How to write a business plan for your e-shop?

Online retail business plans explained

If you are considering venturing into the world of e-commerce, a good understanding of what goes into an e-shop business plan is crucial. 

Good to know: E-commerce is booming

Recent figures totalled worldwide e-commerce sales at over 4.9 trillion US dollars. This is expected to increase by 50% over the next four years. ¹ Reports also show that UK consumers lead Europe in online purchases. The UK spends over 250 billion euros online annually. That’s more than 10% of its GDP! ²

A good e-shop business plan should set out the concept of your business, your objectives and your development strategies. It provides an overview of your potential customer base and an analysis of any issues that may arise. 

Differences between retail and e-shop business plans

The basic concepts behind writing an e-commerce business plan are the same no matter what you are selling. Online shopping entrepreneurs, however, should be aware that an e-shop business plan does differ from a normal retail business plan. This is particularly important regarding financials and operational structure. 

Consider the following examples: 

Entrepreneur A wants to open a physical retail bicycle shop. Their business plan will need to have details on the costs of leasing a premises, shopfitting costs, council taxes, employee wages and utility costs. 

Entrepreneur A may have to look at logistical issues like maintaining storage and what local suppliers to use. Customer-facing roles for employees will need to be listed in the organisational chart. 

Entrepreneur B wants to launch an e-shop. Their e-commerce business plan will need to cover the costs of building a website, hosting and setting up an e-commerce payment system. Digital marketing strategies should be the main focus. 

Entrepreneur B’s logistical operations and employee roles will be different. An e-shop may become affiliated with companies such as Amazon, ship products themselves, or source their products via suppliers. The plan may need to outline strategies covering online customer service, negative reviews and meeting fulfilment targets.

How a business plan can help your e-shop

Most people wouldn’t build a house without first making sure they have a firm foundation for it. The same principle applies to your e-shop. Your e-commerce business plan will help you solidify your online shopping concept, prepare for unforeseen eventualities and identify any areas of weakness. 

A business plan can also help you secure a loan from a bank or other financial institutions. Banks will look carefully at your business plan to get an understanding of your projected financials, operational structure, organisational chart, marketing strategies, and more. A comprehensive business plan can help you secure the loan you need to open your retail store.

Your e-commerce business plan should answer questions such as:

• How can you stand out from the crowd?
• Who is your ideal customer?
• Who are your competitors?
• How can you source products?
• Will you need to hire employees?
• Is your digital marketing strategy sound?
• What are the relevant tax regulations? 
• What are the exact financial requirements? 

The act of writing an online retail business plan can create new ways of thinking about your enterprise. It’s a great platform for testing out digital marketing opportunities or the viability of new product lines. 

Good to know: The statistics on business plans

On average, 1 in 5 new businesses launched in the UK will fail in their first year. 60% don’t make it past their third year. ³ The lack of a sound business plan is a key reason behind these high attrition rates. Studies have shown that having a business plan can enhance overall growth by up to 30%. ⁴ ⁵

Once your e-shop business plan is completed, it can act as a valuable resource. Referring back to your plan can also help you to stay focused on your goals. Are you meeting your projected key performance indicators (KPIs)? Are your sales figures where they should be? Your business plan should have the answers.  

Business plans aren’t just for self-reference either. If you want to secure investors for your e-shop, a solid business plan will demonstrate that your concept is viable. Many internet entrepreneurs work with influencers or celebrities. A precise business plan will give potential online partners a clear overview of all aspects of your e-shop. 

It’s not just new entrepreneurs that require a robust business plan. Existing businesses can use a business plan to attract new investors, launch a crowdfunding campaign or secure a bank loan. 

What to do before writing your e-shop business plan

Writing a concise, informative and accurate business plan can be a complicated process. Devote some time and energy to preparation before you even start to write your plan. 

Try taking a sheet of paper and quickly jot down the essential facts of your business. What are you offering your customers and why are your products or services better than the competition? How will your customers receive your products or services? Are you catering to other businesses (B2B) or are you targeting individual consumers (B2C)? Do you make your own products, or will you need to source them? 

Take a close look at your competitors and see if you can identify how they have achieved their success. Consider how are their sites designed. What digital marketing strategies do they use? What social media are they active on? Why are you drawn to their brand? 

It can also be helpful to study existing e-shop business plans and look over templates. This will assist you in coming up with a structure for your own plan.     

The essential elements of an e-shop business plan

The summary – Although the summary is the first part of your e-shop business plan, it should be the last thing you write. The summary should be a snapshot of the entire document. It acts as a pitch to potential investors or partners. Don’t take more than a page to write your summary. 

Company description – Give a comprehensive overview of your business. Detail what products or services you are selling and why they are desirable. Go into the values behind your business, why you started the company and the inspiration behind your brand. Outline the structure of your company. If you have a team, provide information on your key personnel. Make sure to mention how your site is hosted, what e-commerce software you are using and what your domain name is.  

Market research and competitor analysis – Who is your target market? Research your customers thoroughly and come up with a highly detailed analysis of their demographics. Collect as much relevant data on your industry sector as you can. Identify your main competitors and outline their strengths and weaknesses. Try and find out how much traffic goes to your competitors’ websites each month and if they have any negative reviews. Mention any market gaps or opportunities you have identified. 

Products and/or services – Highlight the benefits and features of your products and/or services. You can use tables with a list of your products, their prices and the projected profits. This section should be kept as short and easy to read as possible. Use bullet points where possible. If you have a wide catalogue, list only your top products. 

Digital marketing strategies – Digital marketing is a cornerstone of any online business. Pay close attention to the digital marketing strategy for your e-shop. Everything you are planning to do to generate buzz and boost sales should be included in this section. Include social media sites you will be using, as well as video marketing or YouTube campaigns. Focus on SEO strategies, content marketing ideas, email marketing and any paid advertising such as Facebook Ads or Google marketing. 

Logistical concerns – It is essential that you explain how you will fulfil customer orders. Are you going to provide downloadable content? Will you have your own warehouse or operate as a dropshipping enterprise? Provide details on how you will keep track of inventory. List all your suppliers and detail raw material costs. Estimate shipping times and provide a breakdown of costs.  

Company financials – Put together a concise accounting of all your projected revenue and any expenses related to your business. How you account for every penny will be of particular interest to investors. Think about how many items you need to sell to reach your income goals. Consider what the margins are on your products and what your marketing spend will be. Be sure to include a list of all your assets and any existing debts.

• Write for your audience – Don’t be overly technical or use jargon. Assume your readers know nothing about your business. 
• Make sure your figures are correct – Go over all your financials carefully. If possible, have your figures double-checked. 
• Be realistic – An e-shop business plan has to reflect the volatile reality of the online marketplace. Don’t present best-case scenarios or what you hope will happen. 

It’s always a good idea to carefully edit your business plan numerous times. Consider what you have written from the reader’s point of view. Check that your data is accurate. Proofread for spelling or grammatical errors. Trim any waffle or repeated information. Have other people read over your plan. Ensure that the formatting is clean and professional. 

Successfully competing in the online marketplace isn’t an easy task. Ankorstore can assist you in creating a viable e-shop business plan. 

Opening a retail enterprise is a huge undertaking. To find the support and advice you need, make sure you check out the Ankorstart program from Ankorstore.