Retail businesses carry many challenges, however, which make it harder for young, inexperienced, and budget-constrained entrepreneurs to start them. That’s especially the case if you open up a traditional brick-and-mortar store.
Today, we need not be constrained by physical location. eCommerce platforms like Shopify, BigCommerce, and WooCommerce make it incredibly easy for anyone to start and grow an online store, with no physical store or capital costs required. And it’s increasingly common for businesses to start with an online store, and eventually open up brick-and-mortar storefronts (Warby Parker, Casper, Bonobos, etc.).
If you want to learn how to start a retail business from scratch, this guide will outline how to start a retail business and online store.
How to Start a Retail Business: 5 Steps to Launching Your Online Business
Follow these steps to start your retail business. Whatever your end goals— be it an online clothing store, a small business selling stationery and other gifts, or something else entirely—start here.
Step 1: Define Your Industry
Start by brainstorming a list of potential industries in which your e-commerce business might operate. Every online business is positioned within the confinements of a particular industry. Whether you sell cosmetics, clothes, food, or anything in between, each industry will have its own set of unique challenges and opportunities.
You can ask yourself a series of questions to help determine your retail industry. If you haven’t yet determined what type of business you plan to launch, try asking yourself:
- What are you passionate about?
- What products do you buy the most?
- What companies do you like the most?
- What products are most popular right now within an industry you’re knowledgeable of?
- What professional experience do you have?
You should also conduct competitor research as a part of your broader market research. This research will help you see the types of companies that are most popular in the industries you’re interested in, the products they sell the most, the type of people that buy there, and much more.
For example, if you were interested in the nutrition/fitness industry (a pretty wide one to start with, but a good starting point nonetheless), you could go to the store of a company like Legion Athletics and examine the following:
- The products they sell
- The way they sell them (the copy, images, and videos used in the product pages)
- The reviews-this is critical; read them thoroughly, especially the negative ones, and see what people say about the products
- The pricing points
- The branding
Your goal isn’t to copy your competitors, but to see what’s working. From there, you can start brainstorming potential ideas to stand out and serve this industry.
Seek Out Secondary Reports and Studies
Search for industry benchmarks and industry reports or studies. See what they say about the sales, popularity, challenges, and the like. Google your industry + terms like industry benchmarks, market segmentation, market trends, market value, and statistics. This data will help you determine the opportunities and challenges related to starting an online store in that niche.
Read Industry and Trade Publications
Industry publications are another avenue for helpful industry research. Read trade magazines, blogs, and journals, and listen to podcasts for the latest trends and industry reporting.
Research Search Engine Opportunities
Search engine optimization (SEO) is essential for every online business because a large segment of your customers will discover your business via search engines. When preparing to start an online store, you want to conduct keyword research. This will help you determine the keyword volume—and therefore the sales opportunities—associated with different products. Tools like Ahrefs or SEMrush can help you find what people look for in Google and other search engines. Leading keywords work as a proxy for popularity and interest. In the nutrition business example above, a lot of people search for nutritional supplements, which means that people are curious about this topic and are potentially interested in buying products related to it.
Step 2: Find and/or Develop Products
When starting a small retail business, you can either source products from external manufacturers or make your own.
Developing Products for your Retail Shop
There are myriad benefits to making your own products. The process involves developing a blueprint, testing, manufacturing, doing quality control, and working on the logistics. For a nuanced understanding of the benefits of retailing your own products, you can check out our course on starting and scaling your online store. Instructor Gretta van Riel, who has created 4 multimillion-dollar businesses, will cover why she recommends this path over sourcing products from other vendors. Get an introduction to some of Gretta’s insights with the free mini-class on starting a profitable online store in 12 weeks or less.
Sourcing Products from Third-Party Vendors
Retailing products manufactured by third-party vendors can speed up how quickly your retail store gets to market. To do so, you’ll need to determine the products you want to sell and then identify vendors and suppliers from whom you can purchase these goods.
Let’s say you want to sell vitamins and other similar supplements. To find these products, you’d search “list of vitamin supplements” or “list of vitamin supplements products” via a search engine. This query would bring you a whole lot of potential products to sell. Your job is to make a list of these products and then find the suppliers or manufacturers.
Once you’ve done this, you can contact the company directly to see if they can supply you with their products. This will probably be cheaper than working with a wholesaler, but the company will likely ask you for a higher initial purchase, which will require a larger initial investment. You may want to compare the costs of sourcing directly from the manufacturer, versus purchasing from a wholesaler to determine which option provides you with the highest profit margin.
Step 3: Choose the Right Products to Sell
One of the key problems e-commerce entrepreneurs run into is that they try to sell the wrong products. If you want to succeed with an online retail business, you need to sell products that fit your audience and your chosen brand. This is all about understanding your audience’s needs.
The research you did in the first step should shine a light on the products people are buying or could be buying in your specific industry. An important point to consider when picking the right product is to select the ones that are popular (or, at least, that could become popular soon), lightweight, simple in nature, and cost-efficient. Popular products might show up in industry-specific magazines and journals, attract praise in the community (scout Reddit and other social networks), or are winning awards.
Using the supplements industry as an example, you’ll see multivitamins are very popular. Because of that, everyone is selling them. If you want to stand out, you’ll have to think deeper. What nutritional supplements are people are already buying that you could mix with a multivitamin? What micronutrients (individual vitamins and minerals) are ignored in most multivitamins that you could sell?
For example, you may find that there is a small number of multivitamins that include caffeine. This could be a great opportunity to offer a unique product to your market.
You can also use a tool like JungleScout to see the type of products that are selling the most on Amazon (more info on how to do that in chapter 1 of our e-commerce workbook ). The goal isn’t to sell the same products sold on Amazon, but the same type of product.
Make sure to avoid products that are overly complex—that means products that have confusing technical features that can be hard to understand or could get broken during transportation. At the end of the day, you want to pick products that you understand and that you’d like to buy if you were a consumer. This will make it much easier to sell and promote.
Step 4: Talk to Suppliers
Now that you have a list of suppliers you made in Step 2, your job is to contact and start negotiating with them. Begin by analyzing their sites and business. Check for potential revenue volumes available on the web so you can see how big they are. The bigger they are, the higher the minimum initial orders will likely be.
You want to work with suppliers that are comfortable selling to small businesses like yours. When approaching suppliers, don’t tell them you’re inexperienced or new at this. Instead, tell them you’re looking for the right supplier to work with for the long run. Avoid talking budgets and other detailed information just yet.
Do some math to find the right target dollar amount that you are willing to invest. If your budget is $10,000, then you should be willing to spend around $5,000 to $8,000 on your first initial order—the rest will be used for logistics, marketing, and other tasks.
If you want to create leverage with a supplier, be willing to make a large initial deposit-somewhere around 50% to 70%—so you can increase your negotiating power.
Step 5: Develop a Brand
No matter how great your products are, if you want to succeed with your online retail business, you need to have a strong brand. For an online store, the basics of solid branding include having a solid positioning statement, great copy, and an overall design that fits your audience and your products perfectly.
Branding is both an art and a science, which can be incredibly extensive. Right now, however, all you care about is nailing your store’s name and logo.
Take some time to think about your business name. Brainstorm as many as you can and think about how it can explain or give an idea of what your business is all about. Most importantly, you want to come up with a name that appeals to your target audience.
Take a look at some of the most popular supplement brands in the world:
- Optimum Nutrition
- Legion Athletics
- Universal Nutrition
They all include something related to the world of fitness—words like “athletics,” “nutrition,” and “muscle.”
As you think about your potential brand names, you want to go ahead and check the availability for their domains on a site like GoDaddy. Ideally, you want to get a .com, but in case you come up with the perfect name that doesn’t have a domain available, consider buying a .io, .co, or .net for the time being.
Check your competition to see the type of colors and logos they use, and what your audience seems to connect with. Check out the logos for the previous examples:
They all have a similar appeal and look; a bit edgy but professional at the same time.
Your logo should be unique, but it should also appeal to the people who are likely customers of some of these brands, so make sure to take notes of their approaches to the brand and use them as a guide to your own company.
How to Start an Online Store
7 Easy Steps to Getting Started in Ecommerce | Start Your Shopify Store
Now that you have done the legwork necessary to develop your retail business, let’s discuss how to start an online store.
Step 1: Create an Account with an Ecommerce Platform
The next step to starting your online retail business requires you to open an account with one of the e-commerce platforms and set up the store. Many people agonize over choosing the platform or e-commerce software that’s just right, but the truth is that most of the market leaders—Shopify, BigCommerce, and WooCommerce—have similar features.
What changes from one to the other is the plugins available, the themes, and other very specific features (like the capacity to use Shopify payments or its POS system). Unlike the other 2 options, WooCommerce needs to be installed with WordPress. That means you have to manage your own web hosting. If you don’t mind doing this, or if you plan to use your blog as one of your main marketing tools, then WooCommerce can be a great option as well.
As you review each option, start checking for themes. A premium theme will help your eCommerce store look professional while also keeping your costs down (premium themes are generally affordable alternatives to hiring a web designer to develop your store for you). You can easily track these down by performing a search with the query “[ECOMMERCE PLATFORM YOU’RE USING] premium themes.” (For example, “Shopify premium themes.”)
Free themes can also work if you plan to use a very minimalist design and you’re capable of doing changes on the front end-otherwise, stick with premium themes.
If possible, you can hire a freelancer to customize your theme a little bit without taking on the cost of hiring a full-time employee. Once again, you want your store to look unique and customized to your brand—a freelance, front-end developer from a site like Fiverr or Upwork will help you make these changes for a reasonable fee.
Check for available plugins or apps on each platform-these apps will help you increase the functionality of your site. The 3 eCommerce platforms mentioned above have an extensive library of great apps to use.
Once you’ve decided on your platform, open an account (all platforms offer free trials) and get ready for the launch.
Step 2: Choose a Launch Date
The negotiation with your suppliers will likely take a few weeks, if not months, from the moment of your first contact until you have their products in your warehouse.
While you manage the supplier’s relationship and logistics, you need to start preparing for your online boutique launch. There’s nothing worse than launching an e-commerce store to the sound of crickets.
It’s better to start sooner than later, so to begin, pick a launch date. You want to pick a date that’s both realistic and challenging-you want motivation, but also to be confident you’ll have your products in stock by that date.
Step 3: Add Products, Photos, and Copy
Start adding your site’s copy, your products, and your product copy. If you have one product, this will be relatively easy. If you have dozens—or even hundreds—then this will take you some time.
Even if you source products from other retailers, you want to take your own product photography to avoid having the same photos of competitors that sourced products from the same vendor. Even if you’re offering a shared product, you want your business to stand out.
There are many companies that provide outsourced product photography, like ProductPhoto.com and Pencil One. All you’ve got to do is send them your product and get them to take the photos and edit them for you.
You also want to write your own product descriptions. This is really important to your online store’s SEO success. If you have the same product listing copy as another website, Google will list your page as having a “duplicate copy.” Search engines don’t see a duplicate copy as valuable. As a result, it will be harder for a customer to find your products.
If copywriting isn’t your specialty, you can hire a freelance writer to help with product copy and even content marketing efforts. Freelancers, again, can help you maintain exceptional standards without taking on the added cost of hiring an employee. If you’re looking for a freelance copywriter, start by asking your network for recommendations. It’s best to go with a writer whose work you can trust, even if it means paying a little more upfront. Freelance platforms like Upwork and Fiverr have tons of writers willing to work for cheap, but they can be hit or miss in terms of content quality.
Step 4: Create Social Media Accounts
You want to create accounts on social media prior to launching your online store. Facebook, twitter, and Instagram all have benefits for small businesses. Instagram, specifically, can be the most beneficial for an online shop.
You can use these networks to build an email list and a following so that by the launch date, you can get a few sales right away. That’s what Tania Eves did when she launched her store Me and the Brave, something that allowed her to become profitable the same day of her launch.
Step 5: Make a Test Purchase
Test a purchase through your eCommerce business to ensure that all steps of the buying experience operate as expected. Make sure that the post-purchase page and emails look and work fine, and that your backend logistics system also triggers the purchase correctly.
Step 6: Develop a Marketing Plan
As we explained before, a marketing plan brings clarity to your company. A marketing strategy will help you understand how you’re targeting your messaging so you can become more effective when you launch.
One popular tactic when developing a marketing plan is to create a buyer persona. This is basically an abstraction of your ideal customer so you can customize your marketing to them. Ideally, you’d want to survey people in your industry or even interview people. You can also use a mix of competitor research with online customer research. The latter includes looking for comments in popular Amazon products to find problems, ideas, and general feedback.
For example, if you were to sell a multivitamin, you could find other similar products on Amazon and see how many people complain about these products:
As you can see, this person doesn’t believe any vitamin is complete for her daily needs and finds that standard vitamins in a pill form make her sick. This is great feedback you can use in your marketing copy—whether that’s your product copy, your email, your social media, and more.
What’s more, you want to define the top marketing channel you will use to reach these buyers. The most common include:
- Facebook ads
- Email marketing
- Blogging (in your own site)
- Guest blogging
All of these channels have their pros and cons. Whatever channel you decide to use, stick to no more than three and master them first, instead of trying to do everything at once and spreading yourself too thin. Knowing how to edit and direct your efforts is key to building a successful online store.
Step 7: Launch Your Online Store
This is the moment of truth: time to launch your e-commerce store. On its own, this moment doesn’t require a lot of work. All you have to do is make your store visible to the public, but there’s a whole lot more behind this simple process that you need to consider before calling it a day.
The marketing plan you developed before will be used on this day to get as many people to check your site and, hopefully, make a purchase. For example, if you have decided to write a few guest blogs on top sites in your industry, make sure they all fall on the same day so the traffic from the blog goes to your digital product listings.
What’s more, you want to send a notification to everyone on your email list. Tell them that you’re launching your store and that your products are ready to buy. You can also consider doing a launch promotion, which includes limited-time deals and discounts for new customers.
There’s a lot you can do-what matters is that you get as many people to your store as possible and get them to purchase. Plan accordingly, and hustle your way to success. For more information, check out this in-depth guide on how to start an e-commerce business.
What to Do After Your Online Store is Up and Running
So you launched your online retail business. What now? To start, you’ve made it, celebrate it! Pop a champagne bottle, get a coffee at your favorite place, call a friend—you name it.
Once the excitement wears off, you’ve got to remember that you run your own business now. This means you have to think and act as a business owner. Your products need to be properly restocked. You need to offer customer service. You need to refine your marketing plan.
Test, analyze, learn, iterate, and grow.
That’s how you will make your online retail business a success. You already have the blueprint, now it’s time for you to get started.
Are you planning on starting your own online store? Launched one recently? Let us know how it’s going in the comments below!
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