How to Start an Online Retail Business With a Tiny Budget

By Ashlee Anderson

It costs a lot to start a physical storefront. Between monthly rent, utilities, inventory, and employees for extra help, even a small shop can cost more than $30,000 to launch. These steep startup costs for a brick-and-mortar business don’t make financial sense for everyone.

Just because you may not be able to afford to launch a retail space doesn't mean you need to let it crush your entrepreneurial spirit!

Instead, turn your attention online where the costs of starting and operating a retail business are a small fraction of physical stores. So cost effective, in fact, that you can start an online retail business even with the tiniest of budgets.

Online Boutique:

A boutique is a smaller store that sells specialized or niche products for a specific clientele. For example, a boutique could carry formal wedding attire or glitzy gowns for pageants. There are even boutiques for fashionable pets.

Boutiques tend to do well in the online retail space because of the narrow market they serve. Instead of trying to compete with mega online retailers like Zappos or Zulily, boutiques offer their customers select products like lingerie, jewelry, wedding gowns, or baby gear.

Once you select a niche for your boutique, there are a number of ways you can find vendors and suppliers. Your initial inventory budget will help determine your best buying options to ‘fill’ your store. But, even if you’re working on a very tight budget, you can explore the possibility of dropshipping partnerships where you won’t be billed for products until a customer makes a purchase.

Setting Up Shop – Once you’ve decided where and how to source your boutique inventory, it’s time to get your store up and running. There are a several low-cost e-commerce platforms to consider. One of the most popular is Shopify, an all-in-one e-commerce solution.

With your monthly Shopify membership, you receive everything you need to be a successful boutique owner including a fully customizable storefront, payment processing, inventory management, and marketing tools.

Amazon FBA:

Amazon is the world’s largest online retailer with more than $107 Billion in net sales in 2015 alone. You too can get a slice of that multi-billion-dollar pie when you sign up to sell via Amazon FBA.

Fulfillment By Amazon, commonly called FBA, is a program that lets you sell on the largest e-retailer without having to worry about housing inventory, picking, packing, shipping or customer service concerns. You just need to focus on finding inventory, listing items for sale, and sending them into Amazon. That’s it! Once you hand off your inventory to Amazon, they take care of the rest.

Scouting Inventory for FBA – For the budget-conscious online entrepreneur, Amazon FBA is a great platform to start earning without a lot of upfront expenses. In fact, a popular way to get started selling on FBA is by scouting sale and clearance items at your local stores and selling them for a profit on Amazon.

This process, called retail arbitrage, allows you to purchase bargain-priced items that fit within your budget. Once your first wave of products sells, you can use the profits to scout and buy even more items as you continue to grow your Amazon storefront.

Want to find out more about Amazon's FBA program? Check out Tracy's story and how she's earning $1,200 a month with this program!

Etsy Shop:

You don’t have to be a handmade artist to run a profitable online retail shop on Etsy. While many shoppers head to Etsy to find one-of-a-kind creations, it’s also a popular marketplace for unique vintage finds and art supplies!

Of course, you can certainly take your crafting hobby full-time as an Etsy seller. But if you enjoy frequenting thrift stores and flea markets, you can also flip your vintage finds for profit on Etsy!

And because it’s free to open your shop, it couldn’t be more affordable to get started. You only pay small fees when listing an item and after an item sells.

Getting Started on Etsy – Whether you decide to turn a thrift store hobby into a vintage boutique or opt to sell art supplies to crafters around the world, there are some things to remember about starting a retail business with Etsy.

To start, treat your virtual storefront as if it were a brick-and-mortar business. This means keeping inventory on hand that is cohesive! If you source your art supplies wholesale, keep items in stock that go together like sticking with a specific artform or craft, i.e., sculpting, knitting, scrapbooking, quilting, etc.

And when it comes to listing your products for sale, remember to take great pictures and keyword optimize your listings! Etsy is very keyword-driven. Potential customers will search for what they’re looking for, and Etsy may or may not display your products in search results depending on how well your storefront and listings match a query. The better optimized your listings are, the more ‘foot traffic’ your storefront will receive.

When in doubt, turn to the Etsy Seller Handbook for advice and inspiration to help you successfully run your shop.

Social Selling:

Although starting an online retail business is a lot more budget-friendly and far less labor-intensive than setting up shop in person, it can still be an overwhelming process for beginners.

If you’re feeling unsure about navigating website ownership or aren’t keen on the idea of inventory management, you might want to consider social selling.

Direct sales meets online boutique; social selling is a way for entrepreneurs to start an online business with a lot of added support. It also happens to be an excellent way to get into retail for the budget-savvy seller.

Take Stella & Dot for example. When you sign up as a Stylist with Stella & Dot, you pay one low startup cost to launch your very own jewelry business. This initial fee gives you Stella & Dot jewelry valued at $350, marketing materials, your own customizable online boutique, and access to an online ‘office.’ Plus, because you’re part of a major brand, you get plenty of training, support, and mentoring to help you succeed, no matter what your goals are as a merchandiser.

What makes social retail businesses, like Stella & Dot, different is the emphasis placed on social selling. Instead of quotas to meet, in-person parties to throw, or recruiting others, your primary focus is to leverage social networks to promote products and close sales.

There are a growing number of direct sales companies that embrace this approach to online selling giving budget-conscious entrepreneurs a chance to focus on what they love while building their business.

Start an Online Retail Business Without Breaking the Bank:

It’s no secret that retail is big business! But as more and more shoppers head online to buy everything from clothes to furniture and even everyday household items, the e-commerce industry has exploded to more than a trillion dollars annually.

This is good news for would-be entrepreneurs who want to cash in on a retail business without the major expenses of a brick-and-mortar store. With the many popular marketplaces as well as social selling platforms, you too can set up shop as an online retailer without going over budget!

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Ashlee Anderson is a freelance writer, blogger and gig economy enthusiast who enjoys the freedom and flexibility of working remotely. After starting a note taking business in college, she’s continued to work for herself as a solopreneur ever since. Today, Ashlee continues to embrace solopreneurship and the endless possibilities to make money as an independent worker. She encourages others to ‘think outside the cubicle’ so they too can find happiness in working on their own terms. Follow along with Ashlee over at Work from Home Happiness  where she shares plenty of practical advice, ideas, and beginner-friendly ways for freelancers, solopreneurs, and remote workers to use their existing skills and experience to earn a living from home.

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