How to start an online business in 8 steps

E-commerce sales have been booming for years, and they’re only expected to increase as customers seek more convenience and accessibility.¹ By learning how to start an online store, you can open a new source of income and tap into an audience of customers who are ready to buy.

How to decide what business to start

If you’re still weighing your options or you’re not sure which industry to enter, you can begin by conducting market research to help identify profitable niches. Make use of resources such as Google Trends, industry reports, online forums, and keyword research tools to start this process.

Conducting market research for online business ideas can help you:

• Identify industry competitors, their product offerings, and their marketing strategies
• Understand who your target audiences are and what their pain points might be
• Assess demand for certain products or solutions to those pain points
• Evaluate profitability margins in various industries

Once you’ve conducted this research, think about how you can leverage your personal interests and expertise to meet gaps for demand in your target market or industry niche. From there, you can start to formulate ideas for products and online businesses.

Steps to starting an online business

It’s important to take a structured approach and thoroughly prepare before launching an e-commerce business, from setting up your e-commerce site and managing inventory to meeting legal requirements and marketing your big idea.

Below are some of the most important tasks to complete while building an online business.

Create a website

A professional and user-friendly website can serve as the foundation of your online business. Not only will your website be a virtual storefront for online customers, but it will also help search engines discover your business. That’s why building an online presence is so important for new business owners.

To create a website for your business, choose a website-hosting platform that is easy to use and can integrate with trusted payment processors to ensure seamless transactions for customers.

Consider including these essential features:

• Easy navigation and accessible menu bars
• Clear calls to action, such as “Sign up,” “Learn more,” or “Buy now”
• Relevant keywords for search engine optimization
• Mobile-responsive design for smartphone and tablet users

Choose a domain name

Even if you’ve already settled on a name for your business, choosing a domain name for your online store can be tough. You’ll want to select a memorable and relevant domain name that reflects your brand and business. For optimal user-friendliness, consider keeping your domain name short, avoiding hyphens, and incorporating keywords that customers might search for.

To register a domain name, you can use domain hosting sites like GoDaddy and Bluehost to select and purchase it. Consider securing various domain extensions — such as .com, .net, and .org — to prevent other businesses from using them and to help protect your brand name.

Design your site

Attract and retain customers with a well-designed website that’s organized, user-friendly, and easy-to-navigate with a streamlined user experience. You’ll want to create a mobile-responsive site that is accessible to customers across devices, and incorporate high-quality images, a clean layout, and consistent branding. When designing a site, you can also include SEO keywords in your content and metadata to help search users find your pages.

Integrate a shopping cart

Once customers are ready to buy, you’ll want their checkout process to be as smooth as possible. That means setting up and customizing a shopping cart integration on your website to facilitate their transactions.

Ideally, this checkout functionality should:

• Support multiple payment methods, including credit and debit cards and digital wallets
• Integrate with e-commerce platforms like BigCommerce and GoDaddy
• Process transactions quickly and securely
• Securely save customer information for recurring purchases
• Offer fraud management services to protect your business and customers

Learn more about how to integrate a shopping cart into your site with PayPal’s all-in-one integration.

Manage your inventory

Effective inventory management can help ensure that your business maintains the right amount of stock and is prepared to meet customer demands.

Here are a few inventory management tips to help:

• Use an automated platform. Process and track inventory changes in real time so you can better regulate your volume of products. A comprehensive inventory management solution can help track sales, shipments, invoices, returns, and product availability from one platform.
• Track periodic automatic replenishment (PAR) levels. Monitor your PAR levels to identify the minimum level of inventory needed to trigger a new order for a product and the maximum level that indicates you’re overstocked.
• Try the economic order quantity (EOQ) method. Use the EOQ technique to determine the optimal amount of stock needed to meet customer demand while minimizing inventory and storage costs.

Stay compliant

There are certain rules and regulations that you must follow as you build your company. Common legal requirements for online businesses include:

• Registering your business with the appropriate government authorities
• Obtaining any required permits and licenses
• Meeting federal and state tax requirements, such as applying for state and federal tax ID numbers
• Complying with regional data protection standards, such as those set by the GDPR (General Data Protection Regulation) in the European Union and other relevant privacy laws that may apply to your business, depending on where you operate and where your customers are located

Legal requirements for online businesses can vary by location and industry, so it’s important to research the specific regulations that apply to your business. You can also consult with legal professionals to ensure compliance with all relevant laws.

Drive traffic

Leverage a mix of marketing strategies to build awareness for your online business and drive traffic to your e-commerce website. You can grow your business with social media outreach, affiliate marketing, influencer partnerships, paid advertising, and email newsletter subscriptions. You can also use SEO tactics to help get your website listed on the first page of search results.

Innovative online business ideas

Whether you’re looking to make a big career move or start a side hustle, you can take inspiration from any number of innovative online business ideas. Consider niche business ideas to tap into specific but loyal communities of customers, or build your e-commerce business around your general area of expertise, such as graphic design, copywriting, tech support, or social media management.

Going further, some unique online business ideas include:

• Online coaching: Use videoconferencing software or pre-recorded videos to provide fitness, educational, career, or life coaching services.
• Eco-friendly clothing and accessories: McKinsey & Company found that customers are shifting their spending toward sustainable products.² Use environmentally friendly practices such as thrifting and sustainable packaging to appeal to today’s customers and create unique products. Learn more about how to start a clothing business.
• Subscription boxes: Create your own monthly or quarterly subscription boxes of curated goods and build a reliable base of customers and revenue.

Find more inspiration with these small business success stories.

Using PayPal to start your online business

Starting an online business can seem overwhelming—not to mention running one. But you don’t have to do it alone. The PayPal Business app offers a range of tools to help your business easily sell with PayPal and contunie growing.

First, you can open a PayPal Business account and get set up in minutes — with no monthly commitments or hidden fees. You can also use PayPal e-commerce integrations with top platforms such as Shopify, GoDaddy, and BigCommerce.

Once you set up your PayPal Business account, you can streamline your operations with other helpful solutions. Use PayPal Checkout to securely accept a range of payment methods like PayPal, Venmo, credit and debit cards, and digital wallets. Offer PayPal Pay Later to help customers pay in easy installments. And create, send, and track invoices right from the PayPal Business app so you can get paid on time.