How to launch a profitable online store

Whether you’re looking to expand your business beyond craft fairs or create an ecommerce empire from the ground up, starting an online store is the first step to transforming your entrepreneurial vision into reality.

Your pre-launch checklist

Get down to business (literally) with these five key steps.

Step 1: Do your research

Whether you’re growing your existing side hustle or starting from scratch, you need to understand your competitors and your market.

Here are some questions to ask yourself:

How do I solve problems or pain points better than anyone else can?

There are many ways to outdo the competition. But before your online store opens, you need to understand what you do better than anyone else.

For instance:

• You make body butters that contain more natural ingredients than competing products.

• Your full line of barbeque seasonings is 100% gluten-free, unlike other brands.

• Your dog grooming services are fully mobile, so pets don’t need to be transported.

Finding your edge—often called your “competitive advantage” —will help you in every aspect of doing business online.

Can I jump on any recent trends?

Following the latest trends can help you make a splash with your new store.

Researching social media hashtags, popular keywords, and Google Trends can help you understand what customers are looking for and how they’re finding it.

To illustrate, here are some trends that could help a new online store succeed:

• Social media users are leveraging the hashtag #LocalHoneySpringfield to find local honey in their town. A beekeeper could use that hashtag to help customers find her online store.
• Google Trends shows that “American made tables” is a top search term used by people looking for dining room furniture. A woodworking company in the United States could make sure their website features the words “American made tables” so shoppers can find what they’re looking for.

How will I turn a profit?

Of course, your business is here to satisfy customers. But it would be great to make a good profit, too! Here are some factors to consider as you calculate costs of doing business online:

• Costs of making your products or providing your services

• Shipping fees or travel expenses

• Cost of owning and managing a website (especially if you hire a person or company to take care of this piece).

Once you factor in these costs, you can decide which products or services will help you earn the largest profit when you make a sale.

Can I offer more to my customers through an online store?

Have you been thinking about expanding your product or service offerings? Now might be the time to make that decision. Having more options available can help you attract more customers when you launch your online store.

Here’s what we mean:

• An entrepreneur selling artisanal infused olive oils could include some of his “up-and-coming" flavors to show customers that there are more options on the way

• An esthetician can pad their online menu by including more service add-ons or new treatment options.

Step 2: Learn about your potential customers

Knowing your customer is key to a profitable business. But how can you learn about customers...before you have any?

One answer: Scope out the competition!

You can learn about your customers by observing how they interact with your competitors online.

• Social media pages: What are your competitor’s customers saying about them in the comments section or in tagged posts? What kinds of people seem to follow and interact with your competitors?

• Review sites: When customers leave reviews of your competitors, what tends to stand out as positive or negative?

• Online groups and forums: When someone is looking for a product or service similar to yours, what questions do they ask? What pain points do they discuss? What solutions seem the most helpful?

When it comes to understanding your customer, you can also trust your gut. Even if you’re launching a brand-new product or service, you likely have a good guess as to what your ideal customer looks like. For example, a housekeeping service could reasonably assume that “busy parents” would be interested in their services.

Once you get a good grasp on your target audience, you’ll find it’s easier to make decisions about your products and services, and even details like what payment methods to offer.

For example, if your target audience includes Millennials and Gen Z, you could consider offering Venmo as a payment option on your online store. Venmo is an appealing payment option for these groups¹, so you’ll be better equipped to accept payments from this demographic.

Step 3: Build your brand identity

This part can be especially fun for business owners! Through your brand identity, you get to establish the “vibe” your customers get when they visit your website.

There are many small details that come together to form BIG brand impact, such as:

• Your logo

• The colors you use on your website

• The types of images you include and share online

• The “voice” of the words on your website (also called your web copy).

Another important aspect of your brand identity is your brand story. Your brand story tells customers why you’re passionate about the products or services you offer—and makes your business more “human”. A good brand story includes the “aha” moment that led you to launch your business, and how you honed your expertise.

Your brand story should be easy for customers to find on your online store. Typically, you’ll place your story in the “About Us” section of your site.

Don’t skimp on this step—a strong brand identity will play an important role in every aspect of doing business, both online and offline. Plus, it can be tough to change your branding once you begin attracting customers, so you’ll want to get it right the first time.

Step 4: Lock down the logistics

The logistics are the “bones” of your online store. This stage includes things like:

• Where do your materials come from and how do you get them? Whether you’re manufacturing products yourself or partnering with suppliers, you need reliable sources for products or raw materials.

• How do you get your products or services to the customer when and where they want it? Prepare for any shipping, delivery, or travel well in advance of opening your online store. You may need special packaging materials, or a vehicle to move heavy equipment.

• Will you need storage for your products or equipment? Your products, tools, and other physical elements of your business need a home. You may also need space to create and pack your products, as well as space to perform your services.

• How will you monitor and manage inventory? Make arrangements for inventory management early in the setup process. This involves tracking stock levels, reordering supplies, and handling returns, and more. You might start with simple spreadsheets, then upgrade to specialized inventory management software as your business grows.

Choose how you’d like to sell

Now that we’ve covered your pre-launch steps, it’s time to think about how you’d like to sell your products or services.

To make your decision easier, we’ll break it into two options: website, or no website.

Option 1: Selling with a website

If you want to use a website to sell your product or services, you can use an ecommerce platform to get started.

Hosted shopping cart

Hosted shopping carts can host your online store on their servers and offer tools and add-ons to help manage your business. Some examples are Wix, BigCommerce, and Ecwid.

• Pro: You can offload tech tasks to someone else and focus your time and effort on running the business.

• Pro: Hosted shopping carts are faster to set up; you can set up your store in a few hours.

• Con: Some of these options don’t give you much flexibility to customize your store.

• Con: You will have to pay for this service, typically through a recurring fee.

Self-hosted ecommerce platforms

Examples of self-hosted ecommerce platforms include WooCommerce and Open Cart. These platforms offer flexibility and control to business owners, but you’ll have to host your online store yourself and deal with tech maintenance and security updates.

• Pro: You’ll have more flexibility and control over your online store.

• Pro: If you go this route, you’re likely to avoid recurring fees.

• Con: It will take more time and in-house resources to troubleshoot and maintain your platform. For example, if a server goes out, you’ll have to deal with it yourself or lean on a developer for support.

Option 2: Selling without a website

If you don't want to build a website, you can consider selling through Marketplaces or Social Media Platforms.

Marketplaces

Amazon, Etsy, and other online marketplaces help businesses start selling online by listing products or services directly on their platforms, and charge fees for doing so.

• Pro: You get access to a broad audience and the marketplace manages technical maintenance.

• Con: Marketplaces charge you a fee for every purchase, and you have little control over customization.

Social media platforms

Facebook, Instagram, TikTok, and Pinterest offer ecommerce features that let businesses sell directly on their apps.

• Pro: Your brand will get exposed to a wider audience already consuming content on the platform.

• Con: You’ll be selling right alongside the competition, and it can be tough to rise above other sellers.

Note: You can use marketplaces and social media platforms in tandem with a website! These two options are not mutually exclusive.

Which ecommerce platform is best for your business?

Well, that depends. Here are some things to consider:

• Industry and product specializations

Look for an e-commerce platform that fits your type of business. For instance, some platforms specialize in selling products vs. services, or digital goods vs. physical goods.

• Preferred payment methods

Different customers have different payment preferences, and offering their preferred payment methods can help close sales.

• Customization and control

Are you happy with built-in tools for managing your online store? Or do you want to build store components from scratch? Determine how much technical knowledge you have and whether a “DIY” approach is a good use of your time.

• Scalability

If you plan to grow your business, you’ll need an e-commerce platform that supports growth. Research the platform’s ability to handle large inventories, support changing and evolving payment options, and integrate with other solution providers.

• Conversions

A conversion occurs when a shopper who visits your online store completes the checkout process for their desired items or services. Start off on the right foot by choosing a payment platform built to optimize your conversions, like PayPal Checkout. PayPal Checkout can help small businesses boost checkout conversions up to 46%.²