How to Build an Online Store

This article contains general information and is not intended to provide information that is specific to American Express, or its products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.

Creating an online store could help to launch a new business or scale an existing brick-and-mortar operation. The digital space offers countless virtual opportunities to connect with target customers, along with the potential for lower expenses compared to maintaining a physical location.

5 steps for creating an online store

Starting an online store can be similar to starting any other type of business in terms of the amount of required planning and the types of hurdles entrepreneurs may face. Those who operate a traditional storefront offline may find it easier to make the transition vs. someone who’s learning how to build an online store from scratch. In either case, here are some things to consider when creating an online store.

1. Define what sets the e-commerce store apart

With so many online businesses already in the market, entrepreneurs will want to be sure they’re offering an appealing product line or distinctive value proposition to capture new customers and encourage repeat purchases.

Whether that entails offering commoditized products – widely available goods – or unique, handmade products, it’s helpful to do some research to determine market demand before creating an online store.

Ultimately, shoppers are looking for a good reason to choose one e-commerce website over another when making purchases. That’s where the concept of value proposition comes in. It provides a customer with a clear reason why they should buy from a particular brand, as opposed to other sellers. This is one of the reasons why offering a perk, like free shipping, might encourage more customers to convert and close the sales cycle.

2. Lay the groundwork for an e-commerce business

Before launching an e-commerce business, it’s beneficial to take care of some housekeeping. The first step is often sorting through the logistics, including:

Create and purchase a domain
Consider your options for building your e-commerce website: Some business owners may hire a web developer with experience building custom e-commerce sites. There are also tools available that online business owners could use to construct their own sites, even if they lack previous experience.
Gather any necessary legal documents: An attorney may be able to assist with tracking down the right documents, which might help avoid costly mistakes.

There are some differences to consider when starting an online store from zero vs. building a digital brand for an existing business, such as costs.

A mature business that plans to sell its products online may already have the necessary inventory to fulfill orders. They may also be able to spend less on marketing if they can build buzz organically through their existing customer base.

Under that scenario, startup costs may be limited to establishing a website and setting up the mechanisms required to collect payments. New businesses, on the other hand, might need to budget more for inventory purchases or marketing since they may not be able to rely on word-of-mouth.

3. Explore third-party online e-commerce platforms to host the site

Building an online store from the ground up could be time-consuming and challenging for business owners who may be less tech-savvy regarding things like graphic design or website coding. Using a third-party e-commerce

platform instead could offer a simpler, and potentially faster, way to launch a new online store.

A third-party e-commerce website essentially provides a plug-and-play option for business owners who want to sell online. Some sites offer tools to create a branded storefront to advertise products and accept credit card payments for purchases.

When deciding on an e-commerce provider, it’s helpful to consider the full range of features and capabilities offered, including:

Ease of use and overall functionality, particularly for customizing and building an online store.
Whether there’s the option to create a custom domain
Which payment methods are accepted, and how payments are
Shipping options, including whether it’s possible to purchase discounted shipping labels through the platform and track orders once they’ve
Access to various tools that could make tasks like managing inventory or communicating with customers easier.
Integration with other e-commerce and social media
Solid customer support and access to educational resources that could be useful in growing an e-commerce business.
Cost, including monthly or annual subscription fees required to join the platform, payment processing fees, and fees to acquire necessary hardware or software.

Brick-and-mortar business owners may also want to look for the option to set up a point-of-sale (POS) system through the platform that can process transactions across multiple sales channels. For businesses that operate at physical locations, being able to sync online and offline transactions could make it easier to track orders and revenue.

4. Build the foundation for people to discover the business

Learning how to build an online store effectively also requires some knowledge about how to make it visible to customers once it’s live. Search engine optimization (SEO) can play an important role in marketing a digital business.

SEO refers to strategies and tactics that could help increase a website’s visibility in search results. The higher a business or brand ranks in search, the greater the likelihood that a customer will click over to their website. More clicks could equal more opportunities for businesses to convert browsers into buyers.

Several elements make up SEO, and what search engines value or prioritize is constantly evolving, including keyword research, optimization, and linking strategies. Optimizing an e-commerce website for search could be tricky and may require the services of an SEO consultant or specialist. An SEO expert should have an in-depth understanding of the concepts above, as well as insights into how changing algorithms may affect where webpages rank in search.

5. Help get the word out about a new store

Once an e-commerce store is up and running, social channels might be a valuable form of marketing. Building an audience through social media begins with identifying where the target customer base spends time. You should take into account where your customers likely tend to spend their time online.

Businesses also need to understand the type of marketing tactics that tend to work best based on the products they’re offering. Studying what competitors are doing successfully to grow their businesses may provide clues as to what works and what doesn’t.

Strategies that may prove effective include:

Reaching out to friends, family members, and other contacts to announce the business opening.
Sending out an email blast to newsletter subscribers (for brick-and- mortar businesses that already have an email list).
Collaborating with social media influencers in the same niche who already have a solid following.

Whether it makes sense to spend money on ad placements on social media apps may depend on the expected return on investment. Business owners with a limited budget may consider running smaller ad campaigns on one or two platforms to test the waters before making a larger financial commitment.

When executed the right way, social media can build a community around a brand and engage with users to encourage them to make a purchase. Plus, social media may provide user-generated content, which could help to build brand trust.

FAQs about how to build an online store

When it comes to creating an online store, there may be something of a learning curve, even for experienced business owners. Here are some of the commonly asked questions about building an online store and what to expect.

How much does it cost to build an online store?

The cost to build an online store can vary depending on several factors, including what type of e-commerce is involved and whether the store is brand- new or an extension of a physical retail location.

Again, for new online stores starting from scratch, some key costs to consider include obtaining required licenses, purchasing necessary inventory and shipping supplies, setting up an online storefront either through a unique domain name or a third-party platform, and marketing the business. For existing stores, the biggest cost may simply be setting up the storefront.

When considering an e-commerce platform for doing business, there may be one fee for basic services or functionality and a separate fee for premium features. Likewise, businesses that choose to set up a website themselves may consider whether it makes sense to use a free option. While it’s possible to set up a basic website at no cost, business owners might need to upgrade to a paid plan to sell products or services.

How much does it cost to run an online store?

Operating costs for an online store may vary from one business to another. Some common e-commerce expenses include:

Inventory, if selling physical products.
Design tools, if selling digital products like templates or e-books.
E-commerce platform fees, including payment processing fees and subscription fees.
Hardware and software fees.
Shipping costs.
Returns and refunds.
Bank fees.

Creating a tentative budget could make it easier to identify all expected expenses required to run an online store. Business owners may consider creating templates for tracking expenses and cash flow that they can easily update from month to month.

How long does it take to build an online store?

The time frame for building an online store can depend largely on the needs of the business. For example, the timing for a drop shipping business might look very different from an e-commerce fulfillment business or a business that sells handmade products.

There are other considerations, including whether a business is building its e- commerce storefront independently or relying on a third-party platform. The number of products can also make a difference as that can determine how many listings or individual web pages need to be created. A basic online store might take a month or less to build, while something more complex may require three to nine months to complete.

How could a business get funding for an online store?

There are several possibilities for funding an online store, such as:

Small business loans.
Lines of Credit.
Credit Cards.

Outside financing from investors may also be possible, though that may be more appropriate for a larger-scale startup. Retailers with existing physical stores may find it easier to get small business loans or lines of credit. Lender requirements for those options often hinge on things like operating history and annual revenue, which a brand-new business may lack.

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