How to Start an Online Store

Analysts predict that global eCommerce sales will reach $4.9 trillion by 2021-showing a growth of 265%. People are only getting more comfortable buying products online, and entrepreneurs are rushing to provide them more options for doing so. 

Starting an online store isn’t just attractive because of the potential profits. In comparison to other forms of business ownership, it also has the lowest barriers to entry. 

You don’t have to worry about the real estate a storefront requires. And you don’t have to hire staff to man that storefront. Your startup costs are lower and the initial steps involved in getting started are far less complicated.

But there’s still a lot you need to know if you want to start a successful eCommerce business. These are twelve of the most important steps not to skip when starting an online store. 

How to Start an Online Store in 12 Steps

Step 1: Determine your products.

Before learning how to start an ecommerce business, you have to know what product or service you’re going to sell. Picking the right products to sell on your eCommerce website is essential to the success of any online store. Sometimes, people go into business because they already have a great product idea in mind. Other times the desire to start a business precedes the step of choosing products.

In either case, you’ll benefit in this step from doing two things:

• Researching the level of need or interest in products you consider
• Figuring out how to supply or create them

Even if you’re confident the product you have in mind is an awesome idea, if there’s not a market need for it, your business won’t get off the ground. A CB Insights analysis found that 42% of startups that fail do so because they’re trying to sell a product that no one needs. So do some consumer research to make sure there’s an audience that will actually want to buy your product to begin with. 

For physical products, you also need to decide who your supplier will be before you start selling through online marketplaces. If you’re creating a new product to sell, that will mean identifying vendors for both the supplies needed to make the product and those for putting it together. 

If you’ll be selling products that already exist, you need to find a high-quality supplier that provides items in your chosen categories. You have two options in this stage. You can either order the products to come directly to you-then store, package, and ship them yourself. Or you can use drop shipping, and find a reputable company to store inventory and deal with order fulfillment for you. 

For digital products, you need to create them. That could mean creating information products like courses or ebooks. Or it could mean software development, which is more involved and may require hiring skilled help. 

Across product types, for new online businesses it’s smart to start small. Pick a focused niche to stick with when starting an online shop. That will make figuring out your marketing and positioning much easier than if you’re trying to sell dozens of products in different categories to an array of audiences.

Step 2: Do competitor and industry research.

Once you have a firm idea of your products, seek to understand the industry and online marketplaces you’ll be entering into. You want to make sure it isn’t oversaturated, as that will make it much harder to get your foot in the door. Identify who your main competitors are, and spend some time reviewing their websites. 

Learn how they price their products, how they position them, and the kind of language they’re using with their online shop. They’ve likely already done audience research and analyzed how certain tactics perform, so you can get a headstart on figuring out what works in your space by paying attention to what they’re doing. 

Identify some of the top industry publications as well, so you can learn about the top trends people are talking about and any potential issues to be aware of. 

You don’t want to enter an industry only to learn that pending legislation will mean heavy regulations that make it harder to get started. Make sure you have a strong understanding of the space before you take the leap. 

Step 3: Figure out your brand and positioning.

Understanding the state of the industry will help you figure out how best to position yourself within it. At this stage, you’ll want to develop (or at least start thinking about):

• Your unique value proposition (UVP) – The line that describes what your online store does and what makes you different from comparable choices. The goal is to be able to sum this up in a sentence. Defining your UVP will help you with many of the steps to come.
• Your buyer persona – A description of the person most likely to buy your products. Knowing who you’re trying to reach will improve your marketing, since you’ll know who you’re talking to, their priorities, and where they hang out online.
• Your visual branding – Your logo, color scheme, and the images you’ll use across social media sites. If possible, hire a graphic designer to help you with this part. 
• Your brand name – Go for something short and easy to remember. It’s great if you can figure out something that relates to what you’re selling, but it’s more important that it be original. Check to make sure someone else hasn’t already staked a legal claim on it. And bonus points if the .com is available. 

If you have the resources, hiring a marketing consultant or agency to help with the branding is worth it. If you’re starting your online store on a tiny budget though, you can learn a lot about branding best practices through online research. 

Step 4: Create a business plan.

A business plan will help guide you in your early days of building your online store. It’s how you turn big ideas to specific steps. The research you did in the first few steps will be invaluable to working out all the details of making your business a reality.

Some good items to cover in your business plan include:

• Your budget – Work out your anticipated costs for the first year
• Funding sources – Identify how you intend to cover the costs of your budget. Do you have enough saved, or will you look into loans or investors?
• Timeline – Create a timeline for each of the steps you still need to complete to get your business started. Give yourself deadlines to help you stay on track.
• Return policy – Returns are an inevitable part of running an eCommerce business, so it’s important to make handling them part of your plan from the outset.
• Shipping policy – Getting your shipping policy right is a huge part of running an eCommerce  store. You need to figure out if you’ll be passing those costs onto customers (which could lose you sales), or building them into your product costs. 
• Customer service – No matter how big your business will be to start, you want a plan for customer service. Figure out what channels you’ll offer for support (phone, email, social media, etc.), and whether you’ll hire someone devoted to providing it, or handle it yourself to start. 

Inevitably, your business plan will undergo some changes. There’s a lot about running a business you can’t predict or plan for. But having a plan in place will help you gain clarity and organize the rest of the process of building your online store. 

Step 5: Decide on your pricing.

Pricing will often be part of your business plan. But it’s an important enough step that we’re giving it its own section here. 

Pricing can be one of the hardest parts of running any business. If you price too low, you won’t make enough money to break even. If you go too high, you’ll lose sales to customers and, well, won’t break even.

Finding that pricing sweet spot is essential. Start by revisiting your competitor research. Make note of what your competitors are charging and how much range there is between them. This will give you an idea of what your audience expects to spend, and what the market will bear for the types of products you want to start  selling. 

Now think carefully about how your products and positioning compare to your competitors. If you price higher, can you make a case for why in your marketing? Can you promise higher quality, better customer support, or something else that sets you apart? 

Try to avoid pricing on the lowest end of the range, as that will make it harder for you to make a profit. But unless you have a strong differentiator for your brand, you also shouldn’t aim for the high end of the range or people will go with someone else. 

Consider how much you’ll need to make to cover the expenses in the budget you created. And for each price point you consider, calculate how much you would need to sell to make a profit. 

Step 6: Register your domain.

Just as soon as you’ve decided on your brand name, snap up that domain! Registering a domain name (if it’s available) is quick, easy, and affordable. 

Even if you’re not quite ready to design and launch your website, claim the domain now in case someone else has the same idea and gets there first. 

Step 7: Cover your legal bases.

While opening an eCommerce  store brings a lot less liability than a physical storefront does, you still need to make sure you do everything required of you by law to set your business up legitimately. 

Because laws and requirements differ based on where you live, where your customers will be, and what type of industry you’re in, you should really meet with both a lawyer and an accountant for this step.

They’ll help you figure out details like:

• What business licenses you need to apply for
• What type of business entity to create (e.g. LLC, partnership, S-corp, etc.)
• How to register for your business trademark
• What permits you need to get
• How much sales tax to apply 
• Applying for a tax ID
• Developing your privacy policy
• Establishing copyright for products or content you create

If you’re trying to keep costs low in the early stages of your business, hiring a lawyer and accountant may seem like a big expense. But they can potentially help you save money and avoid legal trouble, which makes the cost worth it. 

Step 8: Invest in web hosting.

For an eCommerce business, your website is the main way people will interact with your brand. And every website requires web hosting to be accessible online. Choosing the right web hosting provider and plan is important, because it influences:

• How frequently your website will be available (uptime)
• How fast it will load
• How secure it is
• Your ability to grow in years to come

A good eCommerce web hosting plan for a small business can cost as little as $6 a month. And it’s easy to sign up and get started. 

Step 9: Choose how to build your website.

Now you’re finally ready to build the website that will serve as your online store. Creating a great website is hugely important for any eCommerce business, but it doesn’t have to be difficult or expensive. It’s now easier than ever to build an online store with the help of a website builder. 

If you have a really specific vision and you have the resources to hire a professional designer, you’ll have more power over how your website looks and works. But if your priorities are to get your website up quickly and affordably, you can create a functional, professional eCommerce site with a website builder.

Put the work you did in the branding step to use here. Make sure the images and color scheme you use match your overall visual branding. And write copy that reflects your UVP, or consider hiring a copywriter who can. 

If you opt to use a website builder, you can get an online store up quickly. But you may want to devote some time to getting the look and messaging just right. 

Step 10: Choose your eCommerce software.

A store builder will help design your overall site, but an online store needs an extra set of features beyond what a typical website has. In particular, it needs:

• A shopping cart
• A check-out process
• Secure payment processing

Those are the basics. In addition, you may want some other helpful features:

• Easy account creation for customers to make future purchases easier
• A wish list function, so people can mark items they like and offer gift ideas to friends
• A recommendation engine to show people other items they may want, based on what similar customers purchased
• Ability to offer and process discount codes
• Features to help simplify and/or automate the shipping and sales tax processes

Some eCommerce software options are actually free, such as WooCommerce (for WordPress sites specifically). Consider what eCommerce features you consider important, which you consider nice-to-have, and research your options to find the software that seems to be the best fit for your needs and budget.

Step 11: List your products.

After you use a store builder to set up your online shop, begin adding your products. Any good ecommerce software will make it easy for you to start loading your inventory. Add each item to your  eCommerce site, and fill in product descriptions, as well as details about pricing and availability. 

Add high-quality images of your products. And optimize each product page you create for SEO, by adding target keywords into the page title, headings, and image tags. 

Step 12: Develop a marketing plan. 

Getting to the point where your online business is established and your eCommerce website is ready for launch takes a lot of work. But unfortunately, you’re far from done. If you’re learning how to boost your ecommerce sales, make sure people can find your website. That means marketing.

Research your online marketing options, and put together a plan to start getting your website in front of people. That may include content marketing, paid promotion channels like Google Ads, social media integration, or all of the above. Consider promoting your items on platforms such as Facebook and Instagram to drive even more consumers to your online shop.

Getting those first visitors can be an uphill battle. But if you create and follow a marketing plan, and update your plan based on the results you see as you go, you’ll start to gain traction.

Start Your Online Store 

l Starting an online shop takes work. But if you develop a strong strategy, build a great site through ecommerce website builders, and put in the work to promote it, you’re likely to see success. And the benefits of eCommerce businesses are plentiful. 

HostGator can help you check several boxes on this list. We offer domain registration, web hosting plans, and an online store builder that includes eCommerce themes and features.