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’.

Executive Summary

3.1 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.

3.2 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.

3.3 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.

3.4 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.

Ecommerce Business Plan - 3 Years Profit Forecast

Ecommerce Business Plan 1
Immigration Business Plan
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Company Summary

4.1 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.

4.2 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.

4.3 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.

Ecommerce Business Plan - Startup Cost

Start-up Expenses  
Legal $218,000
Consultants $0
Insurance $45,000
Rent $20,000
Research and Development $30,000
Expensed Equipment $51,000
Signs $3,500
TOTAL START-UP EXPENSES $367,500
Start-up Assets $340,000
Cash Required $350,000
Start-up Inventory $68,000
Other Current Assets $215,000
Long-term Assets $295,000
TOTAL ASSETS $1,268,000
Total Requirements $1,635,500
START-UP FUNDING
Start-up Expenses to Fund $610,000
Start-up Assets to Fund $2,001,700
TOTAL FUNDING REQUIRED $2,611,700
Assets
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
TOTAL ASSETS $2,678,900
Liabilities and Capital
Liabilities $35,000
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $46,000
Other Current Liabilities (interest-free) $0
TOTAL LIABILITIES $81,000
Capital
Planned Investment $2,500,100
Investor 1 $0
Investor 2 $0
Other $0
Additional Investment Requirement $0
TOTAL PLANNED INVESTMENT $2,500,100
Loss at Start-up (Start-up Expenses) $97,800
TOTAL CAPITAL $2,597,900
TOTAL CAPITAL AND LIABILITIES $2,678,900
Total Funding $2,611,700

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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.

6.1 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.

Note

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.

6.2 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.

Ecommerce Business Plan - Marketing Segmentation

The detailed marketing segmentation of our target audience is as follows:

6.2.1 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.

6.2.2 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.

6.2.3 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.

Market Analysis
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%
Senior Citizens 34% 25,000 32,000 43,000 51,000 56,000 10.00%
Teens & Kids 22% 13,000 15,000 22,000 29,000 34,000 11.00%
Total 100% 73,000 87,000 112,000 138,000 154,000 10%

6.3 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

6.4 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.

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Marketing Strategy

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.

7.1 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.

7.2 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

7.3 Sales Monthly

Ecommerce Business Plan - Sales Monthly

7.4 Sales Yearly

Ecommerce Business Plan - Sales Yearly

7.5 Sales Forecast

Ecommerce Business Plan - Unit Sales

Sales Forecast      
Unit Sales Year 1 Year 2 Year 3
Clothes 56,000 59,360 62,922
Bags, Accessories & Gifts 46,000 48,760 51,686
Household Items 35,000 37,100 39,326
Downloadable Products 26,000 27,560 29,214
TOTAL UNIT SALES 163,000 172,780 183,147
Unit Prices Year 1 Year 2 Year 3
Clothes $65.00 $75.40 $87.46
Bags, Accessories & Gifts $44.00 $51.04 $59.21
Household Items $36.00 $41.76 $48.44
Downloadable Products $28.00 $32.48 $37.68
Sales
Clothes $3,640,000.00 $4,475,744.00 $5,503,374.82
Bags, Accessories & Gifts $2,024,000.00 $2,488,710.40 $3,060,118.31
Household Items $1,260,000.00 $1,549,296.00 $1,905,014.36
Downloadable Products $728,000.00 $895,148.80 $1,100,674.96
TOTAL SALES $7,652,000.00 $9,408,899.20 $11,569,182.46
Direct Unit Costs Year 1 Year 2 Year 3
Clothes $59.00 $60.00 $62.00
Bags, Accessories & Gifts $45.00 $46.00 $48.00
Household Items $30.00 $31.00 $33.00
Downloadable Products $23.00 $26.00 $27.00
Direct Cost of Sales
Clothes $3,304,000.00 $3,561,600.00 $3,901,139.20
Bags, Accessories & Gifts $2,070,000.00 $2,242,960.00 $2,480,908.80
Household Items $1,050,000.00 $1,150,100.00 $1,297,758.00
Downloadable Products $598,000.00 $716,560.00 $788,767.20
Subtotal Direct Cost of Sales $7,022,000.00 $7,671,220.00 $8,468,573.20

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Personnel plan

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.

8.1 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

8.2 Average Salary of Employees

 Personnel Plan      
Year 1 Year 2 Year 3
Co-Manager $22,000 $24,200 $26,620
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
Graphic Designer $16,000 $17,600 $19,360
Content Writer $14,000 $15,400 $16,940
Drivers $150,000 $165,000 $181,500
Customer Care Representative $14,000 $15,400 $16,940
Total Salaries $304,000 $334,400 $367,840

Financial Plan

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:

9.1 Important Assumptions

 General Assumptions      
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 8.01% 8.32% 8.70%
Long-term Interest Rate 8.20% 8.60% 9.15%
Tax Rate 24.20% 26.04% 27.50%
Other 0 0 0

9.2 Brake-even Analysis

Ecommerce Business Plan - Brake-even Analysis

 Brake-Even Analysis  
Monthly Units Break-even 5340
Monthly Revenue Break-even $136,000
Assumptions:
Average Per-Unit Revenue $245.00
Average Per-Unit Variable Cost $0.64
Estimated Monthly Fixed Cost $169,000

9.3 Projected Profit and Loss

 Pro Forma Profit And Loss      
Year 1 Year 2 Year 3
Sales $7,652,000 $9,408,899 $11,569,182
Direct Cost of Sales $7,022,000 $7,671,220 $8,468,573
Other $0 $0 $0
TOTAL COST OF SALES $7,022,000 $7,671,220 $8,468,573
Gross Margin $630,000 $1,737,679 $3,100,609
Gross Margin % 8.23% 18.47% 26.80%
Expenses
Payroll $304,000 $334,400 $367,840
Sales and Marketing and Other Expenses $130,000 $138,000 $146,000
Depreciation $2,200 $2,400 $2,700
Leased Equipment $0 $0 $0
Utilities $3,200 $3,700 $4,200
Insurance $2,000 $2,300 $2,600
Rent $3,200 $3,500 $4,000
Payroll Taxes $40,000 $42,000 $45,000
Other $0 $0 $0
Total Operating Expenses $484,600 $526,300 $572,340
Profit Before Interest and Taxes $145,400 $1,211,379 $2,528,269
EBITDA $145,400 $1,211,379 $2,528,269
Interest Expense $0 $0 $0
Taxes Incurred $29,080 $242,276 $505,654
Net Profit $116,320 $969,103 $2,022,615
Net Profit/Sales 1.52% 10.30% 17.48%

9.3.1 Profit Monthly

Ecommerce Business Plan - Profit Monthly

9.3.2 Profit Yearly

Ecommerce Business Plan - Profit Yearly

9.3.3 Gross Margin Monthly

Ecommerce Business Plan - Gross Margin Monthly

9.3.4 Gross Margin Yearly

Ecommerce Business Plan - Gross Margin Yearly

9.4 Projected Cash Flow

 Pro Forma Cash Flow      
Cash Received Year 1 Year 2 Year 3
Cash from Operations
Cash Sales $51,000 $55,080 $61,200
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
Cash Spending $35,000 $38,000 $42,000
Bill Payments $18,000 $21,000 $23,000
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
Dividends $0 $0 $0
SUBTOTAL CASH SPENT $54,000 $58,320 $62,986
Net Cash Flow $13,000 $15,000 $20,000
Cash Balance $25,000 $29,000 $34,000

9.5 Projected Balance Sheet

 Pro Forma Balance Sheet      
Assets Year 1 Year 2 Year 3
Current Assets
Cash $250,000 $280,000 $308,000
Accounts Receivable $21,000 $23,520 $26,436
Inventory $4,000 $4,480 $4,990
Other Current Assets $1,000 $1,000 $1,000
TOTAL CURRENT ASSETS $290,000 $324,800 $365,075
Long-term Assets
Long-term Assets $10,000 $10,000 $10,000
Accumulated Depreciation $17,000 $19,040 $21,420
TOTAL LONG-TERM ASSETS $19,000 $21,280 $23,940
TOTAL ASSETS $270,000 $302,400 $340,200
Liabilities and Capital Year 4 Year 5 Year 6
Current Liabilities
Accounts Payable $16,000 $17,920 $20,142
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
SUBTOTAL CURRENT LIABILITIES $12,000 $13,440 $15,107
Long-term Liabilities $0 $0 $0
TOTAL LIABILITIES $12,000 $13,440 $15,107
Paid-in Capital $28,000 $29,000 $30,000
Retained Earnings $62,000 $67,580 $74,338
Earnings $185,000 $201,650 $221,815
TOTAL CAPITAL $270,000 $294,300 $323,730
TOTAL LIABILITIES AND CAPITAL $282,000 $302,400 $340,200
Net Worth $260,000 $283,400 $311,740

9.6 Business Ratios

 Ratio Analysis        
Year 1 Year 2 Year 3 INDUSTRY PROFILE
Sales Growth 7.01% 7.77% 8.61% 3.00%
Percent of Total Assets
Accounts Receivable 9.11% 10.09% 11.18% 9.80%
Inventory 5.45% 6.04% 6.69% 9.90%
Other Current Assets 2.52% 2.79% 3.09% 2.40%
Total Current Assets 151.00% 152.00% 154.00% 158.00%
Long-term Assets 11.30% 12.01% 12.65% 12.00%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
Current Liabilities 4.46% 4.50% 4.54% 4.34%
Long-term Liabilities 0.00% 0.00% 0.00% 0.00%
Total Liabilities 7.12% 7.18% 7.24% 7.38%
NET WORTH 103.90% 104.73% 105.69% 110.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 96.30% 98.90% 101.67% 99.00%
Selling, General & Administrative Expenses 93.07% 95.58% 98.26% 97.80%
Advertising Expenses 1.77% 1.82% 1.87% 1.40%
Profit Before Interest and Taxes 42.90% 44.06% 45.29% 33.90%
Main Ratios
Current 39.01 39.8 40.795 32
Quick 34.2 34.8 35.67 33
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.
Activity Ratios
Accounts Receivable Turnover 7.5 7.8 7.9 N.A.
Collection Days 100 100 100 N.A.
Inventory Turnover 33.4 35.07 36.8 N.A.
Accounts Payable Turnover 16.08 16.5 16.98 N.A.
Payment Days 27 27 27 N.A.
Total Asset Turnover 2.5 2.7 2.76 N.A.
Debt Ratios
Debt to Net Worth -0.03 -0.04 -0.05 N.A.
Current Liab. to Liab. 1 1 1 N.A.
Liquidity Ratios
Net Working Capital $218,000 $230,208 $243,100 N.A.
Interest Coverage 0 0 0 N.A.
Additional Ratios
Assets to Sales 0.82 0.85 0.93 N.A.
Current Debt/Total Assets 1% 1% 0% N.A.
Acid Test 27.8 30.1 31.1 N.A.
Sales/Net Worth 2.2 2.1 2.3 N.A.
Dividend Payout 0 0 0 N.A.