Starting an e-commerce business: model, operations and growth

E-commerce has low entry barriers but intense competition. Success needs solid operations and a profitable acquisition model as much as a good product.

Business models

• Direct-to-consumer (D2C): sell your own products on your own site; brand and customer data are yours.
• Marketplace selling: use big platforms' traffic; pay commission and get limited customer relationship.
• Subscription boxes: regular deliveries and predictable revenue.
• Your own marketplace: a platform connecting buyers and sellers; see our marketplace guide.

Many brands sell both on their site and on marketplaces to spread risk.

Products and sourcing

• Avoid crowded products where price is the only difference.
• Agree minimum orders, lead times and quality terms with suppliers in writing.
• Start with small batches to keep inventory costs down.

Payments, shipping and returns

• Offer trusted, widely used payment methods.
• Show delivery time and cost clearly on product pages.
• Set up withdrawal and return processes that comply with distance-selling rules; easy returns build trust.

Unit economics

Calculate the contribution left on each order: price − product cost − shipping − payment fees − returns − marketing. Acquisition cost must be covered by contribution from first and repeat purchases; see startup metrics.

Growth

• Optimise product pages for search; see our SEO guide.
• Build an email list and repeat-purchase campaigns.
• Highlight reviews and real product photos.
• Run A/B tests to raise conversion.

Conclusion

The winners in e-commerce are brands with repeat customers that make a profit on every order. Browse e-commerce startups on our sector page.