Are you thinking about setting up your own online shop? Opening an online store may sound like a cheap and easy business model but it’s not. You may think that starting an online shop is like opening a high-street shop but without all the overheads except what you may not know is that setting up an online shop is probably more difficult than opening a high-street shop and it has tons of hidden costs.
That doesn’t mean that you shouldn’t build your own e-commerce site, you just need to learn about what needs to be done and how much it could all cost. In doing so, your chance of opening an successful online boutique will increase.
Here’s the truth about starting your own online shop.
Step one – Your online shopping idea.
The great thing about an online shop is that it doesn’t have to be an outstanding original idea to work. As time has shown, almost anything can be sold over the net and it’s basically a case of supply and demand of anything but once you open your online shop you’ll find the hidden cost of e-commerce comes into play.
The more product categories you have, the bidder your online shop will be and the more it will cost to build your online shop and manage it. In addition, it’ll mean that your marketing costs will also increase in order to promote all of your stock.
For a better chance of success when starting your online shop and to keep costs down, try and keep it simple. Sell only one product or one category of products to begin with.
Step two – Sourcing a product for your online store
Whatever you decide to sell in your online store, check how easy it actually is to get a hold of a supplier. Sourcing products globally is now easier with the likes of wholesalers and manufacturers available at a click of a button but just because their based abroad, doesn’t mean their actually any cheaper if you’re a small start-up business.
Most wholesalers and manufacturers still sell in bulk. They may be cheap if you buy 1000 of a single product but anything less may not even be considered. If you find a supplier who can accommodate your buying requests then don’t forget delivery costs which may cost as much as the stock itself and VAT as it will get charged upon arrival to the UK.
This may well bring you and your budget back to the UK to find a local supplier which can be harder than finding an international one.
Local suppliers may not even exist and if they do they may well hold the same minimum order quantity (MOQ) ideology.
After doing all the above you may find that you’ve been stopped in your tracks before you’ve even begun because you need more investment to buy stock. It’s a good idea to setup your suppliers before going ahead and opening your online shop.
This will reveal how much cash you will actually need to setup the online store
Your online shopping system
The website itself is a core factor in thinking that an online shop is easy. Many people think it’s just a “website.” An online shop is much more than that with layers of pages, systems and functions to make it all operate like a shop and it takes a lot of effort to get it to work properly.
An online shop can be made easy with the use of boxed up online solutions or you can go for a more bespoke touch. Either way it will cost you money to get set up and running, even if its marketed as a cheap, quick and easy solution.
Boxed up online shopping solutions:
Are nice, neat and quick solutions giving you everything you need to set up your online shop up but they do come with an overhead of monthly fees. Boxed up ecommerce solutions also have a drawback of being restricted in design and functionality; your shop has to contend within the service providers rules and it may show some limits when it comes to developing an online store that caters for your own needs.
The second drawback is that with a boxed up package, your online shop is not completely yours, you only own the right to operate within it, not own it.
Bespoke shopping solutions:
Nothing online is absolutely bespoke these days with systems being built upon pre-existing systems to minimise costs but something a little more bespoke does give you a greater freedom to customise the look and functionality of your online store to suit your needs. It usually comes at a one off cost in which case the online shop after completion is yours.
A more bespoke shopping solution does require a bigger responsibility from you the shop owner to ensure that everything is maintained and updated to work.
With either case an online shop is never a lifetime solution or a one off cost. You should keep in mind that each route will require constant maintenance and updates to keep it running smoothly. These are the overheads on an online shop.
As well as this, don’t forget design and graphics. Online shops require constantly changing graphics from product photos to sales banners and design tweaks. When opening an online shop most people forget about this area of work but really want and need it. It’s an idea to get friendly with your designer/developer as you’ll need them on an on-going basis.
I’m surprised that many people want to open an online shop but do not research payments. A Payment gateway will be an essential factor for your shop, allowing you to process online payments. This will also be an overhead as each PSP (payment service provider) will charge you an on-going fee or percentage or both for the privilege of processing your payments.
Each one will charge differently so it’s key to research a solution that works for you. Also remember that your choice of PSP has to fit into your choice of shopping system. If not, it may cost you more to build a plugin that works with your PSP.
Marketing your online boutique
Marketing an online shop or online boutique is not like marketing a high-street shop.
A small high-street shop will use “footfall” to get people into the shop. “Footfall” means enticing passers by or people in the vicinity to enter the shop.
- They’ll use a shop sign to promote the brand and capitalise on footfall
- They’ll use flyers or adverts in the local area to promote itself on a “shop or brand level” to create footfall.
- They’ll then use the window display to promote itself on a “product level” to capture the footfall.
The premise of marketing an online boutique is the same however what startup online shops tend to forget is that they are on a digital space and the method of creating footfall is totally different.
- Your logo design could be seen as your shop sign but unlike a high-street shop it’s not seen until you enter the shop. That means it’s not there to entice shoppers in from a far. It’s there to confirm trust, credibility and professionalism as a online shop brand, once the customer is already in the shop. Your logo design should say:
- We’re experts
- We’re specialists
- A brand message
- It’s safe to buy from us
- Marketing your ecommerce site on a “shop or brand level” to create footfall is much harder because it’s a digital space with much more competition. A high street may have three boutiques who can create footfall through flyers, the internet has a million boutiques were digital flyers are posted out in the millions daily. This means that the way we shop online is different:
- Online shoppers are not that interested in shops, in general.
- What they are interested in is brands and products
- They are interested in visiting several online shops to get the best and safest deal
- Because of that, promoting your online shop on a brand or shop level could be a big waste of time
- Your best, most cost effective way of promoting your online shop is through your window display on a product level. On a digital landscape, your shop window is your product placement in search engines and social media.
To get your shop promoted on both search and social media will require you to either spend most of your time learning Search Engine Optimisation (SEO) and social media marketing which are both full time jobs or you’ll have to hire someone to do it for you and neither is cheap. To get any results I would expect to pay at least £500.00pm on each form of marketing. This would allow you to compete as a small online boutique.
My very best advice if you’re starting an online shop is to spend most of your budget on marketing in the form of branding, SEO, social media and print, as that’s what will be generating sales and where you’ll be making your money back.
Setting up an online shop is fuelled with hidden costs so here’s a checklist so you know what you may need to spend on when starting up an online shop:
- Product delivery
- VAT (taxes)
- Web design & Development
- PSP Fees and setup charges
- PSP integration
- Product photography & editing
- Populating site
- Delivery Packaging for products (envelops/bags/boxes)
- Delivery Equipment ( Scales)
- Delivery costs (stamps/franking/courier contract)
- Marketing offline (Print Design, Advert placement)
- Marketing online (SEO, Social Media, newsletters, subscriptions, links)
- Email distributer
- Email design
- Mailing lists
- Domain names
- Something else (because there will be something else).
If you need help creating your online shop then et in touch at https://www.conceptstore.co.uk