How To Start An eCommerce Business – Complete Guide For 2021

Planning to start an eCommerce business, but you have too many ideas and don’t know which is best? Go through our guide and learn everything you need to know on how to start an eCommerce business!

This Advice was Last Updated 1 month ago.

Congratulations on making the tough decision to start an eCommerce business!
That’s why you’re here reading this page, right?

But how to start an eCommerce business and what steps do I need to take?

There are a lot of crucial factors that play major roles in eCommerce, like finding the right platform to sell, connecting with the suppliers, developing a customer base, etc. are the most important and basic ones that you need to take into account.

The purpose of learning how to start an ecommerce business is to earn money through online merchandising. 

But, this is different from affiliate marketing

Affiliate marketing is much easier as you only have to promote other people’s products and you get a percentage of any purchase is done. 

When you start your ecommerce business from scratch, you have to have a solid business plan and carefully take your decisions in order for your business to bloom.

The most amazing thing about starting your own business is that you get to be your boss. No matter how big a company is, when you’re an employee, you work under other people and you have to follow their rules and regulations. But, when you run your own, you get to work for yourself and make decisions.

Unlike a traditional brick and mortar store, an eCommerce business doesn’t necessarily require any physical establishment to run a store. This is where you get to save a lot of money which can be put to good use for other departments, like marketing. 

Doing effective marketing is the utmost necessity to make an eCommerce business successful. Surely your business will not turn into Amazon overnight, but you shouldn’t expect any less from your potential business if you are willing to do what it takes.

Browsing and purchasing products online used to be a difficult task in the past. But, it has become a common practice nowadays. 

The recent Coronavirus pandemic has shown us the importance of eCommerce around the world. With a lot of the countries being under lockdown, people had no other option but to order their products online.

Taking all into account, we can safely say that the eCommerce business is something that has a bright future, as more and more people use it daily. As we move into a period where shopping on the web is considerably more basic, you must get in line and start an online eCommerce store. This is one of the best business ideas for this time.

If you’re ready to start your new ecommerce business from scratch, we must warn you that launching your store is never so simple. You just can’t figure out everything without doing proper research. 

To establish a specific target audience, you need to know which products are preferred by it. Then, you have to choose the means of marketing to effectively reach out to your niche.

Moreover, without the requirement for a brick-and-mortar store, eCommerce offers more flexibility and opportunities for business visionaries. 

Taking all these into account, if you’re ready to start an eCommerce business from scratch, we’re here to help you with our detailed guide!

Looking for more ways to make money online ? Check out all our articles on this topic.

Affiliate Disclosure

Please note that in this tutorial, we use affiliate links when promoting other products or services. They do not add any additional cost to you when you make a purchase. They are solely used to bring us a small commission and keep this site alive and free of annoying ads. We only recommend safe to buy and use products and services from reliable companies.

Table of contents

Good product research from the start gives you a lot of benefits in the future to come

Research Products

The first step that you have to take when learning how to start an eCommerce business is to do proper research on the products you want to sell in your store. Let’s go through the steps that you will have to take.

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Find the Niche before Choosing the Products

Simply put, a ‘niche’ is the category or larger genre under which a certain type of product will fall into. Before choosing the products to sell in your eCommerce store, you have to take the first step and find a niche that will be perfect for you.

For example, if you want to sell cycling goods, then ‘cycling’ could be your niche, and your store must have everything related to and required for cycling.

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Find Products that Resolves Customers Problems

As mentioned earlier, choosing the right products to sell in your store is a crucial factor that will make or break your eCommerce business. When you are doing product research based on your niche, make sure to look beyond just the product.

Keep an eye open to customers’ “pain points” when you select a product. Your chosen product has to be a problem solver for your customers’ needs. This will surely increase your customer base. And by selling it from your eCommerce store, you look to gain devoted customers that will recommend you further on to their friends.

For example, Active Hound is a business that brought a lot of solutions to pet owners. The founders of the business, Zak and Lucy, understood their customers’ ‘pain’ regarding the toys of their pets. Most of the pet toys that are available in the market are quite expensive and not durable enough.

To address this issue, Zak and Lucy founded Active Hound that brought durable dog toys. Being successful in their first venture, they started launching other pet materials as well.

What Zak and Lucy tried to focus on was looking at the customers’ ‘pain point’ and trying to find a remedy. They brought in products that initiated a solution to the problem their potential customers were facing. 

Following this strategy, you can focus on finding the product you want to sell to your targeted group of customers.

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Find Products for People with Passions

The first thing to consider when learning how to start an ecommerce business is that when people are passionate about a certain product, they don’t think twice before buying it. The purchase translates to investment and such products always create hype amongst buyers.

To make sure you’re choosing the right products for your potential customers, assess your products against your target people’s hobbies. People who are passionate about painting will always buy quality paint materials. If you can promote your products well-enough to people who have this hobby, your sales are ensured.

Moreover, when you do business with passionate customers and they like the quality that you offer, you earn their loyalty to your brand name. They will always come to your store if they can get the perfect product from you. 

Creating a group of loyal customers at the beginning of the business can be considered a huge head start for your target audience.

Furthermore, if the niche you’re choosing is also something that you have an interest in, you’re bound to start a successful business. When you love the products you sell, you know all about them and you can describe them better to your customers. When your customers will see that you know what you’re doing and they can get the best suggestions from you, why would they go to someone else?

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Make Use Of Your Professional Experiences

Even if you don’t hold much passion towards the niche you choose, but you have past experiences of working in this sector, make sure to utilize it. Mention in the description of your business that you hold explicit experience of working in this field.

For example, if you have professional experience of working as an IT Professional, you can go with electronic gadgets. You will know what devices and components are best for people. Different groups of people require different devices. For example, a gamer needs a more powerful laptop or desktop unit, compared to a normal user that just uses it for office tools.

To help your customers find the best products, your professional experiences will come in handy. When your customers realize that you know everything about the products that you sell, they will put their faith in you and trust your advice.

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Find Trending Products

When you learn how to start an ecommerce business watch out for trends and always consider them as an opportunity. People love to follow trends. And if you can give them products that will make it easier for them to follow the trend, they will love you for this.

A few years ago, a movement started on Facebook named “No Shave November”. The purpose of the trend was to save the money that men would spend in a month and donate it. It initiated a new trend of posting pictures with a beard.

But, unfortunately, not everyone has glorious beards. This created an opportunity for business owners who sell beard-growing oils or medicines. Taking up on this trend, they made thousands of dollars. The secret lied in their marketing. They made men understand that it is an essential feature for men to have a glorious beard. And that if you don’t have a thick beard, you’re not ‘man’ enough!

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Go through Reviews of Existing Products

One of the most effective ways to find out which products people like are to browse through reviews on existing products. Go to other eCommerce stores, and browse through their customer review section.

When customers like a product, they don’t always post a positive review about it. But, if they don’t like something, they will surely post a negative review on it. This is what you have to focus on. Never sell products in your store that people dislike. If your customers see that your products are not good enough when you start your business, there are very few chances of them coming back to you after the first purchase.

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Conduct A Thorough Keyword Research

Since you’re going to run an online store, you must have some general ideas about keywords. Otherwise, the chances of your website showing on top of the search results are quite low.

When you choose a niche, search for related keywords to that niche and conduct research on the products that people most search for. 

For example, if cycling is your niche, you might find that people searched for ‘best bicycle chains’, ‘best bicycle seats’ along with ‘best bicycles’.

Your job is to make a list of the products that are related to the most commonly used keywords and round them up in your online store.

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Get Products from Popular Brands

People tend to feel skeptical towards a new business that they’re not familiar with. And you can’t blame them for that! No one would be willing to spend a large amount of money on something they don’t know and then regret later on.

This is why, since you’re not manufacturing any products, it’s best to go with the popular brands that people are already familiar with. In this way, you don’t have to build their trust with the brand and the reputation will speak for itself.

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Choose Products that People Will Buy Again

How many laptops have you bought so far in your life? If you’re not super-rich and you don’t have a habit of changing it every month, I bet you can easily count the number of laptops you have bought so far. But, can you count how many ink cartridges you have bought for your printer? Or how many batteries you have bought for your remote?

If you’re not selling products that will earn you thousands of dollars in a single purchase, it’s better to go with products that people will buy repeatedly. 

If ‘pet materials’ is your niche, and you offer pet foods at good prices, people will come again to you and buy pet foods as it is something they will require constantly.

Then again, to make sure you have returning customers, your products and your service have to be good enough for them to be satisfied. Otherwise, they will just go to a different store to take care of their needs.

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Ask Your Friends

Don’t forget to ask your friends or family members if they’d buy certain products from you. Remember, you’re not asking them to buy anything from you right now, you’re just asking for their advice. So, make sure you make your intentions clear about it.

When you choose some products for your business and don’t find enough reviews or comments about their effectiveness, you can ask your friends about these instead of selling them right away and taking a risk. 

If the products are not good enough, you might end up losing a bunch of customers. But, if you ask opinions from your friends, you have nothing to lose!

Choosing the business model is essential as it will have an impact on your success.

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Choose Your eCommerce Business Model

We hope that by now you have a clear idea that starting a successful  eCommerce business requires no less amount of effort than any other online business. And just like any other business, you need to choose a specific business model that you will follow. 

Choosing the business model is essential as it will have an impact on your success.

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Factors to Consider before Choosing eCommerce Business Model

To choose the perfect eCommerce business model, you have to consider some factors that are important to the future of your business:

🔰 What are You Capable of?

Before choosing your preferred business model, you need to assess your ability to run the business. You have to find out how much you can invest in the business and what you can achieve with your current resources. Based on the available resources, you will come up with choosing the perfect eCommerce business model for you.

🔰 Who are Your Customers?

After assessing your capabilities, you need to think about the people who are the lifeline of your business – the customers. Your business model will largely depend on the target group of the customers you choose. You have to understand their requirements, evaluate their behaviors, assess their expectations, and choose your business model according to that.

🔰 What Products are You Selling?

The next step is to gather information regarding the products that you will sell. Different types of products will require different types of business models and maybe a different niche. You need to decide on what products you will sell through your online store, and then find out the most suitable business model for that type of product.

🔰  Where Do You Want to Stand?

It might sound a bit confusing, but it is a very important factor that you need to understand when you start a successful business. As the owner of the business, your role doesn’t end with you being the seller. Choosing your business model will depend on where you want to stand in your business. Are you being competitive with the product quality or price? Are you going to introduce new products or just bringing in a new competition to existing products? 

Taking all these factors into account, you will be able to decide which business model is perfect for you.

Let’s decide what kind of business are you opening

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Types of eCommerce Business Models

After you have considered all the necessary factors that play major roles in your business, you have to know about the business models that are usually followed to start a successful eCommerce business.

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Business to Consumer – B2C

This is the most common business model that a lot of businesses follow. In this business model, you act as the seller and are selling products directly to the consumers. Usually, in this business model, people buy their essential goods and bulk orders are pretty frequent.

Although you will not get many orders for products in bulk, you will not have to spend much on marketing as you’re selling directly to the consumers. But, you have to ensure a lot of other important factors.

To make sure your consumers are getting the products on time, you have to follow up with the delivery team constantly. No one likes late deliveries! And if you can’t meet the fast-delivery criteria, there are high chances of you losing a lot of customers in a short period of time.

To ensure your customers’ complaints are reaching you, you have to run a customer service department that will listen to the customers’ problems. You might establish a call-center or just respond to them through texts or emails. But, whatever you do, make sure your customers feel heard and their problems are addressed.

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Business to Business – B2B

You might have understood what this model is from its name. Yes, if you follow the B2B model, you’ll be selling stuff to other businesses. The problem with B2C is that you don’t usually get large orders. But with B2B, most of your orders will come in bulk and you will earn a bigger profit from a single sale.

But, B2B business models require more strategic approaches as you have to convince other business owners. Since they will spend a lot of money buying from you, they will not do it unless they feel safe. So, you have to build a strong connection with your clients to make sure they are feeling comfortable doing business with you.

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Consumer to Business – C2B

Although this model is not so common among business owners, recent endeavors of this business model have been proven successful with a lot of business owners.

In the C2B business model, consumers sell stuff or provide service to business owners. 

One of the most common freelancing websites, Upwork, functions following this business model. The freelancers present their skills to business owners and the owners decide whether or not they should hire them for work. The website charges a small amount of money if a contract is successfully secured.

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Consumer to Consumer – C2C

Compared with other business models, this one is quite new and innovative. This business model is also called ‘Online Marketplace’. Here, people post their stuff online, and other people browse through them to see if they want to buy anything.

Online marketplaces like eBay and Craigslist work following the same business model and everybody knows how successful they are! They are the pioneers of this business model and showed everyone else how to run a C2C business.

Although eBay and Craigslist found immense success in this business model, some underlying issues need to be addressed. As in this business model, consumers themselves are the sellers; you will not have any control over the quality of the products. And since the people who will be willing to buy the products will not get to see the product until they buy it, some ill-intentioned sellers might deceive the buyers. 

As the business owner, it will not always be possible for you to look after these issues and be on top of them.

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Value Delivery Methods

After you have successfully evaluated all your essential factors and chosen a business model, it is time for you to choose a method of delivering value. The value delivery method is closely associated with the business model that you have chosen. If you think of your business model as a car, then your value delivery method is the engine, which means, the value delivery method is the component that makes your business model work.

Among several value delivery methods that are commonly followed, you need to choose the one that suits you the most.

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Marketplaces

When you browse through AliExpress, you will find millions of products available. Who are the manufacturers of these products? Certainly not AliExpress! They just act as a third-party supplier to promote the product and ship it to the consumers. The manufacturers or retailers provide their products to AliExpress, and these products are sold to the final consumers through AliExpress. This value delivery method is known as a Marketplace.

Platforms that sell all kinds of products, like online marketplaces, are getting very popular nowadays, mostly among eCommerce businesses. By following this value delivery method, you save a lot of time and energy by not having to manufacture the products yourself. You just have to act as a middle-man to make purchases successful.

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White Label and Private Label

If you purchase products from Amazon, you must have seen a brand named ‘Amazon Essentials’. Their products are quite good compared to similar products from other brands. But, who are these brand owners? You’ll be surprised to know that Amazon themselves are the brand owners of these products.

In white labeling, you have to purchase a certain product from the distributors, and this product is generic to the original product of a famous brand. In private labeling, you have to hire manufacturers to produce unique products that you can sell.

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Direct to Consumer – D2C

It might sound like the B2C business model, but it is also a value delivery method. In this method, middlemen are cut out of the process, and manufacturers ship the products directly to their consumers.

This method has been proven effective for companies like Casper and Warby Parker. They have shown how the D2C value delivery method can make an online business successful.

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Wholesales

Everyone is acquainted with this value delivery method more or less. In this method, you sell goods to your clients in a bulk amount. This method is usually effective for B2B business models as business owners are the bulk order buyers usually. But, the B2C business model also can follow wholesaling methods in certain contexts as well.

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Subscription Services

Why does that newspaper come to your house every day? Because you subscribed to them! You pay a monthly fee that makes you their member and they provide you the service you require.

This value delivery method is effective in a lot of successful ecommerce businesses. In this process, you build a customer group and sell subscription services to them. When they purchase the service, they are entitled to receive the service you offer for the agreed amount of time. To use this value delivery method, you have to open a membership site and add payment methods there to ‘gate’ the content that will only be accessible to your subscribers.

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Examples of Successful Businesses

As we have already mentioned all about business models, essential factors that need to be taken into account, and value delivery methods, let’s look at some of the innovative and successful business plans.

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Beer Cartel

This business plan followed the subscription value delivery method and became successful. It is one of the greatest beer subscription services in Australia. Subscribers get to receive beers carefully selected by the experts from Beer Cartel.

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Larq

Larq was established in the niche of ensuring clean water and follows the D2C value delivery method. It was founded with crowdfunding and around $1.7 million were collected. The company now donates 1% of its earnings for ensuring clean water around the world.

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Berlin Packaging

Berlin Packaging follows the B2B business model and it has been running for more than 80 years. They maintain an effective connection with their clients and they have more than 200 regular clients who conduct business with them.

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Mountain Crest Gardens

Mountain Crest Gardens is a wholesaling company located in Northern California. They provide plants in bulk to their clients and have been doing great by following the wholesale business model.

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Atlanta light Bulbs

Atlanta Light Bulbs is another excellent example of an eCommerce business that follows the B2B business model. They started their website back in 1999 which made them one of the pioneering businesses of this sector. They take large orders from other businesses and have been quite successful in following the B2B business model.

Don’t risk selling products with no customer interest

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Validate Your Product Idea

One of the most important aspects to take into account when learning how to start an eCommerce business is validating your products. There is nothing more frustrating than spending time and energy in creating a perfect business plan and a product that you think people like, and just realizing that there is no interest in it when you launch it.

For a successful eCommerce business, do some market research when it’s time to validate your product. The best way to do it is to present the product to potential customers and see whether they are interested to buy it or not. If they are not interested, there is no way you should spend your money and time promoting such a product.

A lot of eCommerce businesses don’t think about validating the product ideas and end up losing money by not being able to make any profit. One of the reasons why eCommerce businesses often don’t try to validate product ideas is that it’s time-consuming and thought-provoking.

Validating your product ideas requires a lot of niche research and patient study. If you’re not passionate enough about your business, you might not be interested to spend that much amount of time and energy in researching to find out whether or not your new niche product will be favored by potential customers. 

There are some easy steps that you could follow to validate your product idea.

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Understand the Product

Before you start experimenting with the product, you need to start properly with the data. One of the biggest problems entrepreneurs face is that they don’t understand the product and the market before they jump into launching it.

As you don’t want to be on that list, try to think deeply about your product to understand it.

You need to figure out the potential group of customers to whom you will sell. Other factors that you need to consider are your business model, value delivery method, your available resources, content marketing, etc. Considering all the factors, you have to come up with the best ideas that are suitable for your market and particular product.

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Conduct a Competitor Analysis

When you’re ready to start your business, first consider analyzing your competitors. This is crucial for any product validating ideas. Explore how today’s industry helps you understand what your customers are looking for and the opportunities you have for them. Competitor analysis is the most important research you can do to make sure you’re taking the right steps. With competitor analysis, you can see if the product demand is high enough for you to sell.

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Look at Google Trends

Google is a valuable tool for entrepreneurs who understand the concept of their business product. It can show you how popular your products are and things like high-quality pages and keyword search terms.

However, Google can let you know if your product is just a design idea or something that will give you full strength and stability over time. Google Trends lets you track the importance of your search for a specific time period. You can use it to check if people are starting to talk about your products, whether the interest is at its peak, if your brand is gaining momentum, or if the buzz is fading.

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Get Feedback

Getting feedback from potential customers is one of the most effective ways to validate a product’s potential. You can ask for feedback from your friends on the product you intend to sell. Also, you can go through your competitors’ online stores and check their customer reviews on the products. Based on their reviews, you will know how effective it will be to launch this product.

Other than that, you can also send free samples to your potential customers and ask for feedback from them. As they are not spending any money on this, they will not give you any negative reviews and you might get some constructive criticism if the product is not good.

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Make a Landing Page

The best thing about a landing page is that you don’t have to first invest in a product to be able to create one. You can opt for the eCommerce product concept you want to improve, design your website and then buy the product only if you get a good response. You can also advertise a Google ad to send people to your landing page.

Landing pages allow you to easily see the responses that you will receive from customers when you launch your new product.

A great option to start generating interest in your product is to add a page that will allow users to sign up to receive alerts when your new product is ready to be purchased. This will give you a list of interested buyers which is important because you get to know the potential group of your customers.

Decide which business structure is perfect for you

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Create Your Business Structure

eCommerce is the fastest-growing segment of the retail market. Entrepreneurs who own the brand heritage on the internet are racing their startups to take advantage of the digital gold rush.

Similarly, if you are looking to scale with your eCommerce business, it is important to accurately identify the needs of your business, and that includes proper structuring.

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How to Choose the Perfect Business Structure

Let’s discuss how you can decide which business structure is perfect for you. Later, we will cover a suitable business structure for the eCommerce business.

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Decide How Much Liable You Want to Be

Owning a business has a responsibility – also called Liability. It exists in many forms, but the most important is legal and financial liability. 

Financial responsibility is the degree to which you are personally responsible for the finances of your business, and legal liabilities include managing all the lawsuits that your company has to face.

Structuring an eCommerce business largely depends on the owner’s liability. It’s not enough to just open a new business; you have to evaluate how much you can work for it. 

There’s no shame in accepting that you will not be able to do much work for it and you want to hire other people from scratch. But, if you decide that you will do most of the initial tasks for your business, you can save a lot of money.

Some marketing companies will bear your responsibility for all costs, lawsuits, and other business-related liability, while others give you and your money good privacy. 

Commercial companies like LLCs and small business partners have different levels of business and ownership. Business models such as sole proprietorships and general partnerships play an important role.

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Conduct a Research on Taxation

Not knowing about taxes can make you lose a lot of money. Tax rates are different for various sectors. Personal taxes and corporate taxes are not similar. Even in corporate taxes, different businesses will pay different rates depending on the business structure.

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Focus on Your Employees

Creating the business structure requires knowing what role to take when to take certain action in business, and how to manage the employees. The working conditions of your organization will depend on the size of your business, the items you sell, and where you are located.

Whether you’re just the owner or manager of a growing company, keep in mind that your business will grow depending on the performance of your employees. 

In small eCommerce businesses that do not have a human resources department, the company’s management should spend a lot of time finding employees and training them.

Although you can reduce costs if you hire specialists to provide the services you need. But, they might not always be available when you need them as they are not your employees. This is why it is important to hire people to work for you.

When hiring employees, it is important to consider the time needed to train them and ensure they can handle the amount of work needed in your business.

Once you have established a team, it is important to keep track and manage them properly, to ensure that all the departments are not separated and it’s easy to communicate between them.

As your team progresses, managing your employees, building and improving relationships between them becomes more difficult. 

Here are the main roles that you can create in your business and hire people for them.

➡ eCommerce Manager

This person will be responsible for overseeing all eCommerce activities and ensuring that each member of the organization or entity performs its functions. The role of eCommerce Manager includes Procurement, Web Marketing, Partner Management, Reporting, Strategic Consulting, and Small Business Management.

The eCommerce Manager is responsible for the implementation of additional major projects and cares for other employees. Traditional services may include digital advertising and website management. For an organization to become strong and efficient, before appointing an eCommerce Manager, it is important to know what other members of the organization will do and whom the eCommerce Manager is overseeing.

➡ Web Developer

This may sound daunting, but make sure your Web Developer is familiar with online marketing sites. He or she should be able to make changes before and after creating the customization you need.

In eCommerce, your site is a business product. It is therefore important that your site has to be easy to use and efficient to manage. At the basic level, this means that it should have good graphics, a good search engine, and filtering options implemented, so people can easily find your products.

In addition, it should be able to support the complexity of your product or service listings, link to products, and generate financial statements, as well as shared services that can add more usability when needed. It is important to remember that although you will not need an in-house web developer, you will need someone who can change and update your store when needed.

➡ Digital Operator

Digital Operator ensures the smooth running of the website from buyers’ feedback. His roles include data entry, ensuring that all product lists are displayed correctly, code verification, and website speed assessment.

Also, this person is responsible for the inventory group to ensure that the final number of sales matches the inventory. The Digital Operator maintains a content management system (CMS) and ensures that the user interface works smoothly.

➡ Logistics Manager

As the eCommerce market is launched online, you bring products to consumers in the real world. The Logistics Manager ensures the delivery of orders through your website.

He also looks after the warehouse, insurance, and maintains good governance. In addition to these, the Logistics Manager also conducts the final control. This means monitoring your shipment (which may require bulk stock) or and handling the third parties. The primary role of the Logistics Manager is to ensure that you receive your products from your manufacturers and that your customers receive their shipments on time.

➡ Digital Marketing Manager

This role is extremely crucial for an eCommerce online business to be successful. As your business will run online, most of your marketing will be done using online platforms including Facebook, Instagram, online news platforms, and others like these.

A Digital Marketing Manager will oversee all the content marketing tasks and increase your brand reach to customers. The growth of your company will largely depend on the Digital Marketing Manager.

➡ Customer Support Representative

Everything in your new eCommerce business will not always go right. Some customers might not be satisfied with the product, and some may not get on-time delivery. If they want to reach out to your brand, how do they get in touch?

They will simply look for the customer support department. And this is where a Customer Support Representative is necessary and essential to maintain the goodwill of your store. Customer Support Representatives will answer customers’ queries and will provide solutions to the problems they face.

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Long-term Planning

Initial documents and fees for when you register your business vary by type of business structure. However, this is not all you will need to think about in the long run. Each type of business has specific renewal obligations that may vary from year to year, including specific completion dates and fees.

You need to balance the pros and cons of what your eCommerce needs for business development. If the cons outweigh the pros, you’re doing something wrong. You need to find out immediately what’s going wrong with your business structure and improve it. 

Make sure your business plan is for at least five years – you can always change your business structure when needed, but this is not something you want to do regularly as it is time-consuming and expensive.

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Popular Business Structure: Sole Proprietorship

As the name suggests, this type of business is privately owned and operated. The main advantage of a sole proprietorship is that it requires almost no start-up documents – you just create the eCommerce as any other business.

This structure is very popular with start-up entrepreneurs, local businesses and entertainment companies, and those who want to keep their taxes simple. If you just want to start an eCommerce business without having to do much work and avoid your documents or taxes, the sole proprietorship is right for you.

Let’s discuss the components of Sole Proprietorship.

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Required Paperwork

To start an eCommerce business with a Sole Proprietorship structure, you need almost no paperwork at the federal or state level. You might need to get a local permit to conduct the business. Just check the Small Business Administration website and read about the permit in your area. Get a federal tax identification number and you’re good to go without any hectic paperwork at all!

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Liability

This is what you need to keep in mind that 100% liability of the business falls on you when you choose a sole proprietorship structure. If you owe money in the names of your company, the lender can sue you to get it back.

You will be responsible for everything you buy under your company name, so you are responsible for everything your company does.

Benefits

  • A minimal amount of paperwork needed to start the business
  • No registration fee
  • Quick to start and simple to manage
  • You get to control everything in your business
  • All the profits are yours

Drawbacks

  • You’re 100% liable for everything
  • Might get overwhelming sometimes
  • You will have to bear the losses alone

Sell your product with a high-profit margin

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Source or Manufacture Products

When you sell online, you have the option to make three different types of sales.

The first one is Dropshipping where you collect products from the manufacturers and sell them to the customers.

Another one is to sell digital products, such as movies, e-books, and software. These can be bought from others and sold by you, or you can produce and sell them yourself.

The third is to manufacture your products with your brand and sell them. If you follow this strategy, after manufacturing the products, you can sell them by yourself or get someone else to sell them.

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Steps to Follow for Sourcing and Manufacturing Products

In manufacturing, you control the market price of the product (and thus your profit margin), and how and where you sell your product. In other words, you’re the boss – and you do not have to be afraid of price wars or someone undermining the market and eating your share. 

Let’s look at how you can make your products and the steps you need to get started.

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Decide What You Will Manufacture

It’s possible that you imagine that this is the simple part. You sort out what you need to manufacture, and you do it! But, it’s not easy as it sounds.

As mentioned earlier, you have to decide what you will be manufacturing based on target market demand. The first thing that you need to keep in mind is whether the product you want to manufacture is already available in the target market or not. There is a big chance that it’s already available, so look at their prices and decide if you can maintain the quality of the product by manufacturing with fewer amounts of resources and money.

If your customers have access to other brand alternatives of the products that you manufacture that costs less, they will never buy the expensive product from your brand. So, research to find out which product has the most market demand and is aligned with the production cost.

One procedure is to discover an item that as of now exists and sort out some way to improve it. Have a look through the negative surveys, for instance, and afterward, come up with an approach to fix what buyers disliked about the item.

The reason behind why this methodology works is that you already know that the items sell, and you know there’s a business opportunity for it. You just have to enhance it.

Start by looking for existing items and providers in stores like Alibaba.

Do your research; discover what sort of market exists for this item and read through item reviews from the buyers on Amazon or other eCommerce stores.

As you need to improve the item, try not to get excessively wild with your updates — fix the issues, don’t make new ones.

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Find a Good Manufacturer

Finding a good manufacturer is extremely important when learning how to start an ecommerce business.

The manufacturer will determine the quality of the product, and finally, how much does it cost.

Manufacturing the products by yourself can cause a lot more trouble than outsourcing the manufacturing overseas. Despite the fact that manufacturing outside of your country causes strategic, language and shipping obstructions, if you frequently make 90% gross profit on a scale, these difficulties are worth it, despite all the trouble.

A Chinese Yuan and an Indian Rupee are $0.15 and $0.16, respectively. The estimation of a coin regularly mirrors the average cost for basic items, and if somebody can make money with a lower wage, they save a lot.

In China, most assembly line laborers are paid a normal of $2 an hour contrasted with more than $23 in America. To comprehend the average cost for basic items, you can frequently look at the cost of filtered water in every country- $0.25 in China and more of a dollar in America. It’s easy math how much money you can save by manufacturing products overseas and shipping them to your country.

You have to also keep in mind that the manufacturer has to ship the products to you. So, choose the manufacturer’s location wisely so that it doesn’t cost much to ship the products to your warehouses. Or just choose a cheap shipping method, like sea freight.

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Ensure Quality Control

You’ve picked a product, negotiated with a manufacturer, and checked out samples from them. Now, you have to place the order and hope that it matches your expectations.

Don’t treat this part lightly. If anything turns out badly here on the grounds that you forgot about something, your whole profit margins can go down fast.

You need to spend time with the manufactured product. Test every aspect of it, and get to know everything about it, then start with the marketing.

You may likewise decide to enlist an expert to assess the item during manufacturing and before delivery.

If you’re content with your item, and it sells like you wanted, at that point, you realize you have a decent partner and a long, productive relationship in front of you.

Let customers find your products

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Build Your eCommerce Store

Now that you’re done with all the necessary steps to learn how to start an ecommerce business, it’s time to build your online store and sell. As you’ll be building an eCommerce business, you have to open a website and choose an ecommerce platform.

There are several website builders that you can use to build your eCommerce store like WordPress and Squarespace. Both are good ecommerce platforms for all types of users, but based on ease of use, WordPress rules the field.

WordPress is one of the most convenient and user-friendly website building platforms. According to Kinsta ☍, around 39.5% of websites are managed by WordPress.

Other good ecommerce software include Shopify, BigCommerce, or Wix.

Let’s discuss the steps to build an eCommerce store using WordPress.

What You Need

To create an eCommerce store on WordPress, you have to install an eCommerce plugin. According to statistics ☍, WordPress has more than 55,000+ plugins in its directory. Among several plugins available to create an eCommerce store, you need to find one that meets all of your criteria.

WooCommerce is considered one of the best eCommerce software as it’s convenient and easy to use with a lot of free features.

To build your eCommerce store, you’ll need the following components available first.

  • Domain
  • Hosting
  • Theme
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Domain

The first thing that you’ll need is a domain name for your new ecommerce business. If you read our recent advice, you already know that the domain name is the web address of your site. Your domain name should be:

  • Short and easy
  • Reflects your brand name
  • Keyword specific
  • Memorable and unique
  • Free of trademark infringement

You can buy a domain from sites like Bluehost ☍, Siteground ☍, Namecheap ☍, GoDaddy ☍, etc. 

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Hosting

After you buy your domain name, the next step is to choose your web hosting. This will basically be the server that keeps all your data. Before choosing a hosting, consider these essential factors:

  • Addresses your budget
  • Great customer support
  • Excellent loading speed
  • User reviews
  • Ease of use

Our recommendation is Bluehost ☍, but you can go for DreamHost ☍, HostGator ☍, WP Engine ☍, or others.

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Theme

After choosing your preferred hosting site, let’s get you a suitable theme for your upcoming eCommerce store. And these are the essential factors that you need to consider when choosing a theme for the store:

  • Flexible design
  • Convenient Widget areas
  • Mobile Phone compatibility
  • Easy to use layout
  • CSS code modification

Among so many themes available for WordPress, which one do you want to start with? You’ll find Flatsome ☍, Porto ☍, WoodMart ☍, XStore ☍, etc. when you search for the best WordPress themes for your eCommerce platform.

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Install the Plugins

After you’re done with all the previous steps, make sure you install all the necessary plugins for your ecommerce platform. Among several plugins, these are most important to have:

Do some research by yourself as well to determine what components you require as it might vary from business to business.

More traffic equals more sales

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Drive Traffic to Your Online Store

Your job with the eCommerce store doesn’t end with just building it. If people don’t visit it, you will not get any sales. So, to make sure visitors are coming to your site frequently, you have to drive traffic to the store. You can try some aggressive marketing tactics on search engines and social media platforms at first, to get started with your first sales.

Publish Blog Posts about Popular Products

Don’t let your website be about the products only. To make sure more and more visitors are coming to your store, start publishing blog posts on different topics related to the products you sell. This will bring people to your online store even if they don’t want to buy anything.

For example, if you’re selling rice cookers, you can publish blog articles about the best rice cookers, what makes them good, how to use them, how to maintain rice cookers, etc. If you have the expertise, you can write the blogs by yourself or you can hire other writers to write for you when you start to learn how to start an ecommerce business.

Optimize the Keywords

Most people would just go to Google, search for what they are looking for, and click on the first domain name that is suggested. Since a large number of users follow this strategy, your eCommerce store will not get many hits if it doesn’t rank high in search engines. To make sure it does, you have to find out the most commonly used keywords and incorporate them in your article.

If a customer is looking for laptops, his/her most searched keyword would be affordable laptops, best laptops, HP laptops (or other brands), price of laptops, etc. There are numerous keyword generators available online that would help your cause as surferSEO ☍, ahrefs ☍, keywordtool ☍, etc.

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Build a Community on Social Media Prior to the Launch

In order to launch a profitable online store, gather a group of targeted customers to whom you want to reach out. Make sure you’ve successfully built a community with these customers no matter how small the community is.

Casey Neistat, the co-founder of popular video-sharing app Beme ☍ (which was later bought by CNN), used to make vlogs to connect with his audiences and build a community, which eventually led him to acquire a large audience.

According to Forbes ☍, Basecamp ☍, a cloud-based company has revenue of around $25 million. Before their launching, Basecamp developed a community of around 50,000 people using Signal vs. Noise, their blog.

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Provide Some Sneak Peaks

Offering a look behind the scene and sneak peeks on your upcoming eCommerce store is a great way to increase excitement. You’re not just telling them about your great products, you’re also giving them some visuals. The more they’ll be able to picture your content, the more they’ll be interested in it.

Ever noticed how people get crazy over Apple’s new products because of rumors? Well, you can’t expect the same hype for your eCommerce store, but that doesn’t mean you can’t follow the strategy.

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Stream a Live Video on Social Media

This might sound a bit mainstream, but trust me, it works! Live videos are great ways to communicate with audiences and customers. It works better than sending newsletters or posting ads online as it’s a two-way communication process. While you talk about your eCommerce store, your customers can make comments and you can respond to them.

This will allow you to know how people are receiving your products and whether you’re being able to meet their needs or not. 

According to Go Globe ☍, 80% of people who follow certain brands prefer live video streaming rather than a usual social media post. The statistics further explore that 63% of social media users have agreed that they love live streaming as it adds a human interaction, and 60% of business owners have said that they get real-time customer feedback through live videos which makes their tasks of business development easier.

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Hire Affiliates to Do the Marketing

When learning how to start an ecommerce business, don’t forget about affiliates. They are always useful to increase sales and develop overall business growth. According to statistics published by Hosting Tribunal ☍, revenue earned from affiliate marketing is growing 10% annually since 2015. Also, Streamline Marketing ☍ states that in the U.S., affiliate marketing is about to reach an industry of $6.8 billion!

To drive more traffic to your eCommerce store, you can count on affiliates to spread the word. Most of the affiliate marketing agencies have connections with social media influencers. With their help, you can get the influencers to talk about your store and increase the outreach.

Of course, you have to share a portion of the profit with them, but the benefit you’ll have through affiliate marketing is much more valuable.

Was all this hard work worth it?

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Measuring eCommerce Success

The whole retail world is always in transition, which makes starting an eCommerce business so significant. Yet, eCommerce isn’t limited to just B2C, as of late the B2B space has been playing catchup in online stores.

How much cash you make is an estimation of your online business’ success — however, it doesn’t all end up to this. After all, you can’t drive more sales without understanding the whole process. In this way, we should inspect the success of eCommerce — regardless of whether you’re selling products like garments, machine parts, or even providing services — and how to utilize it to drive achievement.

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Measuring Profit

If you’re at the stage when you think of your profit margin, you’ve already been through the initial stages of launching a profitable online store and promoting it. And you know what an expensive ride it was. Don’t give up just yet, if the profit is not to your liking, it takes time to make sales. Keep focusing on and increasing your sales, and the profit will come sooner or later.

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Measuring Popularity

You have the capacity to target customers by their location, so it’s critical to know what products are being sold and where they are being sold. For example, rainwear has better sales in the Pacific Northwest than in Arizona, or if you’re selling products like vehicle parts, you realize Michigan may be a decent spot to target.

Depending on how popular your eCommerce website is in certain regions, you can measure whether your business can be considered a successful one or not. You can’t expect everyone to know the name of your store within a week of launching, but if you’re not getting the traffic you need even after 6 months, it’s time to rethink some of the strategies.

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Number of Repeated Customers

The success of any business including eCommerce business is to determine how many customers are coming back to your store and make further purchases. It is not easy to identify the returning customers in physical stores but lucky for you, you can always track which customers are returning in an online store.

If you find that not many customers are coming back after their first purchase, you have to consider the possibility that they are not happy with the product or service you provided. In this case, you have to reach out to the customers to ask what went wrong and how you could improve your service, so that more and more customers return to you after their first purchase.

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FAQ on “how to start an eCommerce business”

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Are eCommerce stores better than brick-and-mortar stores?

There are both pros and cons to eCommerce businesses. Starting an ecommerce business doesn’t require any physical locations which saves you a lot of money. But, in a physical store, your customers can see the product and check it as well. In the eCommerce business, you can fix this “problem” by allowing free return for the product, in case it doesn’t meet the consumers’ expectations.
In an online store, the customers rely on the seller and expect that the purchase will be good enough. If enough customers buy products from you and they get what they want, they will give positive reviews about your business which will make other potential customers trust you.

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How do I choose the perfect niche for my eCommerce business?

To choose the perfect niche for your eCommerce website, you need to look at current successful companies. Conduct some research on what they are doing and how much they are growing every year. Their popularity and product outreach will make you understand which niche you should choose for your store.

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How do I build the online store?

The basic guide to building the website is mentioned previously in this article. Basically you just need a good domain name, web hosting and an ecommerce platform to list your products. If you need more help, you’ll find plenty of website-building tools on the internet. Building websites with WordPress is extremely easy and you need very little technical knowledge. However, if you still feel that you’re not the right person to build the website, you can always hire web developers to build a website for you. But, make sure to provide the instructions clearly so that the developer can meet your requirements.

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How do I determine the shipping procedure?

Shipping the products to your customers is an important part when starting an ecommerce business. If you’re ready to invest a bit extra, you can always establish a shipping department and send the products to your customers by yourself. But, if you don’t want to take the hassle, you can hire third-party shipping companies that will take care of the deliveries. But, you need to constantly check whether they are delivering the products on time and safely or not. If any customer doesn’t get the product on time or unharmed, he will blame you for that because you’re the seller.

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Should I allow customers to review my products?

Letting the customers write reviews on your products and services is a great way to earn their trust when starting an ecommerce business. If you have WordPress as your ecommerce platform, there are a lot of free plugins that let your users review your products. You might worry a bit about negative reviews. But, if you provide good service, you don’t need to worry about it much. When people are satisfied with what you provide, they will give a good rating. Opening a social media page and letting people review your eCommerce store is extremely helpful to increase customer outreach. The more people will review your business, the more people will know about it.

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How do I decide on the Payment Options?

It depends on what region you’re targeting and who your target customers are. If your business plan includes selling globally, you have to add options on your ecommerce platform that are accessible for everyone around the world. Visa and Mastercard function in a lot of countries in the world, so they are good options to add when starting an ecommerce business. Along with them, PayPal and Payoneer are a must because a lot of people prefer them over banking transactions.

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What should I do if a customer wants to return a product?

It should be stated in your eCommerce store’s terms and conditions whether you will accept returns or not. But, it is better to keep the option open for the customers as it will increase their confidence in you. If any customer wants to return a product, it means the product is faulty or it didn’t meet his expectations. In any case, communicate with the customer right away and take information about what went wrong.
If you cannot remedy the problem, you might end up getting a bad review about your business. The best way to remedy the problem is to offer the customer a free replacement or full refund based on the customer’s preference. To make them happy, you can throw in something more for free so that they don’t give you any bad reviews. With WordPress as an ecommerce platform, product return options are very easy to implement in your store.

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What if any product gets lost during shipping?

If you’re going to run an eCommerce business, you have to accept the fact that some products will get lost during shipping. In this case, you have to let the customer know about the situation right away and offer something that will make them happy. You can offer a partial discount or provide a free giveaway.

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How do I conduct marketing for my store?

Email marketing and sending newsletters are always good marketing options to increase customer outreach. Other than email marketing, running social media ads and implementing an affiliate marketing program have been proven effective ways of marketing for a lot of online businesses.

Wrapping up our discussion on how to start an eCommerce business

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Conclusion

And that’s it! We’re close to wrapping up our discussion on how to start an eCommerce business. Now you should be able to make up your mind about what is the best way to open your business.

A few things that you need to remember is no matter what products you start selling, always ensure that your customers are getting what they want. Promoting your products is necessary, but make sure to never promote your products by stating any false facts to increase your sales. You might convince a few customers at first, but eventually, you’ll end up earning a bad reputation.

Running an eCommerce business is much easier than running a physical store. You have to consider fewer factors compared to physical stores. But, you have to make use of the saved amount of time and energy elsewhere to make sure your business is growing. If you don’t spend enough time on thinking strategies to develop your business, it will never grow and your profit margin will start to go down.

From choosing the right business model to finding the perfect manufacturers, you have to choose each of them by keeping your target customers in mind. Whatever strategy you follow, they have to align with a group of people who will be your potential customers. When you establish new partnerships, create them wisely as these partnerships are also part of your business. If your customers see you bonding with companies that don’t have a good reputation, they will consider you to be in the same group as well.

Overall, try to think from your customer’s perspective and consider if you would like to conduct any business with you if you were the customer. The answer you find will give you a lot of areas to work on.

We hope our guide to starting an eCommerce business was helpful to you!

Please make sure to leave a comment if we missed out on something, or simply have something to share with us.

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