The Ultimate Guide to Starting an Ecommerce Business in the UK!

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So you want to start an Ecommerce Business here in the UK but not sure where to start?

That is why I created this Ultimate Guide to help you get started on your ecommerce journey the right way by looking at all the important steps you needs to take to get up and running, so lets get started!

Quick background on me, so that you know that this isn’t some generic guide:

I started my own ecommerce business in 2012, with no prior knowledge of ecommerce and built it into a full time business over a 7 year period and I created this guide to be the resource I wish I had had when I started my ecommerce journey.

My website (themoneysmith.co.uk) is reader supported, meaning that I may earn a commission from products or services purchased through links on my site (at no additional cost to you). Learn More.

Step 1: Find a Product to Sell Online

How to Choose a Product

The first step is to find something to sell as without a product, you don’t have an ecommerce business!

But this is also an incredibly challenging part as it seems as though every niche and industry is oversaturated with products but there are opportunities out there and in this section I’m going to explain a good process for finding a product to sell (and hopefully it isn’t too boring!)

Piece of Advice!

When you are doing product research, don’t listen to “guru’s” who will tell you exactly what you sell or pay for lists of the most popular products. If the “guru’s” knew what the hot items are, then they would probably be selling them and the people who create the lists, make more money from selling lists than they would selling the products on the lists! Do your own research and make educated decisions.

Types of Product you can Sell Online

Most people when they are thinking of selling online, think of physical products and most of the large online retailers we all know such as Amazon, Asos and Gymshark all sell physical products but there are other options available and I’ve done a quick breakdown of these below:

Physical
Products

These are physical products that need to be shipped to the customers, including:

• Clothing
• Jewellery & Watches
• Electronics
• Furniture
• Food
• Cosmetics

Digital
Products

Digital product are purchased online, then downloaded or accessed, such as:

• Ebooks
• Licence Keys
• Music
• Photos
• Online Courses
• Graphics

Service
Products

Service products are often monthly subscriptions for services such as:

• Streaming (Netflix, Spotify etc)
• Software (Shopify, Photoshop etc)
• Virtual Services (Assistant, Editor etc)

There are pros and cons for all three different types of products you can sell but there are very successful businesses selling each of these product types but there are many cases of business doing multiple or all of these.

Amazon is probably the best example of this as you can buy physical products (of all kinds), buy digital products such as Music or Books and services such as Amazon Prime for streaming TV shows and films.

How to Choose a Product

But before you choose, there are some things that you might want to think about when finding the right product:

#1 Play to Your Strengths

Do you have any hobbies? passions? or areas of expertise?

The reason why I say this, is because it is always better to start a business in an niche you know about or are passionate about because:

  1. You will have some knowledge of both the product and industry
  2. You will be more inclined to continue learning about the industry
  3. It is easier to spot gaps in the market
  4. You may already have access to your target market

Many of the small niche business owners that I know started because they saw a gap in the market or could offer something a bit different to what was already out there. They also love what they do and this gives them that drive to do it day in day out, even when things get a bit tough.

#2 Don’t Chase the Money

I see so many people who are just focused on making as much money as possible and they try and find the most profitable products and niches but they often end up jumping from product to product and get nowhere!

Rather than building a business that aims to offer the best product, backed up by the best service, which is often the foundations of a successful small business.

#3 Is There a Market for it?

This is HUGELY important as without a market, you aren’t going to have any customers!

It is also one of the more difficult things to research as you won’t get any definitive results, instead you will get some data that you need to interpret but what you want to establish is:

  1. Is there are market for these products?
  2. How big is that market?
  3. How am I going to reach this market?
  4. What is the competition like?

And as I mentioned above, this is where having a good knowledge of a niche can be very beneficial as you may be part of groups, forums or clubs where you have access to your target market and can gauge what the market is like, other research you can do is:

  • Use keyword tools such as Google Keyword Planner to see what the search volume is like for products like yours
  • Google Auto-suggest, you know when you start typing in the Google search bar and it gives you a list of options? These are things that people have recently searched for and can be a great research tool
  • Google Related Searches, these are the ones the appear at the bottom of search results and show similar searches that people have done recently.
Choose Your Products

#4 Why Should People Buy this Product?

Because you want to make money isn’t an acceptable answer!

There has to be a reason why people are going to part with their hard earned cash and buy this product and the most common thing I see people online say is “It needs to solve a problem” and while this isn’t wrong, it also isn’t the whole story either and from my experience, online products fall into 1 of 2 categories:

Products that Solve a Problem

These are products that I class as ones that people ‘need’.

For example, the lighting for my YouTube videos wasn’t great and I couldn’t rely on the UK weather to help. So I NEEDED to buy some lights to rectify this and they solved my lighting problem.

There are plenty of products that fall into this category and you will usually market them on their ability to solve a problem.

Products that Satisfy Someone’s Desires

These are products that I class as ones people ‘want’.

This applies to most luxury and none essential goods, such as Jewellery, Expensive Watches and High End Fashion. No-one needs these products but they WANT them, either to feel better about themselves or to fit in socially.

These products will have a completely different type of marketing to make people want them.

Figuring out which category your products falls into can make planning your website and marketing easier as you have an idea what you need them to achieve.

#5 Is it Going to be Profitable to Sell?

I know I said don’t chase the money above but there is no point choosing a product to sell if it is not going to be profitable. This is the final part of your product research, the numbers!

When it comes to figuring out profitability, you need to look at two things:

  1. Are you going to make a profit on each product you sell?
    • This is pretty simple to figure out as it is your Sale Price – Cost Prices – Costs (payment fees, postage & packing etc) = Net Profit Per Product
  2. Is the profit per product enough to cover your businesses overheads (website fees, rent, utilities, insurance etc) with your projected sales volume? so that you end up with a profitable business overall.

Some of this may includes some guestimates and for sales volume, it is always best to air on the side of caution and go with your lowest potential sales number but you still need to have a basic idea as to whether this has the potential to be a profitable venture or not.

Step 2: Get a Domain Name

domain name

Now you know what you are going to sell, it is time to start working towards building your ecommerce website and the best place to start is to secure a domain name for your store.

If you aren’t sure what a domain name is, to put it simply, it is the virtual address of your website, such as themoneysmith.co.uk is my websites address.

Now choosing a domain name is getting more difficult due to the amount of websites there are and also people who buy domain names with the sole intention of selling them on for a profit and you may see domain names for sale ranging from a few hundred pounds to over £100,000.

An unregistered domain name should cost somewhere between £5 and £15 depending on the domain name registrar and whether it is a .com, .co.uk or other domain suffix.

Tips for Choosing a Domain Name

Now, while it is getting harder to find a good domain, there are still some guidelines that you want to try and stick to, such as:

  1. Keep it Short – ideally a domain name should be less than 20 characters and less than three words. This just makes it easier for people to remember and reduces the chances of someone typing it incorrectly.
  2. Keep it Simple – very much follows on from point number 1, the simpler the name, the easier it is to remember.
  3. Avoid Hyphens – most people will forget the hyphen when typing your domain name and this can lead to a loss of traffic as they will be going to a domain that you don’t own.
  4. Use Top Level Domains – this is the suffix that comes at the end of your domain name and the top ones for UK businesses are .com (which is great if you are targeting a global audience) and .co.uk (which is ideal if you are just selling to the UK). Other options can include .net, .org and .co but a .com or .co.uk should be your number 1 priority.

Where to Buy a Domain Name?

To purchase a Domain Name, you need to use a domain name registrar and I would recommend having your domain name and website with different companies as this gives you more control over your website.

Also, when choosing a domain registrar, you want to go with a reputable company and I would generally avoid ones that offer the first year for free or 99p, this is because they usually have hefty renewal fees and might charge you to move to a new registrar. Two of the companies I recommend are:

  • Namecheap – my personal go to for domain names as they are reasonably priced, easy to use and all .com domains include Whois privacy protection
  • Kualo – a great UK based registrar, who I have used in the past as they are reasonably priced but more importantly very transparent, so no hidden charges!

Step 3: Set Up Your Social Media Accounts

social media

Once you have got your domain name sorted (which is probably your business name), then it is time to go through and secure your social media accounts and you want to try and get as many as possible, including:

  • Facebook Page
  • Instagram
  • Twitter
  • Pinterest

You may also want to get YouTube and TikTok if you plan on creating video content for your store.

When it comes to getting these accounts, you want all of them to have the same name so that you have continuity between all of them, which is better for branding (twitter can be the awkward one due to the 15 character limit on usernames).

Once you have set up your social media accounts, you might want to start branding them before you start and there are a couple of options when it comes to creating a logo:

  1. Use software such as Photoshop but this isn’t the easiest software to just use
  2. Use online tools such as Canva, super easy to use and lots of options (The MoneySmith logo was created on Canva)
  3. Outsource using platforms such as Fiver or Upwork and get a professional to do it for (quality may vary depending on how professional the creator is!)

Once you have a logo you are happy with, you can upload it to your social media accounts and also it is ready to use when you start building your website. You can also use it on your packaging if you want.

Step 4: Choosing an Ecommerce Platform

ecommerce platforms

Now that you have got your business mapped out, it is time to start building your business and honestly, this is the part that scares most people as it involves taking action!

One of the things that also stresses people out a lot is choosing which platform to build their site on and I completely understand this, there are not only a huge amount of platforms to choose from but also lots of reviews that sometimes contradict each other.

So in this section, I am going to go through and explain as much as I can about the different types of ecommerce platform that are out there and also the process of building your website to hopefully make the process a little less daunting.

What is an Ecommerce Platform?

An Ecommerce Platform is a piece of software that allows an individual or business to build a website where they can sell products or services to customers or businesses.

Hosted vs Self Hosted Ecommerce?

Something you may come across when researching ecommerce platforms are the terms hosted and self hosted, which may have left you scratching your head but below I have done a quick breakdown of these two options:

Hosted Ecommerce Platforms

Examples:

EKM
ShopWired
Shopify
Bigcommerce

Summary:

A fully hosted ecommerce platform includes hosting, an ecommerce website builder and generally offers users support. This is all included for a monthly price.

Pros:

• No technical knowledge required
• Performance and optimisation are taken care of for you
• Easier to learn for beginners
• Includes support
• Leaves you to focus on marketing, sales and general business aspects

Cons:

• Can be more expensive on a monthly basis
• You are locked in to that platform, moving to another one can be a complex process
• Your site it limited by what the platform allows you to do

Self-Hosted Ecommerce Platforms

Examples:

• WooCommerce
• Opencart
• Prestashop
• Magento

Summary:

A self-hosted ecommerce platform keeps the hosting and software separate. This means that you need to buy hosting and then install your software of choice.

Pros:

• You own the website
• More flexibility as you have access to the source code
• Can be cheaper on a monthly basis
• Most self-hosted platforms have a large community of developers for themes, plugins and apps

Cons:

• You are responsible for the performance & security of the site
• No dedicated support
• Upfront cost can be quite large (themes, plugins, apps etc)
• Can have a steeper learning curve

There is also a third option, which is to have a website custom built but this isn’t really recommended for someone just starting out. This is more of an option for big ecommerce websites, who have the budget to pay for the development and management.

How to Choose an Ecommerce Platform?

In order to choose the right ecommerce platform, you need to look at yourself and your business in order to be able to truly identify what you need, such as:

  • How good are your technical skills?
  • How much technical involvement do you want with your site?
  • What features do you need?
  • What is your monthly budget?
  • What payment gateways are you going to be using?
  • Do you need integration with third-party software such as accounting or order management?

Some of these questions, you may not be able to answer until you have been going a few months but having a basic idea of what you need will help you get started. It is also best to try out as many platforms as you can, fortunately most hosted platforms offer a 14 day free trial.

For people who are new to ecommerce and building websites, hosted ecommerce platforms are what I recommend due there being less technical requirements on your part, which leaves you to focus on building and growing your business, rather than learning how to be a web developer!

To help the process of selecting an ecommerce platform a little bit easier, I have compiled a list of what I think are the best ecommerce platforms for UK businesses.

Step 5: Building Your Ecommerce Website

Once you have decided which ecommerce platform you are going to use, you then need to think about the design of your shop.

Now most people will start thinking about the look of their shop and making it look nice and many people will spend far too long messing around with small design details that have little to no impact on your store (I know as I have been there and done it!).

When it comes to the aesthetics of your site, there are a few things you do want to think about, such as:

  • Is the colour scheme visually pleasing? If you look at most ecommerce websites, the colour schemes are usually quite subtly as to keep the focus on the products
  • Is your font type and colour easy to read? The font style should be easy to read, while things like handwriting styles can look nice, they can be difficult to read, especially on mobile devices. The colour of the font should also contrast against the background so it can easily be read and the size of the font should be easy to read on all devices

But you do want to focus on is making sure that your site is easy to use and navigate, aesthetics are great but usability it king when comes to ecommerce, so think about:

  • How you are going to organise your products?
  • What kind of hierarchy you are going to use?
  • Can a visitor move from product to product or category to category easily?

If you go and visit some of your competitions websites, especially established ones, you will start to notice some of the things that I have mentioned above and you can use this as inspiration for your own site (be inspired but don’t copy!).

Having a visually attractive site that is easy to use and navigate is going to have a positive effect on your online shop as the more time visitors spend browsing your site, the higher the chance of them buying something.

Step 6: Set Up Your Payment Gateways

Get a Payment Gateway

The next step in setting up your ecommerce business is adding a way to get paid, because unless you plan on giving everything away for free, this is kind of important!

But like with everything when it comes to ecommerce, there are many different options when it comes to payment gateways.

Pay As You Go Payment Processors

Arguably the best option when you are just getting started as you only pay transaction fees when you make a sale, some of these options include:

  • PayPal
  • Stripe
  • Amazon Pay
  • Apple Pay
  • Google Pay (G Pay)

While these payment options do give you more flexibility, they do charge higher transactions fees, usually around 3%, however, some do offer reductions in fees for high volume merchants.

Merchant Account + Payment Gateway

This is the more ‘traditional’ way off accepting payments online and requires you to have a merchant account and a payment gateway. These can either be had separately or combined through your chosen partner, such as:

  • Worldpay
  • Sagepay
  • Barclaycard
  • Global Payments

For new ecommerce websites, these aren’t the best option as they usually have monthly fees (£20+) and long contracts (2-5 years). These should only be considered when you are having higher volumes of sales as they can be quite a lot cheaper in terms of transaction fees.

Flexible Payment Options

A recent but much welcomed additional to the types of gateways mentioned above is flexible payment options and depending on the payment provider, you could have things like:

  • Buy now, pay after delivery
  • Break the payment down into 3-6 monthly payments
  • Retail finance, with monthly repayments ranging from 6-24 months

Offering these different types of payments can often lead to increased sales as it gives your customers much more flexibility, especially when it comes to more expensive items and some of the popular options are:

  • Klarna
  • Laybuy

You would want to offer these alongside the more traditional payment options as some people just want to pay for their orders in one go.

Step 7: Set Up Your Shipping Options

Choose a Delivery Method

How are your products going to get from you to your customer?

Choosing the right shipping service can make running an ecommerce considerably easier and ideally you want it to have:

  • Short delivery times
  • Be reliable
  • Cover lost/damaged parcels
  • Not be too expensive

Many new businesses will automatically go for the cheapest option out there, but there is often a reason why they are the cheapest and it may be at the expensive of quality. A compromise of cost and good service is usually the best option.

Packaging

Another element that comes under shipping is your packaging as this the first impression your customer is going to get of your products and you want it to be a good one! It is also part of your branding as many companies will include their name and logo on some or all of their packaging and here are some things to think about when it comes to your packaging:

  • How does your packaging look? It might protect it but if it looks like it has just been thrown together by someone on their kitchen table, it isn’t going to give a great first impression.
  • How much does the packaging cost? You want to find a happy medium between it protecting the item, looking professional and not costing too much.
  • How easy is the packaging to dispose of? Customers are caring more and more about the environment and you might want to consider having easy to recycle postal packaging, plus it makes your business look good.

Take some time when planning how you are going to get the products to your customer and if you have it already setup and ready to go, it will save you a lot of time when your online shop is up and running!

Step 8: Set Up Your Contact Options

The next step is to get all of your contact information on your site as you want to make it as easy as possible for your customers to contact you as this not only builds trust into your site but also can potentially increase conversion rates as people may have questions about your products.

When it comes to contact options, you ideally want to offer as many as possible, such as:

  • Email
  • Contact Form
  • Phone Number
  • WhatsApp Number
  • Live Chat

Obviously, you don’t want to be giving out personal contact details but can be very easy to set up contact methods using services like VoIP for phone numbers and Google for email. A cheap phone can also be used for WhatsApp and Live Chat if you are using something like Facebook Messenger.

You also want to make your contact information easily accessible, such as a link to your contact form in your navigation menu and footer, contact number and email either in your header or footer and an easy to access live chat icon.

You may also want to link to your social media profiles as some people will contact you via these and it also increases the chances of growing your following.

Make Sure Your Website is Legal

When you are selling online, you need to make sure that your business is operating legally. Because if you don’t, you can end up in a lot of trouble with the government and that is the last thing you want to have to deal with!

So what do you need to do to help ensure that your business is legal?
*Disclaimer – this is a guide only, always get anything legal or financial checked by a legal professional, accountant or the relevant authorities*

Business Information

You need to include your business information on your website and also make sure that this information is easy to find. But what information do you need to include?

  • Your Business Name
  • Your Business Address
  • Contact Information such as Telephone Number and Email Address

If you don’t want to use your home address, then one option is to use a Virtual Office, which is where you rent a mailbox from a company and all of your post and correspondence will go there.

When it comes to your contact information, it is worth investing in having a domain linked email address such as info@domain.com rather than having a generic gmail or outlook email address. You can usually do this through your website provider or if you can use G Suite by Google or Office365 by Microsoft that both enable you to do this and you also get to use their apps which makes managing your business email on the go much easier.

With your telephone number, you can use VoIP software that allows you to have a geo or national landline, without having to have another phone line installed as they use the internet to make the calls. You can either have a VoIP phone or install the companies app on your smart phone to turn it into a business phone.

Website Pages – Required

There are pages you need to have on your website that are legal requirements.

Privacy Policy – this is where you tell your visitors exactly what information your website collects, what you do with that information, how you store and protect it and what you will do if you have a data breach. This is a very important page, especially here in the UK and Europe as it shows how you and your business comply with GDPR. Fortunately most ecommerce platforms have really good sample documentation that you can adapt for your business.

Terms and Conditions – you may end up with two sets of terms and conditions. One may be for your websites, so how visitors can use your website and intellectual property etc. The other may be for when they purchase from you and will include your contact info and how to contact you, how they can pay, their right to cancel, returns and refunds. Basically anything related to the transaction that is made between the customer and you as a business.

Website Pages – Optional

For online stores, it is always good practise to create separate pages for parts of your terms and conditions (they must still be in your T&C’s). This just makes it easier for your customers to find out what want to know, without having to trawl through the terms and conditions page.

Contact Page – this just makes it easier for your customers to contact you. This can be really beneficial to sales as some visitors will have questions they want to ask before making a purchase, so make it easy to contact you. Also include your telephone number and email address on this page to give them more options.

Returns Page – clearly listing out your businesses returns policy can help build confidence in your business as you are not trying to hide how your customers can start a return, if they don’t like what they buy from you. Always make sure your returns policy is fair and most importantly legal!

Payment & Delivery – you can do these as separate pages or combine them into one. You basically want to include all the information you sorted out in Step 4 and 5 above and tell your customers how they can pay, what delivery methods you offer and how much delivery costs.

Step 10: Testing Your Store

Test Test Test

I cannot stress enough how important it is to go through a thoroughly test your website out to make sure that is working correctly!

This is because you are now at the stage that you can go through and easily fix any errors because finding out that things aren’t working properly with paying customers is not only stressful but it can cost you sales and customers.

When testing your site, things you want to check are:

  • Are the checkout and payment gateways working properly?
  • Is the back end order management working properly?
  • Can you refund and cancel orders?
  • Are order emails being sent out and displaying properly?
  • If you have enabled customer accounts, are they working?
  • Is your contact form working?
  • If you have live chat, is that working?
  • Are you social media profile links set up properly?

Basically, you want to go through and do everything on your site that a customer would and once again, creating a list of things to check can be helpful.

It can also be good to get a friend or family member to go through a similar process and see if there are any issues that they come across as it is always useful to get the perspective of someone else and if possible, multiple people.

Step 11: Tell The Taxman!

Ok, so the Taxman might not be politically correct but you know what I mean!

When you set up as a business, you need to let HMRC know that you are going to be making an additional income as you may have to pay more tax, depending on your personal circumstances.

There are a couple of ways you can structure your business but it is always worth getting the advice of a chartered accountant before proceeding as they will be able to tell you exactly which route you should take, but for this guide I will list a couple of the options:

  1. Sole Trader – this is the easiest way to get started and in the eyes of the law, you and your business are one and the same. This requires the least amount of paperwork and record keeping and requires you to fill in a relatively simple self-assessment tax return. But as you and your business are one and the same, should anything go wrong and you incur debts or get sued (and lose!), your personal belongings are at risk.
  2. Limited Company or LTD – this requires more record keeping and the submission of annual accounts to companies house and in most cases does require the help of an accountant. But you and your business are separate entities in the eyes of the law, meaning that your personal belongings have more protection (although they can still be taken in some circumstances). Setting up a LTD company does generally become more tax efficient when you are making more money.

As I said above, it is always best to get the advice of an accountant as everyone’s situation is different and what works for one might not work for another.

Step 12: Marketing Your Ecommerce Business

Marketing Your Business

Now that your site is built, tested and your business is ready to go, it is time to start marketing (you can also start marketing before you are ready to start selling and get people interested in your business before you go live) and marketing is a one of the bigger challenges when it comes to ecommerce, so hopefully I can give you some useful tips here!

What is your Unique Selling Point (USP)?

Before you being to start thinking about marketing, what is your businesses USP? and to go into this further:

  • What is going to make your business stand out from the crowd?
  • Why should a customer buy from you rather than the next business?
  • What do you do differently from your competition?

Ecommerce is incredibly competitive these days and while there are still many opportunities out there, you do need to know what makes your business special and different to all of your competition and also how you are going to implement it.

There are many ways you can make your business stand out but there has to be something. Most of the ecommerce businesses that fail, do so because they are generic. Some of the things you could do is:

  • Offer a better customer experience
  • Be more ethical or environmentally friendly
  • Use your business to positively impact the community

These are just a couple of ideas that can set your business apart but one thing I wouldn’t recommend as your USP is being the cheapest as it simply isn’t a sustainable business model. The reason is that if your business grows and you incur more overheads, a leaner start-up company can easily come in and undercut you and thus what brought you to the dance has gone!

How Are You Going To Reach Your Target Market?

The next thing to think about when it comes to marketing is how are you going to get your products in front of your target market?

This is different for every business and there is no one size fits all strategy (which is a good thing as there would be no opportunities otherwise!) and it takes time to find out where your target market is and how is best to reach them.

You need to know this so that you can tailor your marketing strategy so that it works for your business and some things to consider are:

  • Are they going to come via search engines such as Google or Bing? If so then SEO and paying for Google or Bing ads are probably going to be your best marketing strategy.
  • Are they going to be found on Social Media platforms such as Facebook or Instagram? If so then running ads on these platforms along with trying to build an audience is going to be your best bet.
  • Will you be able to reach them directly via Facebook Groups or Forums? If so, then getting involved in these communities and providing value, helping others etc is going to grow your reputation and if you provide a good product, then people will recommend you to others.

As you can see there are a few options out there and they all have their pros and cons but you will probably use a more than one strategy (you want to get as many sales as possible after all!) and with marketing it is a constantly evolving process which requires analysis and some trial and error to keep finding what works and what doesn’t.

Frequently Asked Questions (FAQ)

Conclusion

So there it is, my ultimate guide to starting an ecommerce business!

I hope you found it helpful and learnt something from it as there was many hours put into writing this all to publish it for free.

My one final bit of advice is to just get started, it is so easy to spend weeks, months or even years planning on how you are going to start your perfect ecommerce business but planning only gets you so far at it all means nothing if you don’t take action to actually get started.

So create a plan of action, with deadlines for certain things and work through this plan, so that you actually get started and one more thing, you are never going to get this 100% right, whether it is your product selection, your website or your marketing but you learn from these mistakes and adapt, which helps both you and your business grow.

So go out there, get started and enjoy it, it will be stressful but it will also be one of the best learning experiences you will ever have and there are very few feelings like getting that first sale!