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27 January 2021

How to Start an Online Shop

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There are now more online shops than ever before. Many people in the UK are looking to secure additional or even a main source of income from the comfort of their own homes. If you are one of these people, you may be unsure of how or where to get started. Here at Brightside Public Liability and Product Insurance, brokered by One Insurance Solution, we have put together this guide on how to start an online shop to hopefully help you on your way to establishing a foothold in the online marketplace.

Which ecommerce platform should I use?

Before anything else, you should weigh up the primary options you have on where you will be selling from online. You can either launch your own website from scratch or with a site-building service, or you can utilise an existing ecommerce platform. We will look at each of these options in detail.

Setting up your own website

You may already have your own website you want to add an online store to it, or you may need to build a new website from which to sell your products. There are many platforms available to build a standalone website or to integrate into an existing site, such as Wix, SquareSpace and more.

While this route gives you the highest level of control when it comes to branding and operating your online shop, it also requires you to have some technical knowledge and to develop some marketing knowledge. It may be easier for existing customers to find your own website but attracting new customers will fall entirely upon your own marketing skills, although most platforms have basic capabilities in their out-of-the-box options.

Some fledgling online shop owners relish this as an opportunity to showcase their entrepreneurship and independence – if this describes you then this will likely be your best option. However, if you feel uncomfortable at the prospect there are plenty of existing big-name ecommerce platforms to establish yourself on instead.

Using an existing ecommerce platform

Setting up an online shop on an existing ecommerce marketplace can be a more accessible option for new online shop owners. Although you have less control over the set-up and personalisation of your shop, the greater ease of setting up and operating with the platform’s tools and the massive existing pool of potential customers can take a lot of the initial stress out of the process for many first-timers.

When pursuing this route, you will need to decide which ecommerce platform will best meet your business’s needs.

Selling on Amazon

Amazon is a giant in the online retailing world and will provide you with an enormous number of potential customers. Some handy tools are available too, such as Fulfilment by Amazon which leaves Amazon in charge of handling shipping.

How much does it cost to sell on Amazon?

Amazon offers two selling plans that come with different selling costs: Professional and Individual. The Individual plan comes with no monthly fees, with 75p being charged per item sold instead. Subscribing to the Professional plan carries a £25 monthly fee (excluding VAT) but will allow you to sell an unlimited amount of products per month. There are then additional selling fees when an item sells.

Selling on eBay

Technically, Ebay is more of a marketplace than a platform for designated shops. However, with over 24 million buyers registered with eBay in the UK alone, there’s a large potential customer base to tap into if you set up as an eBay seller. Benefits to selling on eBay include tools to help your shop reach an international audience, PayPal integration for fast and secure customer payments and a seller protection plan. eBay’s mobile app allows you to list items and track sales on the go as well.

How much does it cost to sell on eBay?

A flat 35p ‘insertion fee’ applies as a baseline to any items listed on eBay. However, unlike Amazon you can list up to 1,000 items on the platform per month at any price without incurring any additional insertion charges.

There are only two other fees. Firstly, a final value fee, which is a flat 10% of an item’s final sale price including postage, if it sells, including those listed for free. Secondly, if customers use PayPal , they will also take around 2.9% of an item’s total sale price, plus 30p per transaction.

Selling on Etsy

A favourite ecommerce platform for those selling hobby-crafted items from home, Etsy offers great tools to help your online shop to stand out and thrive. The ‘Sell on Etsy’ app allows you to manage orders, respond to customers and amend listings anytime, anywhere. Analytics on your shop’s performance are also provided to help you learn how to increase your sales. You have a little more freedom in making your shop stand out on Etsy too, as it allows you to pick a unique name and even put up branded header images on your unique seller page on its Plus plan.

How much does it cost to sell on Etsy?

Etsy offers two plans for sellers: Standard and Plus. Standard provides the basic services to sellers and carries no additional monthly charge outside of listing fees. The Plus plan goes further, giving sellers access to a wider array of shop customisation options. These include custom URLs to make your shop easier to find, the ability to let customers know when products are back in stock and credits to promote items. The Plus plan is currently charged at £7.90 per month.

Item listing fees are $0.20 USD, converted into GBP at the current conversion rate, and transaction fees are 5%.

How to sell products

Once you have set up your online shop, you need to know how to list products optimally so that customers buy them. Ways to make your item listings more attractive to customers include:

  • Ensure you fully utilise all the tools on your platform provides, such as product reviews, recommendations, etc
  • Quality photography to show off your products. Consider lighting, how the item is modelled, where it is situated, etc
  • Fully optimise your products’ descriptions by including all the positive aspects of the product and ensuring all practical details like dimensions, size, colour, etc. are included

Postage & Packaging (P&P) and returns

No matter where you end up selling from, you will need to figure out how you are going to deliver products and facilitate returns, especially if you decide to set up your own website. Different courier companies like Royal Mail, DPD and others offer varying prices based on how much you need to send out, so compare services to find one which meets your needs.

Selling through an existing ecommerce platform means there will be rules for P&P and returns that you will need to adhere to, so be sure to understand them if you take this route. Selling from your own website means that you will be responsible for setting these rules yourself, so it is vital that you set delivery expectations. This should lower the chances of friction: if you clearly state that deliveries will take a week, you’ll be less likely to have customers asking where their items are after 3-4 days.

Incentivising sales through perks like free returns may entice some customers. However, ensure the cost of such offers are balanced against how much you’re earning through each sale and the customer behaviours you want to cultivate going forward.

Insure your shop

Once your online shop is operational, ensure everything behind the scenes is also fully thought through, such as taxes, your business plan and any required suppliers. Online shop insurances such as product liability product insurance will also be vital – fortunately, our specialist insurance brokers at One Insurance Solution are here to help. Check out our guide to product liability insurance to see how you can save with a quote from us today.

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