Ultimate Guide to Selling Online

ByNathan Paulus
Edited byVictoria Copans

Updated: June 12, 2024

ByNathan Paulus
Edited byVictoria Copans

Updated: June 12, 2024

Advertising & Editorial Disclosure

Exploring the world of online selling can open up promising avenues for financial growth and personal success. Before taking the plunge into online selling, it's important to understand your target market, the rules and regulations and online marketing strategies so you can anticipate potential hurdles and capitalize on the booming e-commerce landscape.

Key Statistics and Trends in the U.S. Online Retail Market

 

As you begin your online selling journey, here are some e-commerce statistics that can offer valuable insights into the market and the potential of online sales:

  • Among U.S. consumers, the two most popular categories for online purchases are Clothing and Shoes, at 44 percent and 34 percent of consumers respectively. [1]
  • The number of e-commerce users in the U.S. is expected to reach a peak of 289.9 million buyers in 2027.[2]
  • In April 2023, Amazon led as the most visited online marketplace with 4.8 billion visits. eBay ranked second with around 1.2 billion visits. Both also topped the list of online retailers in mobile web traffic.[3]
  • U.S. retail e-commerce sales grew by 3% in Q1 2023 from the previous quarter to hit $272.6 billion.[4]
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Benefits and Risks of E-Commerce

Online sales, or e-commerce, involves the process of selling goods or services via the internet, utilizing various platforms and channels to reach a wide range of customers. One of the most appealing aspects of online selling is that almost anyone can pursue it. Whether you are a small-scale entrepreneur, a freelancer or simply looking to supplement your income, online selling presents an exciting opportunity to boost your personal finances.

However, like any business venture, e-commerce comes with its potential downsides. It's important to know the risks involved, such as security breaches and working with other third-party platforms. Staying updated with the latest trends and strategies is key to navigating these challenges and making the most of this exciting avenue as it continues to evolve with advancing technology.

Benefits of E-Commerce

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    Flexibility

    Online selling allows you to work from the comfort of your own home or any location with an internet connection. The added flexibility to choose your own hours is especially attractive to individuals with caregiving responsibilities or full-time jobs

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    Lower Operational Costs

    One of the significant advantages of online selling is its lower operational costs. Physical space and high utility bills are unnecessary, leading to financial efficiency. This can translate into competitive pricing, larger profit margins or reinvestment into your business.

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    24/7 Availability

    Your online store is open around the clock, allowing customers to shop at their convenience. This constant availability can lead to increased sales, customer satisfaction and enhanced brand reputation.

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    Scalability and Growth

    Online selling offers scalability, allowing you to start small and gradually expand your business. As your business grows, you can quickly and cost-effectively expand your online presence to meet increasing demand without being limited by physical space.

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    Data-Driven Insights

    E-commerce platforms can provide valuable data about customer behavior. These insights can guide decision-making, from product development to marketing strategies, helping you meet customer needs more effectively.

    Global Reach

    Selling online eliminates geographical constraints, enabling your products or services to reach customers on a global scale. Expanding your market in this way can boost sales and diversify your customer base, fostering a more resilient business model.

Risks of E-Commerce

    Security Breaches

    E-commerce platforms handle vast amounts of customer data, making them attractive targets for cybercriminals. A hack or malware infection can lead to the exposure of sensitive information, jeopardizing customer trust and the reputation of the business. A cyberattack can also result in financial damages or legal repercussions for the business. To prevent this, you must prioritize data security by implementing robust encryption and safeguarding customer information.

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    Working With Third-Party Platforms

    While third-party platforms can extend the reach of e-commerce businesses, you may face data-sharing concerns, compatibility issues and reduced control over customer interactions. Choosing reputable platforms and maintaining clear communication with them can help avoid potential conflicts

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    Customer Trust

    Building trust in the virtual world can be challenging. Consumers are wary of online scams, unreliable sellers and potential privacy breaches. To gain and retain customer trust, you should focus on establishing a reputable brand and providing excellent customer service.

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    Competition

    The e-commerce market is highly competitive, with numerous sellers vying for attention. Established players and large marketplaces can make it difficult for new businesses to gain visibility and market share. To thrive in a competitive market, you should differentiate yourself by offering unique products or services, providing value-added features and leveraging effective marketing strategies to attract and retain customers.

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How to Start Selling Online

As you step into the world of online selling, careful preparation and clear direction can set the foundation for your success. Whether you've already chosen what to sell or are still exploring options, understanding your customers and knowing the key factors that make a product successful online are critical first moves.

The following initial stages to help you build a solid base for your online selling journey.

Identify Your Target Audience

Before venturing into online selling, you need to begin with comprehensive market research. This research allows you to gain a deep understanding of your target audience, identifying potential opportunities and obtaining valuable insights into your competition and customers. Market research allows you to effectively tailor your product selection, pricing and marketing strategies to align with their needs and desires. This targeted approach enables you to identify your market niche and establish a strong connection with your customers.

Decide What to Sell Online

When starting an online business, one of the first steps is deciding what to sell. The product you choose to offer plays a significant role in determining your success. Take the time to identify the best products for your target market and evaluate how your choice will impact shipping, production, inventory and other associated costs.

Consider the following steps to help you decide what you want to sell online:

1
Identify Your Interests and Passions

Start with what you know and love. Your passion and knowledge about a particular product or category can be a competitive advantage.

2
Evaluate Competition

Understand what your competitors are offering and identify ways to differentiate your products. This could be through better quality, innovative features, pricing or superior customer service.

3
Assess Profitability

Consider the costs associated with sourcing and selling the product. Conduct a comprehensive analysis to ensure that the potential profit margins are sufficient to sustain your business.

4
Monitor Product Seasonality and Trends

Some products may have high demand during certain times of the year. If you're seeking a steady stream of income, consider products that maintain consistent demand throughout different seasons or have enduring popularity.

5
Conduct Market Testing

Before investing heavily in inventory, validate your product idea by conducting small-scale tests. This can include pre-sales, crowdfunding campaigns or selling in limited quantities to gauge customer response and validate market demand.

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BESTSELLING CATEGORIES ONLINE

As the online marketplace expands, the range of products available for purchase continues to grow. Among U.S. consumers, clothing and shoes have emerged as the most popular categories as of March 2023. However, it is vital for new online sellers to recognize that the e-commerce landscape is dynamic and subject to change. Consumer preferences can shift due to factors such as seasonal trends, evolving consumer behavior and overall economic conditions. While clothing and shoes currently dominate online sales, it's key to remain adaptable and responsive to potential shifts in the market. By staying attuned to changes, you can ensure that your business remains relevant and competitive in the ever-changing online marketplace.

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Find Suppliers for Your Online Business

Once you've determined what you want to sell, the next step is finding a reliable source for your products. Sourcing is a critical aspect of your online business as it directly impacts pricing, inventory management and delivery times. Each sourcing method has its advantages and considerations. It's important to carefully evaluate each sourcing method, considering factors like cost, product quality, reliability and scalability. By selecting the most suitable sourcing method, you can contribute to the efficiency and success of your online business.

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    Dropshipping

    This retail model involves selling products that you don't hold in stock. Purchases are made through a third party that directly ships the products to the customers. Dropshipping is an ideal option for new online sellers, as it requires minimal initial capital and eliminates the need to manage inventory. However, there are lower profit margins and a lack of control over shipping processes to consider. It's also important to note that maintaining product quality can be challenging as you heavily rely on suppliers.

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    Wholesale

    Wholesale involves buying goods in bulk from manufacturers or distributors at a discounted price and then reselling them in smaller quantities at a higher price. Wholesale offers a higher level of control over the product and potentially better profit margins, as you can buy in bulk and directly manage sales. However, it requires a higher upfront investment and adequate storage for inventory. You also need to be aware of the risk of unsold stock and the ongoing responsibility of inventory management.

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    Working With Manufacturers

    This model offers the potential for high-profit margins by eliminating the middleman. Working directly with manufacturers allows for more control and higher profit margins, as there is no intermediary involved. This option is especially suitable for individuals with unique product ideas, though it does require a substantial initial investment and knowledge about product development and manufacturing processes.

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TIPS ON PICKING A RELIABLE SUPPLIER

Choosing a reliable supplier is pivotal in the world of online selling. A trustworthy supplier not only provides quality products but also ensures prompt deliveries, directly impacting your customer satisfaction levels. When selecting a supplier, it's important to consider key characteristics such as transparency in communication, a positive industry reputation, financial stability and a proven capability to deliver according to your needs. Assessing these elements is crucial to safeguard your business against potential supply-chain disruptions. To help you verify a supplier, you can use the Better Business Bureau's search feature to check their customer reviews and contact information before getting a quote from them.

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Select the Right Sales Channels

The next step in your online selling journey is determining the most suitable platforms to showcase and sell your offerings. This requires exploring different sales channel options and considering key factors such as fees, competition, branding control and resource requirements.

When it comes to selling online, you have two primary options: setting up your own online store or leveraging established marketplaces. Each option offers unique benefits and considerations that are important to understand before making a decision.

Build an Online Store

Setting up your own online store presents an exciting opportunity, particularly if you desire complete control over your brand and customer experience. With a dedicated online store, you have the freedom to establish a unique brand identity that reflects your business vision and directly engages customers. However, it is important to recognize that managing an online store requires dedication in terms of time, effort and potential additional costs for website development, maintenance and marketing. You may consider applying for a business credit card to cover additional and operational costs in managing an online store.

Use Large Marketplaces for Selling

While large marketplaces may have some branding limitations, they offer immense help for new online sellers. Marketplaces like Amazon, eBay, Walmart and Etsy provide immediate access to a vast customer base and come with established infrastructure. Selling on these marketplaces allows you to showcase your products and connect with millions of potential customers. Considering listing your products on these marketplaces is a wise choice as you begin your online selling journey, given their extensive visibility, established trust and robust seller tools.

However, it's crucial to carefully evaluate their key features, benefits and other important considerations such as fees, limitations and the impact on branding and customer relationships when leveraging these thriving online marketplaces.

Amazon

  • Key Features: Extensive reach, comprehensive seller tools and fulfilled by Amazon (FBA) program.
  • Who Is This For: Sellers seeking a massive customer base and streamlined fulfillment.
  • Products to Sell: Consumer goods, electronics, books, home essentials.

Amazon offers sellers the advantage of accessing a vast customer base and valuable selling tools. To get started, sellers need to choose a selling plan. The Individual plan is priced at $0.99 per item and is ideal for testing the platform. However, it has limitations on advanced features and selling specific item categories. On the other hand, the Professional plan costs $39.99 per month and provides additional benefits.

Sellers also need to consider the fees associated with each item sold. If the expectation is to sell fewer than 40 items per month, an individual seller account can be chosen, which does not have a monthly fee. However, it is important for sellers to be aware of the intense competition on Amazon and to have a clear understanding of the fees while maintaining high-quality products and optimizing their product listings.

eBay

  • Key Features: Global reach and flexible selling formats.
  • Who Is This For: Sellers looking for a diverse customer base and versatile pricing options.
  • Products to Sell: New and used items, collectibles, vintage goods.

eBay used to be the leading online marketplace globally before Amazon emerged. However, it remains an excellent option, especially for selling used or unique items. With auction-style listings and fixed-price formats, sellers have flexibility in pricing strategies. eBay allows up to 200 free monthly listings, with a 10% fee charged only when an item is sold. Occasional sellers can manage without advanced features, but subscribing brings additional advantages.

eBay's auction system is ideal for generating quick income. Personal and Business accounts both offer free listings, with a 30-cent insertion fee for exceeding the limit. Each sale incurs a final value rate, typically 10%. eBay also provides Store plans with different pricing tiers, granting more free listings, tool discounts and options for customization and Promoted Listings.

Etsy

  • Key Features: Focus on handmade, vintage and unique products.
  • Who Is This For: Artisans, crafters and sellers of one-of-a-kind items.
  • Products to Sell: Handmade crafts, jewelry, personalized gifts, vintage clothing.

Etsy is a niche marketplace for independent sellers offering unique, handcrafted and vintage items. It fosters a community-driven experience, but competition can be fierce. Sellers should prioritize high-quality products, optimized descriptions and brand building. With a low listing fee of $0.20 per item and no monthly fees, Etsy provides tools for store management and analytics.

Offsite advertising incurs a 15% charge for sales from platforms like Google and Facebook. Subscribing to Etsy's Plus plan, priced at $10 per month, provides advanced customization, back-in-stock emails, Etsy Ads credits and the option for a .com domain for store URLs.

Facebook Marketplace

  • Key Features: Leveraging the vast user base of the social media platform.
  • Who Is This For: Sellers looking to tap into a wide audience within their community.
  • Products to Sell: Various categories of products.

Facebook Marketplace is a convenient platform for sellers to connect with local and global buyers. It integrates seamlessly with Facebook, making it easy for users to discover and purchase products. Sellers can leverage social connections and targeted marketing to boost visibility and sales. Listing items on Facebook Marketplace is free and simple, similar to creating a regular Facebook post. With its expanding features like nationwide shipping and online payments, Facebook Marketplace offers a competitive selling experience.

TikTok Shop

  • Key Features: Integration of shopping features within the TikTok app.
  • Who Is This For: Sellers looking to engage with a predominantly young, highly engaged audience.
  • Products to Sell: Trendy and visually captivating products.

TikTok Shop provides a unique opportunity for sellers to reach a wide audience through short-form videos. With engaging short videos, TikTok offers unique opportunities for product promotion. By showcasing products directly within the TikTok app, sellers can capitalize on viral trends and influencers. Creating compelling and engaging content that resonates with TikTok users is crucial for success on this platform. TikTok's unique environment fosters a creative and interactive space where sellers can showcase their products in innovative ways, making it an exciting platform to explore for those looking to reach a highly engaged audience.

Instagram Shopping

  • Key Features: Visual platform with shoppable tags and posts.
  • Who Is This For: Sellers targeting a visually-driven audience.
  • Products to Sell: Fashion, beauty, home decor, lifestyle products.

Instagram Shopping is a powerful tool for sellers to showcase their products on the platform. By utilizing shoppable tags and appealing visuals, sellers can engage potential buyers. Building a strong Instagram presence, creating captivating content and using targeted marketing techniques with hashtags can drive sales. Convert your profile into a business account, connect it to your Facebook catalog and start tagging products in posts and stories. Remember, Instagram is primarily a marketing channel that can attract visitors to your online store but cannot replace it.

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Set Up Your First Online Shop

When establishing your first online shop using popular platforms like Amazon, eBay and Facebook Marketplaces, be sure to adequately prepare and understand the aspects that contribute to a successful setup. This includes familiarizing yourself with the platform's policies and guidelines to ensure compliance and create a seamless selling experience.

Take full advantage of the platform's features to effectively showcase your products and enhance their appeal. Keep in mind that the process of setting up an online shop account can vary among different marketplaces, so always refer to the platform's documentation, guidelines and support resources for accurate and up-to-date information.

1
Account Registration

Start by creating an account on your chosen online selling platform. This will grant you access to the tools and features necessary to set up and manage your online shop. Be sure to carefully read and understand the platform's terms and conditions.

2
Choose a captivating store name

Select a store name that is catchy, memorable and aligns with your brand. A captivating store name can attract attention and make a lasting impression on potential customers.

3
Legal requirements and business registration

Familiarize yourself with the legal obligations and requirements for operating an online business in your jurisdiction. This may include registering your business, obtaining necessary licenses or permits and understanding tax obligations. Ensure you comply with business registration, licensing and tax regulations to establish a legitimate and trustworthy online shop.

4
Create high-quality and compelling product listings

Craft product listings that showcase your products in the best possible light. Use high-quality images, clear and engaging descriptions and highlight the unique features and benefits of each product.

5
Pricing strategy

Develop a pricing strategy that considers your production costs, competitor pricing and market demand. Find the right balance between profitability and competitiveness to attract customers while maximizing your revenue.

6
Payment methods

Determine the payment methods you'll accept from customers. Most marketplaces offer multiple options, such as credit or debit cards, PayPal, digital wallets and sometimes bank transfers. Consider the preferences of your target audience and the availability of each payment method in your target markets.

7
Shipping and fulfillment

Determine your shipping methods, rates and policies. Streamline your fulfillment processes to ensure timely and accurate order processing, packaging and shipping. Provide clear information to customers regarding shipping options and estimated delivery times.

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Promote Your Products Online

When you're ready to sell, effective promotion and marketing are essential for the success of your online shop. With the vast number of online businesses competing for attention, implementing marketing strategies is crucial to help you stand out and attract customers. Advertising plays a key role in increasing brand visibility, driving traffic to your shop and ultimately boosting sales.

As a beginner seller, leveraging low-budget or free strategies can help you maximize your reach without breaking the bank. Be consistent, monitor and analyze the results and adapt your marketing strategies based on feedback and customer behavior.

Here are several strategies you can consider to market your products online:

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    Promote on social media

    Leverage the power of social media platforms like Facebook, Instagram and Twitter to showcase your products, engage with potential customers and build a community around your brand.

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    Partner with influencers

    Collaborate with influencers in your niche to reach their audience and gain exposure. Influencers can create content featuring your products and provide valuable endorsements to drive sales.

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    Paid advertising campaigns

    Invest in targeted advertising on platforms like Google Ads, Facebook Ads or Instagram Ads to reach your ideal customers. Set budgets, define target demographics and create compelling ad content to maximize your return on investment. Paid advertising allows you to target specific audiences with your products and generate immediate traffic to your listings.

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    Content marketing strategy

    Create valuable and engaging content such as blog posts, videos or tutorials that align with your products and resonate with your target audience. This approach establishes your expertise, builds trust and attracts organic traffic to your online shop.

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    Email marketing

    Build an email list and send regular newsletters or promotional emails to keep your audience informed about new products, discounts and special offers. Personalize your emails, provide valuable content and optimize for conversions to drive sales.

Additional Resources

Discover valuable resources and support for your online selling journey. Explore the list below to enhance your online selling experience.

  • Small Business Administration (SBA): The SBA provides guidance, training and resources for starting and growing a small business. Visit their website for valuable tools, templates and information.
  • Google Analytics: Gain insights into your website's performance and customer behavior with Google Analytics. Track website traffic, monitor sales and optimize your online presence.
  • Google Trends: Use Google Trends to explore search trends, consumer interests and product popularity, enabling you to make informed decisions about the products you sell and stay ahead of market trends.
  • U.S. Postal Service (USPS): Get information on shipping rates, services and online tools to streamline your shipping and fulfillment process through USPS.
  • SCORE: SCORE offers free business mentoring and resources to help entrepreneurs start and grow their businesses. Connect with experienced mentors and access useful templates and guides.
  • IRS Small Business and Self-Employed Tax Cente: Understand your tax obligations as a small business owner and find helpful resources and forms on the IRS website.
  • National Retail Federation (NRF): NRF offers industry insights, research reports and best practices for retailers of all sizes, providing valuable information on trends and strategies in the retail industry.
  • Amazon Seller University: If you plan to sell on Amazon, their Seller University provides video tutorials and resources to help you navigate the platform, manage your listings and optimize your sales.
  • Facebook Business Resource Hub: Discover a range of tools, guides and resources to help you succeed in online selling on Facebook, including tips on advertising, marketing and connecting with customers.
  • Shopify Academy: Shopify Academy offers a wide range of free courses and tutorials on e-commerce, marketing and business development to help you build and scale your online store.
  • LinkedIn Learning: Access a vast library of online courses on various business and marketing topics through LinkedIn Learning to enhance your skills and knowledge in online selling.
  • Etsy Seller Handbook: If you're considering selling handmade or unique products, the Etsy Seller Handbook provides valuable tips, marketing strategies and advice specifically for Etsy sellers.
  • HubSpot Academy: HubSpot Academy offers free courses and certifications on inbound marketing, content creation and sales, providing valuable insights to help you promote and grow your online business.
Sources

Statista. "Most Popular Categories for Online Purchases in the US As of March 2023." Accessed July 19, 2023.

Statista.. "Most Visited Online Marketplaces Worldwide as of July 2022, by Monthly Traffic." Accessed July 19, 2023.

Statista.. "Number of Users of E-commerce in the US 2018-2027." Accessed July 19, 2023.

U.S. Department of Commerce. "Quarterly Retail E-commerce Sales 1st Quarter 2023." Accessed July 20, 2023.

Experts' Tips on Selling Online

  1. What initial steps does one need to take to start selling products online?
  2. How can sellers effectively promote their products online without a large marketing budget?
  3. Can you suggest some methods to encourage customer loyalty in an online setting?
  4. How can small businesses manage competition from big players in the online market?
Sandra Possing
Sandra PossingFounder at Sandra Possing International
Scott Wysong, Ph.D.
Scott Wysong, Ph.D.Associate Professor & MBA Program Director in the Satish & Yasmin Gupta College of Business at the University of Dallas
Chris Hinsch, Ph.D.
Chris Hinsch, Ph.D.Professor at Grand Valley State University - Seidman College of Business
Bruce Bachenheimer
Bruce BachenheimerClinical Professor of Management at Pace University
Jeannie Walters
Jeannie WaltersCEO of Experience Investigators and CX Speaker
Diane Helbig
Diane HelbigChief Improvement Catalyzer at Helbig Enterprises

About Nathan Paulus


Nathan Paulus headshot

Nathan Paulus is the Head of Content Marketing at MoneyGeek, with nearly 10 years of experience researching and creating content related to personal finance and financial literacy.

Paulus has a bachelor's degree in English from the University of St. Thomas, Houston. He enjoys helping people from all walks of life build stronger financial foundations.