How to Start an Online Retail Store and How Much Will It Cost
Starting your own retail store is a great investment that can help in times of turbulence and economic prosperity as well. This has been very evident during the period of the lockdown when customers were looking to buy new products but were unable to leave their homes. Companies that had an online store in addition to the brick and mortar one fared much better than those without it. Since launching your own online store is a very challenging and complex process, we would like to answer some of the most common questions, business owners are asking themselves about how to start an online retail business.
Where Do You Start?
It can be difficult to lay out all of the steps in starting an online retail business simply because there are so many aspects to consider. Here are some of the main ones:
- Choose your niche – The first thing you need to do is choose your niche. This is literally what products you plan to sell and to whom you will sell them too. It is a good idea to avoid areas that are dominated by household names. If big brands are dominating a particular market, people will not even consider the alternative. If you have not decided on what exactly you would like to sell, consider doing some research on Google Trends to see which products are in demand or on the rise.
- Choose your platform – We will go into greater detail about all of the various platforms that are available later on, but think about how easy is it to set up and design? Is it easy to navigate? Nowadays, people are expecting sites to be user friendly and easy to navigate, so if you are having issues in this regard, you will end up with a lot of abandoned shopping carts. The platform should also have a wide selection of integration options. At the very least, it should be integratable with your social media channels and preferably run smoothly with your CRM and any marketing software that you use. Do some research into the plugins and extensions they have to offer that can further extend the functionality of your site.
- Choose the supply chain management method – You can choose between dropshipping or holding your own products. Dropshipping is when a customer orders a product on your site. The order gets forwarded to the supplier, and the supplier ships the product straight to the customer under your name. The alternative is to hold your own products if you have the inventory space available.
- Create a website – Good website builders can provide you with some templates to start. Try to provide as much customization as you can. While you may not need to do this now, you definitely will have to do it down the road since this will significantly help you with conversions. Finally, upload all of your products and the necessary descriptions.
Now that your site is up and running, let’s return to the previous question about choosing the platform.
Which Platforms are Available?
Choosing the platform for your e-commerce business is one of the most important decisions you will make, so it is important to make the right decision. Let’s take a look at some of the most popular ones:
- Shopify – This is a very well-known platform and is very useful if you are just starting out. They really hold your hand and walk you through the entire setup process. On the downside, there are limited amounts of API calls, which could cause availability issues, and they make you use their own point of sale software, otherwise, they hit you with a fee. The cost of using this platform starts with $29 a month to simply use the platform and do everything yourself. But you would like to hire an outsourcing company to do everything for you, and this will be about $5,000 a month.
- Magento – Magento is a very versatile and mobile-friendly platform. One of its greatest advantages is that there are tens of thousands of companies around the world working on Magento extensions. With so many extensions available, you will not have to pay to develop a particular functionality for your site. You can simply find an extension that best fits your needs that will cost anywhere from $10 to $500. Consult with a company that specializes in retail software solutions for more detailed information. The eCommerce store cost with Magento might be around $30,000, but it worth it. Some Magento benefits and features are shown in the video below.
- Volusion – Volusion would also be a good fit for stores that have started recently. They help you set up your site by helping you with the SEO and design. What you have to be careful of is that there are sale limits on all of their plans, and you will have to do some research into what happens if you go over the annual sales limit. And the average plans for Volusion range between $29 and $299 a month.
- WooComerce – This is another platform that is friendly to newcomers. Very often, it will be used by bloggers and hobbyists who are looking to expand into e-commerce. One of the biggest drawbacks is scaleability. If you are looking to grow your operations, the side effects would be the operations of the live store slowing down. The platform itself is free, but you will have to buy a domain name, which is usually around $12.
- 3dcart – 3dcart is considered to be a minor player in the field. It offers multilingual support along with advanced shipping solutions without requiring an API. However, things can get tricky if you have large volumes of traffic because it does not have a CDN. This could lead to some downtime. Plans range from $19.99 – $129.99.
Now that we have a general overview of some of the most popular platforms, we need to consider the question of online stores vs marketplaces.
Which is Better: Opening Online Store or Marketplace?
The cost of starting an online retail business is different from regular webstores to marketplaces. Once your webstore is off and running successfully, you might want to think about turning it into a marketplace. However, running a marketplace will be more costly because the user flows are more complex, which requires custom solutions and many iterations to provide the right product-market fit. On the other hand, a simple eCommerce site can be up and running quickly because the transaction structure is much simpler.
How Much Does It Cost to Launch an Online Platform?
Online business startup costs will differ with each individual business and will depend on many factors. How big is the business? If you are not selling a whole lot of products and you do not have a wide customer base, it is better to keep things simple, which will lower your costs. Then you need to think about web design. If you would like to give your store a custom design, you will need to hire a professional UI/UX designer. Also, you will need to account for the costs of the platform and any development work that needs to be done. Here is a pricing overview:
- For small e-commerce stores (up to 1000 articles) – approximately $5000 upfront cost and $500 a month.
- For medium-sized e-commerce stores (10,000 articles) along with a custom design – $15,000 – $20,000 upfront, and the maintenance will be 10% of the upfront cost.
- For an internet store with complete customization and all of the necessary integrations – $30,000 – $50,000 upfront and the maintenance will be 10% of the upfront cost.
How Many People Does It Take to Keep Your Online Store Running?
Every store is different, and will the costs will depend on the size, products sold, and inventory management. While it is possible to run your store all by yourself, it usually takes between 1-4 people to maintain the necessary sales volumes. You will need people to handle things like accounting, chasing down non-payments, answering customer inquiries, and a lot more. As far as the tech support is concerned, the price will depend on the platform and will cost somewhere between $500-$5000 a month. If you have an emergency situation where something needs to be fixed right away, the cost will be the salary of the tech expert who will be performing the job. However, if you have a small business, you can usually perform the fixes yourself.
How Do You Attract People to Your Online Store?
Just like with the brick and mortar stores, you will need to attract customers and let them know about all of the products you are offering. One of the best ways to do this is through email marketing. You can set up an email drip campaign to notify potential buyers about any promotions or sales that are currently going on. You should also actively promote your business on social media. Facebook ads are a very good way to attract buyers, and you can get a good result by spending just $1 every day. Search engine optimization (SEO) is also very important because you want to show up in the top search results when people are searching.
As far as costs are concerned, you can expect to spend anywhere between $500-$5000 a month on SEO. Email marketing will cost you anywhere from $10-$2500 a month, depending on how many subscribers you have.
What to Do if I Need Help Setting Up My Online Store?
We focused a lot on how much does it cost to start an online store, but the fact of the matter is that a lot of the eCommerce platforms are very complex and you will need to hire a development agency that specializes in eCommerce sites to get this done for you. While this will add to the overall maintenance costs, you will ultimately get a higher return on your investment and attract more customers. Skywell Software has a long track record of developing retail software solutions, and we know how to how to set up an online store to help you attract customers. Hire us today to overcome any challenges you are having and start increasing revenue today.