Ecommerce Business Plan for starting your own online store
Are you looking for startup ideas that can easily be initiated and run from home? Well, you must then consider ecommerce business as after the prevalence of coronavirus pandemic internet sales have really shot up.
E-commerce business is based on selling things through the Internet. The line of products may vary from electronic possessions such as e-books or audio/videos to actual physical entities including clothes, furniture, toys, vehicles, etc.
To guide you about each and every aspect of this business, we are providing here a sample business plan for ecommerce of a recent startup ‘TradeE’.
2.1 The Business
TradeE will be a licensed B2C ecommerce startup that will be run through its ecommerce website. The online enterprise will be owned by Diana Blunt.
The business will sell downloadable products throughout the world, however, delivery services for physical items will be provided in just three cities, San Jose, San Francisco, and Oakland.
2.2 Management of Online Retail Store
Management is an important aspect of business as it ensures that everybody clearly knows what they have to do and there is a check on every employee to ensure a perfect workflow.
Starting an online business usually seems easy since you don’t have to personally interact with customers and employees. However, this too can end up in a mess if you are failed at managing it.
Online management is a challenge because your ecommerce site and online transactions are always prone to hackers, frauds, and copycats. To make sure that your and your customer’s data is protected and everything goes like you intended, you must write a detailed business plan.
If you are looking for how to write a business plan for online store you can take help from here.
Diana will govern the business herself. To manage the online store, the company will be hiring social media manager, digital marketing director, virtual assistants, IT specialists, and delivery personnel.
2.3 Customers of Online Retail Store
The groups that are expected to be our major customers will mostly comprise of young, adults, and senior citizens. We believe that college students, working moms and dads, and senior members of households will surely find many things to buy from us.
2.4 Business Target
Our target is to become a renowned online store in our service areas. We believe in generating profits by serving our customers with our best.
3.1 Company Owner
Diana Blunt is the owner of TradeE. She has recently completed her MBA from the Lucas College and Graduate School of Business.
During the years of her graduation, she was constantly involved in learning emerging disciplines and skills such as graphic editing and ecommerce management.
Besides being tech-savvy she is also a great communicator, leader, and tourist.
3.2 Why the online store is being started
Diana had always wished to start a business that can be expanded or contained whenever she wants. Viewing her digital skills and interests she decided to go for an online shop.
Another factor that helped her in this decision was her extreme love for traveling. She wanted to start a business that she can govern without being actually present there.
From this sample business plan ecommerce you can see how the online business TradeE was planned and executed.
3.3 How the online store will be started
Before starting the business, the company owner will do research on which product line should be chosen to get the most recognition. The company will also collaborate with other online businesses to buy their products and sell them on the company’s platform.
Since the business will mainly sell toys, clothes, bags, and accessories, a storage room will be taken on rent to keep the things.
Following the making of business plan ecommerce template, the company will hire the required personnel. TradeE will seek the services of a web developer and IT specialist to create a website that fulfills the criteria of secure transactions, foolproof client database, and copy-protected access. It will be ensured that the web design is user-friendly and descriptive.
The business owner aims at hiring the digital marketing team and director two weeks before the launch so that ecommerce business marketing plan could be executed.
|Research and Development||$30,000|
|TOTAL START-UP EXPENSES||$367,500|
|Other Current Assets||$215,000|
|Start-up Expenses to Fund||$610,000|
|Start-up Assets to Fund||$2,001,700|
|TOTAL FUNDING REQUIRED||$2,611,700|
|Non-cash Assets from Start-up||$2,409,700|
|Cash Requirements from Start-up||$198,200|
|Additional Cash Raised||$40,000|
|Cash Balance on Starting Date||$31,000|
|Liabilities and Capital|
|Accounts Payable (Outstanding Bills)||$46,000|
|Other Current Liabilities (interest-free)||$0|
|Additional Investment Requirement||$0|
|TOTAL PLANNED INVESTMENT||$2,500,100|
|Loss at Start-up (Start-up Expenses)||$97,800|
|TOTAL CAPITAL AND LIABILITIES||$2,678,900|
Products and Offers
Deciding your line of products is the most important part of your startup as it depends on your surroundings, budget, and target customers as well. Rather than being just fashion ecommerce or specifically jewelry ecommerce TradeE has decided to introduce itself as a multiple product line company.
The large range of products offerings by TradeE includes:
Clothes: We will provide all departments of garments for men, women, and children ranging from casual dresses, suits, daily wears to sports & swimming outfits. All the dresses, shirts, T-shirts and suits offered by us will be branded and designer-made.
Bags & Accessories: We will offer branded bags and clutches and a range of accessories including wristwatches, jewelry items, hats, sunglasses, keyrings, mobile covers, socks, gloves, umbrellas, hair accessories, and stationery.
Household Items: We will offer small household items such as home linens, baking dishes, baby items, and kitchen essentials.
Gifts: We will also provide packed as well as un-packed gifts to be given to people of all age groups.
Downloadable Products: We will also be selling e-books, audio and video files, games, movies, stock images, etc.
Marketing Analysis of Online Retail Store
If you are planning e commerce business you must not ignore the fact that market analysis is equally important like all other aspects of a business. Before setting out for a new ecommerce venture, you must analyze where and how you can find the most people to turn into your customers.
Especially if your online business is based on physical products you must figure out which areas for delivery services will be suitable and which cities can help you in getting a maximum number of customers.
Analyzing and discovering your target people is also essential in the case when you are making decisions about social media campaigns. Your approach to promote your startup can only be effective if you know the age groups and the mindset of your target customers.
5.1 Market Trends
Ecommerce businesses are flourishing day by day because people found it convenient to have their favorite thing in their hands by a mere click. Another reason for increased sales is that many people avoid visiting shops personally after the pandemic has hit the earth.
The figures reported by IBISWorld supports the fact that one can’t be at a loss if they devise a comprehensive and workable ecommerce project plan before starting. According to the market research company, 234,699 online businesses are successfully running in the United States. A 10.2% growth rate in the ecommerce businesses has been observed in the past five years and a 6.9% growth rate has been predicted for this year that is 2020.
5.2 Marketing Segmentation
TradeE has categorized its target customers into three groups so that their corresponding choices, preferences, and needs could be thoroughly studied. It is advisable to also classify your intended clientele when you are writing a business plan for ecommerce startup.
The detailed marketing segmentation of our target audience is as follows:
5.2.1 Young & Adults: Our major target group will comprise of young people. They are expected to avail most of our downloadable products such as e-books, music, games. Moreover, we also believe them to be the biggest buyers of our clothes, bags, and accessories.
In addition, moms, the homemakers are also included in this category. Thus, we are confident that the major customer of our home items such as house linens and eating utensils will also be catered for in this category.
5.2.2 Senior Citizens: Our second target group comprises of senior citizens. They are expected to avail all of our services. The elderly persons will also purchase household items as they usually are devoted to homemaking.
Moreover, we expect this respectable category of our customers to be the biggest purchaser of our gifts, as grandpas and grandmas are the ones who want to make kids and grandkids feel special on various events.
5.2.3 Teens & Kids: Our third target group is comprised of children and teens. They are expected to purchase accessories such as wristwatches, mobile covers, stationery, and jewelry items. We also think that they could be the major consumers of our audio and video files and games.
|Potential Customers||Growth||Year 1||Year 2||Year 3||Year 4||Year 5||CAGR|
|Young & Adults||44%||35,000||40,000||47,000||58,000||64,000||10.00%|
|Teens & Kids||22%||13,000||15,000||22,000||29,000||34,000||11.00%|
5.3 Business Target
Business targets as specified by TradeE to be achieved over a certain period of time are given here:
- To maintain an average rating above 4.65 throughout the year
- To increase our marketing qualified lead by 30% every four months
- To improve our lead conversion rate by 10% every month
- To reduce the time we take for delivering items by 15% by the first six months
- To earn a net profit margin of $10k per month by the end of the first six months
- To achieve customer repeat rate of 40% by the end of the first year
5.4 Product Pricing
Our prices are in similar ranges as those of our competitors. However, we will keep on providing several discounts to our repeat customers.
If you are going to start any ecommerce company such as an online boutique you must focus on your marketing plan because that’s what makes an ecommerce site successful.
Without a detailed and perfect marketing strategy, it would be very difficult for you to reach out to people who are most likely to purchase your products.
Considering its importance, TradeE will start executing its sales strategy plan two weeks before the launch.
6.1 Competitive Analysis
Our biggest competitive advantage is that we are providing a very vast product line so to increase the niches of our target groups. All our products will be authentic, and replaceable within 2 days. Moreover, we’ll be offering several discounts in the startup phase to attract more and more customers.
And finally, another thing that will be in our favor is that we will be able to deliver items fast as we are offering delivery services in the three cities that are really close to each other.
6.2 Sales Strategy
- We’ll run a campaign through social media & ensure a strong web and social media presence
- We’ll advertise our startup through local newspapers
- We’ll send gifts to our first 200 customers
- We’ll offer a 15% discount on every shopping above $60 for the first three months
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
|Unit Sales||Year 1||Year 2||Year 3|
|Bags, Accessories & Gifts||46,000||48,760||51,686|
|TOTAL UNIT SALES||163,000||172,780||183,147|
|Unit Prices||Year 1||Year 2||Year 3|
|Bags, Accessories & Gifts||$44.00||$51.04||$59.21|
|Bags, Accessories & Gifts||$2,024,000.00||$2,488,710.40||$3,060,118.31|
|Direct Unit Costs||Year 1||Year 2||Year 3|
|Bags, Accessories & Gifts||$45.00||$46.00||$48.00|
|Direct Cost of Sales|
|Bags, Accessories & Gifts||$2,070,000.00||$2,242,960.00||$2,480,908.80|
|Subtotal Direct Cost of Sales||$7,022,000.00||$7,671,220.00||$8,468,573.20|
Your planning for electronic commerce couldn’t be justified as ideal unless you include in it the ways you will adopt to hire the most competent persons.
Since most of the employees of TradeE will be freelance workers, the company will conduct rigorous online interviews to find the most suitable employee.
7.1 Company Staff
The company’s owner will perform the duties of CEO and HR Manager. The list of company’s required staff, as well as their jobs descriptions, is given below:
- 1 Co-Manager to manage company’s store and delivery operations
- 1 Digital Marketing Officer to manage company’s graphic team
- 1 Social Media Manager to run company’s web pages and social media pages
- 2 IT specialists/Web Developers to maintain and update company’s website
- 1 Graphic Designer to create graphic for company’s site
- 1 Content Writer to write products description and general content for website
- 10 Drivers to ensure quick delivery
- 1 Customer Care Representative to manage client’s requests
7.2 Average Salary of Employees
|Year 1||Year 2||Year 3|
|Digital Marketing Officer||$18,000||$19,800||$21,780|
|Social Media Manager||$18,000||$19,800||$21,780|
|IT Specialist/Web Developers||$52,000||$57,200||$62,920|
|Customer Care Representative||$14,000||$15,400||$16,940|
One of the biggest advantages of online businesses is that even if you starting an ecommerce business from scratch you won’t need a huge amount to invest. Your major spending will be the salaries of your employees and rent of your storeroom.
So in order to analyze expected profits or future investments and identify the resources that are available or could be needed in the coming days, you must prepare a financial plan.
Your financial plan should also include the details of at what financial status you would prefer to contain or expand your product line or service area.
The financial plan for TradeE is given as follows:
8.1 Important Assumptions
|Year 1||Year 2||Year 3|
|Current Interest Rate||8.01%||8.32%||8.70%|
|Long-term Interest Rate||8.20%||8.60%||9.15%|
8.2 Brake-even Analysis
|Monthly Units Break-even||5340|
|Monthly Revenue Break-even||$136,000|
|Average Per-Unit Revenue||$245.00|
|Average Per-Unit Variable Cost||$0.64|
|Estimated Monthly Fixed Cost||$169,000|
8.3 Projected Profit and Loss
|Pro Forma Profit And Loss|
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||$7,022,000||$7,671,220||$8,468,573|
|TOTAL COST OF SALES||$7,022,000||$7,671,220||$8,468,573|
|Gross Margin %||8.23%||18.47%||26.80%|
|Sales and Marketing and Other Expenses||$130,000||$138,000||$146,000|
|Total Operating Expenses||$484,600||$526,300||$572,340|
|Profit Before Interest and Taxes||$145,400||$1,211,379||$2,528,269|
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
|Pro Forma Cash Flow|
|Cash Received||Year 1||Year 2||Year 3|
|Cash from Operations|
|Cash from Receivables||$11,000||$11,880||$12,830|
|SUBTOTAL CASH FROM OPERATIONS||$62,000||$67,580||$72,986|
|Additional Cash Received|
|Sales Tax, VAT, HST/GST Received||$0||$0||$0|
|New Current Borrowing||$0||$0||$0|
|New Other Liabilities (interest-free)||$0||$0||$0|
|New Long-term Liabilities||$0||$0||$0|
|Sales of Other Current Assets||$0||$0||$0|
|Sales of Long-term Assets||$0||$0||$0|
|New Investment Received||$0||$0||$0|
|SUBTOTAL CASH RECEIVED||$62,000||$67,580||$72,986|
|Expenditures||Year 1||Year 2||Year 3|
|Expenditures from Operations|
|SUBTOTAL SPENT ON OPERATIONS||$53,000||$59,000||$65,000|
|Additional Cash Spent|
|Sales Tax, VAT, HST/GST Paid Out||$0||$0||$0|
|Principal Repayment of Current Borrowing||$0||$0||$0|
|Other Liabilities Principal Repayment||$0||$0||$0|
|Long-term Liabilities Principal Repayment||$0||$0||$0|
|Purchase Other Current Assets||$0||$0||$0|
|Purchase Long-term Assets||$0||$0||$0|
|SUBTOTAL CASH SPENT||$54,000||$58,320||$62,986|
|Net Cash Flow||$13,000||$15,000||$20,000|
8.5 Projected Balance Sheet
|Pro Forma Balance Sheet|
|Assets||Year 1||Year 2||Year 3|
|Other Current Assets||$1,000||$1,000||$1,000|
|TOTAL CURRENT ASSETS||$290,000||$324,800||$365,075|
|TOTAL LONG-TERM ASSETS||$19,000||$21,280||$23,940|
|Liabilities and Capital||Year 4||Year 5||Year 6|
|Other Current Liabilities||$0||$0||$0|
|SUBTOTAL CURRENT LIABILITIES||$12,000||$13,440||$15,107|
|TOTAL LIABILITIES AND CAPITAL||$282,000||$302,400||$340,200|
8.6 Business Ratios
|Year 1||Year 2||Year 3||INDUSTRY PROFILE|
|Percent of Total Assets|
|Other Current Assets||2.52%||2.79%||3.09%||2.40%|
|Total Current Assets||151.00%||152.00%||154.00%||158.00%|
|Percent of Sales|
|Selling, General & Administrative Expenses||93.07%||95.58%||98.26%||97.80%|
|Profit Before Interest and Taxes||42.90%||44.06%||45.29%||33.90%|
|Total Debt to Total Assets||0.31%||0.22%||0.13%||0.40%|
|Pre-tax Return on Net Worth||75.03%||78.78%||82.72%||75.00%|
|Pre-tax Return on Assets||90.80%||95.34%||100.11%||111.30%|
|Additional Ratios||Year 1||Year 2||Year 3|
|Net Profit Margin||33.40%||34.44%||35.50%||N.A.|
|Return on Equity||57.03%||58.80%||60.62%||N.A.|
|Accounts Receivable Turnover||7.5||7.8||7.9||N.A.|
|Accounts Payable Turnover||16.08||16.5||16.98||N.A.|
|Total Asset Turnover||2.5||2.7||2.76||N.A.|
|Debt to Net Worth||-0.03||-0.04||-0.05||N.A.|
|Current Liab. to Liab.||1||1||1||N.A.|
|Net Working Capital||$218,000||$230,208||$243,100||N.A.|
|Assets to Sales||0.82||0.85||0.93||N.A.|
|Current Debt/Total Assets||1%||1%||0%||N.A.|
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