Creating an Online Store for Your Business
Every day, more stores open online, more products are sold online, and more purchases are made through ecommerce. So, where does your business reside in terms of ecommerce? If you’re reading this article, you’ve likely made the decision to start selling products online. However, just because it’s easier today than ever before to sell online, does not mean it’s easy. Starting your business, and then creating an online store can be overwhelming and consuming.
If you have not yet set up your business, be sure to read Steps for Starting an Ecommerce Business, first. This will take you through the steps to start your business and determining your business model. Once you have your Business set up, it’s time to create your store!
Should you start an online store?
It’s estimated that by the year 2040, 95% of all purchases will be through eCommerce. So, in short, if you are planning to sell any products as a primary business income, then yes, you should start an online store.
However, there are a great many businesses that are monetized through other means, such as services or advertising. For these business, there still might be an opportunity for secondary business income through an online store. In these cases, products sold are intended to support the primary business objective. For example, if you are a financial consultant, perhaps you could sell products accounting apps or financial coaching books online. If you are a Food Blogger, you could sell cooking appliances or tools online. Or if you have a restaurant, you could sell gift cards or t-shirts with your name on them.
Not all businesses should open an online store, however. A Dentist should not necessary start an online store to sell toothbrushes. The income generated from the store must be worth the time and money invested to create and maintain it. Or, the products sold must really add value for your offline customers.
Regardless of whether the online store generates your primary or secondary income, the steps covered below still pertain.
Steps to creating an online store
As mentioned earlier, this article assumes that you have an existing business or at least have started the process to set up your business. If not, be sure to read Steps for Starting an Ecommerce Business. While there are many steps to creating an online store, these are the overarching ones to guide your process.
1. Determine Products & Inventory Model
The first step before you start creating an online store, is to determine what types of products you want to sell and how you will manage inventory. In the article Steps to Starting Your Ecommerce Business, we review the different Ecommerce Business Models in more depth. So, go back to review those if needed.
It’s estimated that there are 12-24 million eCommerce sites across the entire globe. However, less than 1M of these sites sell more than $1,000/year, so there’s tons of room for growth (WPForms). That said, with so much competition out there, it’s prudent to start narrow in product scope – be the expert in a niche. That’s because it’s easier to drive traffic for a specific topic. The more specific the products, the more likely that every customer that comes to your store is to purchase.
Need help determining what products to sell? Check out this article with tips for Identifying Profitable Products to sell.
In terms of inventory, you will need to determine whether you want to employ drop shipping or carry inventory yourself. If you are new to selling products online, it is much easier to start with drop shipping. In this model, your business operates as the store for other suppliers’ products. Customers come to your online store, place the order, send you payment, and then the orders and payment are forwarded to suppliers to fulfill. If you are not manufacturing your own products, than this is easy to set up through different ecommerce platforms, such as Shopify.
This model has low overhead costs as you do not need to carry inventory, but because you are a third party in this model, your profit margins are lower than other models. This model also has limited control over the products themselves or the time it takes for customers to receive them. This is because you never actually see the physical product or place it in a shipping box, this is all handled by the suppolers.
There are some instances where carrying inventory may be better for you. If you already have the space to hold inventory and you can make a greater profit buying the inventory upfront, then it could be a good option. Generally, for small or new businesses, this is a good option if you are branding generic products, such as t-shirts or totes. Carrying inventory also gives you more control and oversight over product quality.
2. Choose Your Store Type
If you have a very limited product line or products are only available for a limited time, you may want to simply embed a Purchase Button within your website or landing page. Many payment gateway providers offer this capability, such as Paypal or Stripe. You can read more about Payment Gateways here.
Affiliate links are special links that are unique to your business to products on other supplier pages. When a someone clicks the link and buys from the supplier, the unique link that brought that buyer to them signals that you will get the designated commision. In order to obtain affiliate links, you need to enter into an agreement with the supplier, either directly or indirectly through third party affiliate networks. Amazon is one of the most popular Affiliate programs out there for link products in this way. However, the commissions that they offer are rather low.
Affiliate links make the most sense if (a) you are simply looking to offer value to your customers rather than make a high income or (b) you are focusing on a few high-commission affiliate partners that you can promote.
Online Store Builder Platforms
Finally, the most common way that Ecommerce businesses build out their online stores is working with a Platform provider. Ecommerce platforms give you the templates and tools to build your online store without any coding or web design skills. Step 3 gets into this more.
3. Select a Store Platform
There are many variables to consider when selecting the platform for your online store. Make sure to do your research. Look at competitive sites and other online stores to see which ones you like. For a detailed review of the top platforms available to see what may be best for you, you can read this review of the 8 Best Ecommerce Platforms.
Platforms to consider for building your online store
4. Understand State Taxes and Other Legal Requirements
Before you start to sell products you need to determine your sales tax and other legal requirements. You will also need to obtain a Sales Tax registration ID in the state(s) where your business operates. Check to see how often you need to file sales taxes to your states tax department.
There are certain types of business activities that require federal or state permits, licenses, and/or additional paperwork in order to operate legally. Some examples include medical practices, attorney practices, restaurants, certain types of construction companies, and others. All businesses involved in activities that are regulated by the federal government will be required to obtain a federal license.
For information on federal business licenses, visit the Small Business Administration website.
5. Payment Gateway
Once you have your Sales Tax ID, you can select a payment gateway provider. Depending on the Online Store Platform you have selected for your store, you may have payment gateway providers recommended to you. If not, there are many to choose from.
Online payment gateways are offered by a variety of Financial Services companies. A Payment Gateway is an online merchant service software application where providers authorize credit card or direct payments. This allows for seamless online transactions between a variety of different sellers and purchasers.
Be sure to read the Top 5 Payment Gateways.
Creating an online store is the start. Once your store is up and running, it’s time for developing a Customer Acquisition plan. Unfortunately, it is not true that if you simply build it, they will come. You have to find your potential customers and entice them to come to your store. It’s important to put together a marketing strategy and execution plan to generate awareness and trial for your store. If you don’t have experience with this, you can find this helpful article with 5 Marketing Essentials for Customer Acquisition.