Start an Online Store: 4 Step Business Guide

start an online store ecommerce business guide
I'm a marketing guy, a pizza enthusiast and San Francisco resident. Also, I started this blog, Growth Marketing Pro and built it into a 6-figure passive income business in 18 months.
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Starting an online store is a great way to generate income and pursue a passion.

I took the plunge in 2012, and launched my own store called BeGood. I went from a corporate office stiff to an entrepreneur overnight and haven’t looked back since.

starting an online store gif

If you’re ready to start your online store right now, all that’s left is choosing the right ecommerce platform to launch with.

[also read: Bluehost vs Magento vs WooCommerce vs BigCommerce]

But if you want to start an online store and grow your online store into a smart business that makes money online and fulfills a passion, keep reading.

Starting an Online Store: Background

Some people just “get” ecommerce.

There are great minds who start multiple ecommerce companies and seem to succeed every time they do it.

  • Josh Abramson is an ecommerce entrepreneur who consistently strikes gold. He started CollegeHumor, BustedTees and TeePublic. Each of them grew into a multimillon dollar business.
  • The guys who started Warby Parker, recently valued at $1.2 billion also started Harry’s, the men’s razor company valued close to a billion dollars.
  • Brian Lee, the founder of LegalZoom, ShoeDazzle and The Honest Company, ecommerce businesses each valued at over $1 billion.
  • And, of course, the people behind Everlane, which grew from nothing to over $100 million in revenue in just a few short years.

I don’t have quite the same resume.

But, I was able to grow my online clothing store from an idea to a business generating millions in revenue.

Equally important, I’m a student of ecommerce. This stuff fascinates me. I’ve interviewed founders, spoken with early employees and never turn down an opportunity to speak with a new store owner.

I’ve boiled down the winning formula to four steps.

Together, these four steps are the secret sauce for successfully launching an ecommerce store.

ecommerce store secret sauce

Starting a successful online store is about:

  1. Creating a product people love
  2. Choosing the right online store builder
  3. Marketing cheap and intelligently
  4. Ensuring your business economics make sense (admittedly, I learned a few of these lessons the hard way)

Whenever possible, I’ll provide examples to illustrate best practices. Ask questions in the comments!

Grab a seat and learn yourself something.

1. The Right Product for Your Online Store

The first and most important part of online store success is to sell an awesome product.

Ecommerce is just the medium you use to share your product with the world.

The product is what will make your customers swoon and keep coming back for more.

So whatever you’re selling — clothing, jewelry, crafts, arts or otherwise —  your product must:

  • Function properly
  • Fit well
  • Not be hideous
  • Serve the purpose it’s supposed to serve

This is all the obvious stuff.

So what else should your product do?

Your Product Should “Carry” Your Brand and Optimize for Word of Mouth

Have you heard of Dolls Kill or Chubbies?

They’re both outrageous online stores that cater to the 15-25 year old population.

They’ve made niche products that young consumers fell in love with… and told their friends about.

Dolls Kill sells clothing and shoes that not even Rihanna would wear to Coachella.

how to start an online store

Chubbies is a men’s online clothing store that resembles a cross between Tommy Bahama and Jimmy Buffett’s Margaritaville.

Both companies are making tens of millions of dollars now. But they made their first millions via word of mouth.

This means that consumers liked the product so much that they told their friends about it, and those friends told friends and so on!

If your product sells itself because of visual appeal, quality of the object, uniqueness or some other reason — you’re in a good business. Niches are fine. In fact, niches are great.

starting an online store alex and ani
Alex and Ani made collectible, affordable charm bracelets that east coast women fell in love with.

Word of mouth is the secret to many successful online stores. When you have an audience that is willing to tell their friends and family about your brand, you get lots and lots of customers for cheap!

That usually doesn’t happen unless your product is a niche, unique or in some way jarring and memorable.

How do you know if your product has some of these qualities? Ask yourself:

  • Is it already in high demand from your friends, family and even strangers?
  • Does it have anything visually crazy about it — enough so that strangers will stop and say, “oh where’d you get that!?”
  • Is there a really cool story about your product that someone might read and want to tell a friend about?

Your product should be differentiated in some way.  In my opinion, the weirder, the better. You want people to remember you and your store!

Here are some simple ways you might consider differentiating:

  • If you craft ornate jewelry, make sure your pictures highlight the care you take to make your product — your process is uniquely yours so the photography should reflect this
  • If you’re selling funny tee shirts, your store better have some real quippy copy on the homepage and product pages so that readers chuckle while browsing
  • If you’re selling baseball memorabilia, you might consider putting a free baseball card in every order — something to make your customers remember you and tell friends about your online store

Optimize for word of mouth by making your product unique.

Other unique offerings that have made millions include Pura Vida Bracelets, Cards Against Humanity, Diamond Candles, Chivery and The Citizenry.

how to start an online store word of mouth.001

Hero Product(s)

Another way to optimize your product offering is to make sure you launch with a hero product.

A hero product is the product that defines your store and embodies everything you stand for. Hero products give your customer something to latch onto and tell their friends about. Again, it’s all about word of mouth!

Plus, if pursuing a little press is part of your plan for growing, it gives you something to talk about with journalists and bloggers every time.

The internet is a very visual place. Think about the crazy shit you remember on Instagram/Facebook.

weird online store products.001

One mistake I made as an entrepreneur was launching without a hero product. Eventually, my company, BeGood stumbled upon tie dye. It embodied everything my brand stood for: eco friendly and visually wild.

While our tie dye tees weren’t always our #1 best sellers, it gave our brand a great way to tell a story, curry favor with the press and gave our customers something to remember us by.

create an online store hero product

2. Choosing Your Online Store Builder

If you have a product that is ready for the internet, your next step will be to choose the right online store builder and get your website live.

Fortunately, this part is really simple.

Make Life Easy

If you’re just dipping your toes into ecommerce, you can start by selling on Etsy, Amazon or Ebay.

These are real and viable solutions. Some people make good money selling on these platforms.

While they’re pretty easy to set up, there are a few downsides to selling on them:

  • Your website doesn’t live on its own URL, rather it lives on amazon.com or etsy.com
  • Your website cannot look and feel as you want it to
  • You can’t collect customer emails or really interact with your customers in any substantive way
  • Those companies take large fees from their merchants

So while it’s an option, I don’t recommend it.

In today’s world, online store builders (also called ecommerce platforms) make life way easier. In about the same amount of time it takes to register and start selling on one of the above platforms, you can create your own store from scratch.

The big four in online store builders are:

  • Shopify
  • Magento
  • WooCommerce
  • BigCommerce

To be honest, I recommend Shopify 9 times out of 10, but read about all four solutions here.

Whatever your choice, optimize for ease. You don’t want to waste your time building custom solutions for your store — or worse, hiring engineers to do the same.

You need to spend time fine tuning your product offering, managing inventory and marketing your fabulous offering! All of those platforms (and Amazon, Ebay and Etsy) allow you to create a store without any coding background at all.

Ecommerce Website Design

Once you’ve chosen your builder, you’ll want to design your store. The good news is that all of the big four online store builders have quality templates that make it easy for you to very simply design your ideal store.

You will simply choose a template — which is a blank canvas — and plug in your favorite colors, photos and text to give your store the look and feel you want.

For instance, Shopify has hundreds of out-of-the-box options.

shopify template designing a store

Designing your web store used to be a difficult process that would involve designers and engineers. It used to be way more expensive.

Today the process is much easier, but you should still remember a few fundamentals of design.

  1. In general, it’s best to stay within the lines. Humans are creatures of habit. We’re all accustomed to shopping on Nordstrom, Amazon and Zappos. They’re all fairly standard sites and we’re used to that. Sure, the colors and images are different, but the product pages, checkout experience and general structure are very similar.
  2. Use slick photography. If you’re going to do anything well, make your product photographs compelling. At BeGood, we would A/B test photos to optimize for purchases. Sometimes, simply changing to a better product photo would increase purchases of that product by 200% or 300%.
  3. Have an “about us” page. It doesn’t have to be anything fancy, but talk about who you are and why you’re selling online. People have millions of options at their fingertips. Tell them why you and your online store are important.

Technology today is amazing. You can build an online store in just 15 minutes.

In fact, in this Shopify review, I did exactly that.

Learn how to do that yourself in my Shopify Review, Setup and Pricing.

3. Marketing Your Online Store

Once you have a product and an ecommerce store to sell it on, you’re ready to begin racking up sales.

When you’re starting from scratch, getting your first ten or twenty sales feels like an insurmountable feat.

“Marketing” an online store sounds more complicated than it is. It’s about finding inexpensive ways to generate sales for your store.

Some of the first things you should do are simple:

  • Email everyone you know when you launch. Everyone. Not only the people you know. Reach deep into your contact list and let them know you’re open for business!
  • Post on social media and ask your friends to do the same.
  • Contact any bloggers or influencers in your space, local publications or anyone else who might cover you. Spend time courting these folks — press goes a really long way.

Many of your first sales will be friends and friends of friends. Don’t underestimate these precious early customers. If they have a fantastic experience, they’ll tell their friends about your product.

After the obvious stuff, there are a few tactics you’ll want to look into.

Affiliate Marketing

Affiliate marketing is a topic we’ve written about extensively on Growth Marketing Pro. Basically, affiliates are friends — websites, blogs and salespeople — who you pay when they send you a customer who checks out on your online store.

At my company, BeGood — which sold eco friendly clothing and home goods — some of our earliest affiliate partners were eco bloggers.

A simple Google Search reveals hundreds of eco friendly influencers on the web. Find their contact information, reach out and have a real conversation with them. In many cases, a conversation could lead to a product review and even a pay-per-lead affiliate agreement.

Affiliates are great because you do not pay until they send you a customer. This means no upfront marketing cost!

Read The Secret Growth Hack to Scaling an Affiliate Program if you’re interested in learning more.

Press

One of the first ways you should consider marketing your online store is with the help of some good old fashioned press coverage.

Garnering press is very similar to finding affiliates.

It’s as simple as knowing who the influencers are in your space and reaching out to them with a compelling story.

BeGood was able to get in Refinery29, Marie Claire, Wall Street Journal and other publications.

starting an online store and getting press

But you don’t even need to get the attention of big publications.

Some of our best placements were in smaller blogs that just so happened to share the same audience as BeGood.

Learn more about press best practices in The Most Important PR Tips for Your Startup.

Email Marketing

One of the biggest advantages online businesses have is email marketing.

At BeGood, 22% of our sales came from sending pretty marketing emails to our email list. Email marketing is your opportunity to speak to your customer, showcase your newest products, send updates and maybe even advertise sales.

The good news is that email marketing is easier than ever.

Online store builders like Shopify have out-of-the-box plugins that allow you to collect customer email addresses and then send beautiful emails.

If you want to get a little more sophisticated (and pricey), the next place to look is paid marketing.

Some businesses lend themselves well to paid media like Google Adwords and Pinterest ads. The problem is, they require money to test and make work. Starting out, I recommend Facebook ads.

At this point, you’ve probably heard of Facebook advertising. Some online stores, like Military Hippie crushed Facebook ads. They grew from $0 to $1.6 million overnight.

Making this happen, required research, practice, great photography and some luck, says founder, Karolyn Fox.

I only suggest trying Facebook advertising if you have the time to devote to figuring it out. The good news is Growth Marketing Pro has you covered.

Read 7 Tips for Scaling Ecommerce Facebook Ads.

4. The Business Economics of Starting an Online Store

You may not care to think about the financials of your business, but it’s really important.

I’m going to really simplify things so even the stupidest idiots can understand.

starting an online store trump

Take the 1) money you make from your business and subtract all the 2) expenses of running your business. If that number is positive, you’re making money, if it’s not, you’re losing money.

The good news, is that when you start your online store, the stakes are low. If you’re a smart entrepreneur, you likely have just a few thousand bucks set aside to start your business.

Remember to think about these expenses:

  • Taxes! If you’re an individual, these will just be at your individual tax rate.
  • Cost of shipping goods to customers. Depending on size of your goods, this ranges from $2 for jewelry, $6 for clothing and other small-ish goods and up to $20+ for bulkier, weirder items.
  • Merchant fees: most online store builders take 2%+ of your sales for their services. This is a way better deal than selling on Etsy, Amazon or Ebay.
  • Marketing. But you know how to keep those expenses low now 😉

In order to optimize the financials of your business I highly recommend you do a few things:

  1. Keep your margins high. Gross margin is the amount of profit you make off of every sale. For instance, if you get a tee shirt from supplier for $10 and sell it for $20, your margin is 50%. If you buy for $10 and sell for $30, your margin is 67%. Put differently, 67% of your $30 tee shirt is profit, 33% is the cost of buying the tee shirt. Obviously, the higher your margins the better. It’s always better to err on the side of higher margins. You can always offer promotions and discounts to move inventory if the price is a bit too high. Note: the true formula for gross margin % is (Revenue – Cost of Goods) / (Revenue).
  2. Manage your inventory intelligently. This advice is simple: don’t buy too much inventory. You can always buy (or make) more. You cannot make it disappear. Inventory = cash. You shouldn’t need more than a few thousand dollars worth of inventory to launch an online store. Even if you have some disappointed customers waiting for new product, that’s better than having money tied up in dead inventory. Plus, the longer they wait, the more rabid customers become for your product!
  3. Optimize for LTV. Remember this: Ferrari is worth over $20 billion and they have just a few thousand customers per year. 20% of your customers will generate 80% of revenue. Treat them like gold and you will be rewarded. If you’re going to spend marketing dollars or customer support time somewhere, spend it on your highest value customer

Managing your finances shouldn’t be a full-time job.

At small scale, there’s not much to worry about. Again, the stakes are low.

But if you scale your business to a size that makes financials difficult, invest in a bookkeeper or accountant. Trust me, the time you’ll save is well worth the few bucks you’ll spend on their services.

Conclusion

Starting an online store can be a lot of fun. It can also be lucrative if you do it right.

Remember the secret sauce:

ecommerce store secret sauce

  1. Your product must be stellar
  2. Choose the right platform to build your store on
  3. Market your store cheap and wisely
  4. Wrap your hands around at least the elementary financials of your business

Most of all, enjoy starting your online business. It’s a big step and you should be proud!

If you’re ready to get going, pick your online store builder now:

Shopify vs Magento vs WooCommerce vs BigCommerce

Disclaimer: We occasionally link to products and earn fees. We only review products we trust. And we only trust about 10.

*Articles on this blog contain affiliate links that GMP receives a small commission from at no cost to you. We only recommend tools we trust. And never ones we don't trust.


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