An Ultimate Guide to Write an E-Commerce Business Plan

An Ultimate Guide to Write an E-Commerce Business Plan

The e-commerce industry is thriving like ever before. You’ve been following the trends, seeing that many new entrepreneurs are making decent money. Nice job.

The global B2C e-commerce market would reach $6.2 trillion by 2027 before the pandemic. But, that eCommerce sales grow even faster, we can expect this figure to be much higher. Enticing, right? But this means there will be more eCommerce startups, too.

Let’s make sure that your name makes the list of the most successful ones. The first step to get there is to plan your success. This means writing a business plan.

In this post, you’ll find a step-by-step guide to write a business plan. We’ll throw in examples to show the best practices.

What is an eCommerce Business Plan?

An eCommerce business plan is a roadmap that describes the new business, its goals, and the strategies to achieve them. It’s a planning document you need to outline all operations and financial aspects of the new business.

A business plan is important because it gives you a goal and methods to get there. In fact, a lack of a business plan is in the top three reasons why businesses fail. Also, it’s the document that you’ll present to investors looking for talented entrepreneurs like you.

How to Write an eCommerce Business Plan

Here are the six steps to take to write a plan and start your online business off right.

1. Begin an Executive Summary

Even though we’re starting with the executive summary, always revisit this section once you’re done writing the plan. The goal of the summary is to give the most crucial details about the business – and you’ll know more by the end.

Include these points in your executive summary:

  • Give a brief business overview. Describe your company and what you’d like to achieve in the next few years. Example: “ABC is an online clothing store selling boots, clothes, and accessories for men and women.”
  • Define profit goals.“Based on the current market size and the area served by ABC, our sales projections are $300,000.”
  • Set a clear mission statement. It answers the question: “What impact do you want your business to have on the world?” Here’s Timberland’s mission statement for inspiration.

  • Outline the company’s structure. The organizational chart depends on how many people you can hire. The essential staff members include the CEO, a customer support specialist, a software engineer, an accountant, and an order fulfillment manager.
Mission statement

The result should be a concise but optimistic summary that gives the reader an interest in learning more about the new business.

2. Describe Your Target Audience and Products

In this section, we’re going to define the target market and talk about the products in more detail.

First–

A target audience is a group of customers that shares a similar need for a product or service and has money to buy it. Other terms to describe it are “target customers” and “target market.”

The target audience depends on the nature of the business.

Here are a few examples.

Zara (a clothing retailer):

Women and men between 18 and 40 years of age who have medium incomes. They reside in urban areas and follow fashion trends, shopping for clothing at least once in a couple of months. They are price sensitive and want to have the most up to date clothing and accessories for affordable prices.

Best Buy (electronics store):

The entire focus market of consumer electronics customers.

Answer these questions to define your target audience in the business plan in enough detail:

  • Who are the people who would be interested in my products?
  • Where do they live?
  • What interest does the target market share?
  • What is their income range and how often do they shop for products I’m selling?

The result should be several very specific sentences that resemble Zara’s description of the target audience.

Next–

Products.

Here, we describe:

  • The main products. If your eCommerce store will sell hundreds of products, focus on product categories but mention at least a few specific items from each. So no need to describe the entire product range here.
  • Reasons why the target audience needs them. People need Zara’s products, for example, to stay updated on the latest fashion trends
  • How the products will compete with other eCommerce businesses selling the same or similar items. Common competitive points include different prices and a higher level of customer service.

3. Include Market Research

The purpose of market research is to help understand two things:

  • Reasons why target customers might buy your product
  • Main competitors.

First, customer research.

We’ve briefly touched upon customer research already. But here we’re going to expand our research a bit in this section. Here’s why.

We need to come up with several detailed reasons why people might be interested in buying products to ensure long-term interest in your business.

Let’s turn to consumer research. This data from MarketingCharts suggests these motivations for buying clothes online (Amazon).

Amazon clothing purchases graph

Now, let’s get back to Zara for another example. People buy Zara’s clothing because they:

  • Want to stay fashionable (Zara follows the latest fashion trends)
  • Shop at least once in a couple of months (Zara updates collections frequently) The brand updates its clothing collection at least once a month to satisfy this need. Also called “instant fashion,” this strategy ensures that the brand has fresh items when a customer visits their online store.

Expand on the reasons consumers will buy your products and focus on their implications for the business strategy. Give each reason a lot of thought - maybe there’s an opportunity to increase sales by focusing on satisfying a specific need, like free and fast shipping.

Next, competitive analysis.

Our goal is to review the main competitors with the SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis and understand the position of your business in the market.

Here’s an example of a SWOT analysis for Zara.

  • Strengths. Instant fashion strategy provides regular new collections, a fast supply chain, an easy-to-shop online store
  • Weaknesses. Sustainability and environmental impact of the instant fashion strategy, the heavy reliance on brick-and-mortar stores, ethical work practices
  • Opportunities.Frequent visits by the target customers, social media influencer marketing
  • Threats. Strong competition from other retail fashion brands, changing attitude to instant fashion from environmentally conscious customers.

Do a SWOT analysis for a few large competitors. The results will help you understand where your business can outcompete them.

4. Outline Your Marketing and Logistics Plan

A marketing plan describes your business’s strategy to acquire new customers, retain the existing ones, and raise awareness of the brand.

This section includes:

  • Marketing channels you’ll use to promote your business (Facebook advertising, Google, print ads, etc.)
  • Marketing and advertising goals with timelines
  • Key performance indicators you’ll be tracking (website traffic, sales, etc.) Choosing the most effective marketing channels is important for the best start.

Google and Facebook advertising campaigns are common because they give access to millions of potential customers. So they’re your best bet when starting a new eCommerce business.

With Google, you might want to consider running an ads campaign and investing in blogging. The writing companies advise to create keyword-optimized blog posts to educate customers and lead them to product pages. If you feel like you need some professional help, you can create a copywriting team to make sure you provide well-researched content to your audience.

Timberland’s blog is a good example. The company writes many types of posts, from those promoting new products to those describing their social responsibility projects.

Timerland blog example

With social media advertising, consider trying to display banner ads. They are highly customizable, and you can run them on all popular social media networks.

Okay, marketing, check. Next, logistics.

The logistics plan should cover:

  • Suppliers. Where will you get the products to sell at your store?
  • Manufacturing. Define if you’ll produce your products, use a third-party producer, or a dropshipping supplier. Indicate average manufacturing times
  • Shipping and order fulfillment. Write here a) the time needed to pack and ship products to customers, b) shipping services you will use for deliveries
  • Inventory management. Will you store inventory? If yes, where? How will you manage incoming and outgoing inventory?

eCommerce businesses that rent storage spaces also list technical requirements for warehouses. They include computers, security tools like cameras, printers, and loading equipment.

5. Map out Your Financial Plan

This section defines your revenue sources, how much money you have, and how you will manage finances. The most common parts of the financial plan are the income statement, balance sheet, and cash-flow statement.

  • Income statement. Shows revenue sources and summarizes the net profit over a specific time period
  • Balance sheet. Contains information about your current equities (all available assets and liabilities)
  • Cash-flow statement. Describes and compares the collected revenues and paid expenses. When the revenues exceed expenses, the cash-flow statement is positive.

Potential investors and lenders pay special attention to this section. One technique they use is looking for inflated and inaccurate calculations and projections. This helps to filter out incomplete or poorly made business plans.

6. Finish Up with a List of Milestones

The last part of the business plan is the table of milestones. Those are major achievements in business you can use to evaluate its success.

Examples of milestones for a small online store:

  • Create a business model. This includes the development of marketing strategies, search of product suppliers or manufacturing facilities, etc.
  • Design branding materials. A complete branding work (creating assets like logos, typography, iconography, color palette, photography, graphics for social media marketing, etc.)
  • Launch an online store. Develop and launch the online store with all products
  • Reach $20,000 in monthly revenues. This milestone suggests that the business has gained enough new and repeat customers and is ready for expansion.

Each milestone should have a deadline, goal, and budget (if applicable). Such a detailed list of milestones gives you an overview of your project in more practical terms.

Once you’re done with the milestone list, it’s time to get back to the executive summary. That’s the section that should be written last, remember? At this point, you’ve covered everything, so you have all the knowledge to summarize the whole thing.

eCommerce Business Plan: Summary

Starting an eCommerce business without a business plan is like being in a dark room and looking for a black cat. You cat get incredibly lucky and find it, of course. But counting on that is a very bad idea, as suggested by stats on why businesses fail.

A business plan guides your decisions, sets goals, and gives a roadmap to achieving them. It’s a strategic tool with the steps to take to succeed.

To write an eCommerce business plan:

  • Make an executive summary (business overview, mission statement, profit goals, and company structure)
  • Describe your audience and what they want from similar businesses
  • List market research findings (customer and competitor research)
  • Outline the marketing and supply chain plan
  • Define revenue sources, and you plan to support the business financially
  • Make a list of milestones to meet to build a thriving business.

Prove that you’re serious about opening a new company, write a business plan. Hope your plan gets you enough funding and support from investors!

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