People have been buying products from retailers ever since humans started to live in towns and cities. From the Assyrians to the Babylonians, Greeks to the Romans, to industrial cities and beyond, opening up a shop is one of the most common and fruitful forms of entrepreneurship in history.
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.
But in 2020, 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 a retail business online, no physical store or capital costs required.
And it’s increasingly common for shops to start up virtually, and eventually open up IRL storefronts (Warby Parker, Casper, Bonobos, etc.).
If you want to learn how to start an online retail business from scratch, we’ll show you an exact step-by-step plan to get it done.
Table of Contents
Step 1: Define Your Industry
Any online retail 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.
Your job starts by brainstorming a list of potential industries you’d like to operate in. There’s a lot you can do to find your industry, and honestly, there’s no right or wrong answer as to which one you should choose.
Some questions you can ask yourself include:
- 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 do some competitor 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—that’s a pretty bad value proposition—but to see what’s working. From there, you can start brainstorming unique potential ideas to stand out and serve this industry.
Also, 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, statistics, etc.
The studies you find will show you what experts say about it and whether it makes sense to start your online retail business there.
Another great way to research an industry is to read its journals. That is, the magazines, blogs, podcasts, and journals that report the latest news on it.
Leading keywords work like a proxy for popularity and interest. In the example above, you can see a lot of people search for nutritional supplement, which means that people are curious about this topic and are potentially interested in buying products related to it.
Step 2: Look for Products
When selling products online, you have two roads to choose from:
- You can manufacture your own
- You can sell other people’s products (also known as “reselling”)
For the purposes of this article, we’ll assume you will be reselling other companies’ products.
You can manufacture your own, and this is something Gretta van Riel, instructor of our flagship course Start & Scale, recommends doing for many reasons that go beyond the scope of this piece.
But to simplify the process—which requires developing a blueprint, testing, manufacturing, doing quality control, and working the logistics—we’ll focus on reselling alone.
To find products to resell, you need to look for products you’d like to sell and then find its suppliers.
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.”
This search query would bring you a whole lot of potential products to sell. Your job is to make a list of the products, and then find the suppliers or manufacturers.
Then you’d 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.
Look in their website if you can find any information on stocking their products. For example, I found Klaire Labs has a list of official international suppliers but not US-based ones.
If you were planning to resell their products in the US, it may mean you will either have to deal with them directly or that they only sell their products and don’t work with third-party resellers.
Whatever the case, make a list of the products you like and start looking for the companies and distributors who sell them. Later on you will see how to negotiate with them. All you want to do now is to know who to contact.
Step 3: Choose the Right Products to Sell
One of the key problems new ecommerce 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 in Step 1 should shine a light on the products people are buying or could be buying in your specific industry.
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.
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.
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 ecommerce workbook). The goal isn’t to sell the same products sold in Amazon, but the same type of product.
Also, 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.
Start 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.
Following the company found in step #2, Klaire Labs, I found that they likely make less than $1 million in revenue. This data comes from a business analytics company called Owler which provides this type of data.
While this is just an estimate, it can give you a good idea of the size of a company. If you’re feeling like you are in way over your head at this point, don’t fret. Suppliers will likely want to do business with you.
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.
To help you out in your approach, you can use this sample template:
Hi VENDOR NAME,
My name is YOUR NAME and I’m a purchasing agent for YOUR COMPANY. We are interested in carrying many of the items that you have to offer.
Specifically, I would like to get pricing and availability for the following items:
* Products #1
* Products #2
* Products #3
If you could send us more info as well as your product catalogs and MOQ we would greatly appreciate it.
You won’t believe how responsive some large companies can be with entrepreneurs like you, and how friendly some others will be.
Be open to learn and negotiate, and soon you’ll be mastering the art of supplier negotiation.
Step 5: Develop a Brand
No matter how great your products are, if you want to succeed with your online retail business, you want to have a strong brand around it.
That means, you want to have a great 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 in 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 branding and use them as a guide to your own company.
Step 6: Open an Account on an Ecommerce Platform
The next step to starting your online retail business requires you to open an account with one of the ecommerce platforms and set up the store. This is the step most people focus their efforts on, but actually, it’s not that important.
I remember when I started my own ecommerce store years ago, I spent lots of time reading the feature pages of the largest ecommerce platforms, trying to open an account with the right vendor.
In all honesty, this was a big waste of time. Most popular ecommerce platforms—Shopify, BigCommerce, and WooCommerce, among others—have pretty much the same 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’s in-house payment gateway or its POS system).
WooCommerce stands out from the first two as it has to be installed on a WordPress blog, and that means you have to get your own 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 analyze each option, start checking for themes. Do a Google search that includes the ecommerce platform and the query “premium themes.”
The reason you want to use a premium theme (paid, but not too expensive) is that it will help your store look professional. Free themes are alright 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.
Also, if possible, get a freelancer to customize your theme a little bit. 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 a reasonable fee.
At the same time you research themes, check for available plugins or apps on each platform—these apps will help you increase the functionality of your site.
The three 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 7: Prepare Your Store for Launch
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 launch. There’s nothing worse than launching an ecommerce store to the sound of crickets. Been there, done that.
It’s better to start sooner than later, so to begin, pick a launch date.
There’s no rule that says you have to launch your store a certain number of days after you opened your ecommerce platform account. Rather, 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.
After you picked a date and opened an ecommerce platform, you need to start adding your site’s copy, your products, and their 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.
An important note to consider is that because you’ll be reselling other companies’ products, you’ll get the same product photography and copy from them as your competitors.
For that reason, it’s much better if you take or commission your own product photography and write your own copy.
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.
Freelance copywriters are also abound. Just check the same freelance platforms mentioned before—Upwork and Fiverr—for affordable copywriters to help you out.
Another important note is that you should open a few accounts on social networks like Facebook, Twitter, and Instagram well before your store launches. From our experience, Instagram is the most recommended for online retailers.
In either case, you want to use these networks to build an email list and a following so by the launch date, you can get a few sales right away.
Finally, before moving on, make sure to test a purchase. 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 8: 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 with 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. But you can 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 for other similar products in 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 standard vitamins in 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 channels 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.
Step 9: Launch Your Store
This is the moment of truth: time to launch your 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 in 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 go to your site.
What’s more, you want to send a notification to everyone in 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 include 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 ecommerce business.
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 ecommerce store? Launched one recently? Let us know how it’s going in the comments below!