How to Start an Online Store

Co-authored by Madison Boehm

Last Updated: December 7, 2022 References Approved

Starting an online store has advantages over having a physical storefront: there's no rent to pay, and you can reach millions of customers from the comfort of your own home. To have a shot at success, however, it's a good idea to put as much thought into starting an online store as you would for any other business. You'll need a great product, a user-friendly website, and a solid marketing plan. Read on to learn how to get started.

Part 1

Part 1 of 4:

Developing Your Product and Business Plan

1
Decide what you want to sell. If you want to start an online store, you probably already have an idea for a great product to sell. You can sell things across the globe using a virtual store.^{[1]
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Expert Source

Madison Boehm
Business Advisor, Jaxson Maximus
Expert Interview. 29 September 2021.} But keep in mind that certain things are conducive to selling well online, while other items may be more difficult to sell when they can't be viewed in person. In any case, you should believe passionately in the value of your product - otherwise, it will be hard to connect with customers. Here are some questions to consider:
- Is it a physical product that needs to be shipped, or is it a digital product that can be sent through the Internet?
- Are you going to have an inventory (more than one) of each product, or will they be one-of-a-kind (e.g. artwork, vintage items)?
- Are you going to want to sell a wide variety of products, or do you plan to specialize, like selling just t-shirts or books?
- Are you creating the product yourself? If so, make sure you'll be able to keep up with demand. Form a relationship with a reliable supplier.
- If you don't plan to make the product yourself, you'll need a good manufacturer. Research different companies to find the one that works for your business idea.
- Decide how your product will be shipped. Create a plan to ship the product from your home efficiently, or work out a storage and shipping plan with a warehouse. You could also look into drop-shipping if the product is being manufactured by a third party.
- You are going to be intimately involved with your product or service. In order to effectively spread the word and market your store, you are going to need to socialize with people from this industry. Make sure the product is something you can get behind for the long haul.
2
Find a niche. Knowing what product you want to sell is only part of creating a successful online store. You'll need to figure out what differentiates your services from all the other similar services people can choose, both in person or online.^{[2]
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Expert Source

Madison Boehm
Business Advisor, Jaxson Maximus
Expert Interview. 29 September 2021.} Why should a customer buy your hand-knit sweaters when they have 100 other online shops to choose from?
- Size up the competition. Don't just jump into selling a certain product line until you've looked at the websites you'll be competing with. Consider the main online marketplaces you plan to advertise your products; and check out the competition within those portals.
- Offer something truly original. If you're selling handmade crafts or works of art, the originality of your work may itself be the draw that sets your product apart. Try to strike a balance between something that is highly original and also has general appeal.
- Offer expertise. Perhaps the quality that sets your company apart from the rest will be your expertise on the type of product you are selling. Maybe you're a former baseball pro selling a line of baseball gloves, for example. Make your passion and expert knowledge part of the package.
- Offer a user-friendly purchasing process. Even if your product is very similar to other things for sale online, you can set your store apart by making the shopping experience fun and easy. Make sure your website is easy to navigate and fun to share. Be responsive and provide great customer service where others don't.
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3
Test the waters by selling your items on a small scale. In the real world, it'd be wise to try selling your products through other, low-commitment avenues (consignment, flea markets, craft shows, etc.) before taking the plunge and starting an entire store. The same is true for selling online. Try selling your items individually on eBay, Craigslist, Half.com and the like. Here's what you'll want to look for:
- Who is buying your product? Offer a discount coupon or free gift if they answer a brief survey. Find out where else they shop online.
- How much are they willing to pay? Experiment with different prices.
- How is customer satisfaction? This is a good time to test how well you can get your product to the customer. Are you using good packaging? Is the shipping method reliable? Are they happy with their product? Did you describe it well?
4
Make a business plan. Before you start the process of opening your online store, take the time to draw up a detailed business plan, whether or not you're planning on getting outside funding from investors. It will help you plan the steps you'll need to take to make your business successful. Figure out your cost of operation and map out a marketing strategy. You'll want to take these factors into account:
- Production costs, whether you're creating your product yourself or contracting with a manufacturer.
- Shipping costs.
- Taxes.
- Employee wages, if applicable.
- Fees for reserving your domain name and web hosting service.
5
Register your business according to your state's laws. When you're ready to make things official, you'll need to come up with a business name and fill out the necessary legal and tax paperwork to register your business.

Part 2

Part 2 of 4:

Building Your Own Online Store

1
Register a domain name. Choose a name that's short, catchy, and easy to remember. It should also be unique, since the most obvious names are already taken. Look up a domain registration company and try different names until you find one that satisfies you and isn't already in use.
- If the name your heart is set on is already taken, get creative. Spell numbers out, add a small extra word or try hyphenation.
- The domain registration service will provide suggestions for close alternatives if the name you want is taken.
2
Choose a web hosting service. It's worth finding a good service for your website, since the site is the backbone of your online store. If it's finicky, sales will certainly suffer. Free web hosting services are available, but since you're selling products online, you'll need to pay for a service that offers the options you need.^{[3]
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Trustworthy Source
U.S. Small Business Administration
U.S. government agency focused on supporting small businesses
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- You'll need enough space for growth if your business does well.
- Choose a hosting service that allows for customization if you're planning on doing your own programming.
3
Design your website. Either design the website on your own or hire a web designer to create it for you. The emphasis should be on showcasing your product and making it as easy as possible for customers to make a purchase. Don't fall into the trap of making the website too flashy - the more straightforward, the better when it comes to online shopping.
- Include a way to gather email addresses, so you can send advertisements and special offers.^{[4]
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- The customer should have to make no more than two clicks to check out with a product.
- Choose just a few colors and fonts to use.
4
Choose e-commerce software.^{[5]
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Research source} This allows customers to view products and make a secure purchase. The software stores customer information and financial information. In some cases, e-commerce software factors into marketing, since it can be used to send emails to customers. Take a lot of time to research companies before making a choice, since the one you choose will play a huge role in your customers' experience and your company's success.
5
Set up a merchant account. You'll need to set up an account with a bank financial institution so that your customers can pay with credit cards. Going with a bank can be pricey, so many small online store owners go with PayPal as a less expensive option.^{[6]
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Part 3

Part 3 of 4:

Using an All-Inclusive E-Commerce Service

1
Research all-inclusive e-commerce services. If you don't have the inclination to set up your own website from scratch, there are plenty of services that offer a platform for an online store you can set up in just a few hours, for a very low cost. This way you will not have to learn how to code or hire a web designer, and you'll have all the tools you need to start selling your product right away.
- All-inclusive services usually take a small cut from each sale you make.
- The services have benefits, but there are also limitations, since you have to operate within their systems. Get familiar with the different services before choosing one. If you don't find one that suits the business model you have in mind, reconsider starting a new online store on your own.
2
Consider general e-commerce services. Companies like Shopify and Yahoo! Stores will allow you to set up professional-looking online storefronts when you ship your own inventory. Hosted e-commerce solutions go further to provide storefront design, secure payment, hosting, mailing lists, selling statistics, customer support. This is attractive for those who don't want to do their own programming.
3
Look into reselling products for a profit. Affiliate store services such as Amazon eStores LLC allow you to resell products carried by Buy.com and other merchants by writing reviews of products and focusing on a theme that makes consumers' lives easier. Amazon eStores stores allow you to get running quickly, but don't allow you to carry your own physical inventory.
4
Take eBay to the next level. If you've already sold some stuff on eBay, and you're confident that most of your customer base will find you there, then you can "graduate" to an eBay store to save money on listing fees.
- If you haven't used eBay before, this approach may not be for you, since it's best to start with an existing customer base. Your customers will need to be web-savvy enough to feel comfortable using eBay.
- Note that eBay tends to attract people searching for bargains and one-of-a-kind items.
5
Consider Tips for general sales. Tips is an online marketplace where you can post one item or create an entire catalog for free. You upload some photos, describe the items and price them to sell. It's free to post goods for months without having to update the listing. When the item sells and is $35 or less, it's a 5% fee. If the item is $35 or more, the fee is 3%. On top of putting goods up for sale you can embed videos, blog about your products and services and connect to your Twitter account directly from the site for free.
6
Try Cafepress if you're selling customized items. Cafepress is a service worth considering if you're selling mostly t-shirts, and other stuff you can "stamp" with your unique designs, such as mugs, stickers, and buttons. Customers browse your store, order their stuff, and Cafepress processes the order and the items for you. You can start a basic shop for free, and pay a monthly subscription for more features.
7
Sell crafts on Etsy. Etsy is a popular choice for people who make what they sell. There's a 20 cent charge for every item listed, and Etsy keeps 3.5% of your sale price if the item is sold. You get paid directly and are responsible for shipping the item. You're charged fees (depending on what sold) on a monthly basis.^{[7]
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Try selling on Instagram. Instagram is world's most rapidly growing social network with highly engaged audience that is great for selling fashion items, handmade goods and products for home. Upload pictures of your items for sale to Instagram and then sync your account with inSelly.com to create personal online shop from Instagram pictures. Payments will be powered by PayPal, service doesn't take membership fees or sales commissions.

Part 4

Part 4 of 4:

Attracting and Retaining Customers

1
Promote your store on Facebook and Twitter. It may be expensive to advertise your product.^{[8]
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Expert Source

Madison Boehm
Business Advisor, Jaxson Maximus
Expert Interview. 29 September 2021.} Social media platforms are an important way for businesses, especially online businesses, to market themselves. Start an account and encourage people to "like" and "share" your store's page to spread the word.
- Offer incentives for customers to promote your store. You could offer a discount or a free giveaway for those who participate.
- Be sure to keep the accounts up to date with information on new products and deals.
2
Start a blog. Pairing your products with expert knowledge is a great way to attract more people to your site. If your product is fashion-related, start a style blog that features some of your products from time to time. Find a way to participate in online conversations related to the product you are selling.
- Some all-inclusive services offer a blog feature as part of your "storefront."
- Feature other companies' products on your blog, and ask them to feature yours in return. This is a common practice among small online vendors.
- Send samples of your product to prominent bloggers or websites that do product reviews.
- Do guest posts on other people's blogs. For example, if you're selling homemade cookie mix, debut your product on a prominent baking blog.
3
Email customers about promotions. Use an email program like MailChimp to organize customer email addresses and send well-formatted email blasts informing customers about special deals. Don't abuse this method of getting in touch with customers, though - they may end up unsubscribing if you send emails too often.

Expert Q&A

Question

What are the benefits of having an online store?

Madison Boehm
Business Advisor, Jaxson Maximus
Madison Boehm is a Business Advisor and the Co-Founder of Jaxson Maximus, a men’s salon and custom clothiers based in southern Florida. She specializes in business development, operations, and finance. Additionally, she has experience in the salon, clothing, and retail sectors. Madison holds a BBA in Entrepreneurship and Marketing from The University of Houston.

Madison Boehm

Business Advisor, Jaxson Maximus

Expert Answer

Well, the best thing about having a virtual shop is that you can have clients from all around the world. This vastly improves your reach and your business' scope.
Question

What are the disadvantages of online selling?

Madison Boehm
Business Advisor, Jaxson Maximus
Madison Boehm is a Business Advisor and the Co-Founder of Jaxson Maximus, a men’s salon and custom clothiers based in southern Florida. She specializes in business development, operations, and finance. Additionally, she has experience in the salon, clothing, and retail sectors. Madison holds a BBA in Entrepreneurship and Marketing from The University of Houston.

Madison Boehm

Business Advisor, Jaxson Maximus

Expert Answer

The issue with online selling is that there is so much noise in the online space that you really have to differentiate yourself. There's too much competition and a lot of online retailers might have a bigger budget than you.
Question

Should you open a brick and mortar store?

Madison Boehm
Business Advisor, Jaxson Maximus
Madison Boehm is a Business Advisor and the Co-Founder of Jaxson Maximus, a men’s salon and custom clothiers based in southern Florida. She specializes in business development, operations, and finance. Additionally, she has experience in the salon, clothing, and retail sectors. Madison holds a BBA in Entrepreneurship and Marketing from The University of Houston.

Madison Boehm

Business Advisor, Jaxson Maximus

Expert Answer

Opening a brick and mortar store is obviously more costly, especially due to the staff and the rent, but this could be beneficial to you, as you can learn more about your specific clients, as you'll see them on a daily basis and build relationships. If you want to focus on the local community, a brick and mortar store is probably the best idea.