Starting an online store?

6 Oct 2012 | Running a business

Each week, I received between 10-15 request for quotations (RFQs) via this website, plus other requests through word of mouth and phone calls. Never an exception, out of these requests, at least a handful were about setting up online store.

What do people want to sell most? Clothings! But that’s another story for another time.

Typically, to design and set up an online store, I charge between $5 to 10k. What I do is not just creating the website and leave it to the client. I would continue to work closely with client for next 12 months after the website has gone live. Partly to ensure all functions run smoothly, most of all, to coach client on how to manage and promote the online store. This is with the interest of making sure my client has better chances to succeed with it.

But of course, not many people would have such need, would appreciate the hand holding process, or have such budget.

Most of the RFQs for setting up online store that I received, have very low budget. And I’m talking about low of below $1,000!

On the days when I don’t feel good, I would tell these people to stick with their day job and forget about starting a business. But of course, that would be said in silence.

However, I feel good most of the time, that’s when I would instead recommend them to go for Shopify or any hosted online store service provider one can easily find out there.

What is the biggest difference between using a hosted online store service provider, as opposed to paying someone to build one either from scratch, or by using an open source software?
Quite obviously — the cost.

To put it more specifically, it’s the Initial Cost. Anyone who has started business before, knows well how important it is to keep cost under control during initial years of business.

Typically, a hosted online store service provider charges a small monthly fee, most of them requires no contract. In other words, you can start a store anytime, change it anytime, or close it anytime.

By paying the small monthly fees, it is already a huge leap forward in cost control. You do not need to come up with big sum of money up front (even when it’s just couple of hundred dollars). You can use the money on bringing in more products, invest in better branding and packaging or better delivery arrangement; all the works which will probably help you do better in your new venture.

Let us do some mathematics here:

Lets say you will go with Shopify today. The Basic plan is at $29 USD. Converted to Singapore Dollar, we are looking at SGD40 per month. For how long do you think you want to run your business, before you can decide if it is profitable? Six months? One year? Or, lets take two years. At SGD40 per month, in two years, you would have spent SGD960.

I have just checked, Shopify no longer charges transaction fee. So this is a very good thing! But if you are using PayPal or Stripe as your payment gateway, do take note there will be transaction fee (between 3.4 and 3.9%. Please check respective websites for details). So it is important to make sure you have sufficient markups to cover the charges, ie your gross profit margin must be more than 3.9% (I feel silly to have to emphasise this!)

Let’s go back to the $960 you would have to spend to keep the business running for two years. Is this an amount of money you can afford? I would like to think so, because if you can’t see yourself putting aside such amount of money for running a business, believe me, you shouldn’t be starting a business.

Also remember this, we are making the assumption that you are keeping the business for two years regardless it is profitable or not. But seriously, do you really think you need two years to figure that? I’m not saying you should quickly end the business when things are not working out. I’m talking about, as soon as you realise things are not working the way you wanted them to, you’d better quickly think about making some changes. This is when the advantage of not having to sign contract with the service provider come to light.

Not having to sign contract means you will be more adaptable to changes. Things may not, or should I say, will not always work out as planned. As the saying goes, “Change is the only constant”. The sooner you can accept this fact, the more flexible and adaptable you will become in dealing with changes.

This is usually the part where some of you may say: “By using hosted online store service provider like Shopify, does it mean my store will look like everyone else?”

The answer is yes and no. Yes — if you chose to use the free theme that is provided for. No — if you spent a little bit more on custom theme, you can then have a totally unique online store that no one will recognise it is actually a hosted service.

But the main question you should ask yourself first is: do people buy from your store because of how your store looks, or because of what you sell? I would think it’s the latter. If your products are good and useful, people don’t really care if your website looks like everyone else. Allow me to compare it this way: if you are an awesome person with awesome personality, even without expensive clothes and accessories, you will still be awesome. Agree?

Here’s the link again for more information: Shopify

Dean’s note: This post was first published on 6 Oct 2012 and it has been updated on 9 May 2017 for accuracy, with some additional text.

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