Ecommerce Business Plan Template
If you want to start an online business or expand your current ecommerce business, you need a solid business plan.
A successful ecommerce business plan will accomplish several key objectives. First, it will help you create business goals for your online business and give you a roadmap to follow to reach them. It will also help you develop the right sales strategies to attain your goals. For example, by understanding market trends, the strengths and weaknesses of other ecommerce businesses, and the demographic and psychographic needs of your target audience, you can craft a better business strategy and marketing strategies to reach your target customers.
The following Ecommerce business plan template gives you the key elements to include in a winning business plan for an ecommerce startup or an existing ecommerce business.
Sample Ecommerce Business Plan
I. Executive Summary
Business Overview
[Company Name], headquartered at [insert location here] is a new eco-friendly baby supplies e-commerce website that seeks to offer an alternative resource to the mass-market of baby care items. It will feature products that specialize in all-natural, environmentally friendly baby, feminine and maternity items.
Products and Services
[Company Name] will sell an exclusive collection of baby care items with a focus on eco-friendly and environmentally safe products. Product offerings also include an array of feminine and maternity items. It is a priority of [Company Name] to offer only the best products with all-natural ingredients and materials.
[Company Name] is also dedicated to providing educational information on baby care, pregnancy, and holistic lifestyles.
Customer Focus
[Company Name]’s target market is comprised primarily of online consumers with a specific focus on moms and eco-friendly consumers.
The demographics of these potential customers are as follows:
- Roughly 200 million Americans shop online
- Average income of $76,000
- 82% married
- 49.6% in Mgt./Professional occupations
- Median age: 34 years
- Green consumers are found in substantial numbers across all demographic groups, but ages 18 to 34 year olds and high-income households are the top groups for green shopping.
Management Team
[Company Name] is led by [Founder’s Name] who has been in the e-commerce business for 10 years. While [Founder] has never run an e-commerce portal himself, he was previously director of strategic development for an e-commerce site. As such [Founder] has an in-depth knowledge of the e-commerce business as well as the needs mothers, including the operations side (e.g., running day-to-day operations) and the business management side (e.g., staffing, marketing, etc.).
Success Factors
[Company Name] is uniquely qualified to succeed for the following reasons:
- There is currently noe-commerce site dedicated to eco-friendly baby and feminine products. [Company Name]’s focused approach on eco-friendly products is unique in a market where websites look to offer a broad range of products.
- The management team has a track record of success in the e-commerce and consumer product business.
- The e-commerce business is a proven business and has succeeded throughout the world.
- Market trends,such as the growth in e-commerce purchases and the “green” movement favor this business.
Financial Highlights
[Company Name] is seeking a total funding of $430,000 to launch its business. The capital will be used for funding capital expenditures, manpower costs, marketing expenses and working capital.
Specifically, these funds will be used as follows:
- Website design/build and startup business expenses: approximately $120,000
- Working capital: approximately $310,000 to pay for Marketing, salaries, and lease costs until [Company Name] reaches break-even
Top line projections over the next five years are as follows:
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $731,250 | $2,687,401 | $5,358,945 | $7,650,990 | $10,229,809 |
| Total Expenses | $960,000 | $2,472,423 | $4,438,003 | $5,792,613 | $7,105,296 |
| EBITDA | ($228,750) | $214,978 | $920,943 | $1,858,377 | $3,124,513 |
| Depreciation | $7,440 | $7,440 | $7,440 | $7,440 | $7,440 |
| EBIT | ($236,190) | $207,538 | $913,503 | $1,850,937 | $3,117,073 |
| Interest | $27,768 | $24,297 | $20,826 | $17,355 | $13,884 |
| PreTax Income | ($263,958) | $183,241 | $892,677 | $1,833,582 | $3,103,189 |
| Income Tax Expense | $0 | $0 | $284,186 | $641,754 | $1,086,116 |
| Net Income | ($263,958) | $183,241 | $608,491 | $1,191,828 | $2,017,073 |
| Average customers/day | 102 | 339 | 615 | 798 | 970 |
| Number of orders | 36,563 | 122,155 | 221,444 | 287,415 | 349,355 |
II. Company Overview
Who is [Company Name]?
[Company Name] headquartered at [insert location here] is an eco-friendly baby supplies website that seeks to offer an alternative resource to the mass-market of baby care items. Our goal is to shift consumer sentiment to a more eco-conscious attitude through education of eco-friendly baby care products and practices.
The website aims to increase accessibility to these products and lifestyle by creating a user-friendly portal that connects parents to a wide variety of manufacturers, small businesses and products that specialize in all-natural, environmentally friendly baby, feminine and maternity items. The website’s goal is to not only sell goods, but to build a community of parents and eco-friendly businesses in order to become the premier, trusted provider of online services and products in the green space.
[Company Name] was founded by [Founder’s Name]. While [Founder’s Name] has been in the e-commerce business for some time, it was in [month, date] that he decided to launch [Company Name]. With active memberships in the Real Diaper Industry Association, International Center for Traditional Childbearing, Doulas of North America, Real Diaper Association, Baby Carrier Industry Alliance and Baby wearers Institute, [Founder’s Name] has become well connected and respected in the industry, which makes him the ideal leader for the brand.
It was apparent to [Founder’s Name] that an unserved market need existed for the product.
[Company Name]’s History
After surveying the e-commerce landscape, [Founder’s Name] incorporated [Company Name] as an S-Corporation on [date of incorporation].
[Founder’s Name] has selected a technology director with project management experience in the development of e-commerce websites.
Since incorporation, the company has achieved the following milestones:
- Developed the company’s name, logo and placeholder website located at www…
- Determined the list of products to be offered
- Determined web platform requirements
- Identified three potential web development companies and solicited proposals from them
[Company Name]’s Products
Below is [Company Name]’s initial product list. As you can see all items are classified under the following five main categories:
- Diapering: Diapers, wipes, creams, cloth diapers, diaper bags
- Feeding: Bottles, utensils, breastfeeding, formula, bibs
- Toys & books: infant toys and board books
- Safety: Baby monitors, gates, first aid, medicine and baby proofing items
- Gear: Strollers, high chairs, car seats, swings, portable cribs
The website will feature a rotating display of featured and new products on its homepage as well as a searchable database. Products will be sent directly via manufacturer to client’s home.
Website Design
[Company Name] will develop a website whose key elements will include the following:
- Homepage
- Search Engine
- Database of products
- Cart System
- Help and FAQ pages
The website will be built by an established development firm and designed by an accomplished web designer, with the process supervised by the company’s technology director. Where appropriate, existing software applications will be purchased to fill standard needs to keep costs down without sacrificing functionality and to avoid the problems associated with newly-developed software.
[Company Name]’s website will be available at all times, but customer service representatives, answering email requests, will only work 7 days a week, from 9AM to 6 PM.
III. Industry Analysis
Industry Statistics & Trends
The following industry size facts and statistics bode well for [Company Name].
The E-Commerce industry will attract a larger customer market as more households purchase items online. Over the past five years, revenue is expected to increase at an annualized 13.4% to $526.6 billion. However, the looming threat of regulation may hamper sales, and heightened competition is projected to slow profit growth in the coming years.
Trends and drivers include:
- Per capita disposable income is projected to accelerate an average 2.4% per year on average during the period, and employment is on the rise. When income increases and consumers are more willing to spend money, industry operators will experience a revenue boost.
- Moreover, heightened employment will limit leisure time and encourage consumers to leverage the convenience of online shopping.
- In addition, the industry will benefit from additional changes in consumer preferences during the next five years.
- Rather than spending more on goods in department stores or other retail outlets, consumers will increasingly turn to price-competitive options offered online. As a result of this shift in customers’ shopping tendencies, the industry is expected to continue to experience solid growth.
- Internet traffic volume will continue to steadily grow during the next five years, further contributing to industry growth. Internet traffic volume is anticipated to grow as consumers gain easier and more convenient access to the internet with improved technology and the rise of smartphones and public Wi-Fi access. More consumers will have access to online retailers and therefore, will shop at online industry establishments.
- Online retailers will also continue to benefit from low operational costs because they do not have to rent, staff or operate brick-and-mortar stores. Improvements in productivity and efficiency will aid profit growth; however, price-based competition and the continued flood of new entrants is expected to limit industry returns.
- Competition within the industry will be based on the reputation and reliability of operators and prices.
- Operators will attempt to expand the number of regions they service to capture a wider range of customers. Therefore, shipping and handling costs will also be a point of differentiation among players, as will the ability to provide timely product delivery and refunds.
- The functionality of shopping websites and the ease by which consumers can place orders will contribute to the number of repeat and loyal customers as well.
- To increase their customer base, online retailers will continue to improve the online sales process. These efforts will include more accurate product descriptions, more competitive prices and lower freight and delivery costs.
- Furthermore, operators will gradually place a greater emphasis on customer service, increasing their efforts to meet the various needs of online shoppers. Operators will strive to deliver superior after-sales service and devise ways of assuaging consumer concerns regarding privacy and credit card payment issues.
- Online retailers that meet these requirements will ultimately benefit from strengthened brand recognition and higher consumer spending.
IV. Customer Analysis
Demographic Profile of Target Market
[Company Name] will primarily serve e-commerce customers. The demographics of these customers are as follows:
- According to Invesp, 79% of females and 77% of males who have internet access have purchased something online in the past 12 months. Those aged 50 to 64 are the most likely to make an online purchase, followed closely by those aged 30 to 49.
- Unsurprisingly, more online purchases are made by those households with income above $75K per year, though 67% of households with income below $30K have made online purchases.
- When it comes to e-commerce, men drive nearly as much spending online in the U.S. as women. Many men want to buy everything online: 40% of men aged 18-34 say they would ideally “buy everything online,” compared to only 33% of women in the same age group.
- Globally, Generation X (age 35-49) respondents comprise about 28% of those willing to make a purchase online and Baby Boomers (age 50-64) make up about 10%. The Silent Generation (age 65+) contributes roughly 2%. The youngest age group, Generation Z (under age 20), represents about 7% of those who intend to purchase online.
Customer Segmentation
We will primarily target Consumer age groups that have the greatest exposure to the internet for work and leisure are most likely to shop online:
- Consumers aged 18 to 30 – Consumers in this segment have the least discretionary income to spend on e-commerce. This segment’s purchases are mostly in clothing and footwear and small electronic devices.
- Consumers aged 31 to 44 – Consumers in this segment also have significant exposure to the internet and can afford higher-priced goods, such as larger electronics purchases and discretionary items. Moreover, these time-strapped consumers are driven to e-commerce and online auctions by convenience.
- Consumers aged 45 to 54 – Consumers aged 45 to 55 generally have higher disposable income for industry goods. This segment is often more concerned with the convenience than the price of online items.
V. Competitive Analysis
Direct and Indirect Competitors
The following e-commerce sites are expected to be the key competitors for [Company Name] due to their current brand and resources:
Diapers.com
Diapers.com is currently the largest online specialty retailer for baby products. Initially founded as 1800 DIAPERS, the company set out delivering consumables, such as diapers, wipes and formula, to parents with free 1-2 day shipping and a focus on customer service. Diapers.com expanded its selection into far-reaching baby categories, including clothes, car seats, strollers, and toys. Today, Diapers.com is the largest online retailer for everything baby.
Sister sites include Soap.com, BeautyBar.com, Wag.com and Yoyo.com. Amazon.com acquired Quidsi, Inc., which operates Diapers.com and Soap.com for $550 million.
Babies “R” Us.com
Babies “R” Us is owned and operated by Toys”R”Us. Founded in 1948, as a toy and juvenile-products retailer, the company expanded into baby care products in 1996 with the launch of the first Babies “R” Us location. Babies“R”Us operates as a specialty baby products retailer and has grown to approximately 260 locations across the country since its first store opened. The stores offers new and expectant parents a broad assortment of products for newborns and infants, including cribs and furniture, car seats, strollers, formula, diapers, bedding, clothing and toys. Over 11 million moms have utilized the popular Babies“R”Us Registry.
Last year, Toys“R”Us, Inc. reported that its Internet sales grew 29.9% year-over-year to $782 million from $602 million, and the company announced plans to open a dedicated e-commerce fulfillment center in McCarran, NV.
Competitive Advantage
[Company Name] enjoys several advantages over its competitors. These advantages include:
- Niche Market Focus: By serving the niche market of eco-conscious products, [Company Name] will be able to focus its products on the needs of these customers more so than larger, entrenched competitors.
- Relationships: [Founder’s Name] and the technology director know many of the best programmers and web development companies. As such, it will be relatively easy for us to build the website’s functionality.
- Community: By developing a community of moms and online shoppers, [Company Name] will strengthen its brand loyalty
VI. Marketing Plan
The Marketing Plan describes the type of brand [Company Name] seeks to create and the Company’s planned promotions and pricing strategies.
The [Company Name] Brand
The [Company Name] brand will focus on the Company’s unique value proposition:
- Offering a wide variety of eco-friendly baby and feminine items
- Making the online shopping experience easy, enjoyable and informative
- Providing excellent customer service, with dedicated customer service representatives
Promotions Strategy
The Company’s promotions strategy to reach the target market of e-commerce customers includes:
Public Relations
We will contact family and baby magazines, family and life sections of newspapers, and television stations and send them a press release describing the opening and unique value proposition of [Company Name].
Search Engine Optimization
The Company will develop its website in such a manner as to direct as much traffic from search engines as possible. The original website designer will use knowledge of search engine optimization to orient the website’s content towards this end and begin a program of link exchange to move up the search engine rankings (particularly Google). Ongoing search engine optimization of this type will be executed by an experienced SEO firm contracted on a monthly basis.
Pay-Per Click Advertising
Additionally, [Company Name] will use highly-focused, specific keywords to draw traffic to its website through text pay-per click advertising on Google Adwords and banner ads on other appropriate websites (brokered by Google or another ad placement company). Advertisements will be targeted at potential clients who will find our content-rich site to be a valid resource and applicable to their interests, rather than an interruption or distraction.
Email Marketing
[Company Name] will publish a monthly email newsletter to tell customers about trends in motherhood, baby products and child care. Email addresses will be gathered from users who opt-in when using the website and the email newsletters will support the brand of the site as an expert in baby care. In addition, emails presenting exciting new offers or products may be sent as often as once a week to customers who have opted-in to keep them informed of the latest information on the website.
Affiliate Website Partnerships
[Company Name]’s affiliate web program will allow other businesses and websites to earn commissions on products sold on the [Company Name] website by referring their site visitors to our website through links to the homepage or to specific products.
Print Advertising
[Company Name] will initially advertise in family magazines and mom-focused websites and blogs in order to gain awareness.
Pricing Strategy
[Company Name] pricing will be appropriate for the digital medium. That is, they will be priced lower than other big box retailers. The ecommerce store will carry products offered at a range of prices to allow even those with modest budgets to have options.
VII. Operations Plan
Functional Roles
In order to execute on [Company Name]’s business model, the Company needs to perform many functions including the following:
Administrative Functions
- General &administrative functions including legal, marketing, bookkeeping, etc.
- Sourcing suppliers of content and managing supplier relations
- Hiring and training staff
Website Functions
- Developing additional website features
- Site maintenance, updates, and bug-fixing
- Ongoing search engine optimization
Service Functions
- Customer service
- Writing and producing copy for monthly newsletter and blog
Milestones
[Company Name] expects to achieve the following milestones in the following [] months:
| Date | Milestone |
|---|---|
| [Date 1] | Finalize web development contract |
| [Date 2] | Complete prototype design of website |
| [Date 3] | Hire and train initial staff |
| [Date 4] | Launch [Company Name]website |
| [Date 5] | Reach break-even |
VIII. Management Team
Management Team Members
[Company Name] is led by [Founder’s Name] who has been in the e-commerce business for 10 years. While [Founder] has never run an e-commerce portal himself, he was director of strategic development for an e-commerce site devoted to baby products previously. As such [Founder] has an in-depth knowledge of the e-commerce business as well as the needs of mothers, including the operations side (e.g., running day-to-day operations) and the business management side (e.g., staffing, marketing, etc).
[Founder] graduated from the University of ABC where he majored in Business.
The technology director, [Tech Director Name], has 15 years of web development management experience. He has experience managing web development projects for e-commerce at for squidoo.com, creating an e-commerce portal much like that of [Company Name]. He received an MBA in Business Information Systems from XYZ College.
Hiring Plan
In order to launch the e-store, we need to hire the following personnel:
- Sourcing Product Assistants (2 – responsible for finding products and making deals with wholesalers and manufacturers)
- Customer Service Representatives (2– responsible for fielding emails and calls from customers about potential, current, and past orders).
- Part-Time Bookkeeper (1 – will manage accounts payable, create statements, and execute other administrative functions)
At a future date, the following staff will be added:
- Programmer (1 – to be hired in the second year of operation, will work under the technology director implementing new developments and bug fixes in the website. Before this time, programming services will be on a contract basis).
IX. Financial Plan
Revenue and Cost Drivers
[Company Name]’s revenues will come from the sale of baby and feminine products.
The major costs for the company will be cost of goods, internet connection fees, and salaries of the staff. In the initial years, the company’s marketing spend will be high, as it establishes itself in the market.
Capital Requirements and Use of Funds
[Company Name is seeking a total funding of $430,000 to launch its business. The capital will be used for funding capital expenditures, manpower costs, marketing expenses and working capital.
Specifically, these funds will be used as follows:
- Website design/build and startup business expenses: approximately $120,000
- Working capital: approximately $310,000 to pay for Marketing, salaries, and lease costs until [Company Name] reaches break-even
Key Assumptions & Forecasts
Below please find the key assumptions that went into the financial forecast and a summary of the financial projections over the next five years.
| Number of customers per day | |
|---|---|
| Year 1 | 40 |
| Year 2 | 60 |
| Year 3 | 80 |
| Year 4 | 100 |
| Year 5 | 120 |
| Average order price | $32 |
5 Year Annual Profit and Loss Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
| Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
| Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
| Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
| Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
| Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
| Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
| Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
| EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
| EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
| Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
| PRETAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
| Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
| Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
| NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
| Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
5 Year Annual Balance Sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
| Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
| Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
| Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
| Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
| TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
| Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
| Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
5 Year Annual Cash Flow Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
| Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
| Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
| CASH FLOW FROM INVESTMENTS | |||||
| Investment | ($246,450) | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 |
| Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| SUMMARY | |||||
| Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
| Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
| Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
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