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How to Start an Online Store

written by: N Nayab•edited by: Jean Scheid•updated: 5/24/2011

Starting an online store, if done right, helps customers buy products at the click of the mouse, and provides the entrepreneur with a world wide market for his goods and products. Read on for steps involved in starting an online store.

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    Selecting a Niche

    Starting an Online Store The fundamental step in starting any business whether online or in a brick and mortar fashion is selecting a niche. No business succeeds trying to provide everything to everyone. The most difficult part of any business is undertaking painstaking research on what sells, or identifying a want or a desire that is either not properly met, or which the entrepreneur is confident of providing in a better way relative to existing players owing to the entrepreneur's innate advantage such as skills, better resources, or some other competitive advantage.

    Opening an online store without good knowledge of the industry and product knowhow is a stepping stone to failure.

    Image Credit: bands with a mission

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    Tips for Starting an Online Store

    Product Inventory

    Most online entrepreneurs sell goods from others’ inventory, using the online store as a front for affiliate marketing. Such a business model, while remaining a valid way to run an online store, makes the entrepreneur more of a middleman than a entrepreneur, and does not make for a sound business model.

    The online store faces a big drawback compared to a traditional brick and mortar store in that the customers cannot physically verify the product. The online entrepreneur needs to compensate for this disadvantage by implementing passion to promote the product and service offered, and establish a reputation of always delivering exactly to specifications. This requires establishing good control over the products sold.

    Some ways by which the entrepreneur can ensure good control over the product include:

    • Developing a base of exclusive products, either manufactured in-house or sourced directly from manufacturers
    • Making purchases from suppliers before offering them for sale or shipping to customers
    • Having make-to-order agreements that mention product quality and specifications, with suppliers
    • Identifying a supplier where the entrepreneur selects the required products directly after satisfying quality parameters

    Establishing good control over the product also allows the entrepreneur to handle customer queries, complaints, and returns better. Shortcomings in these areas are very often the major reasons for customer annoyance with a business.

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    Store Architecture

    In the brick and mortar world, success of a store depends on three actors, "Location, location, and location!" An online store does away with this key requirement but requires considerable effort from the entrepreneur to become visible.

    The best options for budding entrepreneurs are starting online stores at e-commerce sites such as eBay and Etsy. Riding piggyback on such sites allow some of the reputation of these websites to spill on, provides the ability to tap on to thousands of customers who visit such sites, and provide for a good template on which to structure the business.

    Starting an independent e-commerce website requires effort in designing the site to make it appealing for customers, selecting a reliable hosting provider to ensure the site remains online always, a tie-up with credit card providers and banks to effect payments, establish secure payment transactions, and other considerations. The entrepreneur also needs to invest resources in search engine optimization (SEO) to ensure the website tops search engine rankings, and also promote the website in various e-commerce and product forums.

    Very often, visitors to a website remain attracted or turned off by the items they see when they enter the web page. Two important considerations when developing a virtual store are:

    • Ensuring that your best sellers remain at the most visible spaces, and at entry points to the website
    • Attractive web page design, powered by a simple, uncluttered and easy to navigate design

    Regardless of the store architecture option, a key consideration is to arrange for a sound arrangement to pack and ship the goods, and incorporate the different shipping rates and policy along with the product specifications.

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    Legal Considerations

    Starting an Online Store One important misconception when starting an online store relates to legal considerations. Legal issues remain the most overlooked aspect when entrepreneurs seek how to start a business online. An online store has to adhere to just about all the legal and statutory requirements of a traditional brick-and-mortar store, and sometimes even more.

    Online stores shipping products internationally need to comply with the import duty and other laws applicable to such places.

    Image Credit: Wichary

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    Managing and Tracking the Virtual Store

    Many people mistake a virtual store as a way to earn passive income. This is far from true, unless the entrepreneur manages to set up a fully automated eBay store.

    The success of the virtual store usually requires the active involvement of the entrepreneur on a daily basis. The key role of the entrepreneur includes:

    • Monitoring orders, payment, and shipping to insure everything proceeds smoothly
    • Responding promptly and following up on customer queries, inquiries and complaints
    • Managing inventory
    • Promotional efforts
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    A critical component of setting up an online store is promoting the products. While the virtual store enjoys the advantage of an infinite market, the fact remains that e-selling is much harder than selling in a traditional brick-and-mortar store, and very often encounters fierce competitions from rivals. A good advertising and marketing campaign that targets the potential customers are of critical importance to the success of the virtual store.

    Some ways to market the virtual store include:

    • Ensuring that the content in the website are search engine optimized, to ensure a high ranking in search engines
    • Subscribing to online advertising services such as Google AdWords, Simply, Kontera, and Infolinks
    • Contributing to content sites by writing product reviews and linking to the e-commerce site
    • Posting in social networking sites and other online discussions, aimed primarily to help customers and promoting the business incidentally, rather than trying to spam
    • Listing in online and real world business directories
    • Mutual tie-ups with non-competing websites to promote each other's websites mutually
    • Sending out emails, making sure not to spam or violate privacy policies in place

    Starting an online store is as challenging, if not more challenging than starting a traditional brick-and-mortar store. Following the correct steps for starting online business and adopting the right products, however, ensures that the rewards from an online store far exceed the rewards from a traditional store.