Ask LH: Can I Start A Retail Business With $2000?

Hi Lifehacker, I'm a teenager and I want to start up an online retail business right after school finishes. I have 2000 dollars saved up now, and really don't want to go to university, as that would just put me in debt even more. How do you reckon I could start with $2000 and barely any online experience? Thanks, Entrepreneurial Endeavour

Lemonade stand picture from Shutterstock

Dear EE,

The simplest solution is to buy up a small amount of stock to resell on eBay -- but that's a highly competitive space and you need to offer exceptional service. Online businesses are competitive, so it's not enough to just think "I want to sell stuff online".

Instead, you need a specific idea that you're passionate about -- check out this recent inspiring example of two Australian school kids who are building their own headphone empire. In short, the more interest and expertise you have in your products, the better you'll be at selling them online.

Speaking of expertise, it's equally important to build up your customer service skills if you want your fledgling business to run smoothly (including a sound knowledge of Australia's new consumer protection laws).

Seeing as you're fresh out of high school, it might even be worth getting a part-time job in physical retail to help you learn the ropes. In addition to giving you plenty of first-hand experience with customers, you'll also have a regular income rolling in, which will take some of the pressure off of the business during the start-up phase.

If you're planning to sell other manufacturer's products (as opposed to making your own), you obviously need to get the cheapest price possible to maximise your profits. Sites like provide a database of dirt-cheap products that you can snap up in bulk and then resell.

Naturally, you also have to factor in shipping costs and the amount that people are willing to pay for delivery. In other words, you're usually better off sticking to smaller items.

You may also want to consider a dropship model, whereby you generate orders on your store’s website but the product manufacturers take care of fulfilment to the customer. This essentially means you can start selling with no upfront purchasing costs (although the lion's share of profits naturally goes to the manufacturer).

Once you have your products sorted, you need to work out where to sell them. Obviously, it's important to have a presence where the most eyeballs are at, which basically means eBay -- although it pays to be mindful of the various seller fees involved. Other alternatives that may be worth exploring are Quicksales and Gumtree.

Whatever online shopping site you throw in with, it's also a good idea to build your own personal site, preferably with its own store functionality.

This article explains the five best platforms to build your shopping website on; none of which require any coding skills. (You can also get some additional website building tips here.) At the very least, make sure your business has a Facebook page that is frequently updated and includes plenty of pics of your products.

While this probably wont increase your sales or exposure much, it will give your business an added air of legitimacy. (While we're on that topic, you will also need to register your business: This is surprisingly affordable and can be done online in around 15 minutes.)

Naturally, you should also make a list of practices that are best avoided -- this opinion piece explains some the ways that Australian online retailers frequently get it wrong.

See also: How To Make A Website: The Complete Guide | Start An Online Store For Less Than $200 | Five Best Places To Set Up Shop Online.

Cheers Lifehacker

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    PC Case Gear did this when the current owner James Cameron started the business as a part-time thing whilst going through Uni. Best thing to do is not have it as your sole source of income in the first instance - only have it as a supplement to other work / studies until it becomes viable for you to focus your efforts full-time.

    Try and find a niche and fill it and if the demand is there you will do fine.

    Good Luck.

    "I have $2000 saved up" and "I'm in debt" is an oxymoron.

      Not if your debt is greater than $2000.

        Especially if your debt is greater than $2000.

    I wouldn't discount going to uni just because it will cost you. You should still pursue education after high school. What will you fall back on if your enterprise doesn't work out? Keep the study option open.

    I don't recommend ebay for most things, its very hard to get noticed and competing with overseas vendors who don't have to pay AusPost's criminal prices make it hard.

    I started a year ago with $500, I've sold $50,000 of tablets with zero advertising in 12 months, it's not a living but it makes spending money for me.

    The author is spot on with the need to focus on customer service, you live or die by it and it's often the only leverage you have. I take every single customer complaint seriously, I have to, a bad reputation is easy to earn and very hard to lose.

      @jubal1: Nice website, very clean. I can see how you're doing a good trade, you look much bigger than one person and very established.

      I am also an online merchant, enjoying the first-page in Google for a relevant keyword or too. I agree that eBay is a terrible marketplace, they charge 10% on your sales on top of the GST that you pay if you're successful ($75k revenue per annum), and Aussie Post fees. B&M retailers who complain about rent should see what I pay to AusPost each month.

      However, building a good website is hard, getting it high in google is time consuming, paying for Adwords is ... ridiculous. Getting noticed is possible, but generally it takes a long time and a lot of labor or is expensive.

      I would start out on eBay. You get 30 free listings a month, and if you have an auction that ends in a couple of hours you will appear in search results above the top-rated sellers. If you think you have something to sell, (IMHO) the best way to test it in the market is to do 24 hour auctions on eBay with a reserve price $10 less than your RRP and a 'buy-it-now' button on your RRP. Do 30 of them in a month, try to sell one a day.

      You only need to develop a one-page HTML advertisement, and spend 2 hours a night on eBay testing it. Try to keep your margins so they cover GST & eBay fees. This means you've got enough margin to fund a real business.

      eBay will teach you about keywords, profitability and customer service. If you can make money on eBay, then launch a website to sell your product (and pocket the 10% eBay was taking).

      If you can't make money on eBay you might be spending a whole lot of time, effort and money on something that is too expensive or just not popular.

      Finally, you can start a business on $2,000, easy. But if you're in the resale business, you'll want a $5,000 credit card on top of that (at least) so you keep some stock in your warehouse.

      Oh, and I'd love to hear from _anyone_ in Australia who made drop-shipping work for their first business. It's popular in America, but it's bullsh*t here.

    So i joined a referral business for its education - highly recommend this as this is the invaluable part of learning the theory and sometime get the practical experience of running your own business.
    Disclaimer - I joined Amway - in no way am I saying you should too, only a select few can manage and get to the top.

    You have start up capital and an idea, however the main opposition will be from yourself - as you may be brought down from various sources that arent supportive. (eg friends/family) - hence the education, and motivational audio to keep you going.

    Now the thing about online business is getting the traffic - how do you get your site name out there? SEO - search engine optimization. But will this mean your getting the right people?

    Unfortunately I need to use Amway as an example here - sorry those against it :P
    Amway is the main distributor and provides a 90 day satisfaction guarantee. So if a customer doesnt like the product from a Amway independent business owner, they can return it to Amway. Also the independent business owner doesnt necessarily need to hold stock, their customers can buy online via a referral from them.
    How this affects retailing and you. You need to buy and hold stock, if not selling a service. Stock holds only so much value and risk - a returned item becomes used and you cant return it to your supplier sometimes. It also holds up your cash liquidity - might be hard to move stock, when you dont have cash in hand.
    These are valuable lessons to learn.

    So look around and make sure to do some research in business. Also get tax advice, cause your online store may turn out to be a hobby at first!!

    I would say start it as a side-business first, while working (in retail - as it's easy to get into, and it teaches you everything you need to know about customer service). At the moment, you probably don't have a lot of knowledge about how to do the day to day business stuff, like accounting and administration, and wouldn't have a clue about the legal side of things, or dealing with the ATO.

    If you get the opportunity to pick the brain of the business owner, or the manager. Get them to explain stuff about running a business. Most of them would be happy to share their wisdom, as they probably wished they had the same guidance when they were starting out.

    Having a paying job on the side allows you to maintain the business, even when it isn't producing enough for a living wage. If it's your only source of income, you will be taking money out of the business, which slows growth. If the business is taking off, having a secondary source of income allows you to put more into the business.

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