

Generally, you should look to answer the following questions:

• What does your business do?
• What do you want to achieve?
• What do you sell?
• Who will you sell it to?
• What sets you apart from the competition?
• How will you raise awareness among your target audience?
• What is your current monthly/annual revenue?
• What is your projected revenue for next year and the following years?
• Who’s currently on your team?
• What are their backgrounds and skills?
• How much money are you asking for (if you’re looking for financial backing)?

Section 2: Company Overview

Again, heed the word “overview”. Like the executive summary, this is a concise section that demonstrates who you are, what you do, and why people should care.

Whether you’re seeking investment or planning your e-commerce marketing strategy , it’s vital you get all this information down in one place. Make sure to include your:

• Company name
• Business structure (e.g. sole proprietor, partnership, LLC)
• Vision, mission statement, and value proposition
• Product or service
• Business model (e.g. direct to consumer, dropshipping, wholesale)
• Team members, including their roles, backgrounds, and salaries
• Short and long-term business objectives

Section 3: Market Analysis

A bad product in a good market stands a chance of success.

If you don’t believe me, check out your own purchase history—if you’re anything like me, you’ll have bought your fair share of useless products that sounded amazing when you saw them online.

But a good product in a bad market doesn’t have a cat in hell’s chance. You might be completely changing the game; solving a problem that’s never been solved before. But if no one’s prepared to spend money on it, you’ve not got a business—you’ve got a hobby.

The market analysis stage of your e-commerce business plan should help you find the right market: one with lots of customers who have an immediate need for the “thing” you’re selling (and enough money to buy it). Your market analysis should incorporate the following elements:

The Size of Your Market

It’s impossible to come up with a meaningful financial projection without first estimating the number of people who are potentially interested in buying your product.

Of course, to do that, you first need to figure out who your customers are.

The more demographic and psychographic information you have on them, the more accurately you’ll be able to gauge the scale of your market.

At the same time, remember to factor in broader industry trends. If you’re starting an e-commerce store that exclusively sells gas cans, you might have some early growth potential, but bear in mind there’s a good chance we’ll all be driving electric cars within a decade—in which case your whole market will have dried up.

Your Competitors

No e-commerce brand is an island.

To stand out against the competition, you need to find some way to differentiate yourself. That could be through:

• Segmentation: Focusing on a very specific (and, ideally, underserved) niche within a larger market.
• Pricing strategy: Do you plan to undercut your rivals? Or create demand through exclusivity by pricing yourself higher?
• Distinctiveness: Ideally, there’ll be something unique that distinguishes you from the current market leaders.

SWOT Analysis

SWOT analyses are about assessing your business’s:

• Strengths: The things you do best.
• Weaknesses: The things you’re not so good at.
• Opportunities: Gaps and advantages in your market.
• Threats: External challenges you need to tackle.

Typically, a SWOT analysis is presented as a simple, four-section grid, with bullet points under each heading. Here’s a beautifully presented example from the creative geniuses at Asana :

Section 4: Products & Services

In a sense, your whole e-commerce business plan will be centered on your products and services.

However, given their importance to your business prospects, a section of your plan should be dedicated solely to outlining what you’re selling.

If you only sell one product or plan to launch with a very small range, give plenty of detail on each. But if you stock a wide selection of products, stick to general features and benefits such as price, unique selling points, and materials.

Additionally, be sure to reference any new products you’re planning to launch in the near future, along with any intellectual property you own.

Section 5: Marketing Plan

We know who you are and what you’re selling.

Now’s your chance to explain how you’re going to sell it.

As a marketer, I’m well aware that a marketing plan could easily run to thousands of words, and it can be hard to know where to start—you’ve likely got a lot of ideas about positioning and messaging. To make your life a little easier, use the so-called “four Ps of marketing” as the backbone of your marketing plan:

• Product: How does it meet the needs of your customers? What are its unique selling points?
• Price: How much does it cost? What is its value?
• Place: Where are you selling it?
• Promotion: Which channels will you use to reach your target audience? What messaging will you use?

Discuss the first three relatively briefly, as you’ll cover them in greater depth in other parts of your e-commerce business plan.

Reserve the most detail for that final “P”: promotion. That’s the real meat and drink of your marketing strategy.

Section 6: Logistics & Operations Plan

This might not be the “sexiest” part of your e-commerce business plan, but it’s important to discuss the systems and processes that will help you reach your goals. Specifically, you’ll want to cover:

• Suppliers: Who are they and where are they based? What are their payment terms?
• Production: Are you manufacturing your own products, using a third party, or going down the dropshipping route? Can you efficiently scale up or down to cope with changing demand?
• Shipping and fulfillment: Are you handling fulfillment in-house or using a third party? Will you ship internationally? How long will it take for products to reach customers?
• Inventory: How much will you keep, and where will you store it? How will you manage and track it?

Section 7: Financial Plan

Whether you’re seeking backing from an external investor or simply trying to understand your projected revenue and costs, a financial plan is a crucial element of your e-commerce business plan. Most are broken down into three elements.

Income Statement

Designed to demonstrate your revenue sources and expenses over a month, quarter, or year, the income statement also highlights your all-important bottom line. Subtract expenses from revenue and you’ll see whether you’re in profit or loss.

Of course, if you’re yet to launch your e-commerce business, these figures can be projected.

Balance Sheet

The balance sheet is used to calculate the level of equity in your business—that is, the amount you’d be left with if all debts were paid and assets cashed. To work it out, subtract liabilities (things like loan repayments, wages, and accounts payable) from assets (such as stock and equipment).

Cash Flow Statement

Lastly, your cash flow statement is like a real-time version of your income statement. That’s because it takes into account when cash goes in and out of your business, based on when payments are received and debts settled.

Calculating and projecting cash flow should help you identify periods when you’re likely to be in surplus or short on money, which gives you time to prepare.

Sure, an e-commerce business plan requires a whole lot of work.

But as Abraham Lincoln supposedly said: “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.”

All that time spent analyzing your audience, honing your messaging , and crunching the financial numbers will give you a better chance of making it through those tough early days and scaling effectively when the time is right.

And honestly, no one ever said starting a business is easy.

Emil Kristensen

Emil is the CMO of Drip. When he’s not busy writing awesome content and building the Drip brand, he spends his time reading blog posts and listening to podcasts.

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How to Write E-commerce Business Plan + Template

So apparently everyone is jumping in to start an ecommerce business. Considering you already have your star product or service ready, you must be very thrilled to launch your business and make your first sale.

However, wait. Is your business plan ready? If you haven’t marked writing a business plan as the most important task on your checklist, you need to do that right away.

We know writing an ecommerce business plan is challenging. As a business owner of this new challenging enterprise, you don’t have much time. But this detailed guide with step-by-step procedures is likely to make the entire process of writing easier for you.

Don’t waste a minute further. Let’s dive right into the topic.

Key Takeaways

• Elements like executive summary, product or service, operations, marketing and sales plan, management team, and financial plan come together to make a compelling business plan.
• Determine marketing strategies for your ecommerce business and lay a clear action plan for building a solid brand image.
• Clearly establish your value propositions, business goals, and objectives to form relevant strategies for your ecommerce company.
• Make financial projections and consider various progressive and aggressive scenarios to establish the feasibility of your business idea.
• Identify the gaps and loopholes in your planning and make changes to your business idea accordingly.

Why do you need an Ecommerce business plan?

A business plan has many more advantages apart from helping you get approved for a business loan. Here are a few potential benefits of having one for your ecommerce company:

• Goals fulfillment: You will have to juggle multiple roles while running your ecommerce store. A well-crafted business plan will offer a roadmap to your business while helping you realize your business goals.
• Business strategies: A  business plan simplifies your business strategy and helps put the strategies for sales, marketing, and operations in perspective.
• Market analysis: A business plan strengthens your stand in the market by compelling you to conduct a detailed market analysis of the industry, competitors, and potential customers.
• Test ideas: An ecommerce plan will help you realize the gaps and errors in your planning. This allows you the luxury to make changes in the business model before investing your money in it.
• Simplifies the finance: A well-structured business plan lays a clear financial plan for your ecommerce business. The figures will help you understand the profitability, costs, and expenses of the company and its viability in monetary terms.

There’s much more to it. A business plan is like a beam of bright light that will make walking through the woods easier. It’s a living document that will evolve as the business grows.

Key components of an ecommerce business plan

Wondering what goes into making a perfect ecommerce business plan? Well, these are the key components you shouldn’t be missing.

• Executive summary: The executive summary will highlight the key details of your entire business plan.
• Business overview: This section will include a brief business overview along with its value proposition, objectives, mission, and vision statement.
• Market analysis: This section will define your potential customers and competition. A detailed industry analysis and competitors analysis will lay a foundation for important business strategies.
• Products and services: Define the products and services you will sell to your ideal customer. Also, offer a brief description of each product.
• Sales and marketing strategy: Highlight your sales and marketing plan to attract your potential customers. From content marketing to social media- include every detail of your strategies here.
• Operations plan: A well-defined plan that will help you run a smooth online business. Clearly defined process for inventory, order fulfillment, sales, storage, etc.
• Management team: A brief introduction of your company’s management team and their expertise in the field.
• Financial plan: Includes detailed financial forecasts and key reports like balance sheet, cash flow, P&L, and investment plan.

There is no definite format for business plans. However, a comprehensive plan accounts for all these components and makes it effective.

How to Write an Ecommerce Business Plan: A Complete Guide

From undertaking thorough market research to creating a marketing plan- uncover every detail on writing an effective plan for your online business with this guide.

1. Get an Ecommerce business plan template

Crafting a stellar business plan is a challenge. However, it can be the most precious reward for your business if you manage to write it comprehensively.

The process of translating your business idea into a business plan is lengthy and time-consuming. One is likely to leave behind an important detail or two without any definite format.

This is why you need an Ecommerce business plan template to write your plan in a structurally organized format. A template will help streamline your thoughts, organize the vision, and bring your ideas to life effortlessly.

Let’s not look elsewhere for a perfect template. Upmetrics business plan template is intuitive and is enriched with relevant examples that can be easily used as a reference while writing your plan.

Need Assistance Writing a Ecommerce Business Plan?

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2. Write an executive summary

Executive summary is a concise rundown of key points that summarizes your business plan. Though presented at first, it should be written in the end after you have walked through all the other aspects of planning.

Consider it as a document that will offer a brief insight into your overall business. Investors will read this part and gauge the viability of your business idea. If they find it fascinating and intriguing enough they will read it further in detail.

Add brief details of your ecommerce business, target market, problem, solution, service model, business goals, and financial figures in this section.

Adapt a narrative tone to make it interesting and keep it highly informative. And, most importantly keep it within a limit of 1-2 pages.

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3. Create a company overview section

As the title suggests, this section offers a brief company description of your ecommerce business. You must also include brief details about the company’s history in this section if it’s not a new venture.

So what does this section include?

• Name and location of the business , i.e. location of your warehouse, back end office.
• Type of your Ecommerce business , i.e. B2B, B2C, D2C, C2C, etc.
• Business structure of your e-commerce brand , i.e. sole proprietorship, Partnership, LLC, limited partnership, etc.
• Business goals : Highlight milestones such as sales or revenue goals.
• Mission statement : Describe the fundamental purpose of your business explaining why the business exists. For instance, the mission of First Cry is to offer eco-friendly baby care and maternity items to conscious buyers through its website and listings on a third-party platform.
• Vision statement : It is a declaration of what you want to achieve with your ecommerce business. For instance, First Cry wants to become the preferred brand for baby care products in the markets of North America, Asia, and Europe.

4. Conduct a competitive and market analysis

In this section of competitive and market analysis, you will dive deep into the study of the target market, industry trends, and your competition. Only a thorough understanding of these key elements will help you build a resilient business.

Target market and market opportunities

Begin by determining the Total Addressable Market (TAM) for your products and services. This part of the market analysis will offer a realistic idea of your market size.

Further, strengthen the understanding of your target market by identifying your target audience. Create a buyer persona by considering the psychographic and demographic details of your ideal customer.

Collect data from US census boards, government websites, and industrial publications for solid and foundational market research.

Lastly, identify the market trends and highlight your business strategy to fill the gaps in the existing market.

Competitive analysis

Ecommerce companies operate in a severely competitive marketplace. Understanding your competition will help you safeguard the business against potential threats and risks from your direct and indirect competitors.

Collect the data and analyze your competitors on the grounds of prices, services, quality, product offering, target market, and market size to make conclusive points. Evaluate their strengths and weaknesses using methods like SWOT analysis.

Now, detail the competitive advantage of your products and service offerings. This analysis should reflect that your business idea has a solid advantage over competitors’ offerings.

Focus on quality research. The study of the target market and competition will lay a foundation for crafting efficient business strategies.

5. Detail your products and services

After completing your market analysis, you will create a detailed section for your products and services.

Highlight all the product lines that your online business will offer. Also, mention the products within each product line and the product source.

If you are amongst the ecommerce businesses that sell digital products or services, mention those and explain how the customers will access them.

For instance, an OTT platform offers streaming services to its clients through an application.

Keep this section detailed by adding a brief description of each product and its pricing.

Consider this as a checklist of questions you must answer within this section:

• What are the products of your online store?
• Will you manufacture the products or source them from vendors?
• How will your customers buy the product- Website, application, shopping platforms, etc.
• What will be the pricing of your product offerings?

6. Develop a sales and marketing plan

By now, the readers are aware of the products and services that your online business will offer. It’s now time to tell them your sales and marketing plan.

Millions of ecommerce businesses start every year. But very few manage to crack their desired sales.

In this section, you will make sales strategies to ensure that your desired sales become achievable.

Try answering the following to form an efficient sales plan:

• Sales channels: website, application, ecommerce platforms, subscription box platforms, flash sale sites, etc.
• Sales method: Inbound methods or outbound methods
• Sales personnel: Who will be responsible for product/service sales
• Sales tools: CRM

The decisions you make here will influence the marketing strategy of your online store.

Marketing strategy

Now you need a well-rounded marketing plan to market your online store. After all, marketing is crucial to developing a brand, reaching your target customers, and acquiring sales.

In this section of a business plan, you will highlight the marketing plan for your ecommerce business. Identify the marketing channels that will be most effective for your target customers and design your strategies accordingly.

Here are a few prevalent marketing methods that can help you grow your online store:

• Content marketing: Start writing informative and useful blog posts for your target audience. Focus on principles of SEO and keyword research to grow your reach organically. Also, post guest blogs on websites to increase your chances of reaching a wider audience.
• Social media marketing: Identify the social media platforms that are used the most by your target audience and dedicate your marketing efforts accordingly.
• Email Marketing: Email marketing is the most rewarding marketing channel for thousands of ecommerce businesses out there. Explain how you will build your Email list and draw conversions through them.
• PPC: Design strategies for running paid ads on Google, Facebook, and other platforms and determine your budget for the same.
• Traditional PR: Traditional methods of publications can also help you market your product effectively. If you will be using such methods, highlight the details regarding the same.
• Influencer marketing: Will you hire or barter with influencers to promote your product? If so, define your strategy for the same.

All in all, the marketing plan should clearly define a roadmap to reach your target audience. Also, highlight different marketing tools you will use for your online business.

7. Introduce your management team

Having the right team will help you build a successful ecommerce business. So take your time and figure out the manpower needs for your business.

In this section of your business plan, you will introduce the key management members at your ecommerce store. Define their role, responsibility, experience, expertise, and achievements to prove their suitability in your organization.

Outline the organizational structure of your online store and explain how these people will be responsible for the smooth functioning of your business.

8. Outline your operational plan

Running an ecommerce store is not an easy task. From managing the backend to offering timely deliveries- a lot goes into ensuring smooth business operations.

A solid business plan cannot be complete without a detailed section of operations in it. So take your time and set your operations in line before you start with the store.

Here are a few things that most ecommerce business plans have in common. Consider adding them to your operations plan as well.

• Order fulfillment process: Everything from getting an order to delivery, managing returns, shipment, packaging, exchange, and tracking is defined at this step. Explain how the order will be fulfilled at your online store.
• Manufacturing and quality control: If the products will be manufactured in-house, what will be the manufacturing process? How will you ensure quality? Where will the goods be manufactured? What machinery will you use?
• Suppliers: Who will be your supplier for products and services? What will be the purchase terms? Will there be an agreement or contract? What would be the contingency plan in case of casualty?
• Storage: Will you dropship the products or store them in a warehouse? Where will be the storage located? How will you manage stock? What methods will you use?
• Technology and payment processors: How will the customers pay for online shopping? What payment methods are available for them? What technologies will you use to facilitate payments? How will you secure their personal information?
• Customer service: How can the customers reach you? What will be your order policies? Will there be any customer service team?

The logistics and operations plan will serve as a policy book for your organization. It will answer every query and doubt regarding the process.

9. Prepare financial projections

Now comes the most taxing part of creating a business plan- preparing a financial plan.

A financial plan is crucial because it will help you determine the feasibility of a business idea. Moreover, if you plan to seek funding for your online business, the projections in this plan will compel potential investor’s interest in your business.

Here are a few things to include in your financial plan:

• Startup costs: Estimate the startup costs for your ecommerce business . From website development to inventory costs, licensing fees, security, and software charges- include every cost that will go into establishing your online business.
• Funding source: Determine your funding requirements and what sources will you use to acquire the funds, i.e. business loans, angel investors, friends and family, etc.
• Pricing strategy: Include your pricing plan for the products and services. Consider various overhead and operational costs to determine the final pricing.
• Sales projections: Include your monthly, quarterly, and annual sales projections through different sales channels and also estimate your revenue.
• Income statement: Also known as profit and loss statement, in this key report you will forecast the company’s profit and loss for the next 3-5 years. The difference between a company’s revenue and expenses will give you gross profits and net profits.
• Cash Flow Statement:   A clear documentation of cash that is generated and spent in a business. This will help potential investors understand whether your business will make or lose money.
• Balance sheet: A key summary of your business assets and liabilities that indicates your net worth. Calculate your equity in the business by deducting all the liabilities from your assets.
• Break-even analysis: Break-even will help you evaluate how long before the business will start making money.

Too much of calculations right? Not with the financial forecasting tool from Upmetrics. Simply enter your numbers in the tab and the tool will do all the detailed calculations for you. Import the data from Excel sheets and before you know your projections will be done.

Ecommerce Industry Highlights 2023

Ecommerce is a trillion-dollar industry. It’s indeed a rewarding market for anyone who wants to start an ecommerce business. But before that, you must check out these latest industry highlights of 2023.

• Global market size: The global Ecommerce market size is expected to reach 6.3 trillion dollars in 2023. There is ample room for new businesses to venture into this market.
• Online marketplace : According to Forbes , 24% of total retail purchases will be made online by 2026.
• Market leader: Amazon accounts for 37.8% of Ecommerce sales , which is far more than other ecommerce businesses.
• Cart abandonment: 48% of online shoppers abandon their carts because of extra costs on shipping and taxes. You are likely to lose your potential customers if you fail to consider these aspects.
• Frequency to shop: 79% of online shoppers will shop for something or the other at least once a month. Considering the customer segments, nearly 96% of Gen Z shop at least once a month online.
• Social media commerce: If you think websites and platforms are the only way to reach your potential customers, you are wrong. 96.9 million people in the USA are reported to shop on social media.

The US online marketplace is expected to reach 940.9 billion by 2023 end. There is enough scope for new businesses to emerge and grow in this competitive market space.

Related Ecommerce Resources

• Creating a Successful E-commerce Marketing Plan
• E-commerce Financial Plan
• E-commerce Industry Statistics
• Calculating Your Online Store Startup Budget
• How To Open n E-commerce Business

Download a sample ecommerce business plan

Looking for help to write your business plan? Well, we have something absolutely perfect for you. Download our ecommerce business plan sample pdf and get a detailed guide to write a plan along with relevant examples.

Upmetrics business plan templates are designed specifically for entrepreneurs and business owners who want to write their own business plans. Our templates are modern, intuitive, and easily available to kickstart your plan writing.

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Write your business plan with Upmetrics

All set to start your own ecommerce business? Let’s simplify the entire business planning process for you with Upmetrics. We have more than 400+ customizable sample business plans suited for varying different businesses. With features like AI assistance and financial forecasting, you can bring together an actionable business plan in easy steps.

So whether you are aiming to start a business-to-business or business-to-customer or any other type of ecommerce business, you are well equipped to write the most stellar plan with our business planning app .

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ChatGPT Prompts for Business Plan

Frequently asked questions, can i get expert help to draft my ecommerce business plan.

Of course, you can. Writing a business plan is not an easy task. You may lose context or can leave behind an important detail while writing. A plan writer can translate your business idea into a plan efficiently with his compelling skills. If not, you can take the help of online tools and search for relevant templates to write your own business plan.

Can I customize my ecommerce business plan as per my business needs?

Absolutely yes. No two ecommerce businesses are the same. The very purpose of a business plan is to address the unique concerns, ideas, and questions relating to your ecommerce business. From executive summary to a financial plan, customize every aspect of your plan with Upmetrics business plan builder.

What are the common mistakes to avoid while crafting an ecommerce business plan?

Here are a few mistakes to avoid while drafting a business plan for your new business:

• Lack of market research
• Inadequate financial planning
• Overlooking the competition
• Not having a clear value proposition
• Undermining the technology needs
• Not considering casualties and emergencies
• Using complex language

Can I create an e-commerce business plan on my own, or should I hire a professional?

Ideally, you should be the one drafting your business plan. This is because no one knows your business better than you yourself and your business partners. So instead of hiring a professional, take the assistance of plan builders and step-by-step guides and create a compelling plan. Upmetrics AI assistant will simplify the writing process by helping you put together a cohesive write-up.

What are some emerging payment technologies to consider in your e-commerce business plan?

If you are planning to start a competitive ecommerce brand, you need to offer a bunch of payment solutions preferred by your target audience. Here are a few payment technologies you must definitely have in your business:

• QR code payments
• Mobile wallet
• Contactless payment
• Real-time payments
• Buy now pay later solutions

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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How to Start an E-Commerce Business in 2023: A Step-by-Step Guide

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Table of Contents

1. Define your e-commerce business idea

2. set up your business, 3. source or develop your products, 4. set up your e-commerce website, 5. figure out order fulfillment, 6. market your e-commerce business, how much does it cost to start an e-commerce business, tips for starting an e-commerce business .

An e-commerce business sells goods, services and funds over the internet. Starting an e-commerce business is a lot like starting any company: You’ll need to create a business plan, get licenses and permits and set up dedicated finances. You’ll also need to choose an e-commerce website builder , source your products and market to online customers.

Follow these six steps to get your e-commerce business up and running.

The first step in starting any business is to hone your idea. Online business ideas can include selling physical or digital products as well as professional services. Whatever you choose, you’ll want to define your e-commerce business model and write a business plan that outlines your niche.

During this process, you’ll start to ask a lot of questions: How will you get your products or services to your customers? What sort of licenses or permits do you need? How much will it cost to get your business up and running — and how will you foot that bill? Your business plan should answer these questions and provide a road map for the coming months.

More resources to help shape your idea:

What is e-commerce? Understanding how it works  

Our picks for the best business plan software

Can your business idea actually make money?

Once you've solidified your e-commerce business idea, the next step is to set your company up for success.

This includes back-office steps like:

Choosing a business structure . There are benefits and drawbacks to each of these entity types, so talking to an attorney may be helpful as you choose the one that’s right for you.

Naming your business. Consult your local secretary of state's website as well as the U.S. Patent and Trademark Office to ensure that you're not choosing a name that belongs to another company. Check to see if your potential business domain name is available as well.

Applying for an employer identification number (EIN) . You can get an EIN from the IRS for free online or by mail, fax or phone. Not all businesses need an EIN, but having one can help you separate your personal and business finances.

Opening a business checking account . NerdWallet recommends all business owners have a dedicated bank account for their business.

Getting licenses and permits your city or state requires. This probably includes a business license, and if you perform services, you may also need an occupational license. Check your state or local government website for requirements for your area.

Answers as you set up your business:

Do you need a business license to sell online?

What’s the difference between an LLC and a sole proprietorship?

Our picks for the best free business checking accounts

Shopify Ecommerce

Next, you'll need to source the products you're going to sell. If you’re selling physical products, you may need to make them yourself or work with a manufacturer.

A key decision at this point: Are you going to order products in bulk and keep inventory in stock? If so, you’ll need to think about storage space and raising capital to order goods upfront. However, you’ll have the power to ship items yourself.

Other businesses choose to rely on dropshipping , in which products are manufactured or sourced at the time the order is placed. In general, dropshipping may keep your overhead costs lower, but it can be more difficult to manage since inventory levels and shipping will be out of your hands.

Other options for sourcing e-commerce products include:

White-labeling, or ordering items in bulk from a manufacturer and then branding them with your company’s identity.

Print-on-demand, or paying a third party to print your company’s designs on merchandise like T-shirts, mugs and posters. Print-on-demand normally functions like dropshipping, in that a customer places their order, then the manufacturer creates the product and ships it directly to the customer.

Retail arbitrage, or buying discounted items from retail sellers and listing them in your own store at a markup. 

If you're selling professional services, you might just have to describe and list what you offer on your business website. Still, you’ll need to figure out how much to charge and decide how many clients you can see each day or week.

More to help you develop products:

16 e-commerce business ideas

How to find products to sell on Amazon

How to make money on Shopify

Your e-commerce website will be your storefront. It’s where your customers will learn about you and your business, browse your products and make purchases.

The easiest way to set up a website is to use an online store builder . These platforms can walk you through the process of launching your website, from buying a domain name to managing your inventory to taking credit card payments.

Popular e-commerce website builders include Shopify , Squarespace , Square Online and BigCommerce .

If you’re a very small business or just experimenting with online sales, a free e-commerce website builder may be a good place to start. But to list unlimited products and access more robust suites of tools — which can help with things like shipping label printing, order management and sales analytics — you’ll typically need to spring for a subscription.

In general, many online store builders should be simple enough for someone without web development experience to navigate. But most offer the option to pay a professional designer or developer if you don’t want to build the website on your own.

The best e-commerce platform for you fits into your budget and is appropriate for your skill level.

Choosing the right website builder:

Our picks for the best e-commerce website builders

Wix vs. Squarespace: Head-to-head comparison

Shopify vs. Square Online: Head-to-head comparison

Order fulfillment is the process of getting customers’ purchases in their hands.

Most e-commerce website builders offer shipping label printing, which is the first step in the fulfillment process. Some also offer the ability to add shipping costs onto customers’ orders at checkout.

If you choose to handle order fulfillment yourself, research shipping rates so you have a sense of how much it’ll cost. Look for an online store builder that can help make the shipping process easier or research shipping software providers like Shippo .

Note, too, that e-commerce may connect you to customers across the world. If there are places you’re not willing to ship to, make that clear on your website.

If you don’t want to manage order fulfillment, you can outsource it to an e-commerce fulfillment center or use a service like Fulfillment by Amazon. Fees for fulfillment services vary depending on the size of your products, how far they’re traveling and how much you’re shipping.

More to help you manage orders and inventory:

Our picks for the best inventory management software

What is just-in-time inventory?

Shipping services that integrate with WooCommerce

Now that you've started your online store , you're ready to start serving customers — as long as they can find your products.

Your small-business marketing strategy might include:

Omnichannel commerce , in which you list your products on third-party marketplaces like Amazon and Instagram. Some e-commerce website builders can help facilitate this.

Influencer marketing, in which you pay popular social media creators to plug your products. 

Social media content or paid social media ads.

Optimizing your business website for search engines.

Sending email campaigns to past and future customers.

Many e-commerce website builders include some marketing features, which can help you do things like create social media ads or send emails to customers when they’ve abandoned their carts.

But if you want to develop more sophisticated campaigns, consider investing in marketing software . These tools can help you create email templates and campaigns, text customers, keep track of how individual customers are responding to your emails and more.

More help with marketing:

20 free marketing ideas for small businesses

Online marketing strategies and tips

Content marketing for small businesses

The cost of starting an e-commerce business can vary widely depending on what you’re planning to sell and in what volume. Your expenses may include:

Your e-commerce website. Subscription plans for online store builders generally start around $25 to $30 per month when billed annually. You may also need to spring for a domain name if your e-commerce website builder doesn’t include one — and make note of annual fees to keep your URL registered. 

Payment processing fees. In general, the company that provides your payment processing will take a cut of around 3% from each online sale. 

Stocking up. If you plan to order inventory in bulk, be prepared for significant upfront costs — even before you’ve started generating revenue. Inventory financing may be able to help you bridge the gap.

Order fulfillment. In general, you’ll pay a third-party service to fulfill each order, with rates varying depending on item size and weight. The more customers buy at once, the less you’ll have to pay per item. Order fulfillment services may also include warehousing, for which you’ll pay a per-item storage cost. 

Warehousing. If you’re buying more inventory than you can keep in your home or garage but not using an order fulfillment service that provides storage, you may need to spring for warehouse space of your own.

General costs of running a business. These could include monthly or annual fees for accounting software , business insurance , any employees or contractors you plan to hire and more. You may also need to set aside money for small-business taxes .

As with launching any business, starting an e-commerce business can feel overwhelming. Here are some tips for managing the transition.

1. Start simple

If you’re not certain e-commerce is the right path for you, set up an online store with low overhead first. This may mean starting with the free version of an e-commerce website builder, ordering a small amount of inventory or selling only one or two types of products. 

Starting small can limit how much startup funding you need and make it easier to pivot if your first idea doesn’t land. As your business starts to get traction, you can trade up to a more robust e-commerce platform and expand your product line.

2. Cultivate a loyal customer base

Your e-commerce business needs customers who appreciate your products enough to buy them more than once and, ideally, customers who will promote them to their networks.

Establishing a strong brand presence on social media can help you build a following. But the more information you can gather from your customers, the more you can market directly to them, whether that means creating an email marketing campaign, sending discount codes through text message or letting them know where your booth will be at an event in their region.

3. Invest in multichannel selling

Loyal customers may be willing to visit your website frequently. But to reach new ones, you might have to meet them where they are — which might be on Amazon, Instagram, TikTok or elsewhere. Start with the platforms where your customers are most likely to be, launch those integrations and then see how they perform. You can add platforms later if they fit into your business strategy. 

Keep in mind that selling in person is a channel, too. Craft fairs, local shops and industry or trade events may help you connect with new customers while generating some revenue.

A version of this article originally appeared on JustBusiness, a subsidiary of NerdWallet.

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As the saying goes, “A goal without a plan is just a wish.” So, if you wish to build your own eCommerce empire, having an eCommerce business plan is crucial to your success.

Why Should You Continue Reading This Article?

But maybe you have no idea where to start. Of course, you don’t want to leave out something important. In this article, we’ll show you how to build an eCommerce business plan and discuss how to write it in a well-crafted, simple way from scratch, for your eCommerce small business and what are the key elements that should be included in it.

Let’s get started!

Why You Need an eCommerce Business Plan

Abraham Lincoln once said, “Give me six hours to chop down a tree, and I will spend the first four sharpening the axe” So, planning is almost everything you should start with.

Although it can be hard work to put together a comprehensive eCommerce business plan, it’s such an important step for the below-mentioned four reasons:

• Establishing a Clear Roadmap:  Well-written strategic planning will help you set clear goals and set an action plan to reach them. It will also help you to set priorities and realistically estimate the time and effort needed to achieve them.
• Being Ready for Any Sudden Changes:  Change in the eCommerce business world is happening quicker than ever before. And this increases the value of planning. Having a data-driven business plan gave managers a dashboard to work with navigated sudden change.
• Securing Funding: If you are looking for a loan or an equity investment for your startup, getting a business plan document right is essential because an organization that will provide the money wants to make sure that you know what you are doing and have a clear path to profit.
• Avoiding Costly Mistakes: If you are considering setting up a small business with limited resources, having a startup business plan helps you know exactly what resources are needed to avoid wasting resources down the drain and to make the most of them.

Before You Start Planning: 3 Key Questions to Answer

To build a well-written online business plan sample, you need to answer the following questions:

• What Are You Selling?  Are you selling physical products (i.e apparel, home appliances, etc.), digital products (i.e online courses, ebooks, software, etc.), or services (i.e marketing services, consulting, car repair, etc.)?
• For Whom?  Do you sell to individuals (B2C) or organizations, corporations, and non-profits (B2B) or are you are a part of a marketplace acting as a broker just like affiliate marketing?.
• Who Are Your Suppliers? Do you manufacture your products in-house, or outsource a third-party manufacturer? Do you partner with a dropshipping manufacturer or do you depend on wholesale?

With great data comes a great business plan. Answering this line of questioning will give you an initial overview of what your business is and it’ll be like a starting point.

How to Structure a Business Plan for Your Online Store

Let’s agree from the start that the business plan will not be perfectly completed on the first try. It will continue to evolve as you create each of the planning stages and you’ll be making edits along the way.

For an eCommerce business plan example, there are six basic sections it should include, Let’s delve deeper…

Let’s delve deeper…

1. Executive Summary

Any e-Commerce business plan should start with an executive summary of just one sheet summarizing each section of your business plan. Although it is placed at the beginning, it should be the last section to be written.

The executive summary is the first thing your prospect investors would read, and it creates the first impression of your project. So, make it simple, easy to understand, and attractive.

The executive summary should include:

• Business ideas presentation
• Business model
• Products and services
• Target audience and target market
• Management team
• Success factors or the points that differentiate your company
• Financial strategy

2.  Company Overview

This is the next section that includes detailed information about your business and identified the competitive advantage of your online store. It covers some features such as:

• Brand Name and Founder’s Name: Your online store name and who is behind it.
• Brand Traits: List just 3 to 5 words that describe the brand that you want your online store to be identified with.
• Domain Name: It’s the URL. It should be short, simple, memorable, and doesn’t include numbers.
• Company Type: How your business operates.
• Value Proposition: It’s a brief statement that shows how clear your idea is.
• Mission Statement: The reasons behind your business’ existence.
• Vision: The goals that you want to reach long term. They must be realistic and ambitious so they can be motivating.

3. Market  Analysis

Conducting market research around your eCommerce small business idea is essential. It tells you whether or not people will buy what you’re selling.

Market analysis is broken down into 3 main sections:

A. industry analysis:.

Industry analysis outlines the industry size facts and statistics bode well for your eCommerce business. It answers questions like:

• What does the market look like for your industry overall?
• Has it grown or changed over the years?
• Are there any expectations of growing up or slipping down in the future?
• Are there factors that could impact its growth?

Industry analysis is likely to be one of the toughest parts of your eCommerce business plan, but fortunately, research and white papers are abundant in almost all industries, besides free tools like Google Trends .

B . Market Segment:

The market segment or audience segmentation helps you to create your “Buyer Persona” which represents your target audiences’ various demographic sets (gender, age, geography, education, income level, ethnicity, etc.). The market segment includes both your target market and niche selection.

It’s important to provide an overview of your niche, whether there’s a micro-niche included, and why you chose it.

C. Competitive Analysis:

Competitive Analysis provides an overview of who is your market leaders are and direct, indirect, and potential competitors. It also identifies your competitors’ key strengths, weaknesses, opportunities, and threats, focusing particularly on where you can defeat the competition or add unique value to your business.

Creating a comprehensive competitive analysis includes 4 key phrases that are:

• Identify Your Competitors
• Select a Competitive Analysis Framework
• Collect Data on Your Competitors
• Write Your Competitive Analysis Report

4.  Marketing Plan

By now, you’ve covered almost all your company-related aspects, your customers, and your competitors as well. It’s time to talk about how you’re going to reach your customers and drive traffic to your eCommerce website.

The marketing plan describes the planned promotion strategies, business growth strategies, pricing strategies , sales strategies, and how much can you afford to spend on your marketing efforts. To come up with a well-defined marketing strategy, you need to deeply know your customer inside out.

It’s important to keep in mind that every potential customer is different, and there are many organic and paid marketing techniques that you can use to reach each of them. From SEO, social media, content marketing, and email marketing to influencers, these proven techniques will surely  acquire customers and drive traffic to your online store .

So, this stage is all about defining:

• Which marketing channels are best for you to reach your customer?
• How much can you afford to acquire customers to your online store?

5. Operations Plan

Operational planning reflects the task flow of your eCommerce store and how they’ll be divided. It includes your daily tasks as an online store owner. Some basic things should be established, such as your work schedule, your daily tasks timetable, your location, and your product stock.

Your tasks will include:

• Offering support
• Managing the stock
• Managing returns
• Negotiating with suppliers
• Dealing with unforeseen events
• Promoting your store
• And much more

List all of your daily tasks and how your routine will be to make sure that everything in your business plan will be under control. If you are a startup and you’re the only person in charge, it’d be hard to manage all tasks. So, it’s important to have initial planning on paper, and then make small modifications down the line to hire a staff and management team.

6. Financial Plan

For many people, this is the most difficult part of a business plan. However, it’s extremely important. It outlines the major costs for an eCommerce business that include the cost of goods, internet connection fees, salaries of the staff, etc.

If you’re seeking to get outside funding, your financial statement should contain the following documents:

• Summary of Funding Requirement: It’s an outline showing why you are applying for a loan, the cost for raw materials and operational machines, and how much money you need.
• Use of Funds Statement / Income Statement: It shows how profitable your business would be during a given period and describes how you plan to use the funds you’ll get.
• Business Budget: This displays cash inflow and outflow statements over a specific period of time.
• 3-Year Profit and Loss Projection: It’s assumptions that are stated clearly and in detail to communicate your vision of the company’s future and how you anticipate achieving that vision.

5 eCommerce Business Plans’ Mistakes to Avoid in 2022

As for eCommerce owners ( whether it was for fashion, services, etc.), there are some methodologies they use to approximately estimate future turnover, profitability, and more.  But unfortunately, most of these estimations and expectations are frequently distant from market reality.

ExpandCart gathers the most common mistakes that usually happen when you put an eCommerce marketing plan into work, Let’s show you around! 

Mistake #1  |  Selecting the Improper eCommerce Platform

Whether you’re just getting started with your eCommerce shop or have been running one for a while, a not-suitable eCommerce platform can boost your eCommerce business plan or awfully put it to an end! 

After you’ve created a sample business plan for an eCommerce startup, you’ll need to think about several things when selecting an eCommerce platform, including:

• Your financial situation
• Whether you prefer a template or bespoke design, we can help.
• What type of experience do your consumers want?
• What items do you intend to sell?
• How do you intend to grow your company?
• What tools your platform needs to integrate with?
• How much control do you desire over your website?

The last thing you want is to pick a platform that restricts your company’s development, doesn’t interact with your existing systems, or doesn’t provide the amount of control and flexibility you want.

An improper eCommerce platform can result in a variety of problems, including income loss, decreased conversions, less traffic, security difficulties, bad design, and more. This major error might force you to spend even more time, money, and effort modernizing your platform or moving to a new one entirely.

Take your time while deciding on the best eCommerce platform for your online eCommerce as this will affect the whole performance of your eCommerce business plan. 

Mistake #2  |Skipping Environment Check

Before drafting an eCommerce business plan to launch or boost your e-commerce website, it’s a crucial step to start assessing the viability of your ideas before anything!

And here, we don’t mean broad market studies, but rather a comprehensive test using a limited version of your site, that will assist in ensuring in the field that you are gaining traction in your market. You must be able to tie your business strategy to the fact that you have already made your first sales even before you daft your eCommerce business plan. 

Aside from the checking and validation component, an initial test will help you to get useful feedback from your consumers and discover for yourself the major roadblocks or places for progress in your business.

You’ll be in a better position to carry out your company plan and generate realistic and plausible financial projections once you’ve completed it.

Mistake #3 | No Clear Brand Message or Identity

A good product alone won’t perform as good branding! 

Don’t fall into the trap of believing that your things will sell themselves. To build a successful business, you’ll need to develop a strong brand identity that is both approachable to your target audience and favorable to viral brand awareness. If you’ve done your research, you should have a good notion of what your target audience wants and how to communicate with them. Then it’s only a matter of maintaining a consistent and firm message.

A strong brand identity boosts client loyalty and your chances of gaining global brand recognition.

Mistake #4 | Shallow Website Content 

If your eCommerce business relies on organic traffic to attract clients, then the material on your website should be crafted with the user and SEO in mind.

Many organizations make the mistake of considering content as an afterthought, failing to see that each piece of content represents a chance to increase traffic and convert clients.

You need to provide content that is relevant to your target audience, optimized for search engine traffic, and entices consumers to buy your items, from your homepage to your product descriptions.

Investing in SEO and CRO-friendly content is worthwhile, whether you engage with an SEO service or do it yourself. This entails using the correct high-quality keywords for your niche and crafting material that is designed to convert.

Mistake #5 | Mistargeted Audience 

What else could you possibly require? You have items, a company strategy, and a website. Unfortunately, having an offer and a venue to pitch it isn’t enough to be a true eCommerce success.

One of the most common blunders a business owner can make is failing to precisely define their target demographic and spend time learning what makes them tick. You’ll need to do some serious market research to make sure that:

• Your target audience has a genuine necessity for your product. 
• You know how to express your offer in a way that they will comprehend. 
• You may create a marketing plan that prioritizes your target audience.

Identifying and specifying your target audience can help you develop an atmosphere that they will remember and a brand message that will tempt them to buy and re-buy, and hence, a successful eCommerce business plan! 

Final Notes

We are living in a world of fast-paced digital transformation. Almost all businesses are thinking of building a strong online presence. Being prepared and having a well-crafted business plan for your dream eCommerce website helps you focus on what exactly you want your business to be in the future and provides a map of how to get there in no time.

Remember! Creating your own eCommerce business plan won’t be that easy, but success comes to those willing to put in the work and if you did it right, you will witness a great increase in sales and revenue . You can seek help from experts who can help you plan your business effectively.

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Here is a free business plan sample for an e-commerce platform.

If you're passionate about launching an e-commerce platform but are unsure how to initiate your venture, you've landed on the perfect page.

In the content that follows, we will present to you a comprehensive sample business plan tailored for an e-commerce startup.

As you might be aware, a meticulously formulated business plan is a cornerstone of entrepreneurial achievement, as it assists you in outlining your mission, objectives, and tactical approach for your online enterprise.

To craft a compelling plan with ease and precision, you are invited to utilize our e-commerce business plan template. Additionally, our specialists are on standby to provide a complimentary review and refinement of your plan.

How to draft a great business plan for your e-commerce shop?

A good business plan for an e-commerce platform must be tailored to the unique challenges and opportunities of the online retail space.

To start, it's crucial to provide a comprehensive overview of the e-commerce market. This should include current statistics and an analysis of emerging trends, similar to what we've incorporated in our e-commerce business plan template .

Your business plan should articulate your vision clearly, define your target audience (such as niche markets, general consumers, B2B), and establish your platform's unique value proposition (user-friendly interface, specialized product lines, exceptional customer service, etc.).

Market analysis is a key component. You'll need to thoroughly understand the competitive landscape, digital marketing trends, and consumer buying behaviors.

For an e-commerce platform, it's important to detail your product strategy. Explain your catalog - whether you're focusing on a specific category or offering a wide range of products - and how you plan to source and manage your inventory.

The operational plan should outline the technical infrastructure of your platform, including website development, hosting, security measures, payment processing systems, and customer support channels.

Quality assurance, user experience, and data protection are critical factors to emphasize for an e-commerce business.

Discuss your marketing and sales strategy next. How will you drive traffic to your platform and convert visitors into customers? Explore strategies like search engine optimization (SEO), pay-per-click (PPC) advertising, email marketing, and social media engagement.

It's also vital to consider logistics in your business plan, including warehousing, order fulfillment, shipping, and returns management.

The financial section should cover startup costs, revenue projections, operating expenses, and the path to profitability.

E-commerce platforms may have lower overhead than brick-and-mortar stores, but they require significant investment in technology and marketing. Therefore, a detailed financial plan is essential, and you can refer to our financial forecast for an e-commerce platform for guidance.

Compared to traditional business plans, an e-commerce business plan must focus more on digital strategy, cybersecurity, and a seamless customer journey from discovery to delivery.

A comprehensive business plan will not only help you clarify your approach and strategy but also serve as a tool to attract investors or secure loans.

Investors and lenders will look for a robust market analysis, a well-thought-out operational strategy, and realistic financial projections.

By presenting a detailed and substantiated plan, you show your commitment to the success of your e-commerce venture.

To streamline the process and ensure you cover all necessary points, consider using our e-commerce business plan template .

A free example of business plan for an e-commerce platform

Here, we will provide a concise and illustrative example of a business plan for a specific project.

This example aims to provide an overview of the essential components of a business plan. It is important to note that this version is only a summary. As it stands, this business plan is not sufficiently developed to support a profitability strategy or convince a bank to provide financing.

To be effective, the business plan should be significantly more detailed, including up-to-date market data, more persuasive arguments, a thorough market study, a three-year action plan, as well as detailed financial tables such as a projected income statement, projected balance sheet, cash flow budget, and break-even analysis.

All these elements have been thoroughly included by our experts in the business plan template they have designed for an e-commerce platform .

Here, we will follow the same structure as in our business plan template.

Market Opportunity

Market data and figures.

The e-commerce industry has been experiencing exponential growth over the past few years.

As of recent estimates, the global e-commerce market is valued at over 4 trillion dollars, with projections indicating continued expansion as more consumers shift to online shopping.

In the United States alone, there are thousands of e-commerce platforms, contributing to a significant portion of retail sales. In fact, e-commerce sales are expected to surpass 1 trillion dollars in the near future.

These statistics underscore the pivotal role of e-commerce in the modern retail landscape and its substantial impact on the economy.

The e-commerce sector is characterized by dynamic trends and technological advancements that shape consumer behavior.

Mobile commerce, or m-commerce, is on the rise, with an increasing number of transactions being completed on smartphones and tablets.

Artificial intelligence and machine learning are being integrated into e-commerce platforms to personalize shopping experiences, provide product recommendations, and optimize logistics.

Subscription services and loyalty programs are becoming more prevalent, fostering customer retention and recurring revenue streams.

Social commerce is also gaining traction, with platforms leveraging social media networks to facilitate direct sales.

Moreover, consumers are demanding greater transparency and ethical practices from online retailers, leading to a surge in sustainable and eco-friendly products.

These trends highlight the evolving nature of e-commerce and the need for platforms to continuously innovate to meet consumer expectations.

Success Factors

Several factors contribute to the success of an e-commerce platform.

First and foremost, a seamless and user-friendly website interface is crucial for attracting and retaining customers.

A diverse and high-quality product range that meets consumer needs can set a platform apart from its competitors.

Robust and secure payment systems, along with reliable fulfillment and fast shipping, are essential for building consumer trust.

Customer service excellence, including responsive support and hassle-free returns, is vital for positive customer experiences.

Lastly, effective digital marketing strategies, data analytics to understand customer behavior, and the ability to adapt to emerging e-commerce trends are key to driving growth and ensuring the platform's long-term viability.

The Project

Project presentation.

Our e-commerce platform project is designed to cater to the burgeoning market of health-conscious and digitally savvy consumers. By focusing on a niche segment that values convenience, quality, and variety, our platform will offer a diverse range of products, including organic foods, eco-friendly household items, fitness equipment, and wellness supplements. The platform will be accessible from anywhere, providing a seamless shopping experience with user-friendly navigation and secure payment options.

We aim to leverage advanced technology to ensure fast and reliable delivery services, enhancing customer satisfaction and loyalty. Our e-commerce platform will not only simplify the shopping process but also provide informative content to help consumers make well-informed purchasing decisions.

As a digital marketplace, we aspire to become a one-stop-shop for health and wellness needs, making it easier for people to access products that support their lifestyle choices and contribute to their overall well-being.

Value Proposition

The value proposition of our e-commerce platform is centered around convenience, quality, and a personalized shopping experience. We understand the importance of time and ease in the modern consumer's life and are dedicated to providing a hassle-free online shopping environment.

Our commitment to offering a curated selection of health and wellness products ensures that customers can find everything they need in one place, with the confidence that each item has been carefully chosen to align with their values and health goals.

We are dedicated to fostering a community of like-minded individuals who prioritize their health and the environment, and our platform will serve as a resource for education, inspiration, and the latest trends in the health and wellness industry.

By bridging the gap between consumers and high-quality, sustainable products, we aim to empower individuals to make choices that benefit their health and the planet, solidifying our platform as a leader in the online health and wellness space.

Project Owner

The project owner is an entrepreneur with a passion for health, wellness, and technology. With a background in e-commerce and digital marketing, they possess the expertise to create a platform that not only meets the needs of health-conscious consumers but also exceeds their expectations.

Armed with a vision to integrate cutting-edge technology with a curated product selection, the project owner is committed to building an e-commerce platform that stands out for its user-centric approach and dedication to quality.

With a strong belief in the power of community and education, the project owner is determined to provide a space where consumers can not only shop but also learn and connect with others who share their interests in health and sustainability.

Their drive for innovation and excellence in the e-commerce space is the cornerstone of this project, aiming to transform the way consumers approach health and wellness shopping online.

The Market Study

Market segments.

The market segments for this e-commerce platform are diverse and cater to a wide range of consumer needs.

Firstly, there are tech-savvy consumers who prefer the convenience of online shopping and are looking for a wide array of products at competitive prices.

Secondly, there are niche market consumers who are interested in specific categories such as eco-friendly products, rare collectibles, or specialized tech gadgets.

Another segment includes small to medium-sized businesses seeking an online platform to sell their products without the overhead of setting up their own e-commerce infrastructure.

Lastly, bargain hunters and deal-seekers form a significant segment, always on the lookout for discounts, limited-time offers, and exclusive online sales.

SWOT Analysis

A SWOT analysis of this e-commerce platform project highlights several key factors.

Strengths include a user-friendly interface, a wide range of products, strong partnerships with vendors, and robust logistics and customer support systems.

Weaknesses might encompass the high level of competition in the e-commerce space, the challenge of building customer trust, and the reliance on third-party delivery services.

Opportunities can be found in the growing trend of online shopping, the potential for international expansion, and the ability to leverage data analytics for personalized shopping experiences.

Threats include cybersecurity risks, changes in consumer behavior, and the potential for new regulations affecting online commerce.

Competitor Analysis

Competitor analysis in the e-commerce industry indicates a highly competitive environment.

Direct competitors include major e-commerce giants, as well as niche online stores that cater to specific interests or demographics.

These competitors strive to capture market share by offering unique value propositions such as free shipping, extensive product ranges, and loyalty programs.

Potential competitive advantages for our platform could be a curated product selection, exceptional customer service, a seamless mobile experience, and innovative features such as augmented reality shopping.

Understanding the competitive landscape is crucial for carving out a unique position in the market and for developing strategies to attract and retain customers.

Competitive Advantages

Our e-commerce platform's competitive advantages lie in our commitment to providing a seamless and personalized shopping experience.

We offer a carefully selected range of products, ensuring quality and value for our customers.

Our platform's intuitive design and recommendation algorithms help customers discover products that perfectly match their preferences, enhancing their shopping experience.

Additionally, our dedication to customer service excellence, with features like easy returns, real-time support, and a secure payment gateway, fosters trust and loyalty among our user base.

We also prioritize data security and privacy, ensuring that our customers can shop with confidence and peace of mind.

You can also read our articles about: - how to create an e-commerce platform: a complete guide - the customer segments of an e-commerce platform - the competition study for an e-commerce platform

The Strategy

Development plan.

Our three-year development plan for the e-commerce platform is designed to be robust and scalable.

In the first year, we will concentrate on building a strong foundation with a user-friendly website, secure payment gateways, and an efficient logistics system. We will also focus on customer acquisition through targeted digital marketing campaigns.

The second year will be dedicated to expanding our product offerings and integrating advanced features such as AI-based recommendations and personalized shopping experiences.

In the third year, we aim to expand our market reach internationally and form strategic partnerships with major brands and influencers to increase our visibility and credibility.

Throughout this period, we will continuously optimize our operations and customer service to ensure a seamless shopping experience, keeping us ahead of the competition.

Business Model Canvas

The Business Model Canvas for our e-commerce platform focuses on a broad customer segment that includes tech-savvy individuals, convenience seekers, and niche markets with specific product interests.

Our value proposition is centered around providing a vast range of products, competitive pricing, and a hassle-free shopping experience with fast delivery options.

We will drive sales through our online platform, utilizing key resources such as our e-commerce website, customer data analytics, and a robust supply chain network.

Key activities include website management, order fulfillment, and customer support.

Our revenue streams will be generated from direct product sales, subscription services, and potentially advertising from partner brands. Our costs will mainly involve platform development, marketing, and logistics.

Access our complete and editable Business Model Canvas in our business plan template .

Marketing Strategy

Our marketing strategy is built on customer engagement and retention.

We plan to attract customers by offering first-time purchase discounts and a loyalty program. We will also engage in content marketing to educate our audience about the benefits of online shopping and the unique features of our platform.

Collaborations with influencers and strategic partnerships will help us tap into new customer bases.

We will leverage social media, SEO, and email marketing to maintain a strong online presence and keep our customers informed about new products and promotions.

Risk Policy

The risk policy for our e-commerce platform is designed to mitigate risks associated with online transactions, data security, and supply chain disruptions.

We will implement robust cybersecurity measures to protect customer data and prevent fraud. Regular audits and updates to our security protocols will be a priority.

To manage supply chain risks, we will diversify our supplier base and maintain a buffer inventory for high-demand products.

Cost management strategies will be in place to ensure financial stability, and we will have comprehensive insurance coverage to protect against unforeseen events.

Why Our Project is Viable

We are confident in the viability of our e-commerce platform, given the increasing trend towards online shopping and the convenience it offers to consumers.

With a strong commitment to customer satisfaction, a diverse range of products, and a seamless shopping experience, we believe we can capture a significant share of the market.

We are prepared to adapt to the evolving e-commerce landscape and are excited about the potential for growth and innovation in this space.

We look forward to the opportunity to serve customers worldwide and to build a successful and sustainable online business.

You can also read our articles about: - the Business Model Canvas of an e-commerce platform - the marketing strategy for an e-commerce platform

The Financial Plan

Of course, the text presented below is far from sufficient to serve as a solid and credible financial analysis for a bank or potential investor. They expect specific numbers, financial statements, and charts demonstrating the profitability of your project.

All these elements are available in our business plan template for an e-commerce platform and our financial plan for an e-commerce platform .

Initial expenses for our e-commerce platform include the development of a user-friendly website with robust e-commerce capabilities, investment in secure payment processing systems, initial inventory acquisition if applicable, costs associated with establishing a reliable supply chain, and expenses related to branding and launching targeted digital marketing campaigns to attract our target audience.

Our revenue assumptions are based on a thorough analysis of the online shopping trends, consumer preferences for online purchasing, and the potential reach of our e-commerce platform.

We anticipate a steady increase in sales, starting with a conservative estimate and expanding as our platform gains traction and recognition in the market.

The projected income statement outlines expected revenues from our online sales, cost of goods sold (if applicable), fulfillment and shipping costs, and operating expenses (web hosting, marketing, salaries, etc.).

This results in a forecasted net profit that is essential for assessing the long-term profitability of our e-commerce business.

The projected balance sheet will reflect assets such as website development, software, and any inventory, along with liabilities including debts and anticipated operational expenses.

It will provide a snapshot of the financial health of our e-commerce platform at the end of each fiscal period.

Our projected cash flow statement will detail the inflows and outflows of cash, enabling us to predict our financial needs at any point in time. This is crucial for maintaining adequate liquidity and ensuring smooth operations.

The projected financing plan will enumerate the specific sources of funding we intend to tap into to cover our initial costs and support growth.

The working capital requirement for our e-commerce platform will be diligently managed to ensure we have sufficient funds to support day-to-day activities, such as inventory management, customer service, and other operational expenses.

The break-even analysis will determine the sales volume required to cover all our costs, including initial investments, and to begin generating profits.

It will signal the point at which our e-commerce business becomes self-sustaining.

Key performance indicators we will monitor include the customer acquisition cost, conversion rate, average order value, cart abandonment rate, and the return on advertising spend. These metrics will provide insight into customer behavior and the financial performance of our e-commerce platform.

By tracking these indicators, we will be able to make informed decisions and strategically steer our e-commerce business towards success.

If you want to know more about the financial analysis of this type of activity, please read our article about the financial plan for an e-commerce platform .

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How to Write an Online Business Plan in 2024

Written by Vanessa Petersen on July 26, 2023 Blog , Sell Online .

You’ve committed to turning your ecommerce or online business idea into something real. You want your small business to produce revenue and change the course of your life, but what’s your first step in realizing your dream? Developing a plan. If you’re not sure about how to write an online business plan, you’ve come to the right place.

One of the most essential tasks involved in starting any kind of business is to write a business plan. An online business plan won’t look that different from a traditional business plan and will include many of the same elements.

In this post, we’ll show you how to write an online business plan, including all the components and sections. We’ll also walk through how WooCommerce can help you put your plan to action and achieve your business goals.

Why write a business plan? 

Starting your own business is a great experience and something that will shape your life, fill you with self-confidence and independence, and inspire other people around you. A new business is also a serious endeavor that will take time, money, sweat, lots of decisions, and a degree of risk.

A traditional business plan template helps you document and keep track of your business goals, challenges, opportunities, and all the steps and processes involved with making your idea work. It will help you conduct thorough market research and set you up for success.

When you write a business plan, it can confirm that you’ve found the best online business to start , or provide clarity about the need to pivot.

It details all the things you will need to do in order to successfully launch and grow your business, and may include revenue projections, timelines for specific goals, concept art for products, and architectural drawings for any brick and mortar aspects of your business. 

Business plans help create a structure for your company’s development and keep you grounded in reality, focused, and not distracted by less important matters. 

If you have more than one person helping run the business, the business plan also keeps everyone unified around the same set of goals and objectives. 

Another reason to write a business plan is for situations where you are presenting your idea to someone else and asking them to invest. In that scenario, your business plan is also a sort of sales document. It makes the argument for why your business idea is so good and well-considered that an investor should want to be a part of it. 

But even if you’re self-funding your entire business — which is more common with online businesses — you still want to write the plan for the reasons given earlier.

The benefits of running an online business

Starting an online business or ecommerce store offers many of the same great benefits as any other business, but without as much risk. If you’re thinking of starting a business, here’s why an online one is a great option:

It has low startup costs

Without a storefront, you eliminate so many costs of running a business. With all the bills that come with having property — like rent, parking, furnishings and decor, etc. — there’s a much higher investment required to start a brick-and-mortar-based business. Online businesses still have startup costs, but they are much lower. 

It gives you freedom over your schedule

With an online business, you have more freedom to set your own hours, because you don’t always have to be open during the usual times. You can build your business to suit the lifestyle you want. Rearrange your time to get things done in the fastest possible way and take time off when you need it. 

You can start small

Once you have a location, it’s yours, and you have to make it work. With an online business, you can start very small, offering just a few products or even just a single service. You can more easily test the waters without making huge commitments with inventory, and other physical investments.

You can more easily pivot

If your online or ecommerce business doesn’t do as well as you expected, it’s easier to pivot and adapt to something new because you haven’t committed so much to making your original idea work. There are many business success stories where the business owner adjusted their idea after gaining some experience, and then it took off. It’s a lot easier to do that when you aren’t tied to a physical location.

But, there’s one thing online businesses have in common with every other type of business: You need a robust business plan to help guide your idea from concept to a successful reality that makes money and fulfills your dreams and goals. 

So, let’s get into business planning. 

How do I write my own online business plan?

Most formal business plans and business plan templates include seven sections, plus an executive summary. You’ll need to keep in mind who you’re writing your business plan for. If you are taking this to potential investors or will be seeking a business loan, your business plan needs to sell the idea of your business as a great investment opportunity and communicate the skills, expertise, and commitment you personally bring to the table. 

Here are the key sections of a traditional business plan format:

• Executive summary
• Company description
• Market analysis
• Organization and management
• Service and product line
• Sales and marketing plans
• Financial projections
• Funding request (if working with investors or partners)

Here’s a brief look at each step of creating an online business plan:

Draft an executive summary

In the executive summary, the first section of almost every business plan template, you’ll present your vision and focus on building excitement. If the business plan is a sales document, the executive summary is the lead. It gets the reader engaged and excited to hear more. 

Your executive summary should achieve two goals:

• Deliver the basic facts about your business
• Motivate the reader to keep going and get them excited about your idea

What facts should you include? Whatever helps the reader understand your business idea. Describe the industry and niche. Mention the target market. Briefly state the needs or problems your products and services will be solving. Touch on the potential for growth in terms of revenue and customers. 

For motivation, describe your mission statement and company values. What will set you apart from the competition? What is your value proposition as a business owner? What makes you different? Again — keep this brief. You’ll elaborate later. 

It might be a good move to write all the other sections first, then finish with the executive summary so it will be the most concise and best version of how you describe your business.

Write a company description

Here, you’ll give a brief overview of your company. What are your strengths, skills, and areas of expertise as a business owner that will position you for success? If you have a compelling story behind why you’re starting your business, you can include that too.

Conduct a SWOT analysis 

If you’re not sure where to start, consider doing a SWOT analysis , which is a diagram outlining your strengths, weaknesses, opportunities, and threats. 

It’s a common part of many business plans and will help paint a realistic picture of what your business can achieve, and what stands in the way. You won’t include all of this in the company description, but your strengths and opportunities may fit here. 

Create a mission and vision statement

The company description is also the place to create a mission statement and a vision statement. What’s the difference between these? 

The vision is where you’re going, the mission is how you’ll get there. A vision statement paints a picture of a future reality for your customers and perhaps the world at large, as a result of your company’s influence. A mission statement expresses how you will achieve that.

The company description can elaborate on your vision and mission beyond just a single sentence, and later you can fine-tune what you write into a succinct pair of statements. Feeling some writer’s block? See company description templates by industry for some inspiration.

Include any unique attributes

If your company will involve particular attributes such as manufacturing, supply chains, dropshipping, affiliates, coaching or advising, online courses, or other relevant particulars, include that in your company description, too. 

State your business location, industry, niche, and other details

Also, state the location of your business, even though it’s online. Name your industry and niche target market again, and describe the nature of your company. For example, is it an ecommerce business, a consulting firm, delivery service, wholesale, or ad-based website? These are just some of many types of online business structures. 

You may also want to include whether your business is in any special class of business that might position it for special loan or grant opportunities like women-owned businesses or veteran-owned businesses.

After reading your description, readers should have a good understanding of what your business is about, why it exists, and how it works. Here’s a detailed look at company descriptions , with an example.

Perform a market analysis

A market analysis uses industry research to assess the scope of your business’s target market and describe the current competition in your industry. It can help you estimate the potential for success and prepare for the challenges you may face when you launch your online business or ecommerce shop.

Doing this research, and including it your business plan, can also help you:

• Identify industry trends
• Pinpoint opportunities 
• Diminish risks and reduce costs
• Generate new ideas for products and services
• Learn from the failures and shortcomings of your competitors
• Find ways to stand out from your competitors
• Discover new markets
• Refine your marketing plans

Now let’s dig into the elements involved in a thorough market analysis.

Understand your audience

Here, you will explain in detail who your target customers are and why they want or need what you’ll be selling. What problems or needs does your product solve? What will motivate people to buy from you? And why can’t they get it somewhere else just as easily? An ecommerce business competes against other ecommerce businesses as well as brick-and-mortar stores and shopping malls. Stores with omnichannel strategies compete with both. Why would someone choose you?

Share your key customer demographics, psychographics, and interests. Who will you be serving? What drives them? 

What are their values? If your product, service, or personal brand will appeal to a customer segment that also shares particular values, that’s a strength, not a weakness, and you can use that to win them over. 

Perform customer segmentation

Break down different categories of target customers your business plans to serve. One category could be age. Another might be life situations such as retirees, parents, divorcees, or living with older relatives. You could create a segment of people with particular health conditions, or who live certain lifestyles. 

But you can also get way more specific than that. Runners are different from hikers, who are different from bikers, yoga enthusiasts, and gym enthusiasts. Different supplements, philosophies about food, motivations for eating various foods — all of these present near endless possibilities for more narrowly defining your customer segments, all under the broad category of ‘health.’ And you might serve multiple segments. 

The more customer segments you know, the more effectively you can market to them. In an online store, good product descriptions call out the various customer segments that product is designed for.

Also, give a sense of the potential size of your target market. How many people need what you’re selling? Show how this market is large enough to justify your business and drive revenue. You might do this by studying revenue reports from other companies in your industry. Or look at specific products related to yours and research their sales and revenue performance. 

You may also perform a survey of some kind, or an online quiz, and use that to express the needs your potential customers have that aren’t currently being met.

Perform a competitive analysis

Study your competition. What are they doing well? What areas are they underserving? Where are they underperforming? Make note of what other companies in your industry are struggling with or failing at so that you can deliver something more valuable and gain a competitive advantage.

It could be product quality, customer service, or selection. Maybe their ecommerce store is badly designed and hard to use. Perhaps there’s a huge industry serving the masses, but customers who have more particular tastes or needs aren’t being well-served by the big companies. Those customers might spend more on something that delivers what they really want. 

Maybe your key competition has been rocked by scandal. Maybe a company went out of business, was sold, or closed down due to retirement and there’s an opening in the market you want to leverage. 

The main point of the competitive analysis is to persuade investors that there’s an underserved market that your business plans to cater to. You must be able to promise something that no one else is currently delivering. Otherwise, why should your business exist? Put them at ease by demonstrating proper market research.

Refer to your SWOT analysis and present any potential threats from the competition here, too.

Outline management and organizational structure

Next, present your management and legal structure. Is your company an LLC, sole proprietorship, S corporation, partnership, or some other arrangement? Who’s in charge of what? If you have different departments, list out the leadership for each one. If relevant, you might even include some information about the expertise of your leaders concerning the areas under their charge and the tasks they’ll be performing.

Remember — if your business plan will be used to persuade investors to help fund your business idea, this sort of information will reassure them that your company has strong and competent leadership. 

If there’s a chain of command, use a diagram or other method for laying out who reports to whom. 

List your products and services

What are you selling? You’ll touch on this briefly in the earlier sections, but here is where you’ll expand on the details. If you have an array of similar products, such as food flavors or clothing variations, list as many as seem relevant. But focus on the spirit of the business plan — you’re simply communicating what your business is about, not listing every SKU in your projected inventory. 

Also, include information about your products such as quality, durability, expirations, patents, and whatever else will give a clear picture of what you’re selling.

For service businesses and memberships that may include multiple packages, bundles, or tiers, describe each of these so your readers get a sense of how you’ll appeal to different types of customers and price points. 

Develop a sales and marketing strategy

Having products is great, but how do you intend to sell them? How will people find your business? How will anyone know you exist? And once they know, what will motivate them to buy from you and not from your competition? What is your unique value proposition — the thing that sets you apart from your direct competitors?

You’ll need to develop an initial marketing plan to help promote your business, products, and services to your target customers.

And remember, competition isn’t limited just to other businesses. Sometimes, competition is against the customer’s time, or their budget, or mere indifference — the conflict between doing something and doing nothing. Your SWOT analysis should touch on several of these potential barriers to the success of your online business.

Your marketing plan will obviously change over time, but give your readers and potential investors a sense of how you plan to launch and grow your business. 

Discuss media channels you plan to use, such as pay-per-click (PPC) ads , social media , email marketing , affiliate marketing , direct mail, referrals, joint ventures, search engine optimization (SEO), webinars, influencer marketing , and live events. Describe the ones you actually plan to use, and explain the core strategy you’ll begin with and how you will measure success. 

Also, include a sense of your marketing budget. If you will have a dedicated marketing team, or actual sales professionals using a particular process or sales script, discuss that as well. 

For ecommerce businesses, include a discussion of how you plan to leverage platforms like WooCommerce, which features a host of extensions that can help manage your business , engage customers, save money, and promote growth .

Make financial projections

You’ve made a lot of claims in your business plan, but how will your investors be convinced of your future success? At some point, you have to show them the money. 

If this is a brand new business with no income, where will your finances come from for the first year? Give realistic financial projections for anticipated profits and losses, as well as growth expectations for the first five years. Include financial documents if you have them, including profit and loss statements, balance sheets, and cash flow statements. Include costs of employment, manufacturing, and other investments both one-time and ongoing.

Your financial projections should reference your:

• market analysis 
• anticipated sales volume 

Investors will feel more confident when they can see your business plan does not rely entirely on just one or two ‘wins.’ For example, if your entire plan hinges on selling on eBay or Amazon , what happens if Amazon suspends your store, changes the terms, or you struggle to get noticed there? 

If your plan depends on winning over a few Instagram influencers, what if they don’t come through? It’s really easy to say what you hope will happen. But actually making it happen is another thing. Business success happens more easily when you apply a multi-channel marketing and sales approach. 

Your financial projections will feel based in reality, when you can demonstrate some prior successes, either in other businesses you’ve already launched, test audiences, local sales you made, prior experience, or data from other businesses. 

Explain your funding request — if applicable

If you intend to ask investors to help fund your business idea, present your request in the final main section of your business plan. If you’ve already secured funding from other sources, include that here as well. An investor will feel better knowing they are not the only one who believes in the potential of your business. 

Will your funding request be for a one-time payment, monthly, annually, or at some other interval? How do you plan to repay their investment? Will you allow them to charge interest? How much ROI can you promise them? 

How WooCommerce can help

WooCommerce can help you build a scalable online business that supports your business plan. No matter what you’re selling, WooCommerce offers a suite of flexible tools that allows you to customize your store to meet your needs and goals. 

Here are just some of the benefits your business will enjoy when you choose to build your store with WooCommerce:

• Sell absolutely anything you can imagine . From physical items and digital downloads to subscriptions, memberships, bookings, courses, and affiliate products, WooCommerce provides everything you need. Want to run a wholesale store? You can do that, too!
• Harness the power of WordPress . Since WooCommerce is a plugin specifically for WordPress, you can take advantage of powerful features like the block editor and blogging capabilities. 
• Capture payments securely. Choose from a large number of payment gateways, from popular options like PayPal and Stripe, to more niche processors for specific locations and types of regulated products. And with tools like WooPayments , you can keep customers on-site, capture a variety of currencies, and even accept digital wallets like Apple Pay and Google Pay.
• Customize your shipping options. Offer free shipping, charge based on weight, set fixed prices, or calculate shipping costs based on real-time carrier rates. You can even use extensions like Table Rate Shipping to create complicated shipping rules based on conditions that you set. And with WooCommerce Shipping , you benefit from discounted shipping labels and the ability to print right from your dashboard. 
• Connect to your social media channels. Use extensions to sync your store with social media platforms like Facebook, Instagram, and Pinterest. You can even sell on those platforms alongside your store without having to update inventory and information manually.
• Integrate with marketing tools. Quickly connect your store to any number of marketing tools, from email platforms like MailPoet to CRMs like Jetpack CRM . You can also implement a number of marketing strategies, from abandoned cart emails to loyalty programs.
• Keep track of your numbers. Ecommerce accounting is a big part of running an online business. While you can easily view data in your dashboard, you can also sync with tools like QuickBooks to make your accountant’s life a little bit easier.
• Manage inventory. Update your inventory levels manually or connect to tools like Scanventory to sync with your warehouse. Running low or out of stock? Add a wishlist option so customers get an alert as soon as it’s available.

As you can see, WooCommerce is well-equipped to handle any type of online store and support you as you grow. Here are a few more reasons that WooCommerce should be your go-to choice for implementing the ecommerce side of your online business plan:

WooCommerce itself is free! Many extensions for WooCommerce can also be found for free in the WordPress.org plugins library or on the Woo Marketplace . If you need to start your website with a limited budget, but want to build on a platform that can grow to support a thriving, high-traffic store, WooCommerce is an excellent option.

You have full control over your store

Unlike other ecommerce solutions that are tied to the platform’s own web hosting, WooCommerce is designed to be used with WordPress along with any hosting provider of your choice. You are also free to use whatever payment processor you want without any additional fees from WooCommerce. You can also customize your site’s appearance and functionality more extensively than you can with other ecommerce platforms and with less (or no) coding knowledge.

Thousands of free and premium extensions

There are over 800 free and premium extensions for WooCommerce on WooCommerce.com alone and over 1,000 in the WordPress.org plugins library . There are also hundreds of independent developers and agencies that offer premium and custom extensions for WooCommerce so that you can customize your store with the exact features you need. 

Excellent support and large community of users

WooCommerce is used by over 3.9 million stores — 23% of all online stores worldwide . The support team is available to answer questions and the documentation library is extensive and thorough. There are also plenty of independent resources for learning how to use WordPress and WooCommerce.

Dedicate time and resources to put your online business plan in action

A successful business plan is one that empowers and guides the business owner to launch their online or ecommerce business, and possibly secure funding. But it only works if you use it.

One advantage of starting an ecommerce store or online business is that you aren’t as locked down by deadlines. With a physical location, once you start paying the rent, you better have your business plan ready to put into action. 

But the beauty of being online is that you have more flexibility on the front end. Despite having more wiggle room with your timelines, you still need to keep your momentum going forward. Staying on track with your business projects and goals is one of the keys to reaching profitability sooner and turning your business plan into reality. A few quick tips:

• Schedule your time. Block out hours and specific days to work on your business.
• Treat it like a job, not a hobby. Build on your momentum week after week.
• Always keep learning. Research your industry, competition, target audience, and potential customers. Learn marketing — you can never know too much.
• Try stuff! Take risks, make calls, create campaigns, write content.

Your business plan template should give you a concrete list of tasks and business objectives. Once you write a business plan, then you can implement it.

Frequently asked questions about writing an online business plan

What are the seven steps of a business plan.

The seven key elements of a business plan are the executive summary, company description, market analysis, organization and management, services and products, marketing plan, and financial projections. If you’re making a funding request, that would be an eighth section.

Where can I find business plan templates?

You can find a free business plan template online, for general business plans as well as for specific industries. However, since each business is different and your plan must be authentic and specific to your company — a business plan template can only get you so far. 

If you need design inspiration for your own custom business plan template or want to start with a pre-designed template that you can customize, you can purchase one for a relatively low cost through a stock resources site like Envato Market or Creative Market .

Do I need a business plan if I am already running an online business or ecommerce shop?

Business plans aren’t only for people who are launching new businesses. You can create a business plan at any time to help you maintain or change the direction of your store or just to get a better picture of the health of your business. Below are a few different types of business plans that you might want to consider for your established online business:

• Operational business plan. Outlines the structure of your business operations, staffing, and logistics.
• Feasibility plan. Feasibility plans are like mini business plans that cover new business ideas and outline steps for implementation.
• Growth business plan. This plan is for businesses that want to demonstrate opportunities and plans for growth to attract investors.
• Maturing business plan. This plan is for businesses looking to merge with or acquire other companies, significantly expand, or go public.
• Strategic business plan. Any time your business wants to shift strategies regarding products or marketing or any other major changes to your previous business plan, you’ll want to create a new strategic business plan to address your new goals and the steps involved in achieving them.

What software should I use for my online business plan?

Your business plan should include some images, graphs, and graphic elements in the layout, so you’ll want to at least use word processing software to put your business plan together. If you have access to Google Workspace, Microsoft 365, Canva, or Adobe Creative Cloud, you’ll have some other options that might lead to a more professional layout.

Here’s a list of free and paid software that can help you put together your online business plan outline:

What do investors want to see in a business plan?

The most important piece of information to show investors in your business plan is potential for profitability. Investors don’t want to throw money at a sinking ship, no matter how cool and exciting the business sounds. 

Most investors also want to make sure that they’ll see a decent return on their investment in a relatively short time period — probably around 5-7 years. How much of a return they’ll expect will depend on your industry and what kind of investor they are. 

Investors will also want to see that you clearly understand your business, your industry, and that you have concrete, actionable steps for achieving, maintaining, and growing profitability. They’ll want to make sure that the key people on your team also understand your business and the roles they play and they’ll want to see that each person has a good amount of experience in their field and the required skill sets to fulfill their job duties, if not go above and beyond. 

Any details you can include that highlight unique aspects of your business will also be important. Any area where you have a competitive edge, are offering a unique or proprietary solution, have established any celebrity endorsements, have the backing of other investors, or have secured special grants will be of special interest to investors.

Create your plan for success

Now that you understand what goes into creating a formal business plan, it’s time to write one! Take the time to think through and consider each aspect of the list included in this article, and you’ll be well on your way to finding success.

And WooCommerce is here to support your business every step of the way, with powerful and flexible tools that help your business grow. Start selling online today !

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E-Commerce Start-Up Business Plan

Start your own e-commerce start-up business plan

NoHassleReturn.com

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">, opportunity.

As E-commerce continues to accelerate, so does the problem of merchants and manufacturers needing to process returns. The average rate of returns for Internet-based companies is 9%. In the coming year the value of returned merchandise was $1.5 billion. Every one of these transactions involves financial processing. Many of them require physical shipping of physical goods, plus processing the goods as received. This is a huge hassle. 

NoHassleReturn.com strives to position itself as a strategic partnership between online merchants, Web hosting companies and portals, shipping companies, and online payment agents such as credit card issuers. Due to demand aggregation, the strategy will produce reduced or totally free shipping of returned merchandise to consumers. This differentiating element will multiply the consumer acceptance factor and will draw more revenues to all participating companies. The proposed program is therefore a win-win solution to all parties involved. Moreover, the software architecture and website format will be wireless-friendly thus designing the service in such a way that consumers will later be able to easily use it via cellular phones and other personal wireless devices

E-commerce continues to accelerate and the amount of money spent on purchases made through the Internet shows no sign of decline. During the past holiday season (November 20 to December 19), retailers saw online revenues quadruple, jumping 300% to about $11 billion and far exceeding expectations, according to a study by Shop.org and Boston Consulting Group. The study of 30 retailers in such categories as apparel, books and music, home and garden, specialty foods and electronics showed a 270% growth in the number of orders. The study indicated that online sales were growing at 145% annually and it projected online retailer revenues of more than $36 billion for last year. An earlier study conducted by Ernst & Young, before the holiday frenzy, already estimated that total revenues for online retail and consumer products for the calendar year just completed were around $25-30 billion. Currently, the average rate of returns for Internet-based companies is 9%. In the coming year the value of returned merchandise was $1.5 billion. This indicates an amazing opportunity.

Competition`

The company foresees three types of competition for the services we offer: Direct

If we prove successful, others will follow. Our most worrisome competition would be combining delivery and/or courier services, like something of this type owned or partnered with UPS or FEDEX. 

The first competitors to the new service are the online retailers themselves. Since NoHassleReturn.com will need to strike partnerships and strategic agreements with retailers in order to offer its services, they are classified as internal competitors. 

With NoHassleReturn.com, at least one selling opportunity will be given to retailers while consumer is on the Web–something a partnership with a carrier cannot provide. Moreover, serving as a demand aggregator NoHassleReturn.com should be able to arrange necessary agreements and provide consumers with greatly reduced, or even free, shipping for all returned merchandise.

Thinking in reverse to the previous paragraph, service providers such as Mail Boxes Etc. and PostNet may try to forge strategic partnerships with numerous online retailers to simplify the return process. 

Our mission is to enhance customer service of online merchants, boost their customer retention and increase their sales. We strive to improve the overall image of the online merchant and therefore stimulate growth of online shopping. We put our efforts to increase customer satisfaction when consumers deal with retailers, to enhance the interaction process when retailers communicate with consumers, and to streamline the problem resolution order in all possible ways.

Expectations

NoHassleReturn.com’s financials are conservative yet quite promising. Once they are up and running and sign up some merchants as customers, NoHassleReturn.com will quickly gain momentum and generate impressive sales. 

Financial Highlights by Year

Financing needed.

We need $50,000 to start. We will get that from the two owners to start $25,000 each.

Problem & Solution

Problem worth solving, our solution.

NoHassleReturn.com is an e-commerce start-up company positioning itself to become the market leader in offering online merchants and consumers a uniform and trouble-free way to return merchandise purchased online. The company offers a business-to-business solution to online merchants of physical, non-perishable products. The company utilizes a consolidation approach in handling all product returns that allows online merchants to instantly save bad sales, restore customer satisfaction and stimulate repeat sales, while offering consumers a convenient, centralized online location to claim returns. By creating a new service category and utilizing the first-mover advantage, NoHassleReturn.com positions itself for rapid growth and gains a strong opportunity to raise entry barriers for possible competition.

Target Market

Market size & segments.

E-commerce continues to accelerate and the amount of money spent on purchases made through the Internet shows no sign of decline. During the holiday season (November 20 to December 19), retailers saw online revenues quadruple, jumping 300% to about $11 billion and far exceeding expectations, according to a study by Shop.org and Boston Consulting Group. The study of 30 retailers in such categories as apparel, books and music, home and garden, specialty foods and electronics showed a 270% growth in the number of orders. The study indicated that online sales were growing at 145% annually and it projected online retailer revenues of more than $36 billion for 1999. An earlier study conducted by Ernst & Young, before the holiday frenzy, already estimated that total revenues for online retail and consumer products for the calendar year 1999 were around $25-30 billion.

While a notable amount of positive publicity about the Internet shopping has recently appeared in the media, the number of problems encountered by online shoppers actually increased more dramatically than the sales figures. According to a poll conducted by WebAssured.com, the number of complaints filed between November 25, 1999 and January 13, 2000 was up 404% over the same period last year. Over 62% of the respondents claimed they had experienced at least one problem with an online transaction. Misrepresentation/misinformation and delivering defective products each accounted for at least 22% of all complaints. In the breakdown of types of problems occurred, delivery of a wrong item accounted for 17.2%. These kind of problems ultimately result in product returns that cause additional costs to the consumers and both costs and lost revenues to the retailers.

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When a wrong, defective, or misrepresented item was delivered to a consumer, the return process often proved uneasy. According to recent findings by PC Data Online, 30% of all consumers who returned items found the return process difficult. It is apparent that existing return procedures are inadequate and sometimes irritating. The solution, however, does not lie in forcing all online retailers to establish a "no-questions-asked" return policy and to post it clearly at the top of their websites. The entire sequence a consumer has to follow, starting from looking up the procedures on the Web and then having to make a trip to UPS or the Post Office, has to be streamlined. There is clearly a need, as well as an opportunity, for a new service company to improve the overall return process for online shoppers. As a result, the consumer satisfaction will be enhanced and it will translate into increased repeat sales for online retailers.

Market Segmentation

As stated in the previous section, the estimated online retail revenues were around $25-36 billion. Both sources providing the estimates indicated that only merchants selling physical products (books, CDs, electronics, apparel, etc.) were included in the breakdown by category. No mention was made of services such as online hotel reservations, news subscriptions, or online brokerage being included in the total figures. However, it would be advisable to use a more conservative approach when estimating the total revenues of online merchandise sales. Presented below are estimates for Internet retail sales made by National Retail Federation shortly after the 1998 holiday season.

Competition

Current alternatives.

Direct Competitors

Based on the current intelligence, there is no independent company out there specializing in a "returned merchandise" service to online consumers. No single company is known to be employing a concept of establishing a single point of presence on the Internet for consumers to claim returns. The current situation allows the new company to gain the first-mover advantage and build entry barriers for any possible new entrants.

Internal Competitors

The first competitors to the new service are the online retailers themselves. Since NoHassleReturn.com will need to strike partnerships and strategic agreements with retailers in order to offer its services, they are classified as internal competitors. Retailers may perceive that their internal return procedures are adequate and fully meet customer demands. However, the discussion under the Need Assessment section of this plan clearly indicated that there are significant drawbacks and shortcomings in the return process across the entire industry. Even companies like Amazon.com that touts a quick and easy return policy now sees its customers go to Barnes & Noble superstores to return books. Partnering with brick-and-mortar retailers may be seen as a solution by some e-tailers. However, from the consumer perspective, there still will not be a centralized location to return merchandise, no quick and easy return procedure, and no savings on shipping costs. Consumers may end up having to go from one physical retailer to another to return various items.

Online retailers may try to partner with carriers and service providers such as UPS, Mail Boxes Etc., or Rite Express. Reportedly, eBay.com is working out an agreement with Mail Boxes Etc. to appoint them as a preferred/exclusive service for product returns. eBay.com may receive rebates per shipment for directing its clients to Mail Boxes Etc., but consumers again will have little or no benefit. The standard shipping rates are applied, the choice of carriers is now limited, and online merchants are not informed about product returns ahead of time so that bad sales could be saved. With NoHassleReturn.com, at least one selling opportunity will be given to retailers while consumer is on the Web–something a partnership with a carrier cannot provide. Moreover, serving as a demand aggregator NoHassleReturn.com should be able to arrange necessary agreements and provide consumers with greatly reduced, or even free, shipping for all returned merchandise.

 Channel Competitors

Thinking in reverse to the previous paragraph, service providers such as Mail Boxes Etc. and PostNet may try to forge strategic partnerships with numerous online retailers to simplify the return process. But as it was described, online retailers will be shortchanged in overall customer satisfaction, information exchange, total costs, and additional selling opportunities. Consumers, on the other hand, will lose out on the limited number of "exclusive" carriers for particular retailers, and uniform simplicity in the return process will not be achieved. Moreover, both Mail Boxes Etc. and PostNet combined do not have sufficient physical presence in the market.

Carriers such as UPS and FedEx may try to enter the arena. Those organizations have extensive networks of facilities, experience in shipping, and a track record of quality. The U.S. Postal Service has recently started a TV advertising campaign of a service for online merchants that allows consumers to print return labels online. This is a step towards addressing the shipping end of the return problem, but it falls short of saving bad sales and creating new selling opportunities for merchants. No single shipping company can fully provide the range of benefits the proposed company can. NoHassleReturn.com will be able to arrange strategic alliances with numerous carriers and even play one against the other in negotiating rate reductions and preferential service terms for both merchants and consumers. Being a smaller company with a focus on the e-commerce community, it will also have a greater degree of flexibility in adjusting to customer needs.

Our Advantages

At NoHassleReturn.com, we feel we provide a value-added service to a variety of consumers. By having a safe and easy-to-use return service, the company benefits more people than simply the average customer.

Merchants Advantages

• Increase revenues! NoHassleReturn.com turns the systemic problem of product returns into new selling opportunities.
• Enhance customer satisfaction and retention with the quick and easy return process and boost repeat sales! NoHassleReturn.com provides the opportunity to instantly deal with returns, save bad sales, and turn unhappy customers into loyal patrons.
• Improve customer service with a simple, trouble-free way to return merchandise! NoHassleReturn.com makes it easy for consumers to return products and follow return procedures.
• Simplify the shipping hassle for consumers! NoHassleReturn.com provides the option to print a shipping label since pre-printed labels sometimes get lost or misplaced, which provides added convenience and peace of mind to consumers.
• Improve inventory management and logistics! NoHassleReturn.com immediately alerts you when your customer initiates the return process so that you can act on it right then, not when the merchandise arrives at your door.
• Fine-tune your internal efficiencies and product offerings! NoHassleReturn.com provides you with invaluable new data on all your product returns by customer group, product category, etc., so you can analyze your operations better.
• Enhance your image! NoHassleReturn.com underscores your customer orientation, which you can use to promote your business.

Consumers Advantages

• Return merchandise with ease! NoHassleReturn.com provides one centralized online location with a simple and trouble-free way to return merchandise in just a few easy steps.
• Buy online, return online! No need to call in or email your merchant if authorization is required–NoHassleReturn.com does the communication for you.
• No need to look up every single merchant for return policies every time! NoHassleReturn.com summarizes it for your particular item and makes sure the return time frames are followed.
• Generate a shipping label! NoHassleReturn.com generates a shipping label for you so that you do not have to worry about misplacing the pre-printed label or spending extra time at a shipping company’s counter if the pre-printed label is not included.
• Reduce or eliminate shipping costs! Through strategic alliances, NoHassleReturn.com reduces or completely eliminates the cost of shipping.
• Keep track of your returns! If you would like, NoHassleReturn.com will remind you to ship the claimed item and will maintain a file of your returns for your records.
• Increase awareness in the community! NoHassleReturn.com serves as a "returned merchandise credit bureau," providing discrete information to consumers on merchants and to merchants on consumers.
• Cross reference marketing leads! NoHassleReturn.com maintains a database of purchases that help custom-target online buyers in a more efficient way.
• Improve the overall image of the online merchant! NoHassleReturn.com enhances customer service of online merchants and overall customer satisfaction by simplifying and streamlining the return process.

Keys to Success

In order for the company to operate, a number of specific ingredients are needed. Following are things to put in place before the service can be offered.

• Retrieve all pertinent information on a participating merchant.
• Match appropriate return procedures against the returning item.
• Present procedures to the consumer in the most concise format.
• Provide reference to the merchant’s entire return policies if requested.
• Inform the merchant of the entire transaction as it occurs.
• Gain authorization from the merchant to return merchandise if needed.
• Present the merchant’s website to consumer for selling opportunities.
• Provide confirmation emails to the customer of the actions taking place if requested.
• Interact with the merchant’s database for further customer details if needed.
• Maintain a record of the transactions for the company’s own database.
• Develop successful relationships with online merchants to facilitate exchange of information.
• Develop strategic alliances with online merchants, shipping companies, and credit card issuers to negotiate reduction or elimination of the shipping costs to consumers on returned merchandise.
• Design, maintain, and promote a user-friendly website, the corporate trademark, that offers an easy and trouble-free merchandise return procedure for consumers.

Marketing & Sales

Marketing plan.

Because the company’s service is a business-to-business program, it will be initially promoted to online merchants by direct sales force. Personal selling will be necessary to reach decision makers within online organizations. At first, contacts will be made with Internet service providers, such as America Online, that host online stores and shops. America Online claims to have 20% of the total Internet service provider market in the U.S. Therefore, arranging a strategic partnership where NoHassleReturn.com becomes the preferred or exclusive choice for all returned merchandise bought at AOL.com shops will be invaluable for establishing a well-recognized brand and building up entry barriers for any possible competition. Ideally, a company’s banner with a notation "For an Easy, Trouble-Free Product Return Click Here" will be visibly displayed throughout the shopping section of AOL.com. Portals such as Yahoo! will be approached as well. Reportedly, Yahoo! hosts nearly 6,000 merchants where it charges each merchant at least $100 to $300 per month. Arranging a strategic partnership with Yahoo! will provide a strong leverage in negotiating return contracts with individual merchants. Similar to that of America Online, the company’s banner will be displayed throughout the entire shopping section of Yahoo!

Large online merchants such as Amazon.com and Buy.com will be targeted by the direct sales force during the first stage as well. Those companies have already achieved significant volumes of sales–and therefore product returns–and will find the uniform return process of much benefit to them. Strong "category killers" such as eToys and CDnow are also first sales targets. Auction houses such as eBay.com and uBid.com will be approached with a service offer for products sold to consumers by merchants and direct manufacturers.

Wherever possible, smaller online retailers will be personally approached by the sales force. To stimulate awareness and service penetration among smaller players, industrial marketing techniques will be utilized. Those will include advertising in specialized publications such as Internet World and Red Herring, as well as referral fees for retailers who already use the service. Email campaigns will be used to reach decision makers at smaller companies. The email messages will have an invitation to the NoHassleReturn.com website where a specially designed presentation will explain the benefits of the new service. An invitation to be contacted by a service consultant to discuss details will be included.

The company plans to offer its services right before Thanksgiving 2000. In order to stimulate a quicker adoption of the services, the remainder of the year 2000 will be offered free of charge.

It is estimated that the initial expenses to hire a sales force and a customer service unit of up to five people during the first year will be close to $400,000. Another $200,000 will be needed for sales program development, marketing activities, and training (excludes advertising). The initial compensation package for sales force will include a nominal base salary and a progressive commission structure. This should ensure that during the early stage of the company’s growth not only that sales targets are met, but also that customer (customer here means merchant) satisfaction and retention are fully addressed. The sales force will initially be located at the corporate headquarters. A territorial approach will later be implemented, with sales people located in regions. After one year, sales force members will split into two distinct groups. The first group will include pure sales people, the "go-getters" who will be placed in regions and will work on pure commissions. The commission structure will become more progressive and rewarding for such individuals, including a bonus structure. The estimate for an average commission paid on sales is approximately 5-10%. The second group will include client care professionals who will concentrate on customer satisfaction and retention to ensure the continuity of the program. These individuals will remain at the headquarters and will have a base salary with a bonus structure. The base salary for client care professionals is in the mid-five figures. Industrial advertising and promotional expenses in 2000 are estimated at $250,000.

It is also a possibility to sell the services to merchants via the Internet hosting service providers, portals, and software developers. Those companies will then serve as distributors and agents, compensated on commissions. This approach will eliminate the need for a large sales force. The final layout will depend on how quickly agreements with companies such as America Online and Amazon.com are negotiated, how aggressively they will be able to promote the services, and on what conditions.

The following diagram describes the customer approach (customer here means merchant).

Service consultants are the direct sales force that approaches prospective customers with service offers. Once a customer has been signed, a service consultant will only approach the client with new service offers and product upgrades. A client care professional is then assigned to each customer to deal with all customer service issues. Each customer will be advised to direct all service inquiries to the professional. A professional will also proactively call on customers to ensure high quality of service and customer satisfaction. The consultants and professionals will have direct communication lines between themselves to ensure open information exchange and a quick and efficient problem-resolution culture. This structure will guarantee an aggressive sales approach, client-oriented service, and efficient post-sales support.

NoHassleReturn.com will strive to eliminate the shipping costs to consumers by means of strategic agreements with online merchants, shipping companies, and credit card companies. As stated in the last quote, 58% of all product returns were due to merchants’ faults, hence merchants will have to reimburse shipping costs to consumers in those cases. NoHassleReturn.com therefore proposes that 65% of a given shipping cost should be allocated to corresponding merchants. Due to demand aggregation, the company will be able to negotiate a shipping rate discount with companies such as UPS or FedEx. Hence 20% of shipping costs should be allocated to shipping companies in a form of a discount. Credit card issuers such as Chase and BancOne currently offer a 5% rebate to consumers on purchases with selected online merchants. It is therefore feasible to arrange an agreement with credit card companies and/or issuers to include a 5% shipping cost rebate on all returned merchandise. Since product returns are only 9% of all purchases, it will not represent a large cost to credit card companies to add this differentiating feature to their products. These allocations in total will cover 90% of the shipping cost. The remaining 10% will be absorbed by NoHassleReturn.com via a special "instant rebate."

NoHassleReturn.com will charge merchants a program fee that will average only 0.5% of a given merchant’s total sales. Also, the company will charge a low per-claim fee of 12% of each item’s listed price (each item that has been claimed through the company’s website). However, of the 12% charged per item, up to 4% will be instantly given back to merchants to cover the remaining portion of the shipping cost. The previous table indicates that the 4% rebate is sufficient to cover the remainder of the shipping cost in the first product category. It is actually far more than sufficient in other product categories (refer to ASC Coverage Ratio). NoHassleReturn.com can then decide whether to offer merchants a reimbursement of the remaining portion of shipping costs only or a flat 4% "instant rebate" regardless of shipping costs. For the purpose of this business plan and financial projections, a flat 4% "instant rebate" was used thus reducing the per-claim fee from 12% to 8% across the board.

As it was stated in a prior chapter, retailers should see an average sales increase of at least 15% due to the service offered by the company. On the other hand, based on the proposed pricing structure the service should not cost merchants more than 1.5% of their total revenues. The cost-benefit ratio of 10 will be a strong promotional point for NoHassleReturn.com.

While it is a possibility to charge merchants commissions on all sales made through the company’s website (when consumers claim their returns), it would not capture all sales stimulated by the company. The program will increase consumer satisfaction and loyalty. However, when consumers start buying more due to the program’s effect but dealing directly with the merchant, the company will not receive any commissions and will in effect be giving its services away for free. Hence both fees charged should fully reflect the benefits of the easy-return procedure, early information on all returning items, restored customer satisfaction, selling opportunities created during the claim process, and all repeat sales thereafter.

The company also plans to draw revenues from advertising on its website, but for the purpose of this business plan advertising revenues will be considered negligible. A fee/rebate agreement may be arranged with such companies as UPS and Mail Boxes Etc. for bringing customers to them for shipping needs. Other revenue generating activities such as affiliate programs with VISA, American Express, or Citibank can be arranged to promote certain credit cards as a preferred method of payment online. Those revenues will also be omitted in the financial projections. Once the company has generated a sufficient customer database, it may also market information to retailers and other organizations for a fee. Any fees and payments NoHassleReturn.com could generate from consulting activities in the field of product returns will not be included in the financial projections either.

The service positioning in the eyes of online merchants is imperative to the success of the enterprise. The service proposed by the company is a business-to-business solution offered to online merchants of physical, non-perishable products. However, because online consumers will deal directly with the company via its website, the proposed solution also incorporates some features of a business-to-consumer service. It is therefore of utmost importance to clearly define what this company offers is a customer service & customer satisfaction program for online merchants. The most unique feature is that the proposed company takes the systemic problem of product returns and turns it into new selling opportunities for online merchants.

It is also important to note that NoHassleReturn.com does not try to position itself as a competitor to any incumbents with a similar service, online merchants, or shipping companies. The proposed company strives to position itself as a strategic partner to all parties participating in handling product returns. If nothing else, NoHassleReturn.com should be viewed as an outsourcing company to online merchants with the core competency and focus in handling returned merchandise.

The service offered by NoHassleReturn.com is designed to enhance customer retention and loyalty by offering an easy and trouble-free merchandise return process to online shoppers. According to Jupiter Communications, the goal of the 1999 holiday season was not about generating impressive sales, but rather securing long-term relationships. Retailers now need to focus on retention and loyalty. NoHassleReturn.com will help to achieve just that through establishing lasting, productive relationships with online merchants. Providing an easy, uniform, and trouble-free return process to all online shoppers will enhance the overall image of online merchants. While the number of retailers continues to grow, consumers will not have to look up every single one to find out about return policies and later keep abreast for possible changes. A centralized Internet location–the company’s website–will retrieve, summarize, and present the appropriate policies. Based on product information, it will make sure the correct procedures are used. The company’s banner with a notation "For an Easy, Trouble-Free Product Return Click Here" will be placed visibly on retailers’ websites and will serve as a symbol of customer orientation and care.

Moreover, the shipping process will be streamlined. Customers will be able to generate a shipping label on the company’s website thus reducing the hassle at the shipper’s counter. Although some online retailers already supply pre-printed shipping labels for sold items, customers sometimes lose, or throw away, those labels when they first see and like the products they ordered. Shortly after they may change their mind and would like to return a particular item, but the label is gone. With the proposed program, the label is always available online so that consumers can have peace of mind and also reduce the amount of documents they need to keep just in case. The service therefore offers a dual benefit to consumers. The retailers may then choose to stop including a pre-printed return label with every outgoing shipment thus reducing costs of selling. From a shipping company’s perspective, the shipping process is streamlined because the online-generated label will have all the necessary information, possibly including a tracking number if it is going to be shipped by UPS. That way consumers do not have to spend time at UPS counters filling out forms–both a customer service and operations improvement for UPS. NoHassleReturn.com will be a strategic merger between online merchants, carriers, and their partners targeted at overall improvement of customer satisfaction and ultimately the bottom line of merchants.

Another important feature of NoHassleReturn.com is that shipping of returned merchandise should be free of charge to consumers. (Means of achieving it are discussed in more detail in the Pricing and Revenue Generation section.) This differentiating feature will tremendously increase the consumer acceptance factor of the proposed service. The fact that products purchased online can be returned in an easy and trouble-free way, and that shipping is also free, will help expand the entire online shopping industry. The added convenience and peace of mind consumers will gain with NoHassleReturn.com will translate into more shopping with those online merchants that participate in the NoHassleReturn.com program.

When customers go through the sequence of online entries on the company’s website, the retailer whose product is being claimed for return will be offered at least one selling opportunity. At the end of the sequence the retailer will be able to target the consumer with any new sales offers as its website will appear onscreen. Should an exchange or replacement be preferred by the customer during the online return process, the retailer will receive an additional selling opportunity as its website will appear with offers during that step. These opportunities will translate into more sales for retailers. This will also stimulate customer retention, which means repeat sales. All in all, the program will increase customer satisfaction and generate more sales.

The program has a number of unique features. First, it alerts the retailer that a particular customer is claiming a particular product for return as it happens. That way the retailer knows about it as it occurs and not when the merchandise arrives at its warehouse. This allows to plan ahead. Since 9% of all products are returned, this feature offers useful information to better handle logistics and inventory.

Secondly, and more importantly, by asking consumers during the online sequence why they want to return a particular item merchants gain an invaluable piece of information. If the reason for return is defective product (30% of all reported returns), the retailer can save the sale and turn an unhappy customer into a delighted one by sending a new item right away. If the reason for return is wrong color, wrong size, or wrong product altogether (28% of all reported returns), the retailer may choose to send the correct product right then, thus instantly restoring customer satisfaction and saving a bad sale. It will be up to the retailer to decide on payment and credit terms of the exchange. These benefits ultimately translate into increased customer retention, reduced costs, more sales, and improved bottom line.

It is estimated that the program will generate an average sales increase for merchants of at least 15%. Online shopping is still at the early stage of consumer adoption. As stated earlier, about half the people who have not shopped online cited the cost and hassle of returns as a significant factor for not shopping online. Another recent survey found that 89% of online buyers said that return policies influenced their decision to shop with an online retailer. Consumers demand not only convenience but peace of mind. The proposed program offers both and it should increase the number of online shoppers, thus causing a market expansion for online merchants. The first retailers who implement the proposed program will also be able to differentiate themselves and capture a larger market share in their respective segments. Once embraced by the majority of online merchants, the program will become an industry standard.

It is important to note that during the entire process the company will not ask for, or try to gain access to, consumers’ credit card numbers. This will significantly limit possible liabilities and security/confidentiality concerns.

Milestones & Metrics

Milestones table, key metrics.

Our Key Metrics: 

• Active clients
• Active client leads
• Monitor Facebook and Twitter and reach out to customers who tweet at us or about us
• Easy to understand website and have a online chat and telephone number for questions 
• # of referrals from strategic alliances 
• # of customer who use us month after month 
• # of returns handled and from which company 
• cost of processing returns, make it as streamlined and well thought out as possible 

Ownership & Structure

Those activities that are not crucial to the corporate success (i.e. payroll) will be outsourced or subcontracted. Below are brief summaries of major responsibilities for corporate officers.

• Board of Directors : oversees the overall strategic direction and progress of the company. Specific areas include operational soundness, financial stability, and long-term well-being of the corporation.
• President : responsibilities include strategic guidance of the enterprise, exploration of expansion opportunities, and strategic alliance facilitation and management.
• Chief Executive Officer : the main responsibility is to maintain a strategic fit between the corporate resources and external factors. Responsibilities include running of the overall day-to-day operations, technological and operational soundness, and financial stability.
• Director of Finance and Operations : responsibilities include financial oversight, safeguarding of assets, and human resources management.
• Director of Information Technology : responsibilities include overall technological efficiency, software development, and information control.
• Director of Sales and Marketing : responsibilities include sales generation, marketing programs development, and public relations.

Management Team

There are two principals that are responsible for the idea and the progress of the firm up. They recognize as the companies quickly grows, certain positions such as CEO and CFO will need to be filled. The company was founded by Steve Logic and Dan Codder. Steve has spent the last ten years at Federal Express. While at FedEx, Steve was responsible for their logistics system. Steve has the incredible skill of perceiving business needs and creating a solution to address the need. At FedEx, Steve was the architect behind their benchmarked logistic system that has the ability to track customer packages and share the information with the client. What this meant for FedEx is that they could tell the customer exactly where their package is at any one point. This logistics system is the main driver behind FedEx’s exponential growth. Dan Codder is a twenty-year veteran in the computer industry. Self taught, Dan has worked at IBM, Cadence, Tektronix, and several other companies. Dan has the ability to design and write computer code very quickly and accurately. NoHassleReturn.com will leverage Dan’s skills for the completion of their customer service software engine.

Personnel Table

Financial plan investor-ready personnel plan .">, key assumptions.

• $4.1 million investment
• Status quo in market developments related to returns as part of traditional commerce is online commerce.
• Competition as we foresee it in the plan. 

Revenue by Year

Net profit (or loss) by year, use of funds.

START-UP REQUIREMENTS

Start-up Expenses

Stationery etc. $50

Brochures $450

Insurance $100

Research and development $400

Expensed equipment $1,100

TOTAL START-UP EXPENSES $3,000

Sources of Funds

The two co-owners will each contribute $25,000, for a total startup of $50,000. 

The plan depends on $4.1 million investment in the first month. 

Projected Profit & Loss

Projected balance sheet, projected cash flow statement.

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E-Commerce Financial Plan Template [2024 Guide]

by I.J. Karam | Jan 1, 2024 | Business Plans , Financial Plan Guide

When it comes to launching an online store, a well-crafted E-commerce financial plan is an essential component of your business planning process. It serves as a roadmap that outlines your project’s financial goals, strategies, and projections for the future. It provides clarity and helps you make informed decisions about your E-commerce venture’s operations, growth, and profitability.

As a seasoned business planner with over 15 years of experience helping e-commerce entrepreneurs, my goal is to walk you through the process of creating a detailed financial plan specifically tailored to the online shopping business. We will cover key aspects such as cost forecasting, revenue projections, income statement forecasts, cash flow management, balance sheet forecasting, capital expenditures, startup costs, and capital raising strategies.

E-Commerce Financial Plan Template in Excel

Before diving into the specifics of each section, it’s important to emphasize the importance of accuracy and realism in your financial projections. While forecasting can be challenging, it is crucial to base your estimates on thorough research, industry benchmarks, and realistic assumptions. To help you build a strong financial forecast using a spreadsheet, we invite you to check out our ready-made e-commerce business plan package. It includes a pre-written business plan text in Word and an automatic e-commerce financial plan in Excel that you can easily customize, no accounting or financial expertise needed.

Now, let’s proceed to the first section of our guide: the cost forecast.

E-Commerce Cost Forecast

A cost forecast is a critical element of your financial plan as it helps you estimate and allocate expenses related to running your E-commerce business. By accurately forecasting your costs, you can plan your budget effectively, identify areas of potential savings, and ensure that your online shopping business remains financially sustainable. Let’s explore the key components to consider when creating a robust cost forecast:

Cost of Goods Sold (COGS)

The Cost of Goods Sold represents the direct costs associated with producing or acquiring the products you sell online. This includes the cost of raw materials, manufacturing or procurement costs, packaging, and any other expenses directly tied to the production process. Calculate your COGS by determining the unit cost of each product and multiplying it by the projected sales volume.

Operating Expenses

Operating expenses encompass the day-to-day costs of running your online shop. They can include:

• Marketing and Advertising: Budget for digital marketing campaigns, social media advertising, paid search, search engine optimization (SEO), influencer collaborations, and other promotional activities. Marketing is a major component of the total expenses required to run an e-commerce site. Make sure to include media spend and agency fees if you decide to outsource your campaigns management.
• Website and Hosting: Include costs related to website development, maintenance, hosting fees, domain registration, and security measures.
• Inventory Management: Don’t forget to account for expenses associated with inventory tracking software, warehouse storage, order fulfillment, and logistics. A successful e-commerce business has a strong inventory management practice.
• Customer Service: This includes customer support tools, live chat services (human based or AI-powered), returns management, and order inquiries.
• Payment Processing: Factor in fees associated with payment gateways, credit card processing, and fraud protection.
• Utilities and Office Supplies: This includes costs of utilities, office rent, internet, telephone services, and office supplies.
• Professional Services: Account for expenses related to legal, accounting and consulting services.
• Employee Salaries: If you have employees, include their salaries, benefits and payroll taxes.
• Software and Subscriptions: Include fees for essential software tools, such as inventory management systems, accounting software, and customer relationship management (CRM) platforms.
• Miscellaneous Expenses: It is always a good idea to allow for unexpected or miscellaneous expenses that may arise during the operation of your online store.

Next, we will delve into capital expenditures, where we will discuss investments in long-term assets and infrastructure.

Capital Expenditures

Capital expenditures (CapEx) refer to the investments made in long-term assets and infrastructure that are essential for your E-commerce business’s operations and growth. These expenditures typically involve large, one-time costs but provide benefits over an extended period. It is crucial to carefully plan and forecast your capital expenditures to ensure efficient allocation of resources. Let’s explore the key considerations for this section:

Technology and Equipment

An e-commerce website could be classified as both CAPEX and OPEX, depending on the nature of the expenses incurred. The initial development and setup costs of the website, including design, coding, and customization, would typically be considered capital expenditures (CAPEX) since they involve the acquisition or improvement of a long-term asset.

However, ongoing expenses such as hosting fees, domain registration, maintenance, and updates would be considered operational expenditures (OPEX) since they are recurring costs necessary to keep the website operational.

Here are additional items you may consider as Capex:

• Hardware: Estimate costs for computers, servers, networking equipment, and other devices required for your E-commerce operations.
• Software: Include costs for specialized software applications, such as inventory management systems, order management systems, customer relationship management (CRM) tools, and analytics software.
• Security Systems: Account for investments in cybersecurity measures, SSL certificates, fraud detection, and prevention tools.
• Communication Systems: Budget for phone systems, video conferencing software, and other communication tools necessary for your business’s smooth operation.

Physical Infrastructure

Let’s now look at potential investments in your physical infrastructure:

• Warehousing and Storage: Include costs for acquiring or leasing warehouse space, racking systems, shelving, forklifts, and other equipment needed for inventory storage.
• Packaging and Shipping Equipment: Account for investment related to equipment that help with packaging, scaling, labeling and shipping software.
• Vehicles and Transportation: In case you will handle the delivery in-house, make sure to include the cost of trucks, cars or bikes you plan to purchase.
• Fulfillment Centers: If you’re considering establishing additional fulfillment centers or partnering with third-party logistics providers, include the associated investment.
• Technology Upgrades: Budget for system upgrades or enhancements to handle higher order volumes and improve efficiency.

Depreciation and Replacement

Keep in mind that certain capital assets have a limited lifespan and will require periodic replacement or upgrade. This is why it is a good idea to estimate the depreciation of your assets over time and allocate funds for their eventual replacement.

By carefully considering and forecasting your capital expenditures, you can ensure that you have the necessary resources to support the growth and development of your E-commerce business.

E-Commerce Startup Costs

When starting an E-commerce business, there are several initial expenses you need to consider. These startup costs encompass the one-time investments required to establish your business and set it up for operation. Properly estimating and planning for these costs is essential for a smooth launch. Let’s explore the key components to consider when creating a startup cost forecast:

• Market Research and Validation: Before launching your E-commerce business, you need to conduct market research to understand your target audience, competition, and demand for your products or services. Include expenses related to market research reports, surveys, focus groups, and prototype testing.
• Business Registration and Licensing: This includes the costs associated with registering your business entity and obtaining the necessary licenses and permits such as registration fees, legal consultation fees, and any government or regulatory charges.
• Initial Website Development and Design: Invest in professional website development and design to create an appealing and user-friendly online store. Include initial expenses for domain registration, website hosting, e-commerce platform subscriptions, and hiring web developers or designers if needed.
• Branding: A powerful brand can go a long way in helping you launch and scale a successful e-commerce business. Make sure you budget funds for branding activities to establish a strong brand identity. This may include logo design, brand guidelines, graphic design services, and marketing materials.
• Inventory and Product Sourcing: Estimate the initial investment required to acquire or manufacture your initial inventory. This includes purchasing products, raw materials, packaging materials, and any costs associated with product sourcing, manufacturing or distribution.
• Equipment and Tools: As already seen above, the initial capex required for essential equipment and tools should also be part of your startup investment.
• Professional Services: In case you plan to avail any professional services to help you with the launching phase, then you need to also account for things such as legal consultation, accounting services, or consulting fees for strategic advice…etc.
• Initial Marketing and Advertising: Some entrepreneurs allocate a budget for initial marketing and advertising efforts to generate awareness and drive traffic to their E-commerce website. This could be your soft launch, before the full-fledged store launch.
• Training and Education: If necessary, budget for any training programs or courses that will enhance your skills or knowledge relevant to running an E-commerce business. This could include online courses, workshops, or conferences.

Now that we have seen the main cost items related to starting and running and e-commerce business, let us tackle the revenue forecasting process, as part of your e-commerce financial plan.

E-Commerce Revenue Forecast

Accurately forecasting your online store’s revenue allows you to set realistic goals, make informed business decisions and monitor your operational performance. Before we start, it is key to remember the importance of a solid market analysis to understand your target audience, market trends, competitive landscape, and demand for your products or services. This analysis will provide valuable insights that will inform your revenue projections.

Sales Channels

First, identify the sales channels through which you will generate revenue. For your online store, this typically includes your own e-commerce website, marketplace platforms (such as Amazon or eBay), and any other channels where you plan to sell your products.

Pricing Strategy

Determine the right pricing strategy for your products or services. Consider factors such as production costs, competitor pricing, customer willingness to pay and perceived value. Your pricing strategy should strike a balance between profitability and competitiveness in the market.

Online Sales Volume Forecast

Estimate the number of products or services you expect to sell during the forecast period. This can be based on historical data, market research/sizing, industry benchmarks, or a combination of these factors. Consider variables such as seasonality, trends, and any marketing or promotional activities that may impact your sales volume.

Average Order Value (AOV)

What is AOV? This stands for Average Order Value, a key metric to monitor when running your e-commerce site. You can calculate AOV by dividing the total revenue by the total number of orders during a given period. It is always a good idea to compare your AOV against industry benchmarks.

Customer Acquisition

How will you acquire new customers? What are the associated costs? Account for marketing and advertising expenses, customer acquisition strategies, and conversion rates when estimating the number of new customers you expect to acquire during the forecast period.

Repeat Business and Customer Retention

When modeling your revenue, remember to factor in customer retention rates and the likelihood of repeat purchases. Analyze historical data or industry benchmarks to estimate the percentage of customers who are likely to make repeat purchases and the frequency of those purchases.

Seasonality and Trends

All businesses are exposed to a certain level of seasonality and e-commerce platforms are no exception. Take into account any seasonal fluctuations or trends that may impact your online store by adjusting your revenue forecast accordingly, considering peak seasons, holidays, or other events that may affect customer buying behavior.

New Product Launches or Expansion

If you plan to introduce new products or expand your product line during the forecast period, include the projected revenue from those additions. Consider market demand, production costs, and marketing efforts when estimating the revenue contribution from new products.

E-Commerce Key Performance Indicators (KPIs)

Now let’s look at a number of important key performance indicators any e-commerce entrepreneur should monitor closely to ensure the success of their online shopping ventures. Here we go:

Customer Acquisition Cost (CAC)

Customer Acquisition Cost refers to the amount of money your E-commerce business spends to acquire a new customer. It includes the marketing and advertising expenses incurred to attract potential customers and convert them into paying customers. Calculating your CAC helps you assess the effectiveness of your marketing efforts and determine the financial viability of acquiring new customers.

To calculate your CAC, divide the total marketing and advertising expenses by the number of new customers acquired within a specific period. For example, if you spent $10,000 on marketing and acquired 100 new customers, your CAC would be $100.

Customer Lifetime Value (CLV)

Customer Lifetime Value represents the total net revenue your online store expects to generate from a single customer over the course of their relationship with your business. It takes into account the repeat purchases, average order value and customer retention rates. The CLV is important because it provides insights regarding the actual longer term value of your customers.

Here’s how to calculate CLV:

CLV = AOV x Purchase Frequency x Customer Lifespan

For example, if your average purchase value is $50, the average purchase frequency is 2 times per year per customer, and the average customer lifespan is 3 years, your CLV would be $300 ($50 x 2 x 3).

CLV to CAC Ratio

The CLV-to-CAC Ratio is a key metric that compares the cost of acquiring a customer (CAC) to the expected revenue generated from that customer over their lifetime (CLV). This ratio helps you assess the sustainability and profitability of your customer acquisition efforts.

Ideally, the CAC should be significantly lower than the CLV to ensure a positive return on investment. A lower CLV-to-CAC ratio indicates that your customer acquisition costs are too high compared to the revenue you expect to generate from each customer.

E-Commerce Income Statement Forecast

The income statement forecast, also known as the P&L (profit and loss statement), is a major financial statement that provides an overview of your E-commerce business’s revenue, expenses, and net income over a specific period of time. It helps you understand the profitability of your business and identify areas where you can optimize costs or increase revenue. Let’s explore the key components of your online store’s P&L:

Revenue (Top Line)

Start by including your projected revenue for the forecast period, which we discussed in the previous section. This includes the total sales generated from your E-commerce business, considering factors such as sales volume, average order value and customer retention.

Calculate the cost of goods sold by estimating the direct costs associated with producing or acquiring the products you sell. Subtract the COGS from the revenue to determine the gross profit.

Gross Profit Margin

Calculate the gross profit margin by dividing the gross profit by the revenue and multiplying by 100. The gross profit margin indicates the percentage of revenue that remains after deducting the direct costs of producing goods or services. It helps assess the efficiency of your production/sourcing and pricing strategies.

Next, list all the operating expenses we discussed earlier in this guide, such as marketing and advertising, website and hosting costs, inventory management, customer service, payment processing, utilities and office supplies, professional services, employee salaries, software and subscriptions, and miscellaneous expenses.

Operating Income

Now, subtract the total operating expenses from the gross profit to calculate your e-commerce store’s operating income. The operating income represents the profit generated from your core business operations before considering interest, taxes, and other non-operational items.

Non-Operating Income and Expenses

If applicable, include any non-operating income or expenses that are not directly related to your E-commerce business’s day-to-day operations. This may include interest income, interest expenses, investment gains or losses, and any other income or expenses outside of your primary business operations.

Net Income (Bottom Line)

Subtract the non-operating income and expenses from the operating income to calculate the net income. The net income represents the final profit or loss generated by your E-commerce business after considering all income and expenses.

Profit Margin

You can also calculate the profit margin by dividing the net income by the revenue and multiplying by 100. The profit margin provides an overall view of your business’s profitability and indicates the percentage of revenue that translates into actual net income.

E-Commerce Cash Flow Forecast

A cash flow forecast is a vital component of your financial plan as it helps you project the inflows and outflows of cash in your online shopping business over a specific period. It allows you to anticipate cash shortages or surpluses, plan for capital expenditures, and ensure you have sufficient funds to meet your financial obligations. Let’s explore the key considerations for this section:

Cash Inflows

First, identify and project the various sources of cash inflows for your E-commerce business:

• Sales Revenue: Estimate the cash inflows from your E-commerce sales based on your revenue forecast. Consider the payment methods your customers use, such as credit cards, online payment platforms, or cash on delivery, and the typical payment terms or delays associated with each method.
• Financing Activities: Include any cash inflows from external financing sources, such as loans, investments, or capital contributions. Take into account any anticipated cash injections into your business during the forecast period.
• Other Income: If applicable, consider any other sources of cash inflows, such as interest income, rental income or affiliate program earnings.

Cash Outflows

Next, identify and project the various categories of cash outflows:

• Cost of Goods Sold (COGS): Estimate the cash outflows associated with purchasing or producing your products. Consider the payment terms with your suppliers, inventory management practices, and any upfront or periodic payments required for inventory.
• Operating Expenses: Include the cash outflows related to your operating expenses (see sections above). Here as well, pay attention to the payment terms.
• Taxes and Regulatory Payments: Account for the cash outflows associated with taxes, licensing fees, permits, and any other regulatory obligations specific to your E-commerce business.
• Debt Payments: If you have outstanding loans or debts, estimate the cash outflows required for repayment. Consider the repayment terms, interest rates, and any scheduled principal and interest payments.
• Capital Expenditures: Refer to the capital expenditures section we discussed earlier. Estimate the cash outflows required for investments in technology, infrastructure, equipment, vehicles and other long-term assets.
• Other Expenses: Consider any other cash outflows that are not categorized above but are relevant to your E-commerce business, such as one-time project expenses, legal fees, or unexpected costs.

Net Cash Flow

Calculate the net cash flow for each period by subtracting the total cash outflows from the total cash inflows. A positive net cash flow indicates a surplus, while a negative net cash flow indicates a deficit.

Cash Flow Statement

Use the projected cash inflows and outflows to create a cash flow statement, which provides a comprehensive view of your E-commerce business’s cash position. The cash flow statement includes three sections: operating activities, investing activities, and financing activities. It helps you track the cash flows from your day-to-day operations, investments, and financing transactions.

E-Commerce Balance Sheet Forecast

The balance sheet forecast is a financial statement that provides a snapshot of your E-commerce business’s financial position at a specific point in time. It summarizes your assets, liabilities, and owner’s equity, allowing you to assess your business’s solvency and net worth. Let’s explore the key considerations for this section:

The first part of the balance sheet lists the short-term and long-term assets of your E-commerce business:

• Current Assets: These are assets that can be converted into cash within one year. This includes cash and cash equivalents, accounts receivable, inventory and any other short-term assets.
• Fixed Assets: Estimate the value of your fixed assets, which are long-term assets with a useful life beyond one year. This includes property, plant, and equipment, such as your office space, computers, servers, and any other tangible assets used in your E-commerce operations.
• Intangible Assets: If applicable, consider also any intangible assets your E-commerce business may have, such as intellectual property rights, patents, trademarks, or goodwill.

Liabilities

The second part of the balance sheet comprises short and long term liabilities for your E-commerce business:

• Current Liabilities: Estimate the value of your current liabilities, which are obligations that are due within one year. This includes accounts payable, short-term loans, credit card debt, accrued expenses, and any other short-term obligations.
• Long-Term Liabilities: These include obligations that extend beyond one year such as long-term loans, lease obligations and any other long-term debts.

Shareholder’s Equity

This section goes next to liabilities. Calculate the shareholder’s (or owner’s) equity, which represents the net worth of your E-commerce business. It is the residual interest in the assets of your business after deducting liabilities. Owner’s equity includes the initial capital investment, retained earnings, and any additional contributions or withdrawals made by the owner(s).

Balance Sheet Structure

Organize the projected assets, liabilities, and owner’s equity in a balance sheet format following the equation: Assets = Liabilities + Shareholder’s Equity.

Financial Ratios

It is a good idea to regularly analyze your balance sheet forecast and calculate key financial ratios that provide insights into your E-commerce business’ financial health. Some important ratios to consider include the current ratio (current assets divided by current liabilities), debt-to-equity ratio (total debt divided by owner’s equity) and return on equity (net income divided by owner’s equity). These ratios help assess liquidity, leverage, and profitability.

Final Words

Writing a comprehensive financial plan is crucial for the success and sustainability of your online shopping venture. It provides a roadmap for achieving your financial goals, helps you make informed decisions, and ensures the financial health of your business.

Before we part, we highly recommend you check our automatic e-commerce financial plan Excel template included in our ready-made e-commerce business plan package. Our cost-effective solution allows you to build a solid business plan with accurate financials in record time.

Best of luck in creating a robust financial plan for your E-commerce business, and may it pave the way for your success and prosperity!

E-Commerce Financial Plan Template

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How to Start an E-commerce Business: A 2024 Guide

Build the e-commerce business of your dreams with help from this handy how-to guide.

Starting your own e-commerce business is an exciting venture, especially if you’ve dreamed about the freedom of being your own boss. If you are crafty or have a knack for selling, then the entrepreneurial route could be a great choice for you.

Lifting a business off the ground is hard work. It requires business acumen, creativity, and discipline to take the necessary steps to put your idea out there. But it can be a very worthwhile and rewarding journey. Global e-commerce sales are expected to reach US$6.3 trillion in 2024, according to Shopify, and the Canadian e-commerce market is expected to grow by 17.5 per cent from 2022 to 2023 to US$1.6 million [ 1 , 2 ]. Canada is the ninth-largest e-commerce market in the world, and there is huge potential to profit from e-commerce.

This article offers a step-by-step guide to starting your online business, including costs and tips for success.

How to start an e-commerce business

E-commerce is on the rise, so you’ll need to consider how to stand out because everyone can use digital marketing for their business. Despite the competition, there is a bright future ahead for e-commerce entrepreneurs. Here’s how to get started.

Step 1: Research e-commerce models and decide what to sell.

Today's e-commerce space is vast, with plenty of competition, so it is important to consider your e-commerce business model. There are four basic types:

Business-to-consumer (B2C): A common business model in which a business sells to consumers, anything from spices to shoes. B2C brands can sell different brands under one umbrella, such as Amazon, Walmart, and Alibaba.

Business-to-business (B2B): In B2B models, businesses sell products or services to other businesses. Orders tend to be recurring purchases. Examples include Amazon Business, Alibaba, and Rakuten.

Consumer-to-consumer (C2C): C2C models are typically online marketplaces connecting consumers to exchange and sell goods and services. Online C2C businesses include Craigslist, Etsy, and eBay.

Consumer-to-business (C2B): With C2B, individuals sell their goods and services to companies. A good example is Upwork, which enables businesses to hire freelancers.

At the same time that you're considering your business model, you'll also want to explore the delivery method you'll use to distribute your goods or services. Generally, you'll use one of the following delivery methods:

Direct-to-consumer (D2C): You sell your own products directly to customers without the help of wholesalers or retailers.

Dropshipping: You set up a storefront (website) so customers can pay by credit card or PayPal, sourcing from a supplier that manages inventory and packaging. Dropship businesses are quick and inexpensive to start.

Wholesaling: You purchase products in bulk at a discounted rate from a retailer to sell on your website.

White label: You put your own name and brand on a generic product that you purchase from a distributor.

Private label: You hire a manufacturer to create a product to be sold exclusively by you.

Subscription: You deliver products, such as pet food or fresh vegetable boxes, on a monthly or weekly basis to loyal customers who prioritize convenience.

To find your niche, you’ll want to consider what type of product you want to sell, to whom, and how you will distribute it. Whether you sell your own hand-crafted products or source generic ones, you make all the decisions when you start a business—and you get to decide what works best.

Step 2: Write a business plan.

After you establish the foundation of your business, you’re ready to draft a business plan. This written document details your objectives and roadmap for finance, operations, and marketing. You can use it to get organized and attract potential investors.

Do some research to figure out the current competitors and market landscape for your product or service. Determine your target market and how you might sell to them. Plan the logistics, including when, where, and how you will proceed in the coming months. 

Step 3: Choose a business name and start building your brand.

Next, your business needs a name and brand identity. For those starting white-label e-commerce businesses, the brand is especially crucial to its success. 

Choosing a business name can be fun, but it requires some strategic thinking. In addition to a unique yet uncomplicated name that clearly explains your product, you’ll want to check if the web domain, social media handles, and legal name are available. Do your research to ensure it translates well across cultures, especially if you aim to go global.

In building your brand, you’ll need to design a logo that will be placed on all packaging, website design, and marketing materials. Eventually, you may want to hire a designer who can translate your brand’s ethos into beautiful web visuals.

See this video for ideas on branding in e-commerce.

Step 4: Register your business.

Before you begin selling, you must register your business by choosing a legal structure, applying for a Canadian Business Number, and obtaining other permits and licenses specific to your chosen business model. 

Once you’ve decided on a business name, search the national name databases to make sure it is available. You will need to choose your legal structure, a business entity type that will determine the legal and financial guidelines of your online business—typically, you can select from a partnership, corporation, sole proprietorship, or co-operative. Consider consulting a legal professional to ensure the right choice for your business.

Next, you can apply for a Canadian Business Number. Registering for this business tax ID can be done online for free from the CRA website. This nine-digit number allows you to separate your business and personal finances.

After receiving your CBN, check what other business licenses and permits you need to operate in your city, territory, or province. You may need to register your business with the territory or province you’ll be headquartered in. Many e-commerce businesses are home-based, so they don’t need as many licenses as brick-and-mortar stores, but you might need a home occupation permit that states your business doesn’t contribute to traffic or noise. Your business registration requirements will differ depending on your region, industry, and business type.

Step 5: Create your e-commerce business website.

With the paperwork signed and your business officially registered, the next step is to create an e-commerce website. The website is the “storefront” for your business, where customers can arrive, browse, and place items in their shopping carts. Your business website and its functionality are critical to your success.

To start, you’ll need a domain name that matches your business name. Then, select an e-commerce platform that suits your bandwidth for creating and maintaining the online store. The two most common types are all-inclusive software (like Shopify) and open-source platforms (like Magento), where you will conduct business operations such as managing inventory, shipping orders, and more.

Here are just a few e-commerce platforms to choose from:

Shopify: This popular e-commerce platform is all-inclusive and user-friendly, with plenty of customization options. With this hosted, software-as-a-service (SaaS) platform, you can choose from several subscription options depending on your business needs.

Squarespace: Known as a platform for building websites with modern templates, Squarespace also offers e-commerce capabilities. It is user-friendly but does not offer as many customizable e-commerce features as Shopify.

WooCommerce: WooCommerce is an open-source plug-in that you can add on to start selling on your WordPress site. It is free to download and offers a wide range of e-commerce tools, best for entrepreneurs with prior technical experience.

Magento: If you’re tech-savvy, you might want to use Magento, an open-source platform that allows you (or a hired developer) to customize every element of your online store.

After you’ve selected an e-commerce platform, you can move forward with building, customizing, and launching your online store. You’ll decide on the template design, create a wireframe, add your product inventory, and write out descriptions to introduce your business.

Step 6: Source and develop your products or services

Once you’ve set up a website prototype, you can add your product names, descriptions, and photos. You’ll also need to obtain your products, whether you go into production to develop them or source them from a wholesaler.

If you are a craftsperson, you’ll want to produce enough inventory to last the first few months. That might mean creating one of each colour and size of a clothing line, or 20 of each ceramic pot. This number will vary depending on your labour bandwidth and your marketing strategy, like how much traffic you’re driving to your website’s launch.

Then, you’ll need to arrange logistics such as branded packaging, warehousing, inventory management, and shipping.

Step 7: Launch and market your business

Congrats! Once you have successfully launched the business, you can begin monitoring your metrics and key performance indicators (KPIs) as your business grows. Continue experimenting with different types of digital marketing to drive traffic to your brand. 

Amid the inventory management, logistics, and marketing, you’ll want to ensure that your shipping and fulfillment go smoothly for every customer. It is wise to prepare contingency plans in case anything goes wrong. 

How much does it cost to start an e-commerce business?

Starting an e-commerce business is an investment that can reap generous profits, especially if a large consumer base connects with your brand. However, it also requires time: It can take up to two years to get an online business off the ground and start earning a profit.

Here are some upfront costs to consider:

Licenses and permits: Your legal documentation, such as licenses and permits, will depend on your business entity type, your state/location, and the products you sell. Fees can vary between territories and provinces. 

E-commerce platform, domain name, and hosting: Software such as Shopify will cost $38 CAD a month for just basics and $99 for a regular plan. Open-source platforms are free to download, but you’ll need to consider hosting and developer fees. Some platforms include a domain name and hosting, while others must be purchased separately—a domain can cost as little as $1 a year, while hosting can range from a few dollars to $700 per month.

Product inventory: Inventory might be your biggest and most strategic expense, since you’ll want to have enough to sell but don’t want to waste money on items that won’t sell. You may also need warehouse space and equipment.

Shipping: Shipping costs will vary depending on your products, sales, shipping services, speeds, and methods, and whether it is an add-on to your e-commerce platform. You may choose to outsource the entire shipping process if you want to focus on the products and other business operations.

Marketing: When starting, you may want to invest more in marketing and advertising. The Business Development Bank of Canada advises B2B companies should spend between 2 and 5 per cent of their revenues towards general marketing activities, raising that to 5 to 10 per cent for B2C firms [ 3 ]. However, some new e-commerce businesses spend up to 30 per cent on customer acquisition [ 4 ]. Using free resources and experimenting at first is recommended.

Employees: Depending on how big your company is and how fast it grows, you may be running the show for the first few months or even years. Some experience rapid growth and need to hire employees shortly after launching the business, while others remain solopreneurs.

Generally, there are fewer costs associated with e-commerce than brick and mortar. With rent prices and inflation escalating and a behavioural shift in the way consumers shop, e-commerce might just deliver a higher return on investment (ROI). Going online has many attractive benefits and a bright future for anyone interested in starting a business.

The initial start-up can cost up to tens of thousands of dollars. New business owners can choose to self-fund, rely on support from friends and family, or take on loans.

Tips for starting an e-commerce business

The journey to creating a successful e-commerce business requires motivation, strategy, passion, and a stroke of luck. Starting a business can feel similar to the birth of a child—hard work, but extraordinarily rewarding. Here are some tips when you’re just starting out:

Start small. You don’t have to invest in hundreds of products at first. If you’re a craftsperson, create an Instagram account and simple branding to gauge interest. If you’re sourcing products, give yourself a timeline to procure items, create a simple website, and a soft launch with targeted Google or Facebook ads. Then, build your business from there.

Keep up with trends. Sustainability is important to consider, as it was one of the biggest trends in e-commerce in 2023, including ethical practices, reducing waste, and efficiency, along with immersive experiences. For example, it is probably a better idea to start a subscription service for organic veggies or vegan meals, rather than a fast-fashion business.

Experiment with marketing. People won’t know about your business unless you promote it. Thankfully, there are many ways to conduct A/B testing on platforms like Google Ads with fewer dollars before launching a major campaign.

Take advantage of partnerships and multi-channel strategies. Even though D2C sales are trending, your brand awareness and sales can benefit from featuring your products on channels like large online retailers like Amazon and Etsy. Social media partnerships, including influencer and affiliate marketing, and public relations (featured in select publications) can also help you get noticed and gain traction.

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Article sources

Shopify. “ Global Ecommerce Sales (2020–2025) , https://www.shopify.com/blog/global-ecommerce-sales#:~:text=Global%20ecommerce%20sales%20are%20expected,increasingly%20lucrative%20option%20for%20businesses.” Accessed April 17, 2024.

EcommerceDB. “ The eCommerce market in Canada , https://ecommercedb.com/markets/ca/all.” Accessed April 17, 2024.

Business Development Bank of Canada (BDC). “ What is the average marketing budget for a small business? , https://www.bdc.ca/en/articles-tools/marketing-sales-export/marketing/what-average-marketing-budget-for-small-business” Accessed April 17, 2024.

Boldist. “ Planning Your Ecommerce Digital Marketing Budget , https://boldist.co/marketing-strategy/ecommerce-digital-marketing-budget/.” Accessed April 17, 2024.

Semrush. “ What Ecommerce Trends Will Define 2022? , https://www.semrush.com/blog/ecommerce-trends-2022/.” Accessed April 17, 2024.

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In today’s dynamic and uncertain landscape, commerce strategy—what we might formerly have referred to as ecommerce strategy—is so much more than it once was. Commerce is a complex journey in which the moment of truth—conversion—takes place. This reality means that every brand in every industry with every business model needs to optimize the commerce experience, and thus the customer experience , to drive conversion rates and revenues. Done correctly, this process also contains critical activities that can significantly reduce costs and satisfy a business’ key metrics for success.

The first step is to build a strategy that’s focused on commerce, a channel-less experience, rather than ecommerce, a rigid, outdated notion that doesn’t meet the needs of the modern consumer.

“It’s about experiential buying in a seamless omnichannel journey, which is so rich that it essentially becomes channel-less.” Rich Berkman, VP and Senior Partner for Digital Commerce at IBM iX

A successful commerce strategy then is a holistic endeavor across an organization, focused on personalization and fostering customer loyalty even in deeply uncertain times.

Ecommerce is dead

The idea of an “ecommerce business” is an anachronism, a holdover from when breaking into the digital realm involved replicating product descriptions on a web page and calling it an ecommerce store. In the early days of online shopping, ecommerce brands were categorized as online stores or “multichannel” businesses operating both ecommerce sites and brick-and-mortar locations. This era was defined by massive online marketplaces like Amazon, ecommerce platforms such as eBay, and consumer-to-consumer transactions conducted on social media platforms like Facebook marketplace.

Early on, ecommerce marketing strategies touted the novelty of tax-free, online-only retailing that incentivized consumers to select an online channel both for convenience and better pricing options. Those marketing campaigns focused on search engine optimization (SEO) and similar search-related tactics to drive attention and sales.Personalization on an ecommerce website might have involved a retailer remembering your previous orders or your name.

In the world dictated by these kinds of ecommerce sales and touch points, an effective ecommerce strategy might prioritize releasing new products on early iterations of social media, or retargeting consumers across marketing channels with an email marketing campaign. Later in the journey, tactics like influencer marketing and social media marketing encouraged channel-specific messaging that still separated a retailer’s digital operations from its in-person activities.

But the paradigm has shifted. Fatigued by endless options and plagued by the perception of bad actors, today consumers expect more.The modern shopper expects a unified and seamless buying journey with multiple channels involved.   The idea of discrete sales channels has collapsed into an imperative to create fluid, dynamic experiences that meet customers exactly where they are.

That means every business, no matter the industry or organizational plan, needs to prioritize the three pillars of an excellent commerce experience strategy: Trust, relevance and convenience . Experience is the North Star of conversion. By cultivating those pillars, any retailer, from a small business to a multinational corporation, can elevate its experience to increase its relevance and remain competitive.

Building trust in an uncertain world

Research shows that today’s customer is anxious and uncertain. Most consumers believe that the world is changing too quickly; over half think business leaders are lying to them , purposely trying to mislead people by grossly exaggerating or providing information they know is false. And, in of 2024, brand awareness means little without trust. The integrity of a business’ reputation remains among the top criteria for consumers when they consider where their dollars go.

Customer acquisition and customer retention depend on consistently excellent experiences that reward consumer trust. Making trust a priority requires building relationships through transparent commerce experiences. It means implementing systems that treat potential customers as valued partners rather than a series of data points and target markets to exploit. The necessity of trust in a relationship-focused commerce strategy is perhaps most obvious in terms of how a business treats the data it acquires from its customer base.

But trust is earned—or lost—at every interaction in the customer journey.

• Can the customer trust a business to maintain competitive pricing, and generate digital marketing campaigns that are more useful than invasive?
• Can the customer trust a business to make it easy to control their own data?
• Is the user experience intuitive and cohesive regardless of whether a customer is shopping at an online sale or in a store?
• When new customers view their shopping carts and prepare to complete checkout, does the business automatically sign them up for services they do not want?
• Does the payment process frustrate a customer to the point of cart abandonment?
• If a package is set to deliver during a specific window, can the customer trust it arrives during that time?
• Does the brand make it convenient to do business with them post purchase?

By addressing the issue of consumer trust at every stage, an organization can eliminate fiction and consumer pain points to build long-lasting relationships.

Navigating ethical personalization

Personalization in commerce is no longer optional . Just as search engine optimization is essential common practice for getting a business’s webpages in front of people online, personalization is essential for meeting consumer expectations. Today’s consumer expects a highly customized channel-less experience that anticipates their needs.

But those same consumers are also wary of the potential costs of personalization. According to a recent article in Forbes, data security is a “nonnegotiable” factor for boomers , 90% of whom said that personal data protection is their first consideration when choosing a brand. And for gen X, data protection is of the utmost priority; 87% say it’s the primary factor influencing their purchasing behavior. This puts brands in a delicate position.

“You cannot create an experience that resonates with consumers—one that is trusted, relevant and convenient—without understanding the emotions and motivations of those populations being served.” Shantha Farris, Global Digital Commerce Strategy and Offering Leader at IBM iX

The vast amounts of data businesses collect, combined with external data sources, can be used to present cross-selling and upselling opportunities that genuinely appeal to customers. Using automation, businesses can create buyer personas at a rapid pace and use them to improve the customer journey and craft engaging content across channels. But in a channel-less world, data should be used to inform more than FAQ pages, content marketing tactics and email campaigns.

To create precise and positive experiences, brands should synthesize their proprietary customer data—like purchase history and preferences—with third-party sources such as data gleaned from social media scraping, user-generated content and demographic market research. By using these sources, businesses can obtain both real-time insights into target customers’ sentiment and broader macro-level perspectives on their industry at large. Using advanced analytics and machine learning algorithms, such data streams can be transformed into deep insights that predict a target audience’s needs.

To ensure the success of this approach, it is crucial to maintain a strong focus on data quality, security and ethical considerations. Brands must ensure that they are collecting and using data in a way that is transparent, compliant with regulations and respectful of customer privacy. By doing so, they can build trust with their customers and create a positive, personalized experience that drives long-term growth and loyalty across the commerce journey.

Creating delightful, convenient experiences

As mentioned earlier, experience is the North Star of conversion, and building convenient experiences with consistent functions remains a key driver for a business’ sustainable growth. In a channel-less world, successful brands deliver holistic customer journeys that meet customers exactly where they are, whether the touch point is a product page, an SMS message, a social platform like TikTok, or an in-person visit to a store.

The future of commerce , augmented by automation and AI , will increasingly provide packaged customer experiences. This might include personalized subscriptions or a series of products, like travel arrangements, purchased together by using natural language and taking a specific customer’s preferences into account.

“Once you have the foundation of a trusted, relevant and convenient experience, building on that foundation with the power of generative AI will allow businesses to deepen their customer relationships, ultimately driving more profitable brand growth.” Rich Berkman, VP and Senior Partner for Digital Commerce at IBM iX

The moment of conversion can take many forms. With careful planning, the modern retailer has the potential to create a powerful buying experience—one that wins customer loyalty and cultivates meaningful brand relationships. And new technologies like generative AI, when used correctly, provide an opportunity for sustainable and strategic growth.

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