Are you interested in starting a retail business online? Do you want to know the best retail business ideas to start with little or no money? Do you need a sample retail business plan template and feasibility study? Then here’s a guide on how to start a retail business online.
A retail business is simply a business that entails the buying of goods in bulk or wholesale and reselling to the end users or consumers. Retailers are an important part of an integrated system known as the supply chain or distribution chain. A retailer purchases goods or products in large quantities directly from the manufacturer or through a wholesaler, and then sells in smaller quantities to the consumers for a profit.
In fact, a retail business is one of the most popular businesses because of its ease of setup and operation. The retail industry has some giants and brand names such as Amazon, Wal-Mart, Shop Rite, Jumia, Konga, IKEA, etc. If you look around your neighborhood, you must see at least two or more retail stores. Thus, most people stay clear of the industry because of the presumed competition or market saturation.
However, those who are creative can take a new approach by setting up a retail business online. Now why should you start a retail business online and who should start a retail business. Well, below are some reasons why you should consider starting a retail business.
Six Reasons why you should start a retail business online
- The retail industry is very broad and there are a lot of product categories. Thus giving you a choice as to what field you want to be in, what product you want to sell and what type of clients or customers you want to deal with.
- A retail business is very easy to set up and run. All you need to do is decide on what you want to sell and find a supply source.
- There is no stipulated minimum capital. You can start with very low capital and operate your business from a kiosk.
- There is no entry barrier and retailing does not require any special license or permit except the general business operating permit.
- The retail business is very profitable as there is always demand for retail products and services, as most products are daily needs or basic needs.
- You can even start a retail business on the web without owning or stocking any products. You can dropship products to your customers straight from the manufacturer or wholesaler without even touching the products.
Starting a Retail Business Online – Sample Business Plan Template
1. Choose a product or line of products to sell
The first step to starting a retail business whether online or offline is to decide on the type of products you will sell. Now the best product to sell is actually that product that has market demand It must be a product that you understand its features and benefits. If you are going to retail cosmetics, then you must have an idea of the workings of cosmetics, and the trend in the beauty care industry.
A business plan is very important especially when starting a retail business. The reason why most retailers complain about the business and its economy is because most of them ventured into retailing without proper feasibility study and planning.
A retail business plan will enable you know how much investment capital you will need, how your retail business will market itself, operate and also establish your profit margin. Here is a sample retail business plan template to help you get started.
The cost of starting a retail business depends on the scale of the business you intend to start and the type of products you intend carrying. The estimated cost of starting a retail business should be around $5,000 to $100,000 depending on scale and location of your store. Now due to the complex nature of computing your financial estimates and sales projections, it is advisable you contact a professional business plan writer for assistance.
It is also important that you highlight your vision and mission statement, management style and team, operational strategy, manpower analysis, marketing strategy and round it up with your executive summary. After preparing your business plan, you need to raise the necessary capital to kick off operation. You can seek loans from commercial banks or raise funds from angel investors, investment bankers or Venture capitalists.
3. Register a Business Name
You need to choose a business name for your retail store and if you will be establishing a presence online, you may need to pick a corresponding domain name. It is important that you choose a business name and domain name that is brandable, short and easy to remember. You can search the internet for retail business name ideas.
4. Get a retail business license
Your lawyer or consultant can assist you in the process or acquiring a business license as it might be required you to have an employer identification number as well as appropriate registration. However, I must state clearly that the issue of licensing may vary according to country and states.
Take Nigeria as an instance, retailing is a business that have almost no bureaucratic hurdle, especially when it comes to licenses and permits. But in the United States or Canada, operating a retail business may require three types of licensing:
- Sales tax license – Not all states or locality require additional business licenses, but almost all states require a sales-tax license that allows you to charge customers a sales tax and then pay it to the proper agency.
- Federal licensing – There are some products that are federally regulated and require a federal and sometimes also a state license to sell. Contact your state’s government office to find out what forms and actions are required for it.
- Retail license – These must be done in person because the business may require either a local business license, a seller’s permit or a health permit depending on the product you are retailing.
A good location is very important to the success of your retail store. Your retail business space should have enough space to accommodate the display of your product and have an additional space where you can handle administrative and accounting tasks. Your retail shop should be sited in an easily accessible and high traffic area.
Also, your target customers should be put into consideration when establishing your store. For instance, if you will be dealing on food stuffs and provisions, a good place to site your shop is within residential areas. If you want to sell athletic shoes or sport kits, you should be located near a stadium.
6. Stock your retail shop with goods
To commence operation, you need to talk to your fellow retail business owners to find out the best manufacturers to order your supply. Once you have a list of the potential supply vendors, call them and ask how much their minimum opening order is and to send you any new accounts literature.
7. Hire employees
Develop a plan for staffing your retail company. Consider the hours of operation for the business, the type of people to employ and how much you will be paying them. You should also make sure you hire competent and qualified staff.
8. Get the necessary equipment
Aside the products or goods, there are certain equipment you need to get your retail shop up and running. Example of such equipment are:
- POS (Point of Sale)
- Checkout counter
- Display rack
- Deep freezer
- Shopping cart
- Cashier desk
- Scanner for cash register
- Shopping basket
- A delivery van to deliver products to customers on demand
- Computer system
- Alternative Power supply (Generator)
9. Market your Retail Business
A retail business is one that markets itself especially when there is less competition for the product you are carrying and the environment you are operating in. But when there is a strong competition, you need to brand your business and stand out. Below are some marketing ideas, strategies and techniques.
a. Create a user friendly online retail store and make it easy for your customers to buy from you
b. Offer the best prices and list the benefits of each product
d. Use social media to connect and stay in touch with customers
f. Advertise in local media such as prints, radio and television stations
4 Challenges of starting a retail business
Getting a retail business up and running can be a daunting proposition for many business owners. While retailing can be a successful business venture and can lead to big profits, several challenges stand in your way as entrepreneur but you can overcome them if you are prepared and determined. Example of such challenges include:
There is massive competition in the retail industry, whether you are doing business online or offline. This is because of the low entry barrier. Major retailers compete at the price level, thus reducing the profit margin of each product. Unless you are one of them or in partnership with them, you will have to compete with the big stores who often have the ability to offer lower prices than you can. Thus you would have to depend on sales volume and niche concentration to make significant profit.
- Employee retention
One big challenge that retail businesses face is the high rate of employee turnover. The retail industry usually have poor employee retention, as most low level staff are youngsters with ambition and these leads to extra expenses due to the constant training and retraining of new staff.
Theft in a retail store is something that is inevitable, but it can be reduced to the barest minimum especially if you are doing business on the web. The problem of theft is a serious challenge especially for retailers who sell items that can easily be slipped into the pocket. A focused effort in inventory control and loss prevention are required to keep this challenge in check.
To further guard against theft, it is advisable you install security cameras, mirrors and convex lenses throughout the store. You should also place your employees on high alert and use inventory management software to prevent against employee theft.
- Getting a good location at an affordable price
Getting a good location for a retail business at an affordable price is difficult but not impossible. Location is one of the factors that contribute to the success of a retail store, so selecting a site has to be done with all carefulness. Even if you will be doing business online, you will still need to be strategically located, so as to deliver your products to the customers with ease.