How to Start an Online Store

Customers have embraced online shopping. While the pandemic accelerated the move to sell and shop online, consumer behavior has changed — and there’s no going back.

In a survey conducted by Wakefield Research for the Square Future of Retail report, consumers say that they make an average of 37% of their monthly retail purchases online. Online shopping is especially popular among parents and people living in urban areas, who say they now make about half of their purchases online. And retailers are meeting their needs. Retailers say that an average of 58% of their revenue currently comes from selling their products online.

If you’re looking to capitalize on this trend, this article details how to start a business with an online store for restaurants, retail brands, and service-based businesses.

How to start an online store

To get started selling online, you’ll need to create an eCommerce website or an online ordering page. Then you’ll need to list products, to set up payments, and to build your online business operations, which includes order fulfillment, shipping, sales tax, and more. Square Online has everything you need for eCommerce, so you can get up and running quickly and easily.

1. Start with a business plan.

A business plan is where you define your business’s future objectives and how you will achieve them. Think of it as a guide to success and any potential roadblocks you may face.

Here’s an overview of what your business plan should include:

  • Executive summary: A top-line description of your business and how you’re going to accomplish your goals, looking ahead three to five years
  • Business description: Your elevator pitch that conveys your business idea concisely
  • Market analysis: A current landscape of the market and a description that identifies your target market
  • Competitive analysis: The strategic research that outlines information about competitors in the space
  • Service and product line: Details on what type of product you offer
  • Operations and management plan: How you plan to get up and running and manage day-to-day operations
  • Financial considerations: A financial analysis of all the capital you need to start, run, and grow your business, potentially including business loans

2. Determine startup costs.

There are a variety of upfront costs that all business owners incur while getting their new ventures off the ground. Proactively making allowances for expenses will help you track your working capital, or the measure of how much liquidity your business has.

Some common startup costs for online stores include:

  • Bills and utilities: Consider the bills and utilities related to your business. Both online and brick-and-mortar retail businesses may incur bills related to their websites’ hosting service subscriptions, customer support software, point-of-sale systems, or accounting software.
  • Equipment and supplies: Think through the inventory, property, and equipment needs that are related to your online business so you can determine whether it’s best to own or lease those supplies.
  • Marketing materials: You may rely on print or digital marketing to increase awareness and sales for your business. Keep in mind any costs related to printing or distributing marketing materials.
  • Employee expenses: If you plan to hire a team, factoring in wages, salaries — including your own — and employee benefits will help you manage your cash flow better and plan ahead as you scale your business.

3. Select and register a domain name.

If you don’t have a website, you need to purchase your domain. Some eCommerce platforms let you buy it directly from them, or you can use a domain registrar. Your domain should be your business name if it’s available, or something that fits your brand, products, or services.

A good domain name should be short and easy to share. Avoid numbers, hyphens, underscores, and symbols that are difficult to remember. Connect the domain name to your business. If your business name isn’t available, add a prefix or suffix.

Be sure to check with your legal counsel to ensure that you don’t run into trouble by choosing a domain name that may be confusingly similar to another business’s brand.

4. Select your eCommerce platform.

Think about the features you need for the stage your business is currently in and for where you want to be in the next couple of years. You can choose from plans that come with increasingly advanced features, such as a real-time shipping rate calculator, integrated shipping labels, abandoned-cart emails for customers, gifting options and custom domains. There are more robust plans to meet your business’s needs as it grows.

5. Create and customize your website.

You want to create a website that reflects your brand and makes sense for your business, whether you’re a retailer, a restaurateur, a professional services provider, or a multi-hyphenate. A customizable online store builder offers flexible designs to create an ideal layout for your business. You can choose colors, fonts, and layout elements that make the most sense for retail, restaurants, and services. The designs have also been optimized for mobile viewing since a lot of online shopping is conducted on consumers’ phones. 

Looking for the best way to feature your products online? Here are the Square tips and tricks for product photography.

6. Take secure payments.

Accept payments online and in person right away with payment systems. The Square eCommerce platform accepts all major cards, and you can get transfers as fast as the next business day with eCommerce processing fees of 2.2% per virtual transaction or lower. Plus, by using the Square eCommerce platform, you won’t have the added expense of managing PCI compliance.

7. Manage inventory and drop shipping.

“Invest the time to digitize your business by cataloging your inventory in a digital system, with high-quality photographs of each item,” says David Rusenko, head of eCommerce at Square. “It’s an upfront investment, but it sets you up to sell on a variety of platforms.”

Once you’re set up to go online, you want to make sure that your inventory management is in sync across channels so that you don’t accidentally sell items that are out of stock. Square Online works together with Square Point of Sale and Square Dashboard to sync online and in-person orders, items, and inventory automatically. Keep from overselling inventory between multiple locations and easily track fulfillment and shipping.

Are you considering drop shipping, a retail fulfillment method in which a business doesn’t keep the products it sells in stock? We have a detailed guide here.

8. Shift strategy to include all sales channels.

Having an omnichannel strategy creates a seamless shopping experience for customers, whether in person or on a mobile device or computer. An online store opens up omnichannel marketing opportunities that give you more ways to promote your business across multiple channels. Omnichannel also gives shoppers more ways to find and buy from you. This is the future of commerce.

Moving your business online doesn’t have to be all or nothing. “Simply starting somewhere allows you to sell in new ways now that customers’ buying journeys have become less straightforward,” says Megan Karande, product marketing manager for Square for Retail.. “It’s about figuring out what works for your business and what makes it easier for you to sell in new channels moving forward.”

“The advancements we saw are only going to continue post-pandemic,” adds Rusenko. “The changes aren’t a way to simply make it through — they’re permanent and redefining what a meaningful retail experience can look like.”

Many retailers are experimenting with different ways to run their businesses, whether it’s trying out wholesale or a new product line, or dabbling in another industry entirely. Going online makes those bets more successful. Among retailers who are selling online, an average of 58% of their revenue now comes from online sales. Of retailers surveyed by Square, one in six say that all of their revenue comes from online sales, and 36% say it’s very likely that they will be an online-only store in 2021 and beyond.

9. Develop a marketing strategy.

Your marketing strategy gives you a clear understanding of your marketing, of your priorities, and of your tactics to achieve your goals. Setting goals and outlining how you plan to achieve them is the best way to grow your business. From doing your research to determining KPIs, here’s how to get started with a marketing strategy.

10. Put together a promotion plan.

Marketing online can be daunting, but there are several ways small-business owners can connect with their customers if they’re just starting out. Here are some resources:


What is eCommerce?

Ecommerce refers to the process of buying and selling goods and services online. An online experience allows retailers and restaurants to serve existing customers better by making shopping and browsing menus easier for them. It also allows businesses to find totally new audiences that may never enter their physical location. Independent retailers, small businesses, and large corporations can all benefit from incorporating eCommerce into their business strategies.

Like any digital technology, eCommerce has continued to advance rapidly. In the 1990s eCommerce began to target a consumer market and online retailers started to pop up. Now almost any business owner or entrepreneur can use an eCommerce platform to open an online store in minutes.

What are the benefits of selling online?

Here are a few benefits of running an eCommerce store:

  • 24/7 shopping: Most eCommerce websites allow shoppers to peruse products and make buying decisions at any time, day or night. This makes shopping easier for customers, and that accessibility is a huge competitive advantage. As a business owner this also allows you to bring in sales while you’re off doing something else.
  • Meet customers where they are: An online store gives you more channels on which to engage with customers. Integrate with social media to let people shop from their feeds, to help customers find you in Google searches and make purchases when they are ready, and to send out newsletters with products that customers need based on their purchase histories.
  • Widened scope: A physical store is limited to selling to customers who are in the area. Many eCommerce websites extend businesses to people across the country and the world, vastly expanding their customer bases and potential revenue. Selling online also offers the ability to broaden or increase inventory. The number of items a business can sell online doesn’t need to be limited in the same way as a physical store, which might be a consideration to increase cash flow.
  • Purchase-funnel clarity: It’s nearly impossible to track how often a single customer comes to a physical store to browse before they make a purchasing decision. An online store can track a customer’s every click, providing valuable insights into the purchasing process and paving the way for marketing opportunities to nudge customers who may be on the fence about purchasing. 

How much does it cost to start an online store?

You can get a custom domain from Square starting at $12 or free for one year with any paid plan.

What are the benefits of an online store versus brick and mortar?

Brick-and-mortar stores shouldn’t be pitted against eCommerce, making businesses feel like they needed to choose one channel over the other. Omnichannel brings these channels together to create a seamless experience. It allows customers to choose how to interact with a retailer and gives retailers more options to build relationships with customers. 

Having both options satisfies the needs of a broader customer base. Most retailers have both customers who prefer to order everything online and others who prefer to see something in person before they buy. Customers who don’t have a preference have both options so they can shop according to their own schedules.

Build your business with a free online store.

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