How to set up an online shop

In our article 'How to sell unwanted goods online', we explained how to maximise profits when selling goods via sites such as Ebay. Our advice was aimed at amateurs, but if you are serious about selling goods or services online, it may make more sense to set up your own online shop.

While this is by no means a casual undertaking, creating a bespoke web-based outlet is probably not as difficult as you imagine.

In this article, we will explain all the things that need to be considered and examine different approaches available to prospective online shopkeepers.

What to sell
Before you go anywhere near a web-hosting service or ready-made storefront package, there are a few fundamental decisions to ponder. First, it’s a good idea to look at the item you are selling and consider what would be the best way to sell it.

For example, a person selling second-hand CDs and DVDs on an ad-hoc basis is probably better off sticking with sites such as Ebay or Amazon Marketplace, as they provide the biggest audiences for such goods.

But if you’re selling niche services or goods that you make or source yourself, it may make good commercial sense to manage your own retail outlet. The decision usually comes down to simple maths.

If switching from an Amazon vendor’s account to a self-run store is likely to result in more profit (because you don’t have to pay fees to Amazon) or allow you to expand your empire, then it’s worth considering – even if it may mean more effort.

On this point, it’s worth thinking about how much spare time and energy you will be able to devote to your endeavour. If you already have another full-time job, you need to determine whether or not you will have time to run your own store as well.

Throwing a few items on Ebay each week doesn’t require much effort, but setting up and managing a dedicated online store effectively amounts to running your own business and should be approached with all the seriousness and attention to detail that any other commercial venture would demand.

Rather than selling physical goods, you may decide to advertise a particular skill or service that you can make money out of – gardening, perhaps, or dog-sitting. A simple web page with a contact email is a great way to attract new customers to your offering.

Understand the law
If you decide to go ahead, it is vital to understand both your responsibilities in respect to consumer law and your liabilities in terms of tax. Whether you’re a sole trader or a small company, you will need to comply with the Sale of Goods Act (SOGA), which covers goods or services that are either faulty or not as described.

You will also be bound by the Distance Selling Regulations (DSR), which cover online transactions, and Consumer Protection Regulations. As a ‘data administrator’, you may also need to abide by Privacy and Ecommerce Communication regulations.

Finally, visit HM Revenue & Customs and Business Link for further information on self-employment or setting up a small business, especially in terms of VAT, income tax and National Insurance payments.