E-Commerce: Write a Business Plan

Now that you have your business idea and niche researched, writing a business plan helps to formulate your idea to see if it will work.  Writing it down helps to put an action plan in place to get your online business started and provides you with a guiding document to help you manage your business as you move forward.

Whether you are starting a simple e-commerce business or a large-scale technology solution, there are certain sections of the business plan that are essential to success. 

The amount of work and the level of detail will depend on the type of business you are opening and your needs. For example, if you are looking for funding, it is recommended to do a full business plan with extensive research, provide financial projections and offer information about the founder(s). 

Here are some sections and information to include in your e-commerce business plan.

  1. Business Goals

  2. About your Company

  3. Business Model

  4. Product / Service Mix

  5. Sales Strategy

  6. Describe your Ideal Client

  7. Financials - Start-Up & Ongoing Costs

  8. Marketing & promotion


Business Goals

What do you want to achieve with your business? These may include: How many clients do you need? How much revenue do you need to gross? What are the markets to whom you are selling?  Are you selling locally, nationally or or do you want to sell internationally?   Define your first year, five year and then think even bigger.  Put down your 20 year business goals to envision where you want this business to grow.

About your Company

  • Vision - The vision statement is aspiring and says what matters to you and where you want the company to go.

  • Mission - A mission statement says how you will achieve your vision.

  • Value added Proposition (VAP) -  What is the value that you offer your customers?  State the tangible benefits of doing business with you.

  • Competitive Advantage - State why someone will choose your company over your competitors.

Business Model

What type of business do you want to start.  The Types of business models are:

  • B2C – Business to Consumer

  • B2B – Business to Business

  • C2B - Consumer to Business (e.g. Upwork)

  • C2C – Consumer to Consumer  (e.g. Craigslist)

Product / Service Mix

  • What are you selling?  Go into details about each product and service that you will be selling through your online store. Provide general information as a guide on what types of product and service you will be selling to help you make informed decisions around current and future offerings.  Include information about the vendor(s), your pricing position, what percentage of your revenue will they be, and other details relevant to your business (e.g., if this is seasonal, who is your ideal customer, key features & benefits).

  • Write a detailed description: As this is a key part of your online business and information will be required to add to your product description on your website, you should start collecting all details in a spreadsheet to stay organized. Include information about the product/service (description) and financials (e.g., cost, shipping, margins, retail).

Sales strategy 

Once you  decide on your business model, you need to develop a plan on how to generate revenue? How will you take your  product or service to market and generate a profit, who will be your ideal customer, and  how will you set up your sales operations.

  • What is your delivery method?  You may choose one or multiple ways to deliver your goods or services.  

    • Dropshipping - this is where you act as a broker between the customer and the vendor.  You enter into an agreement with the vendor to put their product on your e-commerce store, the customer purchases from you and you send the order to the vendor who then ships that product to the customer.  Typically you manage all sales and customer service enquiries.  You can go directly to the vendor or become part of a marketplace that has a variety of products available e.g. Oberlo.  Website platforms such as Shopify are ideally set up for dropshipping.

    • Direct to Consumer Sales (B2C) - is when a manufacturer or retailer sells their product directly to the end consumer.

    • Wholesale - Selling to a third party which then sells a product to the end user is considered wholesale sales.  This is typical for a manufacturer or distributor who carries multiple product skus.

    • Print on Demand - If you are an artist or designer, you have the opportunities to put digital versions of your designs or illustrations on products to sell.  Popular merchandise includes t-shirts, posters, mugs and hats.  Sellers provide images of the mocked-up product on their website and then when someone purchases it through their e-commerce website the order goes to the print-on-demand vendor, printed and then shipped to the customer.  E.g. printful.com / printify.com 

    • White Label / Private Label - If you are looking to sell a line of products under your brand, you are looking to create a white label or private label to put on certain products.  You may have your own product that you’ve created or seek out a manufacturer who is willing to create what you want.  From there you will need to consider how you will sell your merchandise.

    • Service - There are many opportunities for those with expertise in a certain industry or profession where they can sell their services to help individuals or organizations.  There are no physical products sold.

    • Subscription - Selling a product or service on a repeatable basis, often monthly or annually is providing a subscription service.  This is often as a monthly order of items delivered to your home or business, or can be a SaaS product which is a cloud based product or service.  Popular are digital media services for movies, news or gaming.

    • Membership - When you ask people to pay to sign up for a community or group, you are providing a membership service model.  They are offering money to gain the benefits of belonging to that group.

  • Choose your sales channel(s) - The sales channels are the places where people can purchase from you. Your e-commerce website is the hub of all your marketing and will have a shopping cart for your products. If you are selling services, your website will provide information about your services and offer a way to connect with you to discuss the opportunities of working with you and your business. An omni-channel sales strategy includes multiple channels. Online marketplaces sell many products from various vendors, such as Etsy, Amazon and eBay. Social Commerce is selling directly on social media platforms. Google Shopping is available to sell products. And then, there are offline channels available, such as in-person markets and retail outlets.

Describe your Ideal Client 

This is the person or organization that will benefit the most from purchasing your product.  You want to create interest with this group and target your sales and marketing to this group as there is an expectation that they will give you the highest return on investment, either in the short term or long term (repeatable sales). If you offer various products and services, there may be multiple clients to consider.

Financials - Start-up + Ongoing (operations)

It is important to run the numbers to ensure that it is possible to generate a profit.  If not, then it isn’t worth investing the time into starting this business.  Even if you are a not-for-profit, there will always be expenses that need to be covered.  By identifying the costs to start and operate your business, you will know how much revenue you will require.  This is foundational to every start-up business.  Gross revenue minus expenses will result in your net profit.  

Here are some of the typical costs for an online business:

  • START-UP - you will need to factor in these fees to set up your online business.

    • Domain Name

    • Website Hosting (annual cost)

    • Inventory

    • Payment processing

    • Register Business / Incorporation

    • Accounting – accountant, software & set-up

    • Branding & Marketing

      • Website design, logo & content (writing, photography, video)

  • FIXED COSTS - these are the constant costs to running your business.  

    • Infrastructure costs (e.g., website)

    • Administration & Salaries

    • Product development

    • Marketing

  • VARIABLE COSTS - These costs will fluctuate based on the number of sales and changes in the market.  

    • Cost of Goods (COG) Sold

    • Inbound costs (logistics)

    • Outbound costs (logistics)

    • Order processing

    • Customer acquisition costs (e.g., paid media)

This company provides some financial benchmarks for selling online.

  • COG below 15-20% of the sale price

  • OUTBOUND logistics costs below 20-25% of order value

  • MARKETING (FIXED) 5-10% of projected revenue

  • PROCESSING FEES are 2-5% of order value

  • VARIABLE COSTS are 50-60% of revenues

  • FIXED COSTS are 20-25% of revenue

  • 15-25% GROSS MARGIN

Marketing & Promotion 

 A marketing plan is created to outline how you will attract customers to your online store.  

  • Your Brand - Marketing begins with creating your brand story. 

    • What is a brand?  A brand is the promise you make to your customers.  Through words, visuals and actions you tell your brand’s story to help your customers understand what you have to offer, your values, and how you will deliver on that promise.  So people can easily recognize and remember their brand, unique identifiers and a consistent style of content is shared across all owned marketing channels. Your logo, brand colours, type of images, and style of language set the tone and image of your brand and should be used consistently throughout your marketing. Here is a free branding materials checklist to get started >

  • The Plan - There are a variety of tactics or actions that you can take to promote your business.  Creating a profile of your ideal customer, reviewing your resources (time, money, and skill) that you have for marketing, and researching best practices for marketing will help you get started. 

    • Choose your marketing channels: For a digital-first marketing strategy, choose the marketing channels you would like to use. Your website, email marketing, social media, and digital advertising are some of the choices you have.

    • Create content & design for your customer: Considering the buyer’s journey, plan what type of content you will create and share to promote your business.   Start with an organic (free) strategy with frequency of posting and engagement, and then supplement with paid advertising as needed. First you need to attract visitors to your store. To convert visitors into buyers, you first need to give them the information they need to understand what you have to offer, then help them understand if what you offer is the right solution for them, and lastly show them how to do business with you.  Once they become your customer, continue to be a resource to them.  Information you share with your existing customers may include how to use your product and potential other products they may wish to purchase. 

    • To learn more about how visit thefutureisunlimited.ca for webinars and free downloads on How to write a Digital Marketing Plan and more.

  • Do, learn & Adapt - It takes time to build an online presence. Setting up your e-commerce website and other marketing channels takes time - branding, design, writing content, adding product pages, and optimizing for search. Whether you do it yourself or hire a designer you need to be part of the process. Once that is in place you need to start building the content, finding potential customers and then building your credibility as an e-commerce seller. It takes time for search engines to index your website and then

Keep your plan simple, capturing the essential information to start and grow your business.

Writing a business plan doesn’t have to be a formal process. However, it does take a bit of upfront time in doing the research and collecting the information. If this document is for your reference only, use point form, keep it short and add to it as new information comes available. This business planning document(s) is an evergreen document and should be updated as your business grows and evolves. Be sure to schedule in your calendar planning sessions for you to review your progress and make any necessary updates.


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E-Commerce: Find your niche