How to start an online store
When you have decided you want to start an online store, there are many things you need to consider. On this page we will guide you through all steps: from registering a website and buying products to keeping inventory and promoting your online store.
- What software?
- How to get customers
- Business structure
- Is your business cross-border proof?
- Know the rules
Most people that wonder how to start an online store already know which products they want to sell. But if you don’t have a clue yet, it’s best to decide this first. Because the choice of your online shop’s key assortment will strongly impact how you structure your ecommerce website, organize your warehouse and do your marketing.
What kind of ecommerce software will you use?
In order to start an online store, you need to use ecommerce software or a website builder. There are different types of software: you could use open source software, closed source software (also called proprietary software), basic solutions which cost you about 30 euros per month, or more advanced software which costs you hundreds of euros per month and gives you tons of options for your ecommerce platform. Take some time to do your research, make use of the free trial options and compare the different providers. What do you want from your software and can you easily grow or expand to other markets with this solution?
Here are three popular ecommerce software providers:
What kind of products will you sell?
The core of every online store is, of course, the products. The type of items you offer determines the way you do business. For example, if you sell items that are currently very hot, you might generate some serious revenue in a very short time, but what is the long term plan with your store? And if, on the other hand, you sell some very niche items that only attract collectors or diehard fans, it could mean that your items stay in your warehouse for a very long time. Can you afford this?
You must not only think about the type of items you sell but also about where you want to buy these items. Do you know a local dealer? Are you in contact directly with the manufacturer? Do you need to import your items from China, or maybe another EU country? Then certain local rules may apply. Please, again, do your research. You can’t just import a shipload of items from China without needing to do some paperwork.
Where do you store your products?
If you’ve made a decision about the type of products you want to sell and you know where to buy them, you need a place to have these items stored. Most small online business owners start with buying goods at a wholesale price and then store them at home. When sales go well, they buy more and eventually start renting warehouse storage space.
But when things are really going to get off, you might start looking at other solutions. You can have another company store and fulfill the orders for you. This is called dropshipping. There are businesses that are just doing this: storing and fulfilling orders for others. But Amazon, for example, also offers such an e-fulfillment service. Again, do your research and try comparing several e-fulfillment service providers to see which one suits you best.
Another company can store and fulfill the orders.
How do send your orders?
When you know which items you want to sell, and you have found a place to store them, it’s time to ship them. You might know how to send a parcel, but what if the orders are coming in massively and you have to act fast because customers are waiting. How do you ship tons of items to customers across the country, or maybe even abroad?
How do your customers pay you?
When you sell your items, your customers will need to pay for these products. But how will they do this? You need to offer several payment methods on your checkout page. You could offer just one payment method, but this isn’t customer friendly. Because every customer is different: some like to pay with PayPal, others prefer to pay with their credit card. Some like to pay beforehand, while others only want to pay when the goods have arrived. Dutch ecommerce laws even oblige online retailers to offer at least one payment method that gives customers the opportunity to pay after receiving the goods.
How do you get customers?
Customers are very important, as they are the ones buying your products and thus giving you your revenue and, hopefully, your profits. But how do you get customers? Well, customers are visitors who pay. So, the first thing you need to do is attracting visitors to your online shop.
You can start by notifying your family, friends, relatives, and colleagues about your ecommerce website, but you can also start by spreading the news through social media. This can both happen organically or with paid posts.
How to get your online store visible in Google results
One of the bigger challenges for online stores is to get visitors by being visible in search engines like Google. Again, this can both happen organically, by search engine optimization (SEO), or with paid posts. This is called search engine advertising (SEA).
Getting your store visible in Google is quite a challenge and thus a chapter on itself. But the software and content play a huge rol in that. Therefore, it doens’t hurt to check if the software is build according to the guidelines of Google. If you write your own content then its wise to read about the basics of SEO and SEA as well.
When you have visitors, the next step is to turn them into paying visitors. You need to convert visitors into customers. An important topic in the ecommerce is the conversion rate. It’s the number of visitors who do something you want (in this case: buy something) out of the total number of visitors. On average, an online shop has a conversion rate between 2 and 4 percent. This means that if 100 people visit their online shop, 2 to 4 of them leave the shop without having bought something.
On average, an online shop has a conversion rate between 2 and 4 percent.
The business structure
You also need to make a decision about the type of business you want to start. Will it be a sole proprietorship, a private limited company, a public company, a partnership or something else? Making the right decision can be a choice involving tax efficiency and liability.
For example, in the Netherlands a sole proprietor can claim various tax allowances, making a part of your profit tax-free. And the profit made by a private limited company is subject to corporation tax, which is a significantly lower rate than income tax.
But as a sole proprietor, you are personally liable for your company debts, while if you operate your business as a private limited company the company assets and your private capital are separate.
Which top level domain will you use when you start an online store?
You will also need a website where you will sell your goods online. For the website name, you have to decide which name you are going to use and what top level domain (the abbreviation after the dot). Will it be a .com website, a .eu website or maybe some local ‘TLD’ like .fr (for France), .de (Germany) or .co.uk (the United Kingdom)?
Are your business and domain name cross-border proof?
With regards to the business and/or domain name, try to find something that, one day, can also work in other countries, especially in countries where they speak a different language. If you start your online business for example in the Netherlands under a very typical Dutch name, later on, it may be hard to get your foot in the door in another market in Europe. It’s the reason why Dutch shipping platform Jet Verzendt (translation: “Jet Ships”) changed its name into the more international-sounding brand KeenDelivery in 2017.
Try to find a business name that also works in other countries, in case you start an online store abroad.
Know the local rules
What’s the VAT threshold in your country?
When you start an online store located somewhere in the EU and you ship goods (and services) to other EU member states, your shop is subject to the Distance Selling Act. If the turnover (excluding VAT) of the delivery of goods doesn’t exceed a certain threshold, the Distance Selling Act won’t apply and thus the VAT will be levied according the EU country where your company is settled. But if the threshold is exceeded in a different country than where you’re settled, you need to pax taxes to that country.
In 2019, the threshold in Belgium for example was 35,000 euros, while in Germany it was 100,000 euros. Always check the most current VAT thresholds in the European Union if you are doing cross-border ecommerce.
You have an online store running… now what?
When you have set up your online store, you’ve bought your products, you’ve stored them, you’ve promoted your ecommerce website in search engines and social media, you’ve attracted visitors and made them buy your products, you have a running online store! Congratulations. But now what?
Now, it’s important to keep it running. Don’t sit still. Don’t be blinded by the growing analytics or revenue. Keep investing. Keep adapting. Keep improving. Keep being visible on social media. Try to find the bottlenecks in the customer journey. Where on your website do people leave your shop the most? How can you prevent this from happening? Try to find ways of promoting your shop even better. Try to pump up that very important conversion rate. And what does your online store do after sales have taken place? How do you get that customer back to buy something again?
Frequently Asked Questions
Below you can find some frequently asked questions about how to create an online store. Hopefully the answer will help you get started with opening and running your online store!
What do I need to start an online store?
As you may have read above, there are plenty of things you need to think of when you want to start an online store. Basically, you will need:
- products to sell (you can stock them in your warehouse or sell and ship them through dropshipping)
- software on which your online store runs
- knowledge about (local) rules that apply to online retailers
Furthermore, in order to run a successful online store, you will need to optimize your ecommerce website with unique product information, clear product photos, great landing pages and of course interesting products and prices! And don’t forget the efforts you need to put in good marketing. You can have the best online shop in the world, but if no one of your target audience knows about it, you won’t make many sales…
How much does it cost to run an online store?
Running an online store can be done with many few efforts. You can try out a free trial or even use some commercial ecommerce software for free (for example, as long as you don’t sell more than X items). And there’s also open-source software which you can download for free and host on a server.
And if you choose dropshipping, it won’t have to cost you thousands of euros to have your online store filled with all kinds of products. That’s because you only pay for products that your customers order. And if your selling price is higher than your purchase price, you’re good.
But, running a great online store is a different ball game. If you want to have success with your online store, you will have a hard time achieving this without making some serious investments. Investments in your software, your marketing, your products, et cetera.
How to find products to sell online?
Chances are that when you start your online shop, you already know what good you want to sell and where to find them. But most of the time, you have a brief idea of what your online store should sell, but you don’t know yet where to find these items.
A good starting point if you want to know how to find products to sell online might be a wholesale platform or marketplace. Here you can get inspired by what’s offered and then directly contact the wholesaler of vendor. Maybe he also has products you haven’t thought about selling yet! Also, check out the several dropshipping suppliers in Europe.