Starting an online store on a small budget, with no warehouse and no shipping
A toy company founded in 1948 grew to fifteen hundred branches around the world. In 2000 it signed a deal making its online sales exclusive to another company's website, and stopped building its own. Seventeen years later it declared bankruptcy and closed nine hundred stores. What killed it was building its house on someone else's land. Remember that when you get to step four.
What you'll have at the end
One product to start with, a digital storefront at minimum cost, a way to deliver without owning a warehouse, and a list of what you build on your own ground.
Step one: specialise in one product
The everything-stores have shipping fleets and warehouses worth hundreds of millions, and you won't compete with them. What lives is a small store selling one specific thing people want: leather shoes, honey from one particular region, children's clothes in hard-to-find sizes, tools for one hobby. The buyer is looking for exactly that, finds you, and comes back. Choose your product from lesson 8.1 after you've tested it, never before.
Step two: understand where the cost goes
An online store is two halves. The digital half, the site, the page, the photos, the marketing, is cheap and easy, and can start as a social media page and a phone number with no website at all. The physical half, stock, storage, packing, shipping and collection, is what costs and complicates, and it's where small stores fall. Whoever starts with a beautiful website before solving shipping starts from the wrong end.
Step three: sell without stock at first
There are supply-and-fulfilment companies you buy the product from at wholesale, and they ship it to your customer under your store's name and logo, without you owning a warehouse, paying for stock in advance or running a delivery car. Your profit is the gap between wholesale and your price, and your risk is close to zero. This form suits the start and the test, and its flaws are a thin margin and a product others also sell. Once you've proved the demand exists, you move to buying small quantities yourself, or to a product you make.
Step four: build what you own on your own ground
The platform you sell on belongs to someone else: it closes your page, changes its algorithm or raises its fees, and your store ends in a day. Use the platforms to reach people, and keep with you what nobody can take: your customers' numbers and list, your product photos, your store's name and domain, and a simple site even if it's one page. The toy company had everything except this.
Step five: cost a single order in full
Wholesale price, plus packaging, plus shipping, plus platform or payment fees, plus the share of returns that will happen, plus the advertising that brought this customer. Subtract the total from the selling price. If what's left isn't worth your time, the product doesn't work however lovely it is. This sum comes before the first advert, and is redone every month with the month's real figures.
Where most people trip
On advertising before being ready. A paid campaign brings fifty orders in a day, shipping is a week late, customer service is a number that doesn't answer, and the fifty become bad reviews. Start with ten orders fulfilled perfectly, then twenty, then advertise.
Tonight's exercise
Write one product. Find a supply-and-fulfilment company operating in your country that carries it, and cost a single order with the six items. Then register your store's name and domain tonight, the cheapest thing you'll buy and the most important.
Questions I get asked
Do I need a trade licence from day one?
Check your country's rules; in most you can test dozens of orders from a page before registering, and registration becomes necessary when you need a payment gateway or the volume grows. Don't delay it once you get there.
Customers prefer cash on delivery, and that raises returns.
Yes, and that's part of the sum in step five. Confirm by phone before shipping, and offer a small incentive for paying in advance.
Do I sell something I make or something someone else makes?
Start with someone else's product to learn shipping and customers at zero risk, and move to your own once you know the market. Whoever starts with their own product, warehouse and website all at once learns every lesson in one month, and pays for it.
Log every order in Fawatery with its six cost items, so after the first month you know the real profit per order, the figure that decides whether you advertise or stop
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Based on: "How to build a successful e-commerce business on a small budget".
The last lesson in the course is about the hardest question: when to leave your job for the business, and when never to.