This article is part of a larger series on Retail Management.
To start an online store, you’ll first need to iron out a business concept, choose products to sell, and decide on an order fulfillment strategy. Next, you’ll need to build your website. Because online stores are primarily visual platforms, you’ll also need to have strong product pages and a marketing plan. Overall, you can plan to spend around $250 to set up your online store (not including products).
With plug-and-play ecommerce platforms and web builders, this process has never been easier. Shopify leads the pack among the ecommerce platforms we have tested and reviewed and is our top pick for the best ecommerce platforms. It offers a 14-day free trial, no credit card required. Set up a free trial and follow our guide below.
Starting an Online Store Video Tutorial
Step 1: Choose a Business Concept
Setting up an online retail business starts with honing the idea of the products you would like to sell. Begin with selecting an overall business concept by figuring out which niche or industry you would like to focus on. This idea can come from personal interests or market opportunities.
Pick a Business Niche
It’s easier to target customers with a specific interest and sell products that directly appeal to them rather than offering a wide array of general merchandise. Choosing a niche will also give you a specific direction and make it easier to develop a strong brand. For example, a dog enthusiast might want to open an online store with dog products. However, a better business concept is to fill a market void or need, such as organic dog food specifically for pit bulls.
Part of starting a business is knowing the costs, drafting a business plan, and registering it. Download our ebook on how to start a business for detailed insights on budgeting and planning a new business.
Select a Business Model
Once you have an idea of what you want to sell, you need to decide how you want to sell it. You might want to:
- Start a dropshipping business (instead of stocking inventory)
- Use a third-party fulfillment company to store inventory and fulfill orders
- Develop and manufacture your own custom products
- Start a private label brand
- Pack and ship orders yourself
Start by thinking about the amount of time you want to invest in your ecommerce venture. How much space do you have available or are you willing to obtain for storing inventory? If your online store is a side project, it may be realistic to sell and stock only a few products. Or, you can only sell products that are available for dropshipping, so you don’t have to fulfill orders or pay for a third-party service.
However, if you are looking to start an online retail business or grow your online store, you will likely want to develop custom or private label products and stock many of them yourself. This plan means having a dedicated garage, room, or storage space for managing inventory and packing orders—and, when your business takes off and you can no longer fulfill orders yourself, moving over to a fulfillment company (read our guide to the best fulfillment services).
Design a Brand
Once you have an idea of what and how you want to sell, you’ll need to develop a brand. Branding is an important part of establishing an online store because a strong brand helps you attract and retain customers, stand out from the competition, and build trust and credibility with your audience. This process includes picking a company name, website, and logo.
Do branding early in the process of building an online store because you will need to purchase a domain name, which should either be your brand name or at least contain your brand name. For example, luggage brand Away’s website is awaytravel.com (away.com is already taken).
When choosing a domain name for your online store, be sure to:
- Choose an extension (e.g., .biz, .us, and .net) that best reflects your store; .com is most common
- Make it easy to spell
- Keep it as short as possible
Apply for Licenses & Trademarks
While doing your brand development, it’s also a good time to take care of the legal stuff—outline what licenses and legal protections you will need to start your business. Anyone selling products will need to obtain a resale license, also known as a reseller’s permit or sales tax ID from your state’s tax department. You will need to apply for this in each state where you have a physical presence (such as a warehouse).
If you are manufacturing or designing products, you will also want to file for a patent with the United States Patent and Trademark Office (USPTO) if your products qualify. You will also want to trademark your business name to prevent others from selling under your brand name.
Learn more about trademark costs and how to get them.
Estimate Startup Costs
Once you have nailed down a business concept, decided on a business model, and completed your branding, the next step is to estimate costs and look for financing. While building an online store generally costs around $250, starting a business and securing products will be another matter.
Business startup costs during the first year of operations vary significantly. It depends on the industry and ecommerce business model, whether the business has employees or if it is a full-time gig.
For example, full online businesses generally cost less than brick-and-mortar stores because they don’t require the same amount of licenses and permits. You also don’t need to consider overhead expenses such as rent for retail space.
However, Shopify research shows that new online store business owners can expect expenses to reach up to $40,000 in the first year, recoverable through profit margins (with a timeframe set up to 18 to 24 months).
Shopify found that general expense categories during the first year would look something like:
- Product sourcing and procurement (31.6%): Raw materials, manufacturing, patents, etc.
- Operating costs (11%): Legal and accounting fees, business insurance
- Online store costs (9%): Ecommerce platform subscription, web developer, etc.
- Shipping costs (8.7%): Packaging and labels
- Offline/Overhead costs (10.5%): Rent, equipment, etc.
- Employees/hiring costs (18.8%): Salaries, benefits, compensation
- Marketing costs (10.3%): Logo, branding, printed materials, business cards, etc.
Step 2: Source Your Products Through Reliable Suppliers
Once your business plan is solid, the next step is sourcing your products. It will take some time to find the right suppliers and make sure you are satisfied with the final results. Plan to spend several months and a couple of thousand dollars requesting sample orders from different suppliers, especially if you are customizing your products in any way with a unique formula, design, and branding.
Arguably, the hardest part of starting an online store is finding a supplier you trust to deliver quality products on time and for the right price. There are a few different ways new businesses can go about finding one that is best for them.
For example, if you plan on selling on Amazon exclusively, there are popular Amazon products (and even strange products that shoppers love) that can help you get started. You can start by researching what manufacturers your competitors are using. Also, you can request samples from many suppliers at once through Alibaba or other US-based wholesale directories. The most traditional option is to visit industry trade shows to connect with suppliers in person (more on this later).
Did you know?
Most manufacturers prefer selling to wholesalers because they purchase large volumes of products. So, when first starting out, it may be easier to find a wholesaler to work with before going straight to a manufacturer. You’ll get a slightly higher price, but much more flexible ordering terms. Read our tips on how to find wholesale suppliers for your retail business.
Research Your Competitors
To find a supplier, one of the first steps you can take is to research your competitors. Purchase a few of their products and research what is on the product label. Many of them will have the manufacturing location or other details, which you can use in a Google search. There are also smartphone apps you can download that will scan product barcodes and pull up details on the manufacturer. With your smartphone and these apps, you can gather a lot of manufacturing leads on a trip to the mall, box store, or boutique.
Connect With Manufacturers Through Alibaba
Alibaba has millions of products from thousands of manufacturers. Through Alibaba, you can find suppliers to manufacture products, build private labels, or purchase ready-made products to resell. The site is a top name in product sourcing and makes it easy to search for specific products and filter results by price, minimum order, or top-ranking suppliers. You can even search by image if you have a product you want to replicate. Learn how to import items from China using our ultimate guide.
Manufacturing your own products can result in the most profits. The downsides of manufacturing custom products are that it requires a lot of upfront cash and large order quantities, which also means a bigger risk.
Use a Directory Service to Find US-based Suppliers
In addition to searching Alibaba, there are several other directory sites offering mostly ready-made products. Some directory sites link to outside suppliers, while others have a built-in interface for placing orders.
Popular wholesale sites include:
- Faire: Unique items from smaller apparel, gift, beauty, and home product makers
- The Grommet Wholesale: Unusual gift items from independent makers and manufacturers
- Worldwide Brands: A directory site with thousands of wholesale suppliers
- Wholesale Central: A free directory site with thousands of wholesale suppliers
Interested to learn more?
Attend Trade Shows & Wholesale Marketplaces
Attending trade shows is the most efficient way to test a lot of products firsthand and a great way to find suppliers you might not otherwise encounter, especially if you are only searching online. There are some permanent showrooms that you can visit year-round to find suppliers and products. Other shows are temporary and bring in thousands of vendors at once.
We list the best retail trade shows for product sourcing; some of the most popular include:
- AmericasMart Atlanta: Gift and home items
- NY NOW: Gift, lifestyle, handmade, and home items
- Toy Fair: Toy, collectible, and children’s products
- Cosmoprof North America: Skincare and beauty products, including private label
- ASD Market Week: General merchandise, apparel, accessories, and suppliers offering custom and private label
- MAGIC: One of the largest apparel and accessory shows
Consider Designing a Private Label Brand
Private label brands are goods manufactured by one company but then sold under the retailer’s brand name. Private label products help businesses build a strong identity and prevent customers from trying to find your products for lower prices on other online stores. To start a private label brand, design a logo and packaging to place on a standard or slightly customized product from a manufacturer or wholesaler.
Starting a private label brand such as cosmetics and beauty products is a good middle-ground option between manufacturing a custom product and buying traditional wholesale goods. Private label items provide unique branding, SKUs for product listings, and sometimes unique formulas or design elements. Still, the process is much easier than designing and manufacturing a completely new product.
Step 3: Decide How You’ll Fulfill Orders
Order fulfillment is the process of storing products, packing customer orders, and shipping products out. When starting, many small businesses handle this process themselves out of a garage or storage space. However, some companies handle order fulfillment for ecommerce sellers.
Create an Inventory Management System
Part of efficient order fulfillment is having an effective inventory system. Inventory management is the process of ordering, tracking, and storing your products to meet demand efficiently. It’s a crucial part of any retail or ecommerce business.
Tracking inventory stock effectively helps businesses prevent stockouts (minimize carrying costs and shrinkage), manage multiple locations, and ensure accurate recordkeeping. An inventory solution makes these processes easier than trying to do them all manually.
There are paid inventory solutions and specialized systems such as POS inventory software for those managing a storefront or doing in-person sales. However, there are also free inventory management tools and inventory templates to help you get started.
If you need more help establishing a full process, read our guide to retail inventory management and stock-keeping unit (SKU) vs universal product codes (UPC) numbers, and SKU generation for products.
Pick a Fulfillment Method
Processing, picking, and packing customer orders are part of the fulfillment process. There are four different ways to do this: in-house fulfillment, outsourced third-party fulfillment, dropshipping, or a hybrid approach.
In-house Order Fulfillment
In-house order fulfillment is literally in-house—all of your customer orders are processed, picked, packed, and shipped under your roof. Your business handles all phases of the order fulfillment process, including receiving and storing inventory. This type of order fulfillment works best for businesses with full-time store owners or those that process fewer than 10 orders daily (usually startups or young businesses).
If you are fulfilling customer orders yourself, you have full control over choosing retail packaging materials and packing them in custom boxes. We have a guide that features some eye-catching business packaging ideas that can help.
Third-party Order Fulfillment
If you want to outsource order fulfillment, order fulfillment companies and third-party logistics providers (3PLs) will store your products and then pack and send orders as they come in. With this fulfillment method, ecommerce businesses still purchase inventory upfront and send it to the order fulfillment company to store. This method is often ideal for ecommerce businesses that have outgrown their at-home fulfillment space and do not want to start their own warehouse and large-scale fulfillment operation.
Dropshipping companies serve as the product supplier and fulfill customer orders, so ecommerce businesses don’t have to purchase upfront inventory. When working with dropshipping companies, ecommerce sellers are limited in that they can only sell products the dropshipper has available. However, there are fewer upfront costs and a lot less work involved for ecommerce businesses. You can read our guide to starting your own dropshipping business.
Shopify, our top-recommended ecommerce platform, connects with hundreds of dropshippers (such as DSers) through its Shopify App Marketplace. Learn how to open a Shopify dropshipping store.
Hybrid Fulfillment Solution
A hybrid fulfillment approach combines some (or all) of the above order fulfillment methods. This is a popular solution for growing businesses because it offers a lot of flexibility. It is also ideal for brick-and-mortar stores expanding into online sales by allowing shoppers to buy online and pick up purchases in-store.
Select a Shipping Provider
If you are packing and shipping customer orders in-house, choose a shipping software or service, look for cheap shipping supplies, and shop around for the most efficient shipping rates among FedEx vs UPS vs USPS—the most popular shipping platforms. However, if you plan to ship internationally, there are different ways to do so, such as cross-border international shipping and localized fulfillment.
If you go with popular ecommerce platforms like Shopify, BigCommerce, and Square Online, then you will be delighted to know that they have built-in shipping tools. They have discounted shipping rates, automatically calculate shipping costs for customers at checkout, and make it easy for ecommerce businesses to print shipping labels directly from the order management system.
However, if you built your own site or use a shopping cart plugin that does not have these features, you’ll need to find a third-party solution. For small operations, Stamps.com is a popular option. It syncs with many online marketplaces like Amazon and Etsy, plus shopping carts like Magento. Simply import customer orders and print out the shipping labels at home.
Step 4: Choose an Ecommerce Platform
There are several popular ecommerce platforms that many small businesses use to learn how to build an online store. Shopify, BigCommerce, and Square Online are some of the most popular platforms for new businesses and retailers looking to expand online. All of these programs offer templates, varying levels of inventory management tools, reporting, and options for connected payment processing.
These tools also offer native or plug-in solutions for selling and advertising on social media, selling in person, connecting a blog, and selling on third-party marketplaces like Amazon and eBay. They also have different plans for businesses of different sizes and sales volumes.
Best Ecommerce Platforms & Online Store Builders Compared
$16+ ($23+ for online store)
Based on our evaluation of the best ecommerce platforms, the choice of an ecommerce solution for most small businesses usually comes down to BigCommerce vs Shopify. Shopify is our top-recommended ecommerce platform for small businesses, whereas BigCommerce is better suited for larger-revenue businesses, especially those that have complex inventories or want to save on processing fees.
When to use a WordPress site:
If your business is not a dedicated ecommerce site and rather a blog, coaching, or publishing site that also sells merchandise, you may want to create a WordPress site and add a WooCommerce or other WordPress shopping cart plugin. Businesses can turn any existing WordPress site into an ecommerce store by using these plugins, so it is a good option for those looking to sell merchandise or expand into retail sales.
Step 5. Build Your Ecommerce Website
After choosing a platform, build your online store’s website by selecting a theme, customizing your site, putting security measures in place, and getting any necessary add-ons. Use your brand design and custom products or packaging as a guide to choosing fonts, a color scheme, and an overall look.
Follow ecommerce website design best practices, including:
- Prioritize navigation features: Easy navigation is critical for a positive user experience, so make sure your site has great header, search, and related product navigation features. Don’t forget to add a sitemap to make your website easy for search engines to navigate.
- Display customer reviews: Have a way of collecting and displaying reviews and other user-generated content on your website from the get-go. This type of content helps build confidence and trust among potential customers.
- Make it easy for customers to contact you: Include a chat option like Facebook Messenger and a phone number with clear support hours. Add an FAQ section with store policies and common questions.
Should you build a custom store?
Larger businesses with developers may benefit from a custom store. However, most small businesses that don’t have a developer and want to manage the website themselves would have the flexibility to do so with a templated design from one of our recommended ecommerce platforms. Remember, even if you start with a template or theme, you can still customize your online store to suit your needs and your brand.
Step 6: Set Up Your Product Listings
When your online store infrastructure is in place, it’s time to add the actual products. There are multiple layers to this process. First, you’ll need to enter all the inventory data for each item—like wholesale price, retail markup, vendor information, SKUs and barcode information, categories, colors, sizes, quantities, and other data points relevant to your specific merchandise.
If you already have a list of inventory, you can upload this information in bulk via a CSV or Excel file. You can also use our free inventory templates to help you get started. Otherwise, you can manually enter each product.
Create Descriptive Product Pages
After you enter the data, the next step is to create a detailed individual product page for each item. For ecommerce websites, product pages are arguably the most important element of the site. Shoppers can land on a product page after browsing your store, from a Google search, or via a targeted advertisement.
A product page should have:
- Clear pricing information: Pricing should be displayed prominently and clearly indicate whether or not the price displayed is before or after any promotions.
- Easy “Add to Cart” buttons: Add a large “Add to Cart” button next to product images and below pricing information; the goal is to get shoppers to buy, so make sure the button is a color that stands out.
- High-quality photos: Product photos can make or break sales. Use high-quality images that show products from all angles, in all variants, and in action where situationally relevant.
- Customer reviews or social proof: When buying online, shoppers can’t see or feel the product for themselves, so they rely on customer reviews to assess product quality. Incorporate user reviews in product pages and/or photos and testimonials from social media—most ecommerce platforms have these features built-in or available through a plugin.
- Detailed product descriptions: Product descriptions should be concise and include precise product information like size and material, but should not be salesy.
- Related products: At the bottom, display similar products or items people who bought the item also purchased—some ecommerce platforms have this built-in, while others have this feature available through plugins.
- Proactively addressed customer concerns: Indicate whether or not shipping is free or calculated at checkout, or if there is a minimum order for free shipping.
Write Well-crafted Product Descriptions
Product descriptions should be uniform across the site, following the same template and tone throughout. In general, there should be three elements to a product description: a short intro, bullet points outlining high-level features, and a longer description at the bottom for shoppers who want greater detail.
Download our free guide as an easy-to-follow work sheet with a product description template and helpful examples.
Upload High-quality Product Photos
Product photos are one of the most important elements of an online store. High-quality images can showcase the details and quality of an item, while low-quality or grainy photos leave shoppers with more questions than answers.
Some wholesale suppliers will provide high-quality photos of their products, which will save you a lot of time and money. Ask your suppliers if this is something they provide. If not, you can either take the photos yourself or hire a professional.
When taking the photos yourself, use a plain white background in a well-lit area. You can do product photography on a budget with a smartphone camera and natural light. Though, if you are not a professional or experienced photographer, for the best (and fastest) results, there are services that specialize in ecommerce photography.
Square Photo Studio offers very affordable product photography with a fast turnaround time. Square takes photos of the products, and then you can choose either three photos with different angles for $9.95 or a 360-degree photo for $29.95. Square will send you the images within 14 days.
In addition to standalone product shots and 360-degree photos, consider photos of the product in use. This is especially important for apparel, accessories, and makeup. Shoppers will want an idea of what the product will look like when worn. For decor and house items, consider lifestyle photos of the products so that customers can picture the items in their homes.
Step 7: Integrate Payment Processing
Integrating payment processing is a mundane yet critical element of building an ecommerce website. As an online retailer, you’ll need to choose a Payment Card Industry (PCI)-compliant payment processor. Many ecommerce platforms have built-in payment processors or a few select payment partners that are compatible. Any built-in payment processors will be PCI-compliant, e.g., Square, Shopify Payments, Stripe, and PayPal.
Don’t Forget to Configure Sales Tax
Sales tax works differently for online businesses, as you’re operating in multiple states. Luckily, most ecommerce platforms, including Shopify and BigCommerce, automatically calculate sales tax at checkout.
See our guide to ecommerce sales tax for more information.
Step 8: Launch & Market Your Online Store
After setting up the product pages, your site is ready to launch. Once your online store is live, it will require a multipronged marketing approach with search engine optimization (SEO), listings on additional sales channels, and email marketing to bring in a steady flow of shoppers. Some ecommerce businesses also use in-person sales at pop-ups and events to grow their businesses.
Starting an Online Retail Business Frequently Asked Questions (FAQs)
How do I start an online store with no money?
Square Online has a forever-free option that allows you to build a multipage online store. Once you gain traction, you can upgrade your plan for more advanced features. However, expect to put in a lot of work and time before your store becomes significantly profitable.
Is an online retail business profitable?
While there are no guarantees you’ll make any money, you may make a profit with the right resources. Whether you’re covering the costs of your monthly hosting or making a full-time income, any of it is possible given the time, talent, and resources. Your income depends on your niche, audience, and expenses. Try our price markup calculator to learn how to price your products and estimate profit.
What do I need to start an online retail business?
You first need to decide on a business concept. Once that’s ironed out, you can decide where to source your products and how you will fulfill orders. Choosing an e-commerce platform and then building your online store comes next, together with making sure you can process online payments by choosing a payment gateway.
Finally, you’ll need to develop strong product pages and a marketing plan.
What is the easiest online store to set up?
Our top pick for the best ecommerce platforms is Shopify. It is an easy-to-use platform that gives you all the essential features you need when starting an online retail business. You can build a full website, use its built-in payment provider (no need to apply on another platform), sell products online (and on social channels like Facebook), and have marketing tools at your disposal—all within the Shopify dashboard.
Do I need a business license to start an online retail business?
Whether you’re starting a brick-and-mortar store or an online store, most states will require a business license. This is so that you can collect taxes from your customers and the Internal Revenue Service can track tax revenue. Your state’s department of revenue should have the info you need.
How can I market my online retail business?
There are many ways to grow your online store. If you’re creative and persistent, you can attract a following with blogging, social marketing, email, video, and offline engagement—and spend very little money doing it.
- Blogging: Gain fans by showcasing your expertise in your niche. Learn how to start a blog.
- Pinterest: You can create shoppable pins and even share blog posts on Pinterest.
- Email marketing: Market to an email list by collecting emails.
- Video marketing: Create videos to help your potential customers see your product in action.
- Coupon promotions: Send coupons through email marketing or social media ads.
- Free shipping offers: Offer free shipping to help increase sales.
- Influencer marketing: Hire an influencer in exchange for compensation, whether product or cash, to help drive sales.
- Paid social media ads: If you have the budget, you can focus efforts on paid marketing like Facebook ads and Google Ads. These let you drive targeted traffic to your site or certain products. When you make a sale, be sure to use other tactics, like promotional inserts in shipments, to keep customers coming back.
Starting an online store looks a little bit different for everyone depending on the type of business you have and whether you’re taking a brick-and-mortar business online or building a new company from scratch. Here are some of the most common questions around starting an online store.
Statistics show that 54% of consumers prefer online shopping, and 73% of ecommerce sales are expected to come from mobile. It is clear that ecommerce is here to stay, and having an online store should be part of a retail business’ growth plan.
Thanks to plug-and-play software like Shopify, BigCommerce, and Square Online, learning how to start an online store is easy. Most people can even set up a basic store in under a day. However, building a successful and profitable ecommerce operation requires much more than simply building an ecommerce site. You’ll need a business plan, carefully selected or manufactured products, a marketing strategy, and an organized order fulfillment operation.
Shopify is one of the biggest names in ecommerce software because it makes it easy for individuals or businesses of any size to start an online store. Preset templates and built-in inventory and order management features make it simple to get an ecommerce business up and running in no time.
What’s more, Shopify’s app marketplace offers dropshipping companies and marketing tools and features to build product pages. With several plans, individuals can start a small online store and grow it to an ecommerce enterprise. Try Shopify’s free 14-day trial.