Start An Online Store For Less Than $200

So many people I speak with have that great idea for an online store spinning around inside their head, but it never gets realised because of the perceived roadblocks to getting up and running. The tools for aspiring entrepreneurs that have evolved over the past few years have made it possible for anyone to start an online business with just a few hundred dollars in initial investment. The information below is based on my experience over the last four months taking the online store for men Details by Sven from an idea in my head to a profitable online business.

Picture by Keystone/Getty Images

What Are You Going To Sell?

The safest way to make money is to have something to sell. This why ecommerce is a great starting point for someone who wants to take that first step towards building their own business; you don't have to grow to a million users before being able to monetise. If you can sell something from day 1, you have a good chance of being profitable.

Some things to consider when choosing what to sell:

  • Will you manufacture your own product or retail other's products? Whilst you can find cheap manufacturers through a service like Alibaba.com, we decided that we would prefer to handpick a collection of unique and well-designed Australian gifts and accessories for men and offer these products as an online retailer.
  • Digital or physical products? The larger the product you wish to sell, the harder it will be to ship. If you can create a digital product, such as an ebook, your costs will remain close to zero.
  • Dropship or warehouse? If you choose a physical product, you don't necessarily have to touch the product. If you are retailing other people's products they may allow you to work a dropship model, whereby you generate orders on your store's website but the product manufacturers/designers take care of fulfilment to the customer. This model has worked best for me, and allowed Details by Sven to begin selling with no upfront purchasing costs.

Build Your Online Store

Gone are the days of having to pay thousands of dollars to a web design company to put together your online store. With a platform like Shopify you can be up and running with a professional looking online store within hours, and all for a basic cost of $29 per month. Other great aspects of using Shopify include that you get the first month free, you don't need any coding skills, it's easy to scale ($29 a month gets you 100 products), and there are beautifully-designed templates on offer. (Details by Sven uses the $140 Reign theme.)

There are also lots of handy third party integrations you can take advantage of with Shopify to ensure your store is running smoothly, including PayPal (which handles payments easily, though you'll pay a small cut of your transactions) and Shipwire (which will stock and ship your products if you choose to manufacture your own.)

Shopify has worked well for us, but there are other services out there with similar features. The key point is that building your own system from scratch makes no sense.

Get Ready To Trade

The most basic requirements required to start trading also cost very little:

  • Register your business: This can all be done online in under 15 minutes, and cost us $30.
  • Register a domain and open some email accounts: We used GoDaddy, with a first year expense of $14
  • Hosting: came free as part of a Shopify account

Acquiring Customers

There are several ways to start building a passionate community around your store, and all of them require nothing but some hard work and persistence. Here is what has worked well for Details by Sven so far:

  • Start a Facebook page: Start attracting likes by promoting your store to friends and family and actively engaging with other pages and your own fans as you grow.
  • Open a Twitter account: Start following others and build your own following to promote your products.
  • Mailchimp: You can start with a free account to begin a simple email newsletter to your store's subscribers. Keep customers informed of new product offers and other promotions.
  • Connect with bloggers: Try to identify where your ideal customers spend time online and reach out to those blogs/sites and offer to help them in some way. More often than not they'll be happy to plug your site in return.
  • Google Analytics is a great tool to measure your site's traffic and the percentage of people who are making purchases — and it's entirely free
  • .

What Are You Waiting For?

Whilst it certainly isn't easy to generate a perfect idea that finds a profitable niche and solves a problem for the market, it has never been easier to take your idea and test it in the marketplace by taking advantage of the amazing tools now available. Details by Sven was live and generating revenue after four weeks and less than $200 upfront costs. Whilst there is a long road ahead to become an established business that generates six figures, we can continue to experiment and grow into a perfectly viable lifestyle business. For a $200 investment, that's not a bad outcome.

Entrepeneur Luke Ryan is the co-founder of Details by Sven.


Comments

    I'd add: It's worth paying $40 for templates, services etc rather than trying to code things for yourself or get them for free.
    Also, don't expect people to find your store and magically start purchasing with no marketing outlay, there's only so far Facebook/twitter will get you. Big businesses spend a lot on acquisition (and branding) you're no exception, you just need to do it a bit more wisely. Try a bit of AdWords or Facebook advertising (Paid for) and see how you go.

    Also, do whatever you can to provide free shipping. People HATE paying for shipping. Any site that doesn't have a clear shipping cost displayed on the item page obviously is ashamed of their shipping costs. I note your site (very nice) charges $6.95. I was one click away from buying a wallet, but then not only had to leave the product page to find the shipping cost, but also was put off by getting to a paypal page, confirming a $15.00 transaction, and only THEN finding out it was $6.95 shipping. Can you imagine going to a checkout in a store "that's $15 please sir" (And it comes up on the till). You hand over your card and the shopping assistant says "That'll be $21.95 then all up. Credit, cheque or savings?"

    And you missed point #1 for people to consider. What's your USP? Why should people buy from you? Do you have a market? What do you do better than others?

    I've seen hundreds of small Aussie retailers start up, all very nice, but you need to either be a destination for people to visit, be there when they are searching, or be front of mind when they're going to purchase something in that vertical.

    Last edited 05/10/12 12:50 pm

      "People HATE paying for shipping".
      +1
      I hate paying for shipping. As nonsensical as it sounds I would rather pay $7 in shipping (say, $70 in total) included in the cost of a good (and they advertise free shipping) instead of paying $63 PLUS $7 shipping.
      And I agree it's incredibly annoying upfront not being told how much shipping is going to cost.

      Last edited 05/10/12 2:16 pm

        Boardgame I was looking favourably on at Kickstarter was $40 for the item, +$30 shipping. No thanks. It's a real killer.

      Thanks for commenting blue. It is a really valid point about shipping. Especially when large sites like the iconic etc offer free shipping, it has started to set an expectation. Our strategy to begin with was to test free shipping for orders over $90 and a flat rate for orders below that. Though feedback like this is really helpful and I think free shipping is the way any online retailer must head as it is clearly becoming a standard expectation for consumers.

        Cheers Luke. I had a chat with the head of marketing for ASOS recently (at a conference over here). He said the reason they are in a strong position is that they squeezed every part of their business until they could do free shipping, then when they broke even, they squeezed again until they could do 5 day free shipping, then again, 2 day, now it's mostly next day and no-one can compete with that.

        As for the ...Sven site, you're obviously a *little* embarrassed by the shipping policy, or else it'd be more prevalent on each page. Certainly not being transparent with it is a bad user experience. I'd make it free shipping for all, or at least maybe offer a coupon for free shipping for a while (put it on site) and see how you go. You might not turn a profit on the odd transaction (I'd wager that even on my $15 wallet you'd just about break even though) and you'll acquire more and happier customers who will spend more. Even 'free shipping if you buy two items' might be an easy halfway. Customers don't mind paying for shipping so much on low margin products (eg computer components etc), I think we understand that.

        Good luck with the site, it's nice.

          You'll be pleased to see Details by Sven has adopted a free shipping policy. It will be interesting to measure the conversion against the old shipping rates. Re- the placement if shipping rates on product pages, unfortunately that is 1 definite drawback of not customising your own design - a lot of shopify's themes do not give you the option to display shipping rates on product pages, or the homepage for that matter.

    Oh and make sure you read the relevant laws of trading... customers these days are very up to date on their own rights. Make sure you are too.

    Best tip I can think of is to "manage expectations".. and that harks back to what blue is saying about the shipping. Be upfront about things.. be clear about the processes and extra charges etc. If you can't get an item in their hands in less than 5 days, you need to have a very good reason why and tell people..

    Keep in mind that eBay will no longer let you sell things like prayers or ghosts, so if you are looking for a niche, start there.

    What about services, like public speaking.
    And also, ABN's, would you need one nessisarily?

      if you are invoicing someone for you service you would need to be registered for an ABN, though you can set this up and trade under your own name

    Hi Luke, just a question for you, how did you get the retailers on board for your website, did you contact them all individually?

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