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How to Start an Online Store: Check Out Our In-Depth Guide!

20-minute read

A standing in a storage room of boxes looks at a smartphone. She stands in front of a laptop
Allison Grinberg-Funes

Allison Grinberg-Funes

30 November 2021

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You've been on the other side of the checkout cart and now you're ready to switch it up. Setting up your online store helps pave the road to success. It's important to understand what's in store (pun intended).

In this guide, we'll review the process of how to start an online store, from how to know if you're ready to how to execute each step along the way.

It's a lot of information, so we suggest reviewing it one bit at a time. Learning how to set up an online store is a process. Use the links below to jump to the content you're most interested in.

5 Signs You're Ready to Start an Online Store

How to Start an Online Store: The 10 Steps You Should Follow

5 Signs You're Ready to Start an Online Store

1. You have a product or service you are ready to sell.

There's a chance you already have a product or service that you are ready to sell to customers. You may already be selling something, whether it be via word-of-mouth or at local farmer's markets and craft fairs.

Or you haven't started yet but you have an inkling that an online store is the right selling method for you.

Both are good signs you're ready to take the next steps.

2. You have money saved to help you with setting up.

Ever heard the phrase, "It takes money to make money?" In the case of setting up an online store, having funds saved can certainly help.

There are different things you may want to spend your money on along the way, such as:

  • Paying for your domain and hosting
  • Hiring a designer to help with a logo and brand
  • Keeping your inventory stocked
  • Shipping your products
  • Marketing costs (e.g., social media paid ads)
  • And more

The amount of money you put into your online store is up to you. But if you have a foundation to stand on now, you'll likely be more prepared for the costs that may arise.

3. You are ready to commit the time.

When you think about how to start an online store, it's important to consider your bandwidth. Both setting up and maintaining your online store can take a good amount of time.

Some changes you may make over time are:

  • Updates to available inventory
  • Pricing changes
  • Holiday specials and deals
  • Updating payment methods
  • And more

It may take you a bit longer to make these changes until you're used to navigating your online store.

That leads us to our next point.

4. You are confident to learn a new skill set.

If you have a business, you likely have a specific set of skills. But knowing how to start an online store and keep the business running over time is a learned skill.

You may be ready to learn how to set up an online store if you have the time (and patience) to learn how to navigate new technology.

5. You describe yourself as resilient.

Being a business owner takes perseverance and grit. But maintaining your online store takes you to a new level. If you're ready to take on challenges that operating a retail business online may throw at you, then read on.

Next, we'll cover the steps to take when you start an online store.

How to Start an Online Store: The 10 Steps You Should Follow

1. Decide what you want to sell.

We touched on this earlier when you were just beginning to think of how to start an online store. Do you know what you want to sell?

Get clear on what product or service you want to sell. Say you have a physical brick-and- mortar store. Do you want everything in your online store to reflect what you sell offline?

How you present a product or service online will likely differ from how you present it in a storefront. Consider if you want to sell your item in an online store and how customers may receive it.

2. Choose and register a business name.

Once you decide what you want to sell, it's time to choose and register your business name. Depending on your state and city/town, the registration process could differ. Carve out time for this.

When you're learning how to set up an online store, it’s smart to check if your desired business name is already registered, which can help to avoid confusion and lost time in the future. When you register your business with your state, you could learn that another business already has that name. In that case, you would likely need to come up with an entirely new name.

Your business name doesn't only impact your registration. Your domain name and social media handles also need to be unique to your business.

Learn more about how to name your small business here.

3. Write a business plan.

Do you have a business plan? If not, then now is the time to start drafting one. If you do, but you haven't included details about running your business from an online store, then it's time to revise.

Running an online store can be stressful and time-consuming. You may think that you know what your future plans are currently, but consider how easily things may change.

Maybe something changes in shipping costs and you have to adjust your prices. Or your dropshipping company changes their terms and you have to adjust.

A business plan is a map that can lead you in the direction you want to go. It also can help keep you accountable for what you want to achieve and where you may fall short. When you're looking into how to start an online store, it's good to get ahead of yourself and be prepared.

If you aren't sure where to start when it comes to writing a business plan, we have you covered. Check out our FREE downloadable small business plan template here.

4. Get a business license.

Once you register your business, it's time to get a business license. Even though it’s an online store, the state and local laws where you register your business determine whether or not you need to get a business license.

If you run your online store out of your home, it's likely your state may require e-commerce insurance. Check with your Secretary of State's office to learn more.

Having a business license can do a lot for your online store, beyond helping you meet legal requirements.

For example, having a business license can help you:

  • Gain the trust of potential customers
  • Secure financial support like loans, grants, etc.
  • Fulfill requirements of vendors or partners
  • And more

Each state has a slightly different business license application process. You can learn about getting a business license in your state here.

Generally, there is a fee for licensing your business. The cost of getting your business license varies, depending on where you are located. We suggest you give yourself time to apply for your business license so you can look into the process and fees.

Some states allow you to apply for your business license online, while others require you to mail in the application. Depending on your state's overall process, it could take up to two weeks or longer to get your license.

5. Get ecommerce business insurance.

You may be thinking, "Insurance? I haven't even sold and shipped an item yet!" We know. When thinking of how to set up an online store, this may not even be on your mind. But it's smart to get ecommerce business insurance coverage early on when you're learning how to set up an online store.

After all, once you get to the next step in this process, the ball really gets rolling. It's best to make the time now. But before we talk about getting ecommerce business insurance, let's talk a bit about why you may need it.

First, did you know that some ecommerce platforms, like Amazon, now require some of their sellers to have proof of insurance?

Beyond that requirement, there are several ways insurance could benefit you.

Having ecommerce business insurance can help you:

  • Comply with platform regulations
  • Earn customers’ trust
  • Get financial assistance like a loan or grant
  • And more

The great news? The search for ecommerce business insurance doesn't take long — less than 10 minutes, actually! And it's affordable, too, with general liability coverage starting for as low as $22.95/month*. That's less than the cost of most internet packages!

But every business owner knows that any cost adds up and impacts their operations. You deserve to know what a policy can help you with.

We'll go more in depth into how ecommerce and cyber insurance can benefit your business a bit later on.

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6. Choose whether or not you want to use dropshipping.

This is a decision that will impact your business as soon as you make your first sale. The business owner typically stores and maintains the inventory in a regular retail model. But with dropshipping, a wholesale company or manufacturer is the middle person.

When a customer places an order, the wholesaler fulfils the order. Then they send it to the customer on your business's behalf.

Dropshipping has advantages and disadvantages. When you're considering how to start an online store, you have to think of your specific business and its needs.

For many, benefits include not needing to spend money on overhead or space for storing inventory. And the money you do spend isn't breaking the bank. Generally, business owners pay for their domain and dropshipping subscription. This is typically a monthly rate that varies.

Dropshipping also makes it relatively easy for you to get your business started right away. And you can do it from anywhere with an internet connection.

But there are downsides too.

You have access to a larger variety of products. But you don't have much flexibility if you want to customize an item's design or branding. That's because many dropshipping companies will require you to order a specific amount of an item before they can justify a customization.

This process can make fulfilling inventory needs easier for you. But there are sometimes shipping logistic issues that will take time to resolve.

If you don't use dropshipping, there are other ways you can choose to manage your inventory. Learn about some alternative ways here.

Check out our dropshipping guide to learn more.

7. Decide which ecommerce platform to use.

You know you want to run an online store. But where from? There are several ecommerce platforms available to you as a business owner. Your next step is to decide which one you will use to run your business.

While you review your ecommerce platform options, ask yourself:

Do I want to self-host my platform or use a cloud-based platform?

Self-hosting can give you a bit more control over your store's operations and back end. But it also will take more upkeep and technical knowledge. You and your team will need to spend time on maintenance of your servers, where the platform is hosted.

If you use a cloud-based ecommerce platform, you won't be responsible for certain software and server updates. A cloud-based platform can save you a lot of time and frustration if you aren't tech savvy.

Is this platform good for what I'm selling?

How to set up an online store that customers love is a challenge. And every industry has ecommerce platforms that may be better suited for it than others. For example, if you sell clothing in your online store, then you may choose a different platform than a business owner who sells craft products.

That's because the ecommerce platform's features serve each industry differently. And every business is unique!

Is the platform mobile-friendly?

If you have a business website, you may already know what I'm about to say: mobile view matters.

Sure, there will be customers viewing your website from their tablet or laptop. But in reality, 65% of retail store visits are from customers on mobile devices. With such a high percentage, it would be silly to not consider how your store looks on a smartphone.

This is something you can highlight and observe when using your free trial.

Does the platform offer SEO tools?

SEO, also known as search engine optimization, is the marketing tool used to help customers find your store. Think of it like this: a customer does a Google or Bing search for something they’re interested in. They see the results and click on one that appeals to them.

Hopefully, your store is in the top results so that they click your link. SEO is what helps you get to the top of the list.

SEO tools can help increase the likelihood that customers will see and find your store. Some platforms have tools that help store owners with keyword research and other useful metrics.

You can learn more about SEO for small businesses here.

What integrations and plugins does the platform offer?

Think of how your online store may work together with other software and tools you use. Check to see if the ecommerce platform you're considering offers an integration with those software.

If you're using social media platforms like Facebook (now Meta) or Instagram to reach your customers, is there an available tool to link the two? Will the platform integrate with different point-of-sale (POS) systems?

You may not feel that many of the available integrations and plugins are necessary for you right now. But it's good to know what options are available in the future. You never know in what ways your business will grow and what can come in handy.

Does the ecommerce platform provide customer support?

Ecommerce platforms offer their customers a variety of capabilities. They often help with inventory management, POS systems, marketing functions, and more. But despite the capabilities, platforms aren't always easy to navigate.

There are times you may need to troubleshoot an issue. It's not hard to find yourself down a rabbit hole or at a loss for how to fix something.

That's what customer support is for. Choose a platform that offers accessible customer support. That way, when you need help in the platform, someone can easily assist you, and you won't waste valuable time going in digital circles.

Does the platform offer its customers security?

We mentioned the risks you could face when you own an online store business. And you want to prevent anything happening that involves sensitive information.

That's why you may want to consider an ecommerce platform that offers a Secure Sockets Layer, also referred to as SSL. In fact, many of the sites you use regularly likely use SSL. You can tell that by whether or not the URL has "http://" or "https://." If the URL contains the "s," then the site is secure.

That means it's encrypted, so the information that you and other people enter is shared safely with the company on the other side of that website or store.

If your platform didn’t have SSL, it could be easier for hackers to intercept your customers' personal and sensitive information.

You know what to consider when choosing the best ecommerce platform. Now let's review some that you can choose from. Keep in mind that this isn't an exhaustive list.

There are several available options you'll find when looking into how to set up an online store.

Here are a few well-known ecommerce platforms:

Shopify

Shopify is one of the most well-known e-commerce platforms in the retail industry. It's popular because it's easy for many business owners to use, even if you don't consider yourself super tech savvy.

It is an SSL platform, so you can rest easy knowing that the information your customers are entering is likely secure.

Business owners tend to love Shopify because it's mobile-friendly for store customers and for them.

Shopify allows you to easily manage and operate your online store business from wherever you get a Wi-Ficonnection.

You can integrate social media platforms like Facebook and Pinterest. If you are an Amazon Professional Seller, you also can connect your Shopify store to your account.

Finally, Shopify supports 100+ payment processors around the world. You may have a substantial amount of customers asking to accept a specific type of payment. With this feature there's a higher likelihood that you can accommodate their needs. In turn, you can open your business to a wider customer base.

Free trial: 14 days.

Pricing: $29/month for the Basic package (recommended for new business owners). Other pricing is also available when you grow your business and you have additional needs.

While available, you can save 20% by paying for your subscription annually.

Wix

Wix is known for its ability to help people easily create beautiful websites. What's lesser known is that Wix also offers an ecommerce platform for its users.

For online store business owners just starting out, Wix is ideal because it's easy to use. It comes with templates to easily build your site. The site offers 500+ templates to start with, and you can use them to create a storefront that appeals to your customers.

Wix has SSL for security and an SEO tool to help with search engine optimization. Wix helps you create an attractive online store with a well-organized back-end system.

In addition to the templates available, they also accept several different forms of payment. This means you won't have to jump through hoops to accommodate some customers.

Trial: Unlimited

You can start with Wix for free and upgrade to a business and ecommerce plan when you're ready.

Pricing: $23/month for the Business Basic plan. It's $27/month for the Business Unlimited plan, which Wix says is the most popular with its customers.

Once your business grows, you may choose to upgrade to the VIP plan, which is $49/month.

See pricing details here.

Squarespace

Squarespace is another easy-to-use option loved by online store business owners. Not only does Squarespace provide beautifully-designed templates, but their ecommerce store builders help get you up and running quickly.

This platform is great for business owners who are not only selling products but also services. And the good news? There’s no limit on how many items you can list, as product listings are unlimited.

From the onset of setting up your online store, you can accept payments via PayPal. When it comes to estimating overall price for your customer, there's also a handy shipping estimate tool.

We'll discuss the importance of shipping calculations later on. This capability is a huge value-add for your business. The more transparent you are with customers, the more likely they are to buy from your business.

Trial: Free for 14 days

Pricing: $26/month for Basic Commerce and $40/month for Advanced Commerce.

While available, you can save 25% on your Squarespace subscription by purchasing an annual plan. See more about pricing here.

8. Set up your shipping process.

You're probably used to paying shipping fees if you send a friend or family member a package. In that case, it's likely you didn't consider the shipping fee. But when you learn how to start an online store, you'll quickly learn that shipping costs are a huge factor in your operational costs.

Put some time aside to consider your options.

You can ask customers to pay shipping fees. But seeing a shipping fee increasing the overall cost of a product may cause a customer to abandon their cart before buying the item.

Instead, you can:

  • Bake the cost of the shipping into the overall product cost (we'll talk more about that in the next step).
  • Include part of the shipping costs in product prices (meaning both you and the customer would pay a bit of the shipping cost).
  • Offer discounts on shipping costs for customers who buy a specific dollar amount of products.

You may try out a shipping process for a time and find it doesn't work for you. That's OK! Many platforms allow business owners to change how they handle shipping, so your decision isn't set in stone.

9. Set your product prices.

Your shipping costs may or not play into your overall product pricing. Either way, though, taking time to do the math before setting your product price is important. How you price your products will impact how much profit your business will make and how much money you earn over time.

How you decide to price your products depends on a lot of factors like what your competitors are doing, what your overall business goals are, your desired profit margin, and more.

And there are several different pricing methods you can use to come up with your store's product prices.

Learn more about different product pricing strategies here. It's a good idea to consider your shipping costs in your pricing.

Once you have a strategy, plug it into the business plan you started in Step 3.

10. Upload products to your platform.

Once you have your pricing and shipping costs down, it's time to upload your products and their details onto your platform.

Each ecommerce platform's process for uploading a product will look a bit different. In general, here are some details to keep in mind when uploading your products:

Make sure your image quality is clear.

The images of products you display should be clear and crisp. Some platforms may have requirements for file size. When it comes to clarity, it's a good practice to use a high-definition image.

This way there's a higher likelihood that a customer can clearly see the product, whether they're viewing it on desktop or mobile.

And remember — take some time to make your product look good. Consider hiring a product photographer to help best portray your products.

Clear descriptions of your product and its image.

When you write your product description, include as many details as you can. Be mindful to not overwhelm shoppers. Make sure to include the product's name and use it in the description.

Detailing these sections of your site can help to improve your store's SEO. Even writing the alt text descriptions can help!

Not only can alt text increase the chances that shoppers will find your online store. This is also an accessibility-friendly practice to adopt.

Shoppers that may have visual impairments often can use alt tags to understand what an image depicts if they can’t fully view it, or if they are using a screen reader to shop.

Include important shipping or discount information.

When you're looking into how to start an online store, keep in mind that product details matter. Include any details about shipping costs or discounts in your descriptions. Sure, this may be apparent once a shopper is ready to check out, but it's helpful to say upfront.

This kind of transparency can go a long way in building your customers' trust in your company and brand.

Protect Your Online Store with Ecommerce & Cyber Insurance

Here are two types of ecommerce insurance coverage that you may want to consider:

General liability insurance

General liability insurance, which is also referred to as commercial general liability or GL insurance, is a type of insurance coverage that can act as a great foundation for your business's financial protection.

One of the more common claims is product liability. As an online store business owner, if you sell something to a customer and they claim the product caused harm or damage, they could sue you.

Remember, you're likely responsible for the claim and legal costs even if you're not at fault.

Let's look at a scenario:

Nancy owns a toy store and sells toys under her own label through her online store. A customer buys a toy for their child. Unfortunately, the child gets sick. After a trip to the emergency room, the child is fine.

But the customer sues Nancy for the child's medical bills. They claim the toy was made from a toxic material.

Without ecommerce insurance with general liability coverage, Nancy may have to pay her customer's medical bills out-of-pocket. If she had considered a general liability policy when learning how to set up an online store, she could be covered for the cost of the medical bills and legal fees if she hires an attorney (up to her policy's limits).

Another common claim is advertising injury. As a business owner operating an online store, you can face a variety of digital risks, like slander, libel, copyright infringement, and more.

For example, say Ken owns an online store and decides to advertise his product. He claims that his product is better than his competitor's product, which he says isn't safe.

Ken's competitor sees this advertisement and sues Ken for libel. The competitor claims that the advertisement caused him to lose business.

With general liability coverage, you'd likely be financially covered for the claims fees and the legal costs, up to your policy's limit.

Without a policy, you could face paying those fees out-of-pocket.

What happens if you have a physical store location too? In that case, general liability can help protect you from third-party accident claims. If a customer gets hurt while at your store and sues you, then an e-commerce insurance policy with GL coverage can help cover the costs of the claim and legal fees.

The scenarios above touch only the surface of how general liability coverage can help financially protect your business. You may think these types of things wouldn't happen to you in your business.

But these occurrences are more common than you may think! According to a recent study, forty percent of small business owners may experience a property or liability loss in the next 10 years.

And these losses aren't cheap. The average product liability claim is $35,000, and the average reputational harm claim is $50,000.

What would you do if today you all of a sudden owed $35,000 or more on behalf of your business? That amount of money could put most small companies in debt.

You could protect your business from the chance of hefty claim fees and legal fees. That peace of mind could be yours for as low as $22.95/month* in the form of an e-commerce policy, which typically includes general liability coverage.

Let's review.

GL typically covers:

  • Third-party accidents
  • Bodily injury
  • Third-party property damage
  • Advertising injury
  • And more

General liability insurance typically does not cover:

  • Professional services
  • Damages to your work
  • Motor vehicles while in use for business
  • Workers compensation or injury of employees
  • And more

If you are an Amazon Professional Seller: our ecommerce insurance meets the coverage requirements spelled out in Amazon's terms of service.

You can find ecommerce business insurance that works for you by comparing quotes for free here.

Cyber insurance

General liability insurance can be helpful if any of your customers experience damage or harm as a result of your products or services. But when you run an online business, you open yourself up to all kinds of risks. This includes cyber risks.

If you're familiar with antivirus software or you use a password manager, then you're on the right track to protecting your information online. But that likely isn't enough when you're considering how to set up your online store.

You can't prevent unforeseen events from occurring, but you can manage how prepared you are to respond.

If your business is hacked, you could be responsible for helping customers monitor their credit, finding the source of the breach, communicating with and notifying your customers, and more.

Hacking is more common than most assume. In fact, an attack happens every 39 seconds. You may assume no hacker would be interested in your online store, but think again.

Forty-three percent of cyber attacks are specifically targeted at small businesses.

These numbers are substantial enough to show that cyber liability insurance is important to consider. But how may it come into play?

Let's look at a scenario:

Barbara owns a small retail business. The software she uses to accept and process payments was hacked. Now, Barbara has to explain to her customers what happened and how the hack may impact them.

Barbara hires a cyber expert to craft the communication to her customers. Then she spends extra time on an email campaign to spread the news.

Without cyber liability insurance, Barbara could be forced to pay for the cyber expert out-of-pocket. That's money she could use to operate her business. And it could put her behind on her goals.

She also isn't an expert on cyber attacks. That means she has to spend a lot of extra time researching and talking to customers to avoid a lawsuit..

If Barbara had ecommerce insurance, however, the situation could play out differently. A policy could help to cover the cost of paying for an expert's help, up to her policy's limit.

And in the end, she'd gain peace of mind.

Cyber insurance typically covers:

  • Extortion loss
  • Fraud response expense
  • Crisis management expense
  • Forensic and legal expense
  • Public relations expense
  • And more

Fortunately, getting cyber insurance is easy and fast. In less than 60 seconds, you can get cyber insurance for your small business today.

Workers compensation insurance

Even if you're a one-person operation right now, it's a good idea to have an understanding of workers compensation insurance.

This type of coverage can help to cover an employee's medical bills and lost wages if they get injured or sick while working for you.

Workers compensation typically covers:

  • Lost wages
  • Medical payments
  • Rehabilitation expenses
  • And more

Each state has different laws and regulations surrounding workers compensation insurance.

Check with your Secretary of State's office to see what your state's workers compensation laws are.

You're Ready to Open Your Online Store's Virtual Doors

Phew. That was a lot of information! Feel free to keep this document and its steps on hand so you can follow along as you go.

There's no need to rush. Sure, you can get an online store up and running quickly with one or two products. But it's also OK to take your time with each step.

Unlike brick-and-mortar stores, online stores don't close their doors after hours. So it's perfectly reasonable that you take some time to get things right. You can even take time for each step into the business plan we discussed in Step 3.

Once you cover these steps, you can continue forward while paving your own path for your business. Our blog Simply U has plenty of content to help you grow and protect your business along the way. You've got this!

* Monthly payment calculations (i) do not include initial premium down payment and (ii) may vary by state, insurance provider, and nature of your business. Averages based on August 2021 data of 43% of our total policies sold. This content is intended to be used for informational purposes only. It is not intended to provide legal, tax, accounting, investment, or any other form of professional advice.

Allison Grinberg-Funes

Written by

Allison Grinberg-Funes

I’ve told stories since I learned to talk and written since I could hold a pen. As a small business owner myself - I'm a freelance writer and yoga teacher - I love contributing to the entrepreneurship community in different ways (including writing for Simply Business!). When I’m not drafting articles for SB, I can be found on my yoga mat, perusing an indie bookstore, and writing (with my cat nearby of course).

Allison writes on a number of topics such as small business leadership, business structures, and employee training.

This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry specific professionals who may better understand your business’s needs. Read our full disclaimer

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