Product Sourcing: How to Start an eCommerce Store - A Step-By-Step Guide

Worldwide eCommerce sales are likely to hit $6 trillion by 2024. What was once a game dominated by big companies is now approachable thanks to powerful entry-level eCommerce tools and strategies. So, if you want to know how to start an eCommerce store in 2022, check out our guide below.

Starting an ecommerce business

We’ve broken down the process into nine steps:

• Finding a product (and niche)
• Competitive research
• Choosing a sales platform
• Picking a business model
• Finding suppliers
• Managing shipping
• Applying for a license (if necessary)
• Creating internal processes
• Advertising your products

Below, you’ll find a breakdown of how to approach each step. Regardless of whether you are a beginner or an eCommerce veteran, you’ll find tips using the latest eCommerce data.

1. Find a niche and product

Your goal as a new or experienced seller is to find products with high selling potential. But if you don’t focus on individual niches and products, your strategy will be unfocused and ineffective.

Before launching, it’s crucial to conduct thorough market research to validate your business idea, analyze customer needs, and ensure there is sufficient market demand for your products.

A niche refers to an entire group of products. For example, kitchenware is a niche while a spatula would be a product for that niche.

Having a niche is important because it allows you to focus on the needs of a few potential customers. Creating strategies catered to those customers will let you appeal to them easier.

Identifying your target market and using keyword research can help you discover trending products and understand current market demand, ensuring your offerings align with what customers are searching for.

To find a good niche, here are some excellent research tools:

• Social media. Sites like Twitter, Pinterest, and Reddit are full of people who talk about what they want. Look up trending products in various social media spaces involving eCommerce.
• Existing eCommerce sites. Sites like Amazon and Walmart have many best-selling pages and trending products. Pay attention to those who win in the long- and short-run. For more information on what works, look closely at customer reviews.
• Local stores. Your local Walmart (or similar store) will have trending products prominently displayed upfront. You’ll want to supplement this data with other sources for it to be effective.
• Google Trends. Google’s trend pages lets you see what people search for online over a period. It’s a quick and easy way to use historical data.
• Analysis tools. Many eCommerce sites like Walmart or Amazon have third-party analysis tools you can use. These tools use data from the platform you can apply to your site or their site.
• Competitor research. Analyzing other businesses in your niche helps you identify gaps in the market and opportunities to differentiate your product offerings.

Focusing on a niche market helps you stand out from competitors and better meet the needs of your target audience.

It’s important to focus on products that meet your needs. As a new seller, an ideal solution would be to look for trending products with long-term potential.

When selecting products, consider how they fit into broader product categories and ensure your product listings and product pages are well-optimized for your online store to improve discoverability and conversions.

2. Do competitive research

Competitive research allows you to see how others are performing. When starting an online business, it’s best to know who your competition is before selling.

Using competitor research helps validate your business idea and gives you insight into current market demand, allowing you to make informed decisions.

Ideally, you’ll want to target a low-competition high-demand area. This means you need to look at the current competition and see where their products lack. To do this, you can look at customer reviews and the list of products your competition offers.

Understanding your target customers and target audience is essential when analyzing competitors, as it helps you identify what appeals to them and where competitors may be falling short.

Identifying an underserved portion of the niche allows you to find a product to focus on. You’ll also want to see what competitors in your niche do to find success.

Looking at past promotional material and the ways competitors describe their product can help. Your goal is to identify weaknesses in the competition you can exploit.

To do this, address some of the biggest complaints of a product or niche. Presenting your product as a solution to a known problem competitors aren’t addressing can help your eCommerce business grow.

3. Choose a platform for selling

Once you know how your products can dominate the market, you need to choose a platform. Often, the platform you choose for selling can change your strategy.

Choosing the right ecommerce website and online store platform is critical, as it impacts your ability to manage inventory, optimize product listings, and streamline operations with integrated inventory management features.

Below are some popular platforms you can use:

• Amazon is the largest eCommerce platform available, owning about 50% of the market. By making use of third-party analysis tools (like AMZScout), you can shorten your product research process.
• eBay is an auction-based marketplace you can use today with very little setup. If you want to get the feel of beginning with eCommerce, eBay isn’t a terrible option, but has less traffic than Amazon.
• You can create your own eCommerce site through online tools like WordPress or Shopify. It’s often great to have a Shopify store in combination with other eCommerce websites, but harder and more expensive to get popular.
• Social selling is an incredible trend where you sell on sites like Facebook and TikTok. It has the chance to grow your sales numbers by up to 50% if done right. However, you’ll have to increase your ad costs.

Online marketplaces like Etsy, eBay, Amazon, and TikTok Shop facilitate consumer to consumer, business to consumer, and business to business transactions, providing ecommerce sellers with multiple channels to reach customers.

These platforms are sales channels. As you get comfortable with eCommerce, it’s best to have multiple channels.

Search engine optimization is essential for your ecommerce website, as optimizing for search engines increases your store’s visibility and helps attract more customers online.

Selling products online requires careful planning and execution to build a profitable ecommerce business.

4. Choose a business model

Your business model dictates how you will sell and source your products. Here are your options and some quick pros and cons of each:

• Private label selling is selling products with your branding manufactured by someone else. Because you build your own brand, it provides greater potential loyalty. However, it requires more upfront investment.
• Retail arbitrage is buying products from local stores to resell at a markup. It’s ideal if you don’t have a lot of starting capital and want to flip a quick profit. However, it requires a lot of time and energy.
• Online arbitrage is buying products from other eCommerce stores to resell at a markup. Its risks are like retail arbitrage, only with less driving around.
• Dropshipping is selling products with no management of the quality control, storage, or shipment process. It’s great if you excel at marketing and audience building. However, it’s not ideal if you want a high profit margin.
• Wholesale is buying bulk-quantity products from existing brands. It requires a lot of upfront capital investment. However, it can create excellent returns if you have established sales channels.

There are several ecommerce business models to consider, including business to business (B2B), business to consumer (B2C), consumer to consumer (C2C), and consumer to business (C2B), each with unique advantages and sales strategies.

It’s important to create a comprehensive business plan and select the right business structure for your ecommerce company, as this will influence your liabilities, tax obligations, and long-term growth.

Choose a memorable business name and register it appropriately to establish your brand and meet legal requirements.

Many ecommerce businesses start small, and new business owners often test their business idea before scaling up.

Developing your own products can help you build a profitable ecommerce business and lay the foundation for a successful ecommerce business.

A profitable online business requires ongoing planning, adaptation, and a willingness to refine your approach as you grow.

Among these, private label sales typically offer the best long-term potential.

5. Find suppliers

Once you establish how you want to sell, you need to find product suppliers. Below are different ways you can get find good product suppliers:

• Aliexpress & Alibaba connect low-cost, overseas product suppliers with you. Buying from these manufacturers allows you to see reviews and ratings of the supplier before you purchase.
• A Google search for “ ‘business model’ product supplier” can reveal some interesting options. Just be sure to check through third-party sources (like Trustpilot) to be sure you can trust any site you find.
• Dropshipping suppliers like Oberlo and SaleHoo have a database of other suppliers who use their platform. You pay for the access to these product lineups, providing you an easy source for resale.
• Wholesale suppliers like DHGate and EK Wholesale provide you databases specific to wholesale needs. You can use these databases to set up regular deals or contact wholesale distributors.

Sourcing is especially important for dropshipping business models, where you rely on suppliers and third party logistics providers to handle fulfillment, packaging, and delivery.

Some ecommerce sellers also offer services online, such as digital products or virtual services, in addition to physical goods.

Regardless of the supplier you choose, it’s best to get a product sample before committing. The sample will give you a good idea of product quality, giving you more confidence in your supplier.

In addition, take the time to check public reviews on them. If the company is new, just know you are taking a risk by working with them.

When a customer places an order, this triggers the fulfillment process, whether you handle shipping yourself or use a third party logistics provider.

6. Manage shipping

Shipping ensures you can get products to where they need to go. For business shipping and handling, you have one of two options:

• Do it yourself through companies like UPS, USPS, FedEx, DHL, or your own logistics network
• Outsource shipping to other companies.

Option one has two levels of DIY, where you handle the packaging and warehousing. However, you’ll hand off the second half to another shipping company. Alternatively, you can build your own shipping network, which is pretty expensive.

Outsourcing is often the best starting point for new sellers. If you sell on Amazon, you can use the Fulfillment By Amazon (FBA) service to leverage Amazon’s existing logistics network.

When managing shipping, consider shipping costs and how they impact your profit margins. Using third party logistics providers can help streamline fulfillment and reduce operational burdens.

While outsourcing decreases your profits, it’s best to focus on your strengths. Unless your goal is to create an excellent fulfillment network, focus on building your eCommerce store in other ways.

7. Apply for a license

There are many business licenses that you need to do business online. Below is a quick roundup of what you’ll most likely need:

• A business operation license and a sales tax license is necessary to start most eCommerce businesses. This applies to most states. You might also need a seller’s permit.
• An Employee Identification Number (EIN) is necessary if you plan on hiring employees and paying out their taxes properly.
• A DBA license (Doing Business As License) is ideal if you don’t plan on starting a company, but are opening a business and operating under your name.

You’ll also need a dedicated business bank account and proper business banking to manage your ecommerce business finances, separate personal and business funds, and meet payment provider requirements.

Check with your state’s requirements from their official government website to see specific needs.

8. Set up internal processes

A good business operates like a well-oiled machine. As your eCommerce store grows, you’ll be about to hire and outsource to new employees.

During this process, it’s important that you establish internal business processes for people to follow. That is why TIMIFY is here to help you manage your and your employee’s times effectively.

TIMIFY provides you a simple way for efficient team collaboration and resource management. Through a working system built on TIMIFY, everyone knows what to do with no need for micromanaging.

Tracking cash flow, managing cash flow, and monitoring key performance indicators are essential to ensure healthy ecommerce business finances and support sustainable growth.

Customer acquisition and attracting new customers online should be a core focus as you scale, using data-driven processes to reach and engage your target audience.

Ultimately, your goal with any business is to set it up so you don’t have to be involved. By establishing processes and management controls through TIMIFY, you are one step closer to that goal. ​​​​​​​

9. Advertise your products

With businesses, it’s easy to set everything up and forget the last step: bringing people to the page. With advertisements, you can do this, but it’s tricky to start.

Building a marketing strategy and ecommerce marketing strategy is key—incorporate digital marketing, social media marketing, email marketing, and paid advertising to reach your target audience and drive ecommerce sales.

Below are a few advertisement methods you can consider:

• Amazon, eBay, and other eCommerce marketplaces have internal tools for advertising. PPC, or Pay Per Click, campaigns are ideal, as you only pay if your ad is engaging.
• Facebook, TikTok, and Twitter remind us of the power of social advertising. Beyond social selling, it’s good to target people where they browse.
• Google Ads allows you to target specific keywords that people search. If you are on the top of the list of products that meet people’s needs, you’ll get some outstanding exposure.

Use search engine optimization and search engine marketing to attract customers online, increase your store’s visibility, and boost ecommerce sales.

When you start, it’s best to focus on people who already have asked about your product. Retargeting campaigns perform ten times better on average because the customer already has some interest in your product.

You also want to start with many, small ad campaigns with slight variations. A/B testing is where you change a single element between the ads (often the title) to see which is more effective. Doing so allows you to eliminate ads that don’t work.

Leverage analytics to track key performance indicators and continually optimize your marketing strategy for better results.

Many ecommerce businesses use a combination of marketing channels to sell online and grow their own ecommerce business, adapting their approach as they scale.

Understanding the global ecommerce market and adapting your strategy to reach new customers internationally can unlock new growth opportunities.

A strong product development process, informed by customer feedback, helps you create products that meet market demand and stand out from other businesses.

Optimizing your ecommerce business step by step, using A/B testing and data-driven improvements, is essential for long-term success.

Conclusion: Building a successful ecommerce business

As eCommerce approaches the $5 trillion mark, now is an excellent time to start a business. Using these tips and steps, you'll get a good start on creating an effective business.

As your business grows, be sure you have plans for scaling. To aid you in that process, use TIMIFY's retail management tools to build an effective process.