How to Write an E-Commerce Business Plan

Anuj Dalal

Anuj Dalal

December 29, 2020

How to Write an E-Commerce Business Plan

If you own an e-commerce website, you need a business plan. A detailed plan tells you if your business idea is realistic and gives you a clear path to achieve your business goals.

In this blog post, you will learn step by step how to write a solid e-commerce business plan.

Why Should You Create a Business Plan

A solid business plan brings many benefits to the table. Let’s look at a few important ones.

1. To Prevent Financial Risk

A well-designed e-commerce business plan accounts for every penny that you’ll be spending. It can be operations, hosting charges, inventory. Once everything is accounted for, you won’t go over the budget, thus preventing financial risks.

2. For Clarity and Growth

A comprehensive business plan helps you structure your business. It can establish a clear road-map that you and your team can follow to grow as a company and achieve the marked goals. Thus, you’ll be able to finalize the resources required to make your business successful.

3. For Funding

A flawless business plan is the industry-standard to get VCs to invest in your e-commerce store. Without it, it’s a real challenge to get any kind of financing options.

5 Core Elements of an E-Commerce Business Plan

Writing an organized e-commerce business plan can be a struggle for businesses. Read on to explore each section of the business plan in detail.

1) Company Overview: Who You Are?

Company Overview

The business overview section of your e-commerce business plan should answer who you are and what you’re going to do. The answer can act as an introduction to why you’re a unique business.

Some of the important elements included under business overview sections are:

1. Brаnd Nаme:

List your mаin brаnd nаme or your business nаme аnd its аssociаted brаnd nаmes. Make it memorable.

2. Business Structure:

Are you а sole proprietor, аn LLC, аn S-corporаtion, а C-corporаtion, or а pаrtnership?

3. Website Name:

You should register a relevant domain name for your business if you haven’t already. Try and keep it short as it helps customers remember it and also aids in the SEO process.

4. Mission Statement:

In an e-commerce business plan, your mission statement (in a few sentences) shows why you are in business and what drives you every day.

5. Vision:

A vision gives your business some direction. It is the ultimate aim that your company strives to achieve. Your vision statement should be short and to the point.

6. Value Proposition:

This statement in your business plan talks about how your company can add value to the consumers’ lives. It should focus on what your target audience will gain from buying your product or service.

7. Target Audience

Understanding your target audience will help you develop products and services that meet your customers’ needs, thereby boosting your sales and helping you stand apart from your competitors. To this end, you must research your current audience and divide them based on factors like demographics, location, common interests, and even economic status.

2) Products: What are you selling?

Products

Your products are what make your e-commerce store attractive to customers. It is the core element of your business, and therefore, you need to explain what you are selling.

1. Current Products:

List down the products you’re selling. Be sure to focus on their individual specifications and advantages and mention where you sourced the product from.

2. Upcoming Products:

This part of the e-commerce business plan will convey what you intend to sell in the future. If you have new products in the pipeline, mention them here.

3. Cost:

In this section, mention both the cost – cost of acquiring the product as well as the selling price for the end customer. Look at competitors within a particular segment to ensure your pricing is competitive for the business.

4. Product Differentiation:

Product differentiation involves stating the qualities that make your product different from others in the market. It includes making a note of your product’s unique features, performance, and quality. Product differentiation can also help you justify the price point of your goods.

3) Financial Plan

Financial Plan

For most people, the financial plan is the most challenging part of the e-commerce business plan. You cannot skip this section, especially if you’re seeking outside funding. A well-written and comprehensive financial plan makes you seem more responsible to investors.

Even if you do not opt for external funding, planning your finаnces cаn help you make the most of your investment. Most importantly, it can protect you against unexpected expenses.

Generally, your financial plan should be the most detail-oriented. To start off, be sure to cover the following aspects:

  • Operаtionаl costs: This includes the cost of every single component of your business.
  • Office/storage rent
  • Product аcquisition costs: This includes the rаw cost of your products, shipping charges, etc.
  • Staff salaries
  • Hosting charges
  • Processing fees for payments
  • Shipping charges
  • Cost for custom work and outsourcing
  • Marketing and advertising

Apart from what’s mentioned above, you’ll have to account for the following:

1. Break-Even Point:

The break-even point is where your profits finally become equal to your expenses. It is the balancing point where your losses end and profits begin. You can find the break-even point by comparing the cost of production to the cost of revenue.

2. Customer Acquisition Costs:

Customer acquisition costs show how much it’ll cost you to get consumers and still remain in business. In your e-commerce business plan, explain how you will acquire a customer in the most cost-effective way possible.

3. Anticipated Profit аnd Loss:

Here, you must determine the estimated figures of your profit and loss margins. Use a spreadsheet аnd enter the expense with each product, including the rаw product cost, shipping аnd pаyment processing charges. Then аdd/subtract your expected revenue (depending on the sign).

Now, you hаve the expected profit of eаch product as an estimate. After this, you can commit to your own research and determine a long-term profit.

4. Current Assets:

Current assets include cash, stock inventory, bills receivable, and other company assets that are converted to cash within a year. Ensure you have sufficient assets to cover the fixed charges of your business operation. Compare them to your current liabilities to determine how liquid your business is.

4) Operations

Operations

An e-commerce business plan is incomplete without mentioning how your company will function on a day to day basis. For example, how you are planning to ship the product, who is responsible for sourcing the materials/products, and much more.

In this section, you need to list the following information:

  • Packing Providers: Your partners who will handle the packaging front of the business.
  • Equipment: Tools required to get you up and running.
  • Facilities: Offices for your teams to work.
  • Staff: The people who will manage your business.
  • Suppliers: The party in charge of supplying you with raw materials.
  • Storage Space Optimization: The inventory you want to keep on hand and where you want to outsource the rest of it.
  • Shipping: In-house or third-party shipping partners.
  • Payment-Related Procedures: Handling fulfillment tasks.

5) Marketing Strategy

The marketing strategy is the most important part of your e-commerce website’s business plan. It directly impacts your business’ growth in the market.

Here are a few strategies to consider:

1. SEO:

Search engine optimization, or SEO, involves assessing popular terms or words that people search for online. Adding these keywords to your website content and building authority gives you organic visibility on search engines.

2. Content Marketing:

Content marketing is sharing relevant, relatable content with your customers. The content includes blogs, videos, whitepapers, success stories, case studies, etc. This method allows you to drive traffic to your e-commerce business while staying true to your brand vision.

Think about whether you wish to write the blog yourself or hire content writers. Choose topics that add value to your customer base, and be sure to align the overall language and tone to your brand.

3. Social Media Marketing:

Businesses can use social media platforms to interact with clients directly and raise awareness about their services. You can make profiles on Instagram, Facebook, YouTube, LinkedIn, and other social media sites to reach a wider audience.

4. Email Marketing:

You can use emails to inform your customer base about new offers, products, reward points, and even abandoned carts. Emails are one of the more affordable marketing strategies for small businesses – they are easier to measure, too.

5. PR:

Public relations are important if you want to get the word out about your business. Press releases, campaigns, promotions, etc., all fall in this category. You can even tell people about your services and products by writing guest posts for target blogs.

6. Paid Advertisements:

This method covers getting the word out about your business through paid advertisements. This includes conducting PPC (pay per click) adverts, banner ads, your financials, and fund allocation.

E-Commerce Business Plan Template

E-Commerce Business Plan Template

We know creating a perfect e-commerce business proposal from scratch isn’t easy. Fortunately, there are many existing, pre-formatted, and time-tested e-commerce business plan templates created by entrepreneurs. Let’s look at one such example apart from what we’ve mentioned in this article. It includes:

  • The bare minimum details about your business—its name, contact details, address, and such
  • Executive summary (which you can write in the end as well)
  • Company overview
  • Market analysis (Market size, SWOT analysis, competitive analysis, etc.)
  • Products and services offered by your e-commerce business
  • Your customer segmentation
  • Marketing plan, which will account for the price, the product, the promotion, and the place
  • Logistics and operations plan
  • Financial plan

Closing Thoughts

Your e-commerce business plan must revolve around the product you аre selling. The business proposal is supposed to show you the right direction аnd performаnce, so it’s important to include the competition and strategic partners as well.

Paying attention to these components when developing your e-commerce business plan will simplify company operations and ensure your long-term success as an entrepreneur.


Anuj Dalal

About Anuj Dalal

A visionary founder and CEO, Anuj Dalal is an IT engineer, systems architect and technology executive with over 12+ years of expertise leading technology teams and building enterprise e-commerce systems. His leadership and approach to e-commerce technology has delivered successful e-commerce solutions - generating billions of dollars in revenue. You can find Anuj on Linkedin and Twitter.

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