Last year, eCommerce generated over $1 trillion in sales. That’s nearly 4% of the U.S. economy. Have you ever wondered how to start an online store?

I Heart Dogs founder Marshall Morris has achieved remarkable success through community building. He’s making nearly $22 million in annual revenue with a 20% profit margin.

We’ll share his secrets to developing a following of more than 50 million online supporters. We’ll also explore the role feeding 30 million dogs and helping veterans has played in his success and how you can start an online store using his strategies.

Get ready to learn even more about how to start an online store.

How to Start an Online Store

Starting an online store can be an exciting venture, but it requires careful planning and execution. We’ll cover the following topics to help you understand how to start an eCommerce site and make a great living doing it.

Read from start to finish or click on any of the links above to jump to that section.

Step #1. Choose a Product or Niche

Decide what products you want to sell. It could be physical products, digital goods, or handmade items. Make sure to choose something you’re passionate about that also has market demand.

Let’s look at each of the product classes to help you understand what to sell online.

Physical Products

Whether you’re selling your own products on eCommerce platforms or using marketing tools to sell other brands in your online business, the most commonly searched product categories are:

• Clothing
• Furniture
• Car parts
• Beauty products
• Office supplies

You can store products in your home or business, or you can pay a fulfillment center to manage the shipping. Learn how to use Amazon Fulfillment.

Marshall told us:

He also commented on his troubles using a fulfillment center.

Check out our interview with him below:

Next, let’s look at selling digital products in online stores.

Digital Products

Digital products have become increasingly popular due to their low overhead costs and the ability to reach a global audience instantly. Here are some good digital product ideas you can consider selling:

• Ebooks: Share your expertise on a particular topic by writing and selling ebooks. Nonfiction ebooks that provide valuable information, how-to guides, and self-help content tend to perform well.
• Online courses: Create and sell online courses on subjects you’re knowledgeable about. Platforms like Teachable, Udemy, and Coursera can help you reach a wider audience.
• Stock photos and graphics: If you are skilled in photography or graphic design, you can sell stock photos, illustrations, icons, or other digital visual assets on platforms like Shutterstock or Adobe Stock.
• Music and audio products: Compose and sell original music, sound effects, jingles, or audiobooks. Websites like iTunes or Bandcamp can be helpful for reaching your audience.
• Printables: Design printable planners, calendars, or worksheets. Many printables focus on productivity and organization, but you can use your creativity to design all types of charts or templates.
• Apps: If you have programming skills, you can create and sell software applications or mobile apps.
• Web templates and themes: Design and sell website templates and themes. Popular platforms include WordPress, Shopify, or Joomla.
• Digital artwork: Create and sell digital art, illustrations, or 3D models. Websites like Etsy or DeviantArt can be useful for selling digital artwork.
• Digital knitting and crochet patterns: If you’re into knitting or crochet, you can design and sell digital patterns for unique designs.
• Video content: Produce and sell video content such as stock footage, video effects, or templates for video-editing software.
• Virtual event tickets: Organize and sell tickets to virtual conferences, classes, and events.
• Language courses: If you are multilingual, create and sell language learning courses or resources.
• Resume and CV templates: Design and sell professional resume or CV templates for jobseekers.
• Fonts: Design and sell original fonts for use in graphic design and digital projects.
• Social media templates and content: Create and sell social media templates or content packs to help businesses with their online presence.

Digital products should be high quality. You should also provide customer support and how-to guides when selling digital products. In addition, you’ll want to focus on marketing and promoting your products effectively to reach a broader audience and increase sales.

Learn more about creating digital products in our interview with a course creator who’s making nearly $50K per year:

Homemade Items

Selling homemade items online can be a rewarding way to turn your hobbies and skills into a business. Here are some popular homemade items that often perform well in online stores:

• Handmade crafts: This category includes a wide range of items such as pottery, candles, soap, bath bombs, woodwork, and jewelry. If you knit or crochet, you might also decide to offer clothes, scarves, or plushies.
• Artwork: Sell original paintings, illustrations, or digital prints of your art.
• Personalized gifts: Offer custom-made items such as personalized mugs or engraved cutting boards.
• Baked goods: If you enjoy baking, consider selling homemade cookies, cakes, and desserts. Just be aware that selling food may require special licensing or permits.
• Homemade sauces: Create and sell homemade sauces, jams, pickles, or spice blends with unique flavors.
• DIY kits: Put together DIY crafting or cooking kits. These kits provide customers with the necessary materials and instructions to create a final product without having to assemble everything on their own.
• Natural skincare products: Offer homemade skincare products such as moisturizers or natural soaps that are made from organic ingredients.
• Pet accessories: Create and sell handmade pet collars, bandanas, toys, or pet-themed products.
• Home decor: Craft and sell home decor items like decorative pillows or wall hangings. Depending on the equipment you have available, you can also create custom wall decals.
• Herbal teas and infusions: If you have knowledge of herbs, create and sell herbal tea blends and infusions.
• Scented candles: Make scented candles with unique fragrances and designs.
• Embroidered or hand-painted items: Personalize clothing, home linens, or accessories with embroidery or hand-painted designs.
• Seasonal and holiday items: Design and sell handmade seasonal or holiday-themed decorations and gifts.

Pro Tip: Quality and customer service are essential to building a strong brand. Investing in professional photography can help your products stand out on social media and your online store.

Check out our interview with Jazmin Richards, who started Blk Sunflower and made $300K in the first 18 months:

Step #2. Perform Market Research

Don’t start an online store before you conduct market research. You’ll want to understand your target audience, competitors, and the demand for your chosen products. Discovering more about your audience will help you analyze opportunities and potential roadblocks before starting your eCommerce business.

Keep reading to learn more about identifying a target audience.

Target Audience

Your target market consists of people who want to buy your products. It’s important to understand their demographics, interests, and how much they spend on product categories.

You should also research where your target customers hang out online. An eCommerce website that sells toys will probably want to market on sites like YouTube Kids and TikTok but probably not X or LinkedIn.

Meanwhile, the opposite will likely be true for a spreadsheet seller who wants to market their online tools.

Competitors

Before you start an online store, you’ll also want to understand the other companies in the market. This involves researching how they get customers, their sales channels, and what they charge.

Online businesses like yours will be competing against massive online marketplaces like Etsy and Amazon as well as local and global small businesses.

Demand

You’ll need people who want to buy your products to become a profitable online store. Find out the demand before spending a lot of time and money on a particular niche.

Pro Tip: Research the total addressable market (TAM), which is the total amount of money that a company makes if you corner 100% of the market. While it’s unlikely an online store will ever reach 100%, it’s still useful to know the market size.

It’s also helpful to know how much the average business in the industry makes in revenue and profit margin. Your online store may experience seasonal fluctuations, so make sure you understand the industry’s seasonality.

Learn more about conducting market research.

Next, you’ll want to write a business plan for your online store.

Step #3. Create a Business Plan

Outline your business strategy, financial projections, marketing plan, and operational details. A well-thought-out business plan will guide your online store’s growth and success.

Business Strategy

Online stores can adopt various business strategies to achieve their goals, attract customers, and increase revenue. Consider some of these common business strategies for online stores:

• Niche market: Focusing on a specific part of the market allows you to cater to a niche market of customers who need a limited set of products.
• Cost: Another strategy is to offer products at lower prices than competitors while maintaining an acceptable level of quality. This could involve sourcing products at a cheaper price or lowering your profit per item.
• Differentiation: Differentiate your online store by offering unique products or a superior shopping experience. Creating a strong brand identity and emphasizing how your store is unique can help you stand out from competitors.
• Customer relationships: Prioritize building strong relationships with your customers. Personalized marketing and loyalty programs can help you retain customers and encourage them to come back for future purchases.
• Social media marketing: Take advantage of social media to connect with your customers, drive traffic, and increase awareness of your company.
• Content marketing: Creating relevant content makes it easier to attract and retain customers. Content marketing can include blog posts, videos, or educational resources.
• Omni-channel experiences: Customers should have the same overall shopping experience regardless of whether they’re online, in store, or on social media.
• Upselling and cross-selling: Look for chances to upsell customers on more expensive products or convince them to add extra items to their cart. These techniques increase the overall value of your average order.
• Free shipping: Offering free shipping can encourage customers to complete their purchase without having to pay extra. This strategy is especially effective if your competitors charge for shipping.
• Flash sales and limited-time offers: Putting a time limit on discounts creates a sense of urgency. If customers are on the fence about buying from your eCommerce platform, they might be swayed by a special deal.
• Subscriptions: Offer subscription plans that provide customers with regular deliveries or access to special content. Subscriptions can build customer loyalty and create a recurring revenue source.

Remember that the effectiveness of these strategies may vary depending on your target market and what you sell. Keep an eye on how each strategy is working and make adjustments as needed.

Financial Projections

Creating financial projections for an online store is essential for understanding the potential profitability and growth of your business. Remember that financial projections are educated estimates and not precise predictions. They’re planning tools to guide your decision-making and help you set realistic goals for the future.

Before you start making projections, it’s important to have a good idea of your expenses, revenue, and overall profitability. Calculating your net profit or loss is a fairly simple process:

1. Collect data: Collect information about how your online store is performing. If you just opened a new business, you can also use market research data about your industry to come up with an estimate.
2. Identify your revenue: Figure out your main sources of revenue. Depending on your business model, this could include a mix of subscriptions, product sales, and other sources.
3. Sales forecast: Estimate your monthly or annual sales based on what you’ve learned so far. Consider factors like seasonal demand and conversion rates.
4. Cost of goods sold (COGS): Calculate the direct costs associated with producing or acquiring inventory. This includes the cost of materials, manufacturing, and shipping.
5. Operating expenses: Come up with an estimate of your operating expenses. Some expenses will be fixed, while others will change from month to month. This category includes things like rent and web hosting.
6. Gross profit: Subtract the COGS from your projected sales to calculate your gross profit. This is how much money you’ll have to cover operating expenses and turn a profit.
7. Net profit or loss: Subtract your operating expenses from gross profit to determine your net profit or loss. If your expenses are more than your revenue, you’ll have a net loss.

Once you know more about your net profit or loss, you can calculate a break-even point. This is the minimum amount you need to make to cover your expenses and start making money.

Pay close attention to when you have cash coming in or going out. Analyzing cash flow will help you understand when you’ll have cash available to cover expenses.

A projected balance sheet will show your online store’s assets, liabilities, and equity at a specific point in the future. Your calculations should include cash, inventory, accounts payable, and any other financial transactions.

Over time, you can conduct a sensitivity analysis to see how variables such as expenses and pricing affect your projections. A sensitivity analysis can also make it easier to identify potential risks and opportunities.

It’s crucial to be conservative in your estimates and consider possible risks and uncertainties that may impact your business. If you’re unsure about financial forecasting, consider seeking assistance from a financial advisor or accountant.

Marketing Plan

Creating a comprehensive marketing plan is crucial for the success of your online store. A well-designed marketing plan will help you attract customers, drive sales, and improve brand awareness.

Your marketing plan should be based on the market research you’ve already conducted. Once you have a strong understanding of your target market, you can set specific marketing goals such as expanding your following on social media.

Pro Tip: Identify your store’s unique selling proposition (USP) and what sets you apart from the competition. Emphasize your USP in all marketing and customer communications.

Let’s review some additional steps you can take to highlight your USP and connect with your target audience:

• Search engine optimization (SEO): Use SEO best practices to improve your website’s organic search visibility. Focus on relevant keywords, quality content, meta tags, and backlinks to rank higher in search engine results.
• Content marketing: Create engaging content that resonates with your target audience. You can use a mix of blogs, videos, and infographics to teach your customers new things and establish yourself as an authority.
• Social media: Choose the appropriate social media platforms based on your target audience. In addition to posting your own content, social media allows you to communicate directly with customers.
• Email marketing: Building an email subscriber list lets you communicate with your customers on a regular basis. You can keep in touch by sending product updates, coupons, or other types of content.
• Paid advertising: Use paid advertising channels like Google Ads to drive targeted traffic to your online store. You’ll want to set a budget and monitor the performance of your campaigns.
• Partnerships: Partnering with other brands or businesses makes it easier to expand your reach and cross-promote. There may also be bloggers and influencers in your niche who are interested in working with your brand.
• Customer reviews: Encourage satisfied customers to leave reviews on your website and social media platforms. Positive reviews build trust and credibility.

Marketing takes time and persistence. You can use tools like Google Analytics and social media insights to measure website traffic and conversion rates. If a campaign isn’t working, you’ll probably need to revisit your marketing plan and how much you’re investing in that area.

Operations Plan

An operations plan outlines the specific processes and procedures you’ll need to follow to run your business. Basically, it provides a detailed road map for how your business will operate on a day-to-day basis.

Your operations plan should include the following elements:

• Business location: Describe the physical location of your business and any facilities you may need in the future.
• Production process (if applicable): Outline the steps involved in producing your products or delivering your services. This section should cover quality control and production capacity.
• Supply chain: Explain how you will handle your supply chains and source vendors.
• Inventory management: Detail how you will track and manage inventory levels to make sure you always have enough materials or products in stock.
• Order fulfillment and delivery: Explain how you’ll process orders and ship them to customers. This section should also include information about delivery and shipping.
• Risk management: Identify potential risks and describe the steps you’ll take to mitigate them. This could include contingency plans for emergencies and business continuity strategies.

After you’ve outlined these basic parts of your plan, it’s time to consider the internal support you’ll need to operate. Here are some of the key support functions that most businesses rely on:

• Customer service: Outline how you’ll respond to customers’ questions and concerns. Which channels will you have available for customer requests?
• Information technology: Think about the infrastructure required to support your operations. List any hardware, software, security measures, and data management solutions you anticipate using for your business. You could also add information about any potential upgrades or plans to automate in the future.
• Human resources: You may not need a formal human resources department depending on the size of your business. However, you should still describe the organizational structure and who’s taking responsibility for recruiting, performance, and employee development.
• Health and safety: Explain the health and safety protocols you’ll put in place to protect employees and customers.
• Legal: Address any legal and regulatory requirements related to your business operations. This could include licenses, permits, and environmental regulations.

Your operational plan should also set specific timelines and milestones for achieving operational goals. This will help you ensure that your business stays on track over time.

An operational plan should serve as a reference document for yourself and your team to ensure smooth day-to-day operations and predictable long-term growth.

Step #4. Choose a Business Model

Determine your business model, which could include options like dropshipping, an inventory-based model, or print on demand.

Dropshipping Products

Dropshipping products is a wonderful way to run an eCommerce store. You’ll be responsible for creating a website and marketing your eCommerce business. The dropshipping company handles all the fulfillment.

Here are the basic steps:

1. Connect the API to your online store.
2. Market the products.
3. Customer places an order.
4. You approve the order and pay the dropshipper.
5. Dropshipping company packs and ships the order.
6. You keep the profits.

The startup costs for an eCommerce site are less expensive this way since you don’t need to purchase inventory in advance for a dropshipping business. You only pay for products after a customer places an order, which reduces the risk of having unsold inventory.

When you dropship products, you can also offer a broader selection of products without the need to physically store them. Plus, you can run your business from anywhere without having to stay close to a physical facility or warehouse.

The downside is that you’ll likely pay more per product than if you buy inventory on your own in bulk. You’ll also have less control over things like shipping times and quality control. It can be challenging to provide a consistent customer experience when products are shipped from various suppliers.

Weighing these advantages and challenges will help you determine whether dropping is right for you. Learn more about dropshipping.

Carrying Inventory

Carrying inventory involves purchasing and storing products in a warehouse or physical location until they are sold to customers. With this model, you’ll have full control over product quality, inventory levels, and shipping times.

Buying in bulk allows you to negotiate lower unit costs and increase your profit margins. You’ll also have the freedom to customize packaging and add personalized touches to improve your brand identity.

At the same time, purchasing inventory requires a larger upfront investment. You’ll also need to manage your own inventory and make sure that you have everything in stock on time. There’s a risk of holding unsold inventory, which ties up capital and may lead to losses if your products become outdated.

Ultimately, the decision between dropshipping and carrying inventory depends on your financial capabilities, risk tolerance, and long-term vision for your online store. Some businesses may even choose to combine both approaches.

Print on Demand

A print-on-demand system works similarly to dropshipping. It’s commonly used when people start an online store.

The supplier will carry blank items like T-shirts or mugs, then add designs to it after a customer has ordered and paid. Once the item is printed, the printer will ship it to the customer directly.

This model is appealing for eCommerce sites since you won’t need to hold your own inventory. The downsides to this method are the lower profit margin and the time it takes products to reach customers.

Subscriptions

Business models using a subscription enable small business owners to get repeat sales with ease. Subscriptions are great for essentials like razors and other products that people replenish on a regular basis.

Pro Tip: Make sure to monitor your churn rate when you have subscriptions. Online shoppers will often cancel the subscriptions, especially if you offer the first month free. You’re still responsible for the card fees when an order is canceled.

Digital Products

Focusing on digital products when you start an online store can be highly profitable. Your eCommerce website will collect users’ information and online payments, then provide access to the digital content via email, onsite downloads, or entry to your platform.

As time goes on, this business model can approach up to 90% profit. Just ask Graham Cochrane, who started with $50 and is making $160K per month using the same system as when he first entered online sales.

Step #5. Select a Platform

Choose an eCommerce platform that suits your needs. Popular options include Shopify, WooCommerce (a WordPress plugin), and BigCommerce. Each platform has its strengths and limitations, so research them thoroughly to find the best fit for your store.

Shopify

When you start an online store, you’ll likely consider two main options: Shopify or Wix.. Shopify is the preferred eCommerce platform for many small business owners because they:

• Have an easy-to-use interface
• Don’t require a developer (but you can hire certified ones)
• Support mobile shopping
• Offer lots of free and paid apps that are fully integrated into the system
• Manage security and compliance
• Have a massive community and resources section
• Offer numerous payment gateways
• Can be easily scaled with your business
• Support SEO
• Offer 24/7 customer support
• Provide marketing and analytics tools
• Connect to most online marketplaces

Overall, Shopify is an all-in-one solution that’s user friendly with ongoing support for entrepreneurs. This is an attractive option if you’re looking to start and grow your online store without getting bogged down by technical complexities.

Amazon

You can begin selling online through Amazon without having your own eCommerce website, but they take a commission from each sale. You’ll also need to store your products in an Amazon warehouse to qualify for Amazon Prime.

Check out our interview with the owner of Shed Defender to learn how to start selling on Amazon:

WooCommerce

WordPress is the world’s most commonly used website builder. For an online store website, you’ll want to use the WooCommerce plugin. 

I personally find WooCommerce to be more complicated than Shopify, but most eCommerce website builders use it. We even use it at UpFlip.

BigCommerce

The eCommerce platform BigCommerce is similar to Shopify but uses coding that more people will be familiar with. Both eCommerce platforms offer similar pricing, but one of the big benefits of this company is the ability to have multiple storefronts for one price.

Next you’ll want to choose your store name.

Step #6. Choose Online Store Business Names

An online store business name is used in various places to establish and promote the brand identity of the business. Here are some key areas where your business name will appear:

• Website domain
• Logo and branding
• Social media profiles
• Marketing materials
• Packaging and labels
• Email addresses
• Legal documentation
• Invoices and receipts
• Customer service

It’s essential to choose a unique and memorable business name that reflects the identity of your online store and aligns with your products or services.

Additionally, check to see that the online store name is not already in use by another business and that the domain name is available using our online store name generator. 

A well-chosen business name can assist in attracting customers and building brand recognition.

Step #7. Build an Online Store

Build an online store that’s visually appealing and user friendly. Many eCommerce platforms offer predesigned templates that you can modify to match your brand.

You’ll want to include the following elements when you create an online store:

• Home page
• Header and footer menu
• Product category pages
• Product pages
• Checkout page
• Thank you page

eCommerce websites will also need to:

• Include high-quality photos.
• Accept payments online.
• Include product descriptions.
• Use terminology that people type into search engines.
• Collect sales tax.
• Calculate shipping costs.

Check out the I Heart Dogs website to see how they designed their eCommerce store.

Step #8. Set Up Payment Gateways

Enable secure and convenient payment options for your customers. Popular choices include credit/debit cards, PayPal, Apple Pay, and Google Pay.

You’ll want to consider the payment processor transaction fees and whether you’ll also need to accept payments in person. Most eCommerce stores offer multiple payment options.

I Heart Dogs offers credit card and Google Pay on their own site.

Step #9. Organize Product Listings

Online retail relies on technology to create a similar shopping experience to what you would have in store.

I Heart Dogs uses the following categories:

• Top sellers
• New arrivals
• Health
• Dog supplies
• Home goods
• Garden
• Jewelry
• Apparel

The site then breaks these larger sections into subcategories and individual product pages. Each product page shows how many shelter dogs a purchase will feed.

When you click to buy a product, it then shows an upsell page where you can buy products that are commonly bought with your selection.

From there, you can choose to continue online shopping or check out. This small online store also accepts online payments for charity in multiple locations.

Honestly, I love its mission, but the number of times it tries to get its target customers to donate money can be a little distracting. If you choose to use their strategy when you start online store operations, I’d recommend reducing the number of upsells to one or two offers.

Step #10. Set Up Shipping and Delivery

One of the most challenging aspects of how to start an online business is choosing shipping tools. A benefit of creating an online store that uses dropshipping or a print-on-demand model is that the provider will normally specify the shipping costs.

Most eCommerce platforms also have arrangements with carriers to help you ship from your own store more successfully. Make sure to decide your shipping strategy in advance of opening, including shipping carriers, rates, and delivery regions.

Consider offering free shipping or promotions to attract customers. The free shipping isn’t really free, though. You include it in the cost of goods sold when you start an online business.

If you pay $5 for an item and shipping is $7, the cost of goods sold is $12. That means if you want to make 50% COGS, you need to sell the product for $24.

Step #11. Implement Security Measures

Ensure your online store is secure. Use SSL certificates and other security measures to protect customer data.

Step #12. Ensure Legal and Regulatory Compliance

Research and comply with legal requirements regarding how to start a business online in your state. You’ll need a business structure, employer identification number, business license, and tax permit. Your online store will also need to follow data protection laws.

Check out our business hub for more in-depth information on each of these topics.

Step #13. Test Your eCommerce Store

Before the official launch, thoroughly test your online store to ensure that everything is functioning correctly, from browsing and shopping to the checkout process.

Step #14. Launch Your Own Online Store

Once you’re confident that everything is in place, launch your online store. Then you’ll want to turn your attention to marketing.

Step #15. Market and Promote Your Online Store

Start promoting your online store through various marketing channels such as social media, email marketing, and paid advertising.

Marshall explained his basic marketing strategy:

1. Build a community.
2. Lead them in with a fundraiser or small things like a sticker or mug.
3. Collect their contact information.
4. Build the relationship.
5. Sell more items.

Step #16. Analyze and Optimize Your Online Store

Regularly analyze your store’s performance, sales data, and customer feedback. Use this information to improve and optimize your online store for better results.

Remember that building a successful online store takes time and effort. Being patient and staying dedicated will allow you to continuously adapt to changing market conditions and customer preferences.