Starting an Online Business

1. Choose a platform

First, choose an ecommerce platform provider. This list from the technology review site G2.com3 explains the most popular and reputable options, as well as their pricing structures. Ecommerce platforms make it easy to create an online storefront with professional-looking templates. You simply fill out the fields and upload your products. Platforms can also process the transactions and generate shipping labels.

Should you install a plugin or operate a separate website?

Some ecommerce platforms can be integrated into your existing URL as a plugin. The advantage for choosing this method is that you only have to maintain one website, which can be efficient and cost-effective. Another option is to create a separate retail website and link to it from your main site. If your site isn't compatible with the available plugins, this could be a good alternative. Be sure to create a seamless experience for customers by duplicating branding on both sites.

How much support do you need?

Different platforms will offer varying levels of service. As a new ecommerce business, look for one that offers free tech support. Also consider the cost: Some platforms charge a monthly fee while others are free, and most charge fees based on a percentage of each transaction. Since the cost is relatively low either way, you can try it to decide if ecommerce is a good stream of revenue for the long haul or if it's just a short-term fix for slow sales due to a disruption in business.

Is there an easier way to set up shop?

If you don't want the hassle of setting up a website, another option is uploading products to a marketplace like Amazon, eBay, or Etsy. These sites can be useful places to test selling your products online. Etsy specializes in art, crafts, and vintage collectibles, while Amazon and eBay offer virtually anything. The advantage of using Amazon, eBay, or Etsy is that they're easy to use and have millions of users, which can provide you with a ready-made group of potential customers.

However, these sites also charge hefty commissions, which can eat up a more significant cut of your profits than other ecommerce platforms. You also have little to no control over your branding. And unlike your own website where you can have a newsletter signup box, you have no way to collect email addresses for future marketing campaigns. In fact, marketplaces have strict rules around communicating with customers. For example, Amazon prohibits sellers from contacting buyers4 for any reason other than about a current order, and they're only allowed to do so through Amazon's platform.

2. Upload your products

Once you choose a platform, it's time to build your product catalog. If you have a brick-and-mortar location, start with a small selection of your current inventory, sticking with your best sellers. To make it easy for shoppers, organize your catalog into product categories. For example, if you sell apparel, separate men's and women's items, and then divide products into sub-categories, such as pants or tops. Good organization can encourage browsing, helping shoppers discover more items, and potentially help you to sell more to any given customer.

High-quality product photography is a must with online selling. A recent study of online shoppers found that more than 75% said great photos were essential5 when deciding whether to make a purchase. If you can take quality photos with good lighting, you can do this yourself. If not, hire a professional photography service. If you sell services, don't skip this step. A personal trainer, for example, can use lifestyle photos representing their service's benefits.

Photos are important, but words are what help to seal the deal. Take time to share important details and features. The descriptions are an opportunity to engage customers and help them envision using your product or service. Be sure to share how they'll benefit from using your product or service. The description is also the place to optimize for search engines. Use keywords and phrases a customer may use to find your product or service.

3. Collect sales tax

Depending on where you and your buyer are located, you may be responsible for collecting sales tax. The basic rule for determining tax for online sales is whether your business has a physical presence in a state, such as a storefront, warehouse, or office. For example, if you are located in Georgia and sell to a buyer also located in Georgia, you must collect and file Georgia sales tax.

However, you may be on the hook for collecting sales tax even if you don't have a physical presence6 in that state. The laws have been changing7 since a critical Supreme Court ruling in 2018. It's important check with your accountant to confirm your requirements.

If you sell products through Amazon, eBay, or Etsy marketplaces, you will usually be required to charge the customer sales tax, but these big online sellers will typically collect and remit it for you.

4. Manage your inventory

Inventory management is vital for ecommerce. You can't sell an item that you don't have on the shelf. If you have a physical location, consider using a point-of-sale system that integrates online and offline sales in real-time. This list from PC Magazine8 offers a good starting point. If you sell something to a customer at your brick-and-mortar location, for example, it will automatically adjust the inventory on your website.

Inventory management also involves monitoring the turnover of your products. Sales often follow the Pareto principle, which states that 80% of results come from 20% of the action. With inventory, you may find that 80% of your sales come from 20% of your products. The key is identifying these best sellers and keeping them in stock. The other 80% are still important—they round out your offerings. You may need to keep things moving on these 80%, though, by running periodic sales on your website.

5. Ship your orders

Once you make a sale, you've got to deliver the goods. If you sell products, you'll need to provide shipping. If you sell digital items, like e-books or courses, you can offer downloadable delivery. Another option is online ordering with in-store pickup. More than two-thirds of customers9 have chosen that method of delivery.

For shipping, the major carriers are the USPS, UPS, and FedEx. You'll want to choose a reliable company that can offer affordable rates. UPS and FedEx, for example, often have the best rates on bulky items, while USPS is cost effective on lighter packages. But don't overlook logistics and service. USPS offers the convenience of free package pick-ups, while UPS has robust tracking. There's no one right answer, and you may decide to use more than one.

In addition to choosing a carrier, you'll need to set your shipping rate structure. Real-time rates charge customers the actual cost the carrier charges you. Flat rates offer customers a range based on their purchase price, such as $5.95 shipping on orders up to $30. Or you can offer free shipping, which is popular with customers. To offer this option, you may need to increase your prices or set a minimum purchase to boost your margins.

6. Stay secure

As an ecommerce merchant, you will be collecting customer's personal information over the internet. Protect it by building a secure website and making sure your ecommerce platform provider offers a high level of security. Make sure it uses encrypted payment gateways, SSL certificates, and authentication protocols for sellers and buyers. This will help you to protect your customers' data and privacy.

You have to do your part, too. Always use the latest version of any software you use for ecommerce. The tech companies that make the software you use often find and fix bugs that could compromise the safety of the information you collect. They'll send regular updates, but those updates will only protect you if you regularly maintain and update your website. Make sure to read the communication from your ecommerce or website hosting providers, and immediately install any prompted updates.

Is brick and click for you?

By launching an online store, you create another stream of revenue as well as another way for customers to interact with your business. Up to 80% of shoppers visit a business's website10 before deciding to visit its location. If they can make the purchase at the same time, you increase the chances of getting their business. By taking the steps to add an online store, you make an investment in your business that can reap the rewards for years to come.