eCommerce Blog / How to start an online business

How to start an online business

As more and more people flock to shop on the web, there has never been a better time to start an online business. Researchers predict that by 2009, 40% of all households in the USA will be making online purchases!

So how do you go about setting up your own online business and capitalizing on this emerging trend?

There are three major steps to setting up your online business:

1. Registering your business

This involves some offline work - deciding what type of business you wish to form (sole proprietorship, general partnership, limited partnership, C corporation, S corporation, limited liability corporation), and then registering it. In general, I advise staying away from sole proprietorships and general partnerships. The risk of being lumped with debts and obligations from the business is just too great!

In the USA, business registration practices and requirements vary between states. Georgia and New York both allow business registrations online.


New York

A company called UKIncorp provides an online incorporation service for the following states: Delaware, Arkansas, California, Colorado, Florida, New York, Nevada, Oklahoma, Oregon and Washington.

The online part of this process involves registering a domain name. GoDaddy and Nameboy are good options.

To find more business-related registration and tax forms visit All Business

2. Sourcing Stock

The next stage of the process involves sourcing your products.

Here's a quick link to a company that does it all for you if you don't want to read through this.

If you haven’t already, now is the time to carry out that all-essential market research. With fuel costs on the rise, an increasing number of people are purchasing all types of goods online – everything from clothes, books, and electronics through to necessities like groceries and household supplies. However, online businesses supplying these needs are also proliferating. It’s vital that you establish demand for your product before you proceed too far.

Once you are confident that there is a demand you can fill, it’s time to find a supplier.

There are a number of supply possibilities: wholesalers, drop shippers and overstock/liquidation sales are all fantastic ways to source products.

At this point it is essential that you consider order fulfillment. One feature of good customer service is making sure that the customer receives their purchase as quickly as possible. The longer the customer has to wait, the less likely they are to return to you to buy. Check how quickly your suppliers can re-order and deliver stock. No matter how small your business, you need to be able to cope with a sudden large order should it occur.

It’s very important to compare prices when finding your supplier. Don’t forget that online buyers often expect online products to be slightly cheaper than retail prices. It’s important to do accurate costings for all of your stock (including shipping and transit costs) to make sure that your profit margins are viable.

Product suppliers of non-brand name products such as toys, furniture, jewelry and clothing can be found online at sites such as SaleHoo. Asia is fast becoming a great source of wholesale products and finding these suppliers online is an easy first stop.

For brand name products, you are unlikely to find sources online (and be wary of any online sites purporting to sell brand names). Legitimate brand name sources will generally be in the USA or UK and you will need to contact them directly by telephone to be taken seriously.

When you make initial contact with your suppliers, be prepared with all the important data about your business. You must have a good business plan that includes a well-thought out marketing plan and carefully prepared financial forecasts. The supplier will want to be sure you can shift the stock before they agree to do business with you.

It’s quite usual, and indeed safer, to have more than one supplier – particularly if you are stocking an array of products.

3. How will you sell your product?

Many people don’t actually realize just how many ways there are to sell products online.

You can sell your stock through your own website, through an auction site and using classified ads.

Create your own store

Design your own shopping website, purchase a turnkey store, or use a ready-made store and promote the products of others (e.g. Amazon and Cafepress).

Sell through an Auction site

eBay is the first auction site that everyone thinks of, but Yahoo and Amazon also have strong auction sales.

Auction sites include:


UBid Online Auction




Bidder Network

Online classifieds

Many people find selling by online classifieds a great way of doing business – especially when offering a locally-based product or service. Craig’s List is fast becoming a force to be reckoned with but it’s certainly not the only option! See below for links:


Buy Sell Community

Able Wise

US Free Ads


Comments (1)

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NEW ORLEANS on 7:32 13 Jan
This was written in 2006.... when I first paid to join this site... ISN'T IT TIME TO REDO...UPDATE...!!!!!!


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