More retailers are expanding to online sales channels to capitalize on the internet's expansive reach. While traditionally, retail businesses started as brick-and-mortar stores, many modern companies have established themselves solely through online platforms.
Creating an online retail business requires a unique set of organizational and management skills to adequately design, launch, and manage the technical implications.
10 Steps for Starting an Online Business
The biggest challenge to launching an online retail business is learning the process. By following these 10 comprehensive steps, business owners can build their e-commerce store-
1. Create a Business Plan
First, aspiring owners need to develop a business plan that outlines the financing, marketing, and advertising needs of the organization. This acts as a roadmap that establishes what is necessary to achieve success and long-term growth. Without a detailed business plan, management cannot begin employee onboarding, customer acquisition, or stock resourcing.
For example, if a startup needs additional funds for operational costs, owners must develop a business plan for finding financial assistance, such as loans.
2. Chose a Business Structure
Once the business plan is established, it is time to determine the online retail business structure. For those who are unsure of which structure to choose, the Internal Revenue Service (IRS) website breaks down each model's benefits and requirements. The primary types of business structures include-
- Limited liability company (LLC)
After choosing the structure, owners must file all of the appropriate documents to claim the business's name and receive an employer identification number (EIN).
3. Determine What Products and Services to Sell
When choosing what product lines to offer, businesses need to consider the types of variances they'll carry, including different sizes, colors, and models. The same goes for the type of services and how they will be performed.
Then, business owners must determine where they will source their inventory. As online retail startups typically do not manufacture their own products, they need to research different vendors. Suppliers should be able to offer-
- Different shipping options
- Potential long-term contracts
4. Develop Bar Codes for Products
In order for online retailers to legally sell their products, they need to obtain a universal product code (UPC) for each item and product variance. A UPC barcode is an identification number that enables customers and businesses to search for an item.
Online retailers can purchase UPC barcodes online for immediate use. When businesses buy large batches of consecutive codes, they can receive a significant discount.
5. Build the Inventory
Even retail startups need to have a relatively large arsenal of products to begin with, regardless of whether they are an eCommerce shop or a traditional brick-and-mortar store.
Imagine having a successful grand opening with a surplus of customer orders only to pile up back orders due to insufficient inventory. This can negatively impact customer satisfaction, the brand's reputation, and future business. Therefore, retailers need to organize their storage, warehousing, and distribution needs in order to maintain healthy inventory levels.
6. Choose a Domain
To start, business owners need to choose a hosting provider that handles the back end of the e-commerce website. Then retailers can purchase a domain name and begin setting up the technical processes.
While the domain name should match the store's name, it may not be available. If that is the case, the business should get as close to the brand as possible or present an offer to the domain holder.
Business owners also have the option of creating their own websites if they want full control. However, this option requires more maintenance and extensive IT knowledge.
7. Build the E-commerce Site
After the technical processes are properly implemented, executives can begin designing the aesthetic and layout of the website, including-
The site should be easy to navigate, so consumers can quickly find products, blog posts, and contact information.
For retailers that choose a preprogrammed e-commerce platform, setting up the shopping cart is relatively easy. Hosting providers handle payment processing liability and guarantee secure transactions.
On the other hand, self-hosted stores must create their own processors, which could pose a security risk for customers. Many consumers will second-guess a purchase if they feel their billing information is not protected.
9. Invest in Marketing and Advertising
When the website is live and products are available for purchase, management should work on their e-commerce marketing strategies to grow the customer base. Online retailers should consider-
- Search engine optimization (SEO)
10. Manage the Business
Once everything is running, it is essential to actively monitor customer activity and internal processes to detect bugs or technical difficulties. Managing an online store also involves collecting insights on customer preferences to make educated decisions on products, discounts, and customer service.
By monitoring traffic, retailers may find a more efficient layout that can promote sales and conversion rates.