How To Create an E-Commerce Business Plan in 8 Steps

Writing a comprehensive business plan should be one of your first priorities if you’re thinking of starting an e-commerce business.

A business plan is a roadmap with milestones that help you achieve your company’s main goals and stick to your strategies. It explains the long-term vision of where your company is headed and how it plans to get there. An e-commerce company should have a clear business plan so that all stakeholders have a shared understanding of both the end goal and the journey to get there.

While the overall structure of an e-commerce business plan doesn’t differ much from that of a traditional retail store’s, the business strategies differ.

For instance, a brick-and-mortar business plan should concentrate on leasing space and designing a physical storefront. An e-commerce business plan, on the other hand,  should focus on designing the company’s digital storefront (i.e., its website). Similar differences apply to areas like marketing objectives, management structures, and hiring policies.

This article will take you through the finer details of creating an effective business plan for your e-commerce company. Here, you’ll see examples and learn how to:

• Draft an executive summary
• Describe your company
• List your products and services
• Analyze your target audience
• Estimate overall market size
• Define your marketing plan
• Define your value delivery system
• Create pro forma financial statements to explain operational assumptions
• E-commerce business plan examples

1. Draft an executive summary

An executive summary outlines everything included in your business plan. It’s the first section of your plan—which makes it important because it should capture the reader’s attention and entice them to read through the rest of your ideas. It should be well written and heavy on data, and should fit on a single page.

Although every business plan starts with the executive summary, it’s typically written last. But you’ll want to bullet point key items early on and take notes as you work on the rest of the business plan. When you return to the summary with those notes in hand, it should come together more easily.

The idea here is to provide a clear and concise overview of what your business is about and how you plan to make it successful. It must include your business goals and mission statement, and it should introduce your company’s products and services, management team, business structure, and location (i.e., an online platform). The executive summary should also include your company’s financial information and growth plans.

A typical business plan for an e-commerce company includes the following sections:

• Business opportunity foresight and how you plan to capitalize on it
• Target market projections and your intended customer base
• Company business structure (e.g., sole proprietorship, limited liability company, or corporation)
• Market analysis and sales strategies
• Financial analysis and projections
• Information about business owners and employees

An implementation plan detailing initiatives from the planning stage onward

2. Describe your company (qualitative)

This section of your business plan is where you’ll answer logical questions about your company in minute detail.

Use the descriptive section to provide a company overview, explaining what your company does, what makes it unique, its location, and its competitive advantages. Some points to address in this section include:

• A company description. The description explains what your business does, what gaps it fills in the marketplace, what advantages it seeks to bring customers, and how it plans to adapt to changing market dynamics and customer preferences.
• Details about your products and services. What is your unique selling point (USP)? How do you intend to stand out from other e-commerce competitors? What is your plan to compete with market leaders in the industry? What customer-focused problem are your products or services solving? What customer needs are you fulfilling?
• Your business model. This describes things like whether you will be a business-to-business (B2B) or business-to-customer (B2C) e-commerce store; whether you’ll sell directly to customers or source products for other manufacturers; and whether you’re planning a traditional sales model or a subscription model.
• Your mission statement and values. These items show how you intend to follow industry best practices and comply with environmental, safety, and governmental regulations, as well as social norms.
• Your company’s ownership structure and management hierarchy. Provide brief backgrounds of your team leaders and details about the size and composition of your workforce.
• A brief overview of external forces that are likely to influence your business. This will include legal, political, social, technological, economic, and environmental considerations.

3. List your products and services

Use this section to describe the products you’ll sell or the services you’ll offer via your online store. If your e-commerce business plans to sell too many items to list individually, include a general description of each product line. If you’re going to sell only a handful of items, provide additional information about each, such as how they’re made or where they’re sourced.

This section should give your readers a clear understanding of whether you will manufacture your own products or buy them from wholesalers. Explain how your products differ from competitors’ similar products and what advantages they bring your customers. You can also include packaging details (e.g., design, materials) in this section.

Finally, present an overview of products or services you plan to introduce in the future. Explain what value they’ll add to your offerings and how that will improve profitability for your business.

4. Analyze your target audience

Your target audience or persona is the focus of your e-commerce startup. The audience determines everything from your business plan and marketing strategy to website design and advertising needs. Creating personalized experiences for your target customer base is how you generate traffic to your website, drive sales, and create brand loyalty.

Your first objective in this section is to define your target audience based on market segments and customer profiles. In other words, break your target audience into demographics and psychographics.

Demographic data will determine which marketing channels you use for your business, where you sell your products, and how you price them. Most importantly, it will decide your tone when addressing your ideal customers.

Segment your target audience based on the following demographic indicators:

• Age
• Gender
• Race
• Education
• Employment status
• Occupation
• Income
• Relationship status
• Location

Psychographic data can provide insights into your customers’ personality traits, attitudes, interests, and values. It’s about knowing what motivates your target audience and guides their purchasing decisions. Here are the main psychographic data points to focus on in your business plan:

• Activities
• Interests
• Opinions
• Hobbies

• Values
• Attitudes
• Behaviors
• Political affiliations
• Lifestyle preferences

Provide an overview of the tools you used to analyze and define your target audience (e.g., market research, surveys, online forums, competitive analysis).

5. Estimate overall market size

An accurate estimate of the overall market size is crucial for all startups and early-stage entrepreneurs.

This section informs your partners, teams, and investors about the potential value in the industry. Your business plan should include the following details:

• Total addressable market (TAM). TAM represents the maximum available revenue opportunity for your business. In other words, if every person in your target audience were to become a customer, how big would that market be in terms of revenue?
• Penetration rate. This is the percentage of potential customers you aim to acquire relative to the total size of your target market. This figure is crucial for your teams and potential investors to quantify the business opportunity your company represents.
• Competitor details. Elaborate on existing players you’ll compete against in the market. Illustrate the pros and cons of your competitors’ products and how your products are better. Also, explain how you intend to seize your competitors’ market share in the long run.

6. Define your marketing plan

Your marketing plan should outline the advertising strategy you intend to use to set yourself apart from competitors, generate leads, and reach your target audience. It should address four key elements.

• Product. The goods or services your business will offer and how they differ from similar offerings that already exist in the market.
• Price. How much you’ll charge and how you plan to balance prices with sales volume to maximize profits.
• Promotion. How you’ll position your brand and its products and services in the market.
• Place. The sales channels you intend to use to reach your target audience.

Besides these four points, your marketing plan should also touch upon several other important considerations, including:

• The market research on which you base your marketing strategy
• The overall messaging you’ll use to target particular demographic and psychographic segments of your target audience
• The advertising methods and platforms you plan to use to spread your message (e.g., social media, radio, online, TV, print, content marketing)
• The key performance indicators (KPIs) you’ll use to measure the effectiveness of your marketing efforts
• Your marketing budget, with a platform-wide breakdown of resource allocation

This section should also address how you intend to adjust your marketing plan on an ongoing basis, based on your KPIs and market feedback. For instance, if email marketing is performing better than expected, you can rework the campaign budget to allow more spending through that channel.

7. Define your value delivery system

A value delivery system is how a product or service is designed to offer the most value to customers who opt to buy it. In the context of e-commerce, there are five distinct value delivery systems. They are:

• White label. White labeling (so-called because the white labels are left blank, to be filled in) is when a company buys a product manufactured by a third party and sells it under its own brand name. It can help an e-commerce business increase brand visibility with zero manufacturing costs.
• Private label. Private label is when a third party specially manufactures a product and an e-commerce company sells it under its own brand name. This allows greater control over product specifications and packaging than white labeling.
• Wholesale. This is a B2B e-commerce model where you sell discounted goods in bulk to other retailers instead of selling directly to customers. This is a low-margin but high-volume business model.
• Dropshipping. This is an e-commerce business model where the seller doesn’t stock products in-house. Instead, it routes all orders to a third-party manufacturer, wholesaler, or online retailer who ships the goods to the customer.
• Subscription. A subscription model e-commerce business is where customers subscribe to a recurring product or service. Subscription deliveries can occur on a weekly, biweekly, monthly, or even yearly basis.

8. Create pro forma financial statements to explain operational assumptions

Creating financial statements is a crucial part of your business plan and is based on operational assumptions and realistic financial projections. You’ll use charts and graphs to explain your business in financial terms. The objective is to convince the reader of your business’s stability and longevity.

Your projected financial statements will have three elements:

• Income statement projection. This is a profit and loss statement that calculates gross margins based on a sales forecast.
• Cash-flow projection. This is where you lay out your cash-flow statement based on anticipated inflows and outflows.
• Balance sheet projection. This shows your company’s projected assets, liabilities, and owner’s equity over a given period.

Your pro forma financial plan must also include a reasonable break-even analysis, expected profits and losses, and funding requirements.

E-Commerce business plan examples

If you’ve never written a business plan before and are feeling jittery about putting your facts on paper, try these e-commerce business plan templates and examples.

• Business plan template by Shopify. Shopify offers new entrepreneurs step-by-step access to the full scope of running a business, helping them identify areas where they need to upgrade their skills.
• Business plan template by Hubspot. Hubspot offers a valuable selection of ready-to-use business plan templates especially curated for startups and small business entrepreneurs.
• Business plan template by Sage. For people who are passionate about their business ideas, Sage designed these templates to make the job of writing a business plan enjoyable and less daunting for beginners.

Create a business plan the easy way

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Use Project Catalog™ on our platform to browse hundreds of professionals and agencies from all over the globe.

Get a professionally written business plan that will help you find potential investors and attract funding for your e-commerce business.

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Upwork is not affiliated with and does not sponsor or endorse any of the tools or services discussed in this article. These tools and services are provided only as potential options, and each reader and company should take the time needed to adequately analyse and determine the tools or services that would best fit their specific needs and situation.