Table of Contents
The History of Shopify
Shopify is one of the most robust and user-friendly e-commerce platforms on the market today. It is easy to set up an account with Shopify, upload your products and set up your store so that you can begin selling right away.
Plus, Shopify offers very reasonable prices and takes care of everything from the shipping to the payment gateways. So where does this company come from and how have they become the number 1 e-commerce platform on the market today?
Shopify began in 2004. It is based in Ontario, Canada, and was founded by Tobias Lütke, Daniel Weinand and Scott Lake. They currently have over 200,000 merchants that have online stores with their platform and the amount of merchandise volume that goes through Shopify stores is far greater than $10 billion.
This is impressive when you think about the fact that three guys created the store just because they couldn’t find an e-commerce platform that they liked.
Most of the work on coding was done by Tobias Lütke. The guys were inspired to make this store because they wanted to make a sporting goods store called Snowdevil. The framework Ruby on Rails was used to create Shopify in the platform is actually launched in June 2006.
Three years later Shopify released the App Store and API allowing people to create apps for the App Store. There are several companies that are in the business of making Shopify apps.
The platform joined the mobile revolution in April 2010. Their first mobile app was for Apple. This allowed Shopify store owners to manage their store directly from their mobile devices for the first time. They also began a contest that brought in several well-known entrepreneurs to mentor people who were building their businesses.
The Shopify payments platform, which is one of the reasons that so many people go with Shopify, was released in August 2013. In 2014, the platform had 120,000 merchants and in 2015, the company released their initial public offering and began trading at $28 a share.
The platform has become immensely popular among just about everyone in the e-commerce industry. Shopify has made it easy for people to start their own e-commerce website and is hosting some very large and prestigious online retailers.
With all of the options available that are native to Shopify and all of the add-on options that you get with the App Store, you can’t go wrong with Shopify.
Who are Shopify’s Top Competitors?
If you’re thinking about going with Shopify as your e-commerce platform you might be wondering about the competition and whether or not you’re choosing the right company. While it is true that Shopify is the most popular e-commerce platform out there does that mean it is the best?
There are actually some pretty solid reasons to go with Shopify over the competitors that are out there. Here is what you need to know so that you can feel good about your decision.
Bigcommerce is one of the major competitors for Shopify if you’re talking about platforms that do the same thing like Shopify. The truth is, Shopify has many more internet searches than Bigcommerce. However, the site isn’t doing too badly either.
While Shopify can boast almost a quarter-of-a-million merchants, BigCommerce has 100,000 or so. They are fairly easy to use and have a lot of the same features as Shopify has, plus they have about the same pricing as Shopify does. However, Shopify simply does it better things to the App Store, the terrific interface, customer service and more.
If there was ever a platform that can compete with Shopify for the features that are available it is Magento. That’s because this platform is open source and anyone can build features to work with this program.
However, Magento is not a full-service e-commerce platform. It does not offer the support, the security for the company standing behind it. The people designing Magento are independent programmers working together to create a great e-commerce platform but for most people, Shopify works much better.
If you are familiar with WordPress you might’ve heard of WooCommerce. This premium WordPress addition is a solid program with a great team behind it. What WooCommerce has going for it is that it works with WordPress which is one of the leading content management systems in the world.
Shopify Wins by Customer Consensus
So these programs have been around for a while and others are a little newer than Shopify but what they all have in common is that while Shopify’s interest from consumers has grown exponentially the interest in the rest of these e-commerce platforms has pretty much stayed the same as it was when they first released.
That’s not to say that the platforms haven’t improved – they have – but they never really took off with consumers as Shopify has.
Shopify Compared to Other eCommerce Platforms
If you are considering using Shopify, you might be wondering whether they live up to their claim as the best eCommerce platform or whether there is a better solution out there. To help you answer that question, this chapter will go over some of the top eCommerce platforms and discuss the advantages and disadvantages of each one, as well as how they stack up to Shopify.
An Ecommerce Platform Defined
The first thing that we’ll do is define what an eCommerce platform actually is. An eCommerce platform is a software program that gives you the framework to build an online store. This means that rather than having to code in things like product pages, shopping carts, buying buttons and various other complex design elements.
All of that is done for you when you use an eCommerce platform. All you have to do is customize your site with the design that you want – usually through the use of themes, and then add your products and other information. It is an easy way to build an online store as long as you choose a platform that does what you need it to do.
Comparison: Shopify Against Other Platforms
There are many eCommerce platforms out there to choose from – hundreds if not thousands. Shopify is by far the most popular and the most widely used of all of these platforms but does that mean it is the best? We’ll be looking at the top eCommerce platforms and see how Shopify stacks up against each of them. If Shopify is the best, you should know why, and be able to compare the platform fairly against all of the others in order to make an informed, unbiased decision. So, let’s compare them one by one.
The Top Ecommerce Platforms
We’ll be comparing Shopify against three platforms that are definitely up there in the top five with Shopify: Magento, Bigcommerce and Volusion. We’ll compare each one with Shopify on the basis of the following factors: Pricing, design customization, features, security, marketing, reports, add-ons and support.
These are all of the basic framework components of each eCommerce platform out there and by looking at these eight factors you can decide how each of them compare with Shopify and decide which one you are going to go with, or if you are still going to use Shopify.
First, let’s discuss pricing. Magento is free unless you want to upgrade to the Enterprise Edition, which is pretty pricey. BigCommerce is the most expensive of the bunch with four tiers of features, each one about double what Shopify costs per month. Volusion and Shopify are very similar when it comes to pricing.
Next is design customization. All of these design customizations are based upon themes. All of the platforms have some free themes and then there are premium themes as well. BigCommerce doesn’t charge anything for their selection of 100 themes, but the quality is pretty low.
Volusion has a couple of dozen free themes and then nearly a hundred premium ones, and the quality is comparable to Shopify. Magento has some free themes but most of the good ones are premium and they can run upwards of $150. Shopify and Volusion definitely have the best out of the four and Shopify themes are a little higher quality.
These four are nearly comparable when it comes to frontend features. The only problem really lies with the BigCommerce platform which isn’t very clean. It does have more features than any other platform to make up for it, however. All of the frontend designs are mobile responsive so you don’t have to worry about that.
BigCommerce is the clear winner here when it comes to backend features. There is just enough customization to allow you to make your store look the way you want and the interface is very nice and clean.
Shopify also has a clean interface and is fairly robust although not quite as nice as BigCommerce. Both Volusion and Magento have backends that have a very steep learning curve and although Magento offers a much greater array of features, it is almost impossible for first-time users to make the backend do what they want without learning much of the tutorial information first.
Shopify is the clear winner here because of the hosting that they offer and the fact that they feature a Content Delivery Network (CDN) and are PCI compliant. BigCommerce is pretty secure as well but doesn’t feature a CDN. Volusion does provide hosting and has CDN and PCI compliance but you have to pay for encryption which Shopify offers for free. Magento requires that you get outside hosting which costs you extra per month, but the basic edition of Magento is free to make up for it.
Marketing encompasses several aspects including SEO, social media and more. When it comes to SEO the big winner is BigCommerce as the SEO customization is very well planned and quite robust. Shopify only has the basic SEO features and Volusion is even worse. However, Magento has everything built-in for SEO just the way you’d need it.
As for social media integration, all of them are about the same except for Magento, which offers no social media integration whatsoever. As for the newsletter feature, both Volusion and Magento have them built-in. Shopify and BigCommerce don’t have a built-in newsletter but they do integrate easily with the third-party applications for this feature.
All of the platforms offer the same basic promotion features like discounts and coupon codes. They also all support selling items via other channels and allow you to use the onsite marketing tools to start bringing in traffic.
As for reports, they all offer pretty much the same thing. The reports and statistics features on these platforms are all basically the same and give you the much-needed information about conversion rates, bounce rates and an overview of the products that you are selling. There is no real clear winner here when it comes to this feature.
All of these platforms also offer add-ons that will extend the usability of the platform and give you even more features than you had before. They have app sections of each platform that you can browse and decide how you want to expand your store.
The thing about the apps is that they are constantly changing and each platform is always moving alongside the others so you can’t really pick a clear winner based on this. What you have to do instead is decide which one you are going to use and then keep track of the add-ons that you see.
Okay, so what about support? Let’s start with Shopify. No matter what package you choose – including the $9 a month Basic package you get 24/7 support. BigCommerce has a great education centre and you can get in touch with support 24/7 weekdays and between limited hours on the weekends.
Volusion offers phone, live chat and email support 24/7 and then Magento is the one that is seriously lacking in support unless you upgrade to the expensive Enterprise version. However, you can visit forums to get help with Magento.
Why You Should Start a Shopify Store
While there are some enormous benefits to starting an eCommerce website, there may be even more benefits to doing it with the Shopify platform. In fact, many of the risks and the potential problems mentioned in this introduction that comes with having your own e-store are minimized or eliminated thanks to the Shopify platform.
Whether or not you start an eCommerce business is up to you, but if you decide you are going to, you definitely need to do it using the Shopify platform. Here are just a few reasons.
- Your store design costs normally would be thousands of dollars, for getting a website designer that not only has the skills to create a great looking website but also to program all of the eCommerce functions you need including security. But with Shopify, there is no huge investment of thousands of dollars. You just pay one of four tiers of pricing and you get the perfect eCommerce website.
- You get the benefit of the entire Shopify team. You aren’t just getting a website template with Shopify, you are getting a ready-made store that has already had all of the bugs worked out and has been re-designed and re-worked so that it functions perfectly and has just about every feature that you could possibly want.
- The platform is so intuitive that you can start building your store right after logging in. You might have to look at the help pages to use some of the more advanced features but for adding products and customizing design as well as other basics, you can start doing it right away with almost no learning curve.
- You have some incredible security. By law, an eCommerce website has to take certain steps to protect a customer’s financial information, but you don’t just get sufficient security with Shopify, you get some of the most highly rated security features of any eCommerce platform on the market today. You don’t have to worry about programming security protocols or making sure that your site is protected on all sides from thieves who want your customer’s credit card numbers. Shopify does all the work for you.
- Shopify is designed to help you reach your SEO potential. If you were to pay a designer for a custom eCommerce site you would spend thousands of dollars or perhaps even tens of thousands of dollars and you wouldn’t get the features that you get with Shopify. One of those features is their search engine optimization. With Shopify, your e-store has the best chance possible to rank high in the search engines and bring you lots of organic traffic.
- You get analytics that tells you exactly what is going on. With Shopify, you can see exactly where your customers are coming from, what keywords they are using to reach your site and where they go once they get there, not to mention how long they stay. All of this information has one primary purpose – to allow you to tweak your Shopify site and your marketing and promotion efforts to get as many people coming to your site as possible and then get them to stay there once they arrive. You still have to offer great products, but Shopify helps you market your site much more effectively and gets customers to show up, which is half the battle when it comes to eCommerce.
- Your site is already optimized for mobile and will continue to be optimized in the future. With Shopify, you get a responsive website that will work with any mobile device and as this quickly becomes the primary way that people shop, your eCommerce website is only going to get better, as the engineers behind the platform ensure that you always keep up with the technology.
- You get hosting with your site. Shopify has an advantage that many eCommerce platforms do not share – your site is hosted by them, and your payment gateway and other shopping cart features are already taken care of. Not only does this save you money since you don’t have to pay for hosting, but you also will always have enough bandwidth to support your traffic and of course, but you also get security with the hosting that is unrivalled.
- Shopify is extremely reliable. Shopify didn’t get to its spot as the number one eCommerce platform by accident. They are so popular and so widely used because of how reliable the platform is. When your store begins to get more traffic, you will lose money for every second or minute that your site id own. Using Shopify minimizes the chances of this as much as possible.
- Shopify has numerous apps created for your use. The Shopify app store has some talented designers creating programs that you can use to make your eCommerce store even better. You can customize the appearance of your site and do a great deal with Shopify but with the app store, you can create an unstoppable force in the world of eCommerce.
1. Choosing the Right Shopify Package
When you start selling with Shopify, there are different packages that you’ll be choosing from in order to use the platform to sell your products or services. Choosing the right package is important because it will determine what sort of features you get with your store and the tools that you’ll have at your disposal to run your business.
The easiest way to allow you to determine what package you should go with is to describe each feature that Shopify offers, based upon this chart, and then mark which membership tiers get access to that feature.
At the time of this writing, the Shopify plans are as follows (Following prices and package details may change without prior notice. Please check the latest package details on Shopify):
- Start a FREE Trial
- Lite: $9 per month
- Basic: $29 per month
- Pro: $79 per month
- Unlimited: $179 per month
Features Offered by Shopify with Membership
Online Store: Basic, Pro, Unlimited
With Shopify, this is where everything begins. If you want to have an online store, you need to choose one of the membership plans that offer it – Basic, Pro or Unlimited. If you choose the Lite plan, you aren’t going to get a store.
Point-of-Sale: Lite, Basic, Pro, Unlimited
You get the point-of-sale feature with all of the plans. What this gives you is the ability to take payments any way you need to using the Shopify POS. That means that you can accept payments in both the virtual and real-world and it is easy to set up with an app on your mobile device and an intuitive design that requires no training whatsoever. There is also a retail add-on package that gives you everything you need to sell in a brick-and-mortar store.
Facebook Integration: Lite, Basic, Pro, Unlimited
With this feature, your store gets fully integrated with Facebook so when people visit your page, they can see the items that you have in your store, update whenever you change them, and be able to click through to your store and buy if they want to. No matter which plans you choose you to get this integration.
Pinterest Integration: Basic, Pro, Unlimited
This feature comes with every package except for the Lite package and it allows you to sell items from your store directly on Pinterest by having a buy button integrated into your pins. Buyable pins allow customers to buy without even leaving Pinterest and could definitely result in a lot more sales.
Twitter Integration: Basic, Pro, Unlimited
Again, comes with every package except for the Lite, and this feature works pretty much the same as the Pinterest integration does. Anytime you tweet a product, it will automatically include a buy button, product image and description so that people can shop without even leaving Twitter.
Shopify Buy Button: Lite, Basic, Pro, Unlimited
The Shopify buy button is how you can add your buy button to any website that you choose, and it comes with all of the different packages that Shopify offers.
Retail Package: Lite, Basic, Pro, Unlimited
This is the cost of the retail add-on package. With some features, you get a discount with the higher-priced Shopify packages, but with this particular one, the retail add-on costs $40 no matter which package you go with.
Credit Card Rates: Lite, Basic, Pro, Unlimited
As mentioned in the last feature, some tiers give you different costs. This is an example of those. You pay fewer fees for accepting credit cards the higher of a tier you choose. So for the Lite and Basic packages, you pay 2.9% plus 30 cents online and 2.7% plus 0 cents in person while the Pro package only charges you 2.6% plus 30 cents online and 2.4% plus 0 cents in person. The Unlimited package gives you a further discount – 2.4% plus 30 cents online and 2.2% plus 0 cents in person.
Transaction Fees: Lite, Basic, Pro, Unlimited
So, for this package, you don’t pay any transaction fees with Shopify Payments no matter which package you choose. But if you use external payment gateways you are going to pay 2% on the Lite and Basic packages, and 1% with the Pro. The Unlimited package only charges you half a percent of transaction fees on outside payments.
Number of Products: Lite, Basic, Pro, Unlimited
No matter which package you go with, you get an unlimited number of products in your store.
24/7 Support: Lite, Basic, Pro, Unlimited
All of the packages include 24/7 support. If you are paying for a package with Shopify, you get access to support 24 hours a day, 7 days a week, 365 days per year.
Shipping Label Discounts: Lite, Basic, Pro, Unlimited
When you buy shipping labels from Shopify you get deeper discounts with the higher tier packages. With Lite and Basic, you get up to 50% off shipping labels while you get another 5% off with Pro and another 10% off (for a total of up to 60% off) with Unlimited
Fraud Analysis: Lite, Basic, Pro, Unlimited
No matter what package you go with you get Shopify’s award-winning fraud analysis to make sure that you are protected from fraudulent purchases.
Manual Order Creation: Lite, Basic, Pro, Unlimited
Again, you get this feature no matter which package you choose. What a manual order feature gives you is the ability to enter an order manually without having the customer purchase the product online. That means if you sell something in the real world you can still take advantage of Shopify’s features by entering it into the system manually.
Website & Blog: Basic, Pro, Unlimited
With the exception of the Lite package, you get to have a website and blog through Shopify with any of the tiers that you choose. This allows you to blog and build authority as well as gives you an eCommerce store. Blogging can help you rank for more keywords as well.
File Storage: Lite, Basic, Pro, Unlimited
No matter what you choose here, you get unlimited file storage.
Discount Codes: Lite, Basic, Pro, Unlimited
Discount codes allow you to run promotions and give your customers a discount when they use a specific code. This is a very good tool for knowing where your traffic came from and which advertising methods work the best.
Gift Cards: Basic, Pro, Unlimited
With the Basic, Pro and Unlimited packages you get gift cards that your customers can use to give to other people or use at a later date.
Professional Reports: Pro, Unlimited
The Pro and the Unlimited packages are the only ones that give you the ability to run advanced reports and see what is really going on in your store. You do get some basic reporting without this feature, but it is very limited and it could be worth upgrading to the Pro or Unlimited packages all by itself.
Abandoned Cart Recovery: Pro, Unlimited
This allows customers to come back after closing out the page and finding their shopping cart just as they left it.
Advanced Report Builder: Unlimited
The only package that you get this advanced report builder in is the Unlimited package and in fact, this is one of only two features that you can only get with the Unlimited package.
Real-Time Carrier Shipping: Unlimited
This is the other feature that you get only with the Unlimited package.
2. Shopify Costs versus Potential Sales
Many people are hesitant to start their own e-commerce store. One of the reasons that they never follow through with it is that they are concerned that it will cost them more than they will make in sales.
Obviously, this is to be avoided, and many people that are considering starting an e-commerce store are already having trouble with their bills and don’t have the budget to pay for a store until it makes a profit.
So you have to do some calculations to decide whether or not the cost of doing business in Shopify is going to be worth whatever price that you’ll be paying.
Your Shopify Plan
Your Shopify plan is the first thing that is going to determine whether your sales are going to outweigh your cost or whether it’s going to be the other way around. There are four Shopify plans to choose from. The first of the plans is only nine dollars a month.
From there it goes to $29 a month, $79 a month and $179 a month. With each of these plans, you get various benefits and features for your Shopify store. You also get discounts on things like Shopify shipping and on credit card processing fees so factor this in as well.
Your Product Choice
The next thing that is going to influence whether or not you’ll be above or below water with your Shopify site is what products you have chosen and whether or not you have chosen to fulfil orders yourself or you’re using a third-party like a drop shipper.
On the product side, your profit will depend on how much you can save by buying the products wholesale and how much you can mark them up before selling them to the customer.
However, if you are selling the items yourself and keeping them warehoused, you are going to have overhead and cash flow issues that may affect your profit.
The other thing that will determine how much you’re spending versus how much is making is what sort of add-ons you have and how much you’re spending on them.
Some people have third-party applications that they use to manage their social media, other people have Shopify apps that they are paying a monthly subscription for and there may be other fees or costs covered under this miscellaneous umbrella. How much you can keep these costs down correlates to whether you can afford your payment or not.
3. How You Can Use Drop Shipping with Shopify
One of the options that you have with your Shopify store is the ability to use dropshipping companies to sell products. This works very much in the same way as the Amazon affiliate program.
You list products on your website and you do the promotion, and when someone buys one of those products you get a cut but you don’t actually have to do any of the fulfillments because it is all taken care of by the drop shipping company. So, how do you configure Shopify to use dropshipping and is it a profitable venture?
What is Drop Shipping?
Dropshipping is when a company like yours purchases a product from a company that will then ship the product to the customer. Your company doesn’t actually buy the product until the customer buys it from you.
This makes for lower overhead and removes the need to warehouse and ship products. However, the disadvantage of drop shipping, is that you aren’t able to mark up the product very much before customers decide that they don’t want to buy from you because your prices are too high.
What Drop Shipping is offered through Shopify?
One of the drop shipping options offered through Shopify is Amazon itself. Amazon has a long history of allowing people to make a profit from selling their products on your website.
This is a great deal because Amazon has amazing customer service and as a vendor that is selling their products, you’ll benefit from that customer service reputation as well. Amazon is definitely the biggest drop shipping company that is offered as part of the Shopify platform as well as the most reliable.
Shipwire is another drop shipping service that is integrated into Shopify. Shipwire allows you to store and ship your products from their warehouses that are located all over the world, specifically: the United States, Australia, China and the United Kingdom.
Rakuten, which was previously called Webgistix, is the other dropshipping platform that is integrated into Shopify. They have a good reputation and quite a few shipping options which are great if you want to offer your customers the widest choice available of shipping.
They have a reputation for delivering items fast and keeping up with modern technology, which you can integrate into your store. They also have great customer service according to the people that have reviewed them online.
4. Determining Your Market Size in Your eCommerce Business
Once you have decided what kind of products you are going to sell, you next need to determine how big the market is for those products. There are a number of mistakes that some new entrepreneurs make when setting up their store for the first time.
We’ll go over a few of those in a moment. If you can avoid the mistakes, then you have a much better chance of being successful. Determining market size definitely is one of the most important things that you can do before setting up your store, but do keep in mind that even if you determine that the market is too small for the product that you have chosen, you might still be able to sell it.
That’s one of the first mistakes that people make when they are determining their market size. They stubbornly stick to one product because it is their passion and that’s why they got into the business in the first place.
There’s nothing wrong with that, except that if you want to be successful, you are going to have to do more than sell a product that almost no one wants. So, how do you appeal to a wider customer base while still selling something that you are familiar with or knowledgeable about? There are actually two ways that this can be accomplished.
Method One: Expand Your Product Line
So, you want to sell bandanas or ‘do-rags that feature horses. This is a great product – for someone who wants to wear a bandana that features horses. But there aren’t many people looking for that particular product. In fact, you might be hard-pressed to sell a single bandanna. But there is definitely a market for ‘do-rags and bandannas.
The problem is, there is too much competition in this wider market, which is why you went with the niche – that and your unparalleled expertise on horse prints and patterns of course. But what if you decided to sell bandannas that featured all kinds of animal, pop culture and photo print designs. You suddenly have opened yourself up to a huge market of bandanna and ‘do-rag wearing customers.
Method Two: Learn Something New
Okay, so maybe your niche product only appeals to a very specific niche and there isn’t anything you can do to expand it. You don’t want to stick with that niche on a potentially huge e-commerce site like your Shopify site. Instead, you want to learn something new.
Simply move on to a new niche and if you don’t know anything about it, then you can learn before you open your store. Of course, you can always find something that is related to your original niche idea so that you can at least incorporate the products that you had in mind at some later date when you have already established a name for yourself with the new niche.
Don’t be Afraid to Choose a Large Market
Another mistake that budding entrepreneurs make when they are first setting up their store is to baulk at competing in a large market. If you are looking at your market and feeling fearful that you will get lost in the shuffle, take heart. There are actually several things that you can do to distinguish yourself in a large market to make sure that you can compete with the big guys. We’ll go over those strategies in a later chapter.
How to Determine the Size of a Market
So, how do you determine the size of a market for a product that you are considering selling? The first step is to check out the market research that has already been done for you. There is no reason not to take advantage of information that is provided by the government, not-for-profit organizations or even companies that have released the information.
To determine the size of the market you’ll research your industry with the Small Business Administration or through FedStats.gov. There are also organizations devoted to each industry that will have more accurate numbers. Checking out these numbers is the first step in determining market size, but not the last one because you are likely competing in a niche market within that consumer segment.
Determine Your Niche Market
If you are competing in a niche market then you are going to want to narrow down the market segment that you figured out by researching the industry into a much smaller number, because you aren’t likely to find specific numbers on your particular niche unless it is incredibly broad.
For example, if you are selling bananas, you wouldn’t be able to get numbers on how many people buy bandanas and ‘do-rags but you might be able to get specific numbers on how many people in the country are buying health and beauty products – hint: it’s almost all of them. That’s unfortunately how the numbers are structured. Luckily there are some solid ways to narrow down your market and be fairly accurate.
We’re going to go into demographics in detail in the next chapter. But we’ll have to skip ahead just a little to make a point here. In order to narrow down your niche market, you’re going to have to read chapter three and follow the instructions there, because you can’t have one without the other.
Your ideal customer will determine what demographics you look at, and that will determine what your market size is going to be. As for the demographics that make up your ideal customers, that will be up to you based on your research.
Estimating Market Size by Competition
Another way that you can estimate the market size of the niche that you are going to be working in is by looking at the competition. For example: if you were to go to Amazon and look at their book selection under the ‘Arts & Photography’ category, you will notice that while ‘Architecture’ has more than 10,000 books in that subcategory, the subcategory ‘Dance’ only has about 1000.
That means that you can safely assume that the dance book niche is about 10% of the size of the architecture book niche. You don’t have to use Amazon for this method, but if you can, it is usually pretty accurate.
If you don’t want to use Amazon’s listings, or your particular niche isn’t represented there, you can use the search engines with the same effect. For example: suppose that you were selling bandannas with famous movie stars on them. If you were to type in ‘bandanas’ you could check out the competition that comes up and see how many of them (if any) are offering movie star bandanas.
Even better, if you have a Google account, you can use the Adwords Keyword Planner to type in phrases that will allow you to see just how many people search monthly for a particular keyword phrase. For example, you might type in ‘Tiger print bandanas’ and see that more than 1000 people every month search for that particular item. That means that if you sold tiger print bandanas and you could get your website in front of those people, you’d make some sales.
So, determining your market size isn’t that difficult. But it’s not all that accurate either unless you are willing to spend tens of millions on market research.
5. Laws, Regulations and Restrictions for Your Business & Your Products
There is a lot to think about when you are starting your eCommerce website and if you want to stay in business, understanding the laws and the regulations that govern your store is going to be paramount. There are six main areas that we’re going to focus on when it comes to regulations, encompassing very different aspects of an eCommerce website.
This information is based upon the laws that govern eCommerce websites that are based in the United States and the information may be different if you are starting your site elsewhere. In addition, there may be other regulations that govern your store if you are selling an unusual or regulated product.
The first legality that we’re going to discuss is your business license. Do you need to get one and how is that even accomplished? Let’s start with what a business license actually is. A business license gives you the ability to operate a “for-profit” business in a certain area, usually a city or county. If you don’t have a business license and you start a business, you can be fined and the city may force you to close your doors.
The business license is obtained through whatever city or county office gives them out in your area and each one will have different requirements or different types of licenses, which may or may not apply to internet only businesses.
The best thing to do is check with your local licensing office and get the current information for your city and state. You also should be aware that you cannot do business under that name until you are licensed, which means that banks aren’t going to open a business account for you unless you can provide proof of your business name, commonly called a D.B.A.
Your Domain & Website Security
One of the reasons that you’re going with Shopify is that it makes it much easier to build a store because most of the difficult stuff is already taken care of. That is the case with site security as well. Shopify has taken care of that aspect of your site for you, and in fact, is one of the most highly rated sites when it comes to security. As long as you’re using the platform, the chances of your store being hacked or your customer’s financial information being stolen is extremely low.
However, there is one website-related thing that you’re going to need to do, and that registers a domain. A domain will be the address where your store is located. It is an important decision because your domain will be the way that people find your store, and one of the ways that Google knows what your store is about.
Next, we’ll discuss how taxes work. There are two different types of tax that you need to be aware of – sales tax and income tax. When you are in business for yourself, you are responsible for paying both of these on every item that you sell (usually) and every dollar that you make (almost).
Sales Tax: When you have an e-store, you actually don’t have to pay sales tax on everything you sell. Your state only requires that you pay sales tax on items that you sell to people who live in your state because a transaction from you to them means that you have “done business” in that state and that is subject to sales tax. When it comes to the other items that you sell, to people in other states, you don’t have to pay sales tax so you only have to set up your store to charge sales tax to the people who live in your state.
Income Tax: The other type of tax that you’ll have to pay is the income tax. Do you remember when you used to get a tax refund check at the first of the year? Well, that time is over. Now, you’ll be paying taxes on the income that you get because you don’t have an employer to withhold those taxes for you.
So, you’ll need to set aside a portion of your income to pay taxes at the end of the year. If you set a certain percentage in a savings account, and the actual amount of taxes that you have to pay is less than what you have saved, then you do get a tax refund of sorts.
You won’t know exactly what you have to pay until the end of the year because you get to deduct your expenses from your income and not pay taxes on any amount that you spent running your business.
Your expenses can also include part of your rent if you work from home, and even vehicle expenses if you had to drive anywhere for your business, such as to the post office to ship items. Any money that you spend running your business, that can be proven, you can deduct before you pay taxes. A tax advisor can help you make sure you get all of the deductions you deserve.
When it comes to hiring employees, there are several different laws that you’ll need to familiarize yourself with. From income tax withholding to laws governing hiring policies, you’ll need to check out the local regulations in your area as well as the federal labour laws. You may not think that you have a need for employees right now, but if your business grows to the point where you can no longer keep up with the shipping, it is something that you might want to consider.
Here are some of the laws that you are going to have to familiarize yourself with if you decide to hire employees:
- Wage and hour regulations
- Workplace safety and health
- Worker’s compensation
- Employee benefits and security
- Unions and their members
- Employee protection
- Regulations governing those in uniform
- The employee polygraph protection act
- Wage garnishment
- Family & medical leave law
- Special employment rights for veterans
We’re going to get into how to set up your shipping in a later chapter. For now, you should just be aware that there are some shipping regulations that govern how you need to label your packages when you need insurance, what happens if you decide to ship overseas and the type of materials you are allowed to send through the U.S. mail or other shipper. For the most part, Shopify has already taken care of this for you with their shipping labels, so you can just concentrate on building your store and attracting customers.
There are a few special regulations that you need to be aware of if you are running an eCommerce website. However, they are mostly to do with site security and protecting your customer’s financial information, something that is taken care of by Shopify.
There are also some rules governing online advertising that every e-store owner needs to review and then there could be special regulations governing your particular product as well. These are all things that you’ll need to research and understand before you open your eCommerce site for the first time and before you make your first sale.
6. Where to Get Your Shopify Products
Unless you are planning to make your Shopify products yourself, such as jewellery or artwork, you are going to have to obtain your inventory somewhere. This can be challenging because not only do you need to find a reputable and reliable supplier of the inventory that you sell, you also need to be able to purchase it at a low enough price that you are able to make money on the product – commonly called buying wholesale. Buying wholesale is usually a lot easier if you are buying in bulk, and for a smaller eCommerce website, this might not be possible, particularly if you are selling big-ticket physical products like electronics.
Of course, there are digital products to consider as well. Digital products can be a huge part of your income, particularly since if you create them yourself, you can sell them with no overhead whatsoever. Then, there are subscription products to consider, which might be something you add to your store if you have a valuable service that people are going to pay for month after month. But as far as obtaining products, let’s start with where you can get your physical inventory.
Obtaining Items Wholesale
When an item is manufactured, ideally, it would go straight to retailers and then they could add their markup and sell the item in their store. Unfortunately, it doesn’t happen like that at all. What actually happens is that the manufacturer sells it to a distributor, who then sells it to a wholesaler (or vice-versa) who then sells it to the retailer, if you’re lucky. There may even be more middle-men with their hand out along the process and so the price can get pretty high by the time it gets to you.
The big stores like Walmart do enough business that they are able to skip a lot of steps and buy directly from the manufacturer. That’s why they can offer their customers such low prices and be able to undercut the competition. But as an eCommerce website without any real clout, especially if you don’t have the money to buy in bulk, you are going to be buying close to retail on some things.
Some wholesalers won’t sell to you unless you purchase a certain amount and others may not want to deal with you at all. Retailers often spend years building relationships with their suppliers in order to make sure they get the best price possible.
Where to Look to Buy Items Wholesale
If you want to buy items wholesale, you need to understand who the players are in your area. The wholesale industry has 50 of the biggest distributing companies generating a quarter of the income in the entire industry. The world of wholesale is a small one and there is a definite distribution chain that wholesalers supply through. It is a club that you have to have an invitation to be a part of.
At the highest level are the manufacturers who take the raw material and turn it into a product, or the import companies who buy it elsewhere and import it to the United States. Those companies then sell it to wholesalers or to distributors responsible for a region, and who distribute the product to the retail stores in that area. There are also brokers who are the go-between of small retail businesses and the distributors.
Volume & Relationships Mean Discounts
When it comes to getting the best price on items, you need to have one of two things, and probably both. You need to be buying large volumes of products, whether that be many items of the same product or just a large order, and you need to establish a relationship with your wholesaler.
If you have been working with the same wholesaler for any length of time, you will begin to build a relationship, and that relationship will ensure that you get a good price down the road, even if you aren’t necessarily buying as much inventory as they’d like to sell you, as they want to keep in your good graces.
Since you’re new, it is unlikely that you’re going to have a relationship with the supplier so you’re going to have to work towards it, and make up for it by buying in bulk as often as you can. Even so, there are wholesalers who will sell and ship to small businesses if you look for them.
You may not get as good of price from these wholesalers but as you become more and more well-known in supplier circles you will be able to move up the ladder to get to a better supplier.
Where to Look for Wholesalers
The best place for you to look for wholesalers these days is probably the internet, as you don’t know anyone outside of the web that you can call. There are definitely wholesalers who list online and market themselves to businesses via the web. There are also trade associations and directories that you can make use of like Wholesale Central.
One way that you can go about finding the right supplier online is to find a store that sells some of the same products that you do and shoot them an email to ask for a recommendation. They may not wish to help you if they are a competitor of yours, so try to find someone who you’re not competing with.
Other than the internet, you can find wholesalers by attending trade shows. There are dozens and possibly hundreds of trade shows that have wholesalers attending them and if you can attend you may be able to get a supplier that you wouldn’t have ordinarily had access to.
You can also read trade magazines, particularly the classifieds section, to find wholesales that supply your particular product. You can also get recommendations from business organizations like the SBA, Small Business Development Center and the local chamber of commerce.
You might also want to try talking to the manufacturer themselves. Although you probably aren’t going to get them to sell you products at the prices they sell to wholesalers, they might give you some recommendations of the people farther down the supply chain that serves small businesses. Another great idea is to visit retailer forums, particularly those for eCommerce. Of course, there is always the Amazon affiliate program as well.
Getting Digital Products to Sell
Depending upon what the digital product is that you are planning to sell, you can almost always make good money on them. You might have heard of Clickbank as the digital marketplace for sellers and affiliates.
The problem with ClickBank products is that they are often overpriced because the creator doesn’t sell that many and has to be an affiliate commission whenever they do sell something. However, Clickbank isn’t the only game in town.
Figure out what sort of digital product that you’d like to sell, and whether you plan on providing that digital product yourself or whether you plan to be an affiliate for someone else and then search the internet for products that fit your needs. You’ll probably have to do some real research because once you find a product, you need to vet it carefully, but soon you’ll have some digital inventory to sell.
7. How to decide if a Product is Right for Shopify?
So, how do you know if a product is right for a Shopify store? Many people have product ideas or niches that they would like to start store around but they aren’t sure if their product idea is viable or not.
There are some really great ways to evaluate product ideas and determine whether or not you should make time and monetary investment in starting an e-store around them. Here are three ways that you can evaluate products specifically for the Shopify platform or for an e-commerce business in general.
Are you the person to market this product?
This is the first question that you should ask yourself because with the Shopify site specifically you are competing in a niche and the way that you’re going to make your business grow is by becoming an expert in that niche.
If you are selling products that you know nothing about and that you’re not willing to learn about then those products are definitely not right for Shopify or any other e-commerce store that you’re considering.
Do people want the product?
The next thing that you’re going to have to figure out is whether or not people want the product. This can be done in a few different ways. Obviously, you could do market research or have a company do it for you, which is usually prohibitively expensive.
A much better way to do market research before you buy a product is to create listings for them and then take them out of stock. Then, you can try to get people interested in your “out of stock” products to see whether or not they would be viable for your Shopify site.
Can you Compete?
Another thing you have to decide is whether or not you can compete in this particular niche. Large corporations dominate the biggest markets out there but there are also some pretty solid companies that are dominating the smaller markets too.
You need to look at the competition and determine whether or not you can rank for any of the keywords that you’ll need to get people into your site as well as whether or not you can sell products at a low enough price to compete with these big-name companies that are likely able to get wholesale prices that are better than yours. If not, then you should choose a different product.
8. Adding Products to Your eCommerce Store
The task of adding your products to your store will take up the bulk of your time unless you can find a way to automate the process somewhat. There are things that you can do to speed up the adding of products, such as importing your inventory using a CSV file, and we’ll get into that as well.
The goal of this chapter is to make it as easy and painless as possible to get your items added into your store along with the proper information for shipping, pricing and categorization. This is going to be a step-by-step guide that will cover all aspects of adding products since it is arguably the most important part of having an eCommerce website.
Exploring the Products Section
The first thing that we’ll do is a quick overview and exploration of the products section of your Shopify store. There are two basic parts that you need to be aware of. The first is the tutorial section, where you can learn through text instructions and screenshots, exactly how you can create your products, and the actual section where you add and edit your products, as well as do other related tasks.
The Help Section
In order to get to your tutorial section, you simply click on ‘Products’ from your admin page and then scroll down to click the link at the bottom that says ‘Learn more about products.’ This will take you to the visual tutorial that will teach you everything that you need to know. Let’s go through the tutorial section quickly so that you can understand where to get help when you need it.
There are nineteen separate sections that pertain to products in the help section, which is actually part of the entire Shopify manual. Another way that you can access it, without having to go to the products page first, is to type in docs.shopify.com and then when the help section comes up, simply click on the ’manual’ link. From there you’ll be able to access the massive amount of helpful information that Shopify provides to you on everything from products to gift cards.
Introduction to Adding Products
So, what exactly are products? They are the items that are for sale in your store. You have specific products that have their own images and you may have a particular quantity as well. The adding or a product is a four-step process.
- Step One: Adding a product title, which works much in the same way as adding a WordPress post.
- Step Two: Adding images for that product. You can add more than one, but you’ll also have a primary product image.
- Step Three: Adding a product description. While the title should describe your product, the description will be what actually sells your product to the customer.
- Step Four: Create variations of your product. For example, you might have different sizes, different colours or other variants.
Adding Your First Product
In order to add your first product, you are going to have to navigate back to the Shopify admin page, assuming you are within the help section. The easiest ways way to do this is just to enter www.shopify.com in your address bar and then press enter. It will take you back to the admin page. From there, click on the products link on the sidebar and you will be able to add a new product.
First, click on ‘Product’ and then click on the large blue button that says ‘Add Product.’ This will take you to an entry page that looks very much like a WordPress ‘add new post’ page. You’ll need to complete the following information if you want to add your product to your store.
- Title: For example, if you were starting a clothing store, this would be where you would put a specific style of the tee-shirt. For example: ‘plain tee-shirts.’ You don’t want to add additional information like size or colour just yet.
- Next is your product description. This is where you’ll type in the information that will sell this item to a potential customer. For example:
“These 100% cotton T-shirts are comfortable and stylish, and make the perfect complement to slacks and a belt, to protect the skin from suspenders and go underneath dress shirts for formal occasions. “
- Next, you want to add your product images. You can add more than one image if you want, but you should try to be selective and only add images that are necessary to show a different aspect of your item – for example, a different colour. Also, you can include image alternative text which will help both for SEO purposes and to describe the image if it won’t display for some reason.
- On the right sidebar at the top, you’ll see the visibility, which is where you want the product to be seen (i.e. the main store) and the visible date, which is simply the date that you are launching that product. This will probably be the same day you launch your store, but sometimes, people have a product coming out on a specific day.
- Next, you’ll fill in your organization information. This means that you’ll identify where in your organization tree this item fits. For example: If it is a t-shirt, it probably fits within the ‘shirts’ category. You’ll further identify it by creating a vendor. This is a useful tool not only for organizing your products but also for the keeping of which of your vendors this product belongs to so that you can order it again when it gets sold. If you are doing consignment this is also helpful.
- The last item on the sidebar is the collections search tool so that you can add it to item collections that will help your customers find items within specific collections and could help you make more sales by giving visitors something else to look at after they have checked out this item.
- At the bottom, you’ll decide on the price of the product and then choose a price to compare it to. This is simply a way for you to create a sales price, with the “Compare at” price being the original, regular price, and the selling price being what you are selling the item for “now,” That way, you can show a higher “original” price so that customers will think that the price has been slashed. You can also check the box that will tell the website to charge tax on that particular item, no matter what the location of the person buying it.
- You’ll set your inventory tracking numbers in the next two boxes. Your first will be your SKU or ‘Stock Keeping Unit’ and the other will be your barcode, or in the case of a book, your International Standard Book Number (ISBN).
- In the next section, you’ll add in shipping weight using ounces, pounds, kilograms or grams and set up any international tariff codes that apply.
- Near the bottom, you’ll get to the most powerful part of the product listing – the variants. You choose the name of each variant, such as size, colour, etc., and you’ll set a variant value for each of the variants that you create to apply to this particular product, which will then apply to similar products as well.
- The last part of the main product listing is the SEO preview, which will allow you to see the HTML title and description that you have created as well as set website SEO options if necessary.
Another extremely powerful feature that the product listing or “Add Product” page includes is the ability to manage transfers. Transfers make it extremely easy to track and update your incoming inventory by letting Shipfy keep track of you. You set this up in your item listings by clicking the “edit” link in the variants section.
Go down to the inventory section and choose “Shopify tracks this product’s inventory” from the dropdown. After you have set the product to be tracked by Shopify you can create a transfer.
You do this by clicking the second option in the product sidebar (Products, Transfers, Inventory, etc.) You’ll record the incoming inventory from a supplier (note: this is not the brand or vendor information that we created earlier.
This is where you actually purchase the product whereas the vendor is more like the brand of the item). Once you have arrived at the transfers page, click ‘Add Transfer’ and choose your supplier (or create a new one if necessary). You’ll also fill out the arrival date of your inventory transfer.
Find the items that you are going to be receiving in that transfer order and take special care to get the quantities right because you can’t change them once the inventory date arrives. When you have entered in all of the products that you will be receiving in that particular delivery you simply save it.
Inventory Tracking, Collections & Gift Cards
Once you have inventory entered into your database, you will be able to view it and track it at a glance by clicking on the third option in the products section – inventory. You’ll be able to accept or reject items from a supplier once the date has arrived for the order to get there and you can also click on the fourth option on the list to view your collections including being able to see any collections that you have created and get a birds-eye view of that particular part of your store. You’ll also be able to set up gift cards for sale in that section as well which will give customers virtual gift cards to purchase.
9. How to Make your First Sale with Shopify
So, you’ve opened up your Shopify store and you’re hoping to make your first sale soon. This is an exciting time and many storeowners refresh their admin area for hours hoping to see just one sale – the very first sale – happen.
Eventually, you will get that first sale, but it may take some patients. Here are some of the ways that you can increase your chances of getting that first sale sooner.
Your Family & Friends
Your family and friends are going to be an invaluable marketing tool when you first launch your store. They may want to buy products from you themselves, just to support you, but more likely they’ll tell their friends and eventually someone will need something that your offering. Any sales organization will tell you that you start with your family and friends and then network from there.
Advertising used to be something that only the most successful businesses could do because it was expensive to advertise on television, radio or newspaper. But with the Internet, advertising has gotten quite a bit cheaper.
You may be able to find a website that appeals directly to your customers and advertise there for a very low price. In addition, there is Facebook advertising, Google Adwords and various other low-cost methods of getting the word out there.
Deeply Discount or Give Away Products
Another method that you can use to get your first sale is to give out huge discounts. Obviously, when you make your first sale you are going to make very much money on it and in fact may lose money. However, the word will spread and you may be of making a profit on other products that you are discounting.
Giving away products doesn’t seem to make sense either but some companies set aside a certain budget for marketing and then use that to make up the cost of the items that they’re giving away.
Then they advertise the free items by describing them as “for a limited time only” which usually brings quite a bit of traffic some of which may be something else.
Make Some YouTube Videos
Finally, you could make some YouTube videos. They can be advice videos or you could just be talking about how you are able to get your store off the ground. Adding links to your store may bring in traffic that will give you yours for sale.
10. Why You Should Add Product Reviews on Shopify
One of the things that are going to help you sell more products on Shopify is if you have good reviews. Your customers are gone want to know what other customers think of the products that you have for sale. Some people are afraid of negative reviews and they don’t enable their product reviews at all.
Still, others don’t even know that they have the capability of having product reviews enabled on their Shopify site. But there are some pretty compelling reasons that you should add product reviews.
They Influence Customer Options
The bottom line is, product reviews influence customer opinions. More than half of the people that buy products online read the customer reviews before they decide to part with their money. For these people, whether the positive reviews outweigh the negative ones is the determining factor of whether or not they’re going to buy.
Reviews Improve Your Marketing Efforts
Have you heard the Hollywood axiom that bad press is still press? Whether people are leaving good reviews or bad reviews on your products you are still getting reviewed and this will bring in visitors. Some companies even purposely spark controversy so that they can get traffic coming in.
Reviews Improve SEO
When it comes to search engine optimization, reviews are some of the best tools that you could have to improve your search engine rankings. That’s because reviews contain words and when you have more words on your site you rank for more keywords.
In this way, even bad reviews are good for you once again; the more reviews that you have on your products the bigger the increase in traffic that you’ll get.
Reviews Show You’re Legitimate
Another thing that reviews do for your business shows that you are legitimate. With all of the scams that are online these days, people are wary about buying from sites that they haven’t heard of or haven’t purchased anything from before.
You can combat this to a certain extent by using trust symbols and using Shopify’s own payment gateways so that people can know that their information is secure.
However, that doesn’t tell them if they’re going to receive their product nor does it give them any information about what kind of shipping you do or what condition the product might be in when it gets there, as well as customer service experiences.
Conclusion: Making Your Shopify Store a Success
You may not be aware that there are many other applications and software connections that you can integrate with your Shopify store. With all of the various programs that are being added each month, it is likely that even this list, current at the time of the writing, will be outdated by the time this book reaches you.
But if you understand some of the programs that are now available, you will be able to find more of the same in the more recent programs offered, or simply newer versions of the ones mentioned here. At the very least, when you have completed this chapter you should be able to know where to look for add-on applications that will make it much easier to run your Shopify store.
Accounting is one of the most important parts of your business management. You need to keep track of what you are spending and how much so that you can make adjustments that will make your business as profitable as possible.
In addition, you’re going to need down-to-the-penny tracking to report your taxes and have all of your paperwork in order if you need to defend your accounting in an audit. Luckily, Shopify can be integrated with some of the biggest third-party accounting software packages like Quickbooks, Freshbooks, Xero and more.
You’ll also need a way to keep track of your inventory and the tools that are offered by Shopify may not have every feature that you require. You can automate the process of replenishing inventory as little or as much as you’d like.
You can track the frequency of item sales so that you can get recommendations on which ones you need to replenish right away and which ones you can worry about later one because the chances are lower of them selling, and you can even automate the process of ordering if you like. Whatever inventory management setup you prefer, you can find a software solution that will provide it.
When it comes to customer service, you want to go the extra mile. You need people to feel as if they can get in touch with someone if they have a problem because otherwise, they might not buy from you in the future.
There are a number of automated solutions that you can integrate into your Shopify store that will make your customer service better and easier to manage. From feedback and comment systems to live chat support, there are many ways that you can integrate third-party applications to make your customer service great.
Social Media Management:
Social media management isn’t just a good idea in today’s online business, it is absolutely vital to the success of every eCommerce website out there. Social media management is definitely one of the aspects of your site that has the most automated tools associated with it.
Whatever social media platforms that you are using, there is probably an application compatible with your Shopify store, and for the major ones, there are many. Shopify already has some integrated Facebook and Twitter tools available.
Marketing is something else that you might need some extra help with. Because marketing is important no matter what kind of business you are in, but difficult to manage if you are a one-person eCommerce website, automated tools that help you market your products are definitely a plus. Often, marketing is combined with social media, but there may be other avenues that you’re pursuing as well.
If you want to create more sales, you need to implement some compatible third-party programs that concentrate on things like upselling a customer or giving them impulse buying options, as well as things like customer loyalty programs that make them want to come back.
There are definitely some reporting tools that are already integrated into your Shopify store, but if you want to get more information than what these standard tools provide you might have to install third-party applications that give you more comprehensive reports.
Things like what your customers viewed before they made a purchase, how long they spent on the purchase page, which products they skipped over and most definitely where they came from to get to your site are all details that you can gather and analyze to make your sales numbers higher.
Shopify probably has one of the best shipping programs already integrated into the store. The way it works is this: a customer purchases an item from you, including the shipping cost. You then purchase the postage-included shipping label from Shopify at a discount – with the amount of the discount depending upon which plan you are currently enrolled in – and send your customer’s item on its way. However, if you don’t want to use the integrated shipping tools for whatever reason, Shopify does allow you to set up your own custom shipping options.
There are far too many tools out there that can be integrated into Shopify to include a list here, but what might help you further are some suggestions on where you can find these programs. One of the richest resources is right on Shopify’s own user forum.
There are probably hundreds of threads with programs that can be integrated into Shopify, and if you have a particular question, there are other Shopify users there, some of them with many years of experience, that can help. You can also request to setup Shopify store from a reputable digital marketing agency in Toronto called 6 Dimensions Marketing. I hope you have enjoyed this article and please don’t forget to sign up for a Shopify FREE trial with my affiliate link to support this blog.