How To Set Up Your First Online Store

man preparing orders to ship for his online store

As the pandemic continues to disrupt workplaces and personal finances, many people are looking for new ways to supplement or replace their income. While setting up an online store may be easier (and cheaper) than creating a physical retail space, it can still be a time-intensive process filled with potential setbacks.

Here, we’ll cover the big decisions you’ll have to make—and common setbacks to watch out for. We also asked several people who have experience building, running, and helping others create ecommerce stores to share their advice.

Pick a Platform

Before you can set up an online store, you need to decide where you want to sell your products and what you want to sell. There’s no “right” answer, but there are pros and cons to each.

When it comes to creating and launching your store, you can:

  • Sell products on an existing website, such as Amazon, eBay, or Etsy
  • Use an ecommerce website-builder, such as Shopify, SquareSpace, or Wix
  • Create or hire someone to make a website and purchase hosting separately

“In my opinion, it's better to set up shop in an existing marketplace,” says Jason Butler, who runs My Money Chronicles in addition to selling various products online. “It's less work because most marketplaces have an easy system or template for you to create a store.”

Steve Chou, founder of MyWifeQuitHerJob.com, a site that teaches people how to sell physical products online, also suggests starting on an existing platform. “If you are new to ecommerce, it always pays to start out on a marketplace to validate your product before spending the time and energy on your own website,” Chou says. “ After all, there's a much steeper learning curve when selling on your own site.”

However, there are benefits to creating your own website instead of, or in addition to, listing your products in existing marketplaces. “A smaller craft business can do well on Etsy because it puts you into their search engine, but if you’re trying to establish a brand you’ll want your own site,” Erika Franchuk, who builds and optimizes websites, including online storefronts, for clients.

The upfront cost of getting your store running will depend, in part, on your choice. Fortunately, it doesn’t have to cost a lot to start.

Franchuk says some of the custom website options cost less than $50 a month if you do it yourself. Although, be prepared to spend thousands if you want to hire someone else to set everything up for you. Additionally, you’ll need to pay for the products you’re making or buying (and then reselling), plus processing fees on the sales.

Using a marketplace gets rid of some of those costs, but they’re not free. In addition to payment processing fees, you may have to pay fees to list your products, and the site may keep a portion of your sales.

Choose a Product Type

Product and market validation can be just as important as figuring out where to create your online store. Similar to choosing a store, there are a few broad categories to consider before narrowing in on your specific products:

  • Custom or handmade products
  • Reselling existing products
  • Creating private label products

If you have a passion project or hobby—such as sewing masks or making jewelry—then you may have already chosen your product type. However, you could do more research to figure out what types of similar products are selling well and where to set your prices.

Reselling existing products might seem like a wacky approach, but some people make a lot of money—and create entire businesses—out of buying clearance items at big box stores and reselling the products online. The “retail arbitrage” option might not be as creative as making handmade goods at home, but it’s a competitive and potentially profitable business.

Creating your own private label product can be more complicated, but also more rewarding. It involves working with a manufacturer to create products with your label. If you’ve ever come across dozens of products on Amazon that all look almost exactly the same, that may be because the same manufacturers are creating similar (or the same) products with different labels on them.

The benefit of having a private label offering over retail arbitrage is that you can distinguish your products from others. For example, if you find exercise bands are selling well because many people are working out at home, you could sell the same bands (with your label printed on them) and include an organization bag and pamphlet with example exercises to help make your offering stand out.

Research Specific Products

Product research continues by narrowing in on exactly what you want to sell and figuring out if people are willing to spend enough for you to make a profit.

Chou uses research tools (there are many options) to learn what people are searching for and buying online both on Amazon and Google. However, he suggests someone who is new to selling online do a simple test.

“Try to sell something close to the product that you want to sell even if you don't have the product in hand,” says Chou. “If someone buys, then buy the product from the store and ship it to the customer. You won't make money this way, but you'll gain information.”

Franchuk suggests starting with something you’re already interested in as you can use your experience and passion to drive your decisions. Still, you’ll want to research how well similar products are selling. Or, if you’ve created a new product or service, conduct research of your own. “That can include creating a small focus group of people who are similar to your ideal customer and getting their feedback,” says Franchuk.

Butler has seen the downside of trying to start too quickly. “I see a lot of people creating a store and posting items without during the research,” he says. “They try to sell items like Beanie Babies or Disney VHS tapes for thousands. Then they get mad when the items don't sell.” They could have saved a lot of time (and their listing fees) if they’d done the research upfront.

Attract Customers

Whether you have your own site or list products on a marketplace, you’ll need to get your listings in front of customers and compel them to buy.

“I always try to build an audience of loyal fans through content,” says Chou. “Paid advertising is a must-have tool for customer acquisition as well.” For example, you may be able to pay for Google ads and have your website show up in search results for similar products. Or, marketplace sites may let you pay to have your listing show up higher in their internal search results or on similar products pages.

Marketing can take different forms as well. “I think the best way to attract customers is to let people know what you're doing,” says Butler. “I share my eBay and t-shirt store links with my friends and family on my social media profiles.”

Franchuck has a slightly different take, as her clients run their own ecommerce sites. “If your website looks generic, or even worse—spammy, people aren’t going to feel comfortable placing an order from you,” says Franchuk. “Have a clean site, take great pictures, create an about page, and stay active on social media.”

When you make a sale (congratulations!) you’ll also need to get the product into the customer’s hands. Generally, this means packing and shipping the product yourself. Although, some people use the “Fulfilled by Amazon” service or dropshipping to sell products online without having to do the packing and shipping themselves.

Avoiding Common Mistakes

We’ve taken a high-level approach to the big decisions you’ll need to make, but what about the things you shouldn’t do?

  • Neglecting customers. “The most common mistake I see is neglecting your existing customers,” says Chou. “A customer who has purchased from you once is 65 percent more likely to buy from you again as opposed to a cold customer. Make sure you have a way to bring customers back to your store.”
  • Assuming customers will find you. “I think the biggest one is taking an ‘if you build it, they will come’ mentally to their online shop,” says Franchuk. “That might be true if you open up a main street location in a small town, but there are so many websites on the internet that unless you’re doing something radically different it’s tough to get noticed.”
  • Thinking you can get rich quickly. “I see a lot of people who don’t realize how much time and effort it takes to get established,” adds Franchuk. “For most store owners it takes months of time, marketing, and patience before you start seeing any money coming in.”
  • Investing in too many courses or tools. Many people make money helping teach others how to sell products online. While research and education are important, be careful about spending a lot of time—and a lot of money—on courses and tools.
  • Going too quickly, or not at all. Butler sees two common mistakes, both related to timing. First, people who rush to list items or create a store without doing any research. And second, people who never start in the first place. “They say that they want to do something, but they never take action. Take action by listing your first item today.”

Finding the right balance can be tricky, particularly when there’s an overwhelming amount of information available. So, set yourself up with a goal for getting started. Perhaps that’s Butler’s advice to list an item today. Or, maybe you give yourself a week to do as much research as you can, and then set aside $100 to create your first store or list your first items.

Looking for simpler way to create extra cash? Check out our guide to starting a side hustle.

Tagged in Earning extra income, Inconsistent income

Louis DeNicola

Louis DeNicola is a personal finance writer with a passion for sharing advice on credit and how to save money. In addition to being a contributing writer at MMI, you can find his work on Credit Karma, MSN Money, Cheapism, Business Insider, and Daily Finance.

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