How to Start an Online Boutique: Easy Tips to Follow

By Vladana Donevski

June 19, 2023

Setting up your online boutique can be both fun and profitable. Entrepreneurs entering the sector often exceed their former salaries and achieve unimaginable incomes. 

In the world of online business, it all comes down to scale. Once you start an online boutique, you can sell to hundreds, perhaps thousands of customers every month.

The supporting technology has improved dramatically over recent years. It’s easier than ever to set up a boutique, sell products, and receive revenues directly from your business bank account. All the tools you need are right at your fingertips. 

There’s a growing market for smaller players, too. While the likes of Amazon still dominate, online consumers are actively looking for boutique stores where they can get something bespoke. 

This article shows you how to start an online boutique following a step-by-step process. 

What You Need to Know Before Starting Your Own Boutique

Starting an online clothing boutique is not that different from starting any other online store, and it’s not without its challenges. Plenty of off-the-shelf solutions are now available, but new entrepreneurs still face some common challenges.

For instance, you won’t make money overnight when starting an online business. It can take a lot of work and perseverance before a trickle of customers becomes a torrent.

You’ll also face administrative challenges. Taxes for online boutiques, for example, can be challenging to wrap your head around. Depending on your location, states, cities, or counties may require operational permits. 

Starting a boutique paperwork and approval process can be long-winded and stressful, and most people make mistakes when beginning with a boutique. But don’t lose your entrepreneurial spirit just yet! After all, chance favors the prepared mind.

How to Start an Online Fashion Boutique

Let’s cut to the chase and take a look at how to start an online boutique: 

Step 1: Evaluate Your Skills, Mindset, And Traits

Before you take any practical steps toward creating an online boutique, you’ll need to do some soul-searching to determine whether an online store is a suitable option for you. Because it is such a competitive industry, you need the right skills, mindset, and traits to succeed. 

Confidence

The top of the list of traits you need is confidence. If you’re going to start a boutique with no money, you need the conviction that your plans will work out. If negative thoughts get in the way, you’ll only see the downsides, and eventually, you’ll burn out. 

Scheduling

Running a boutique business from home requires proper time management. You need a strict schedule of when you will wake up, process orders, work on your website, and contact suppliers. 

Remember, when you are your own boss, no one is there telling you what to do. You need to be frank with yourself about whether you can self-motivate. If you don’t, this could be the wrong path for you. 

Financial Skills

Starting an online boutique also requires having some well-developed financial skills. You need to know: 

• Whether you are making money or not so that you can determine whether your enterprise is sustainable
• Your credit rating and how much it will cost to take out a loan
• How to manage a strict budget, particularly if you have limited startup capital 
• How to start an online boutique without inventory
• The difference between various types of business loans

Don’t worry if it all seems overwhelming. If stuck, you can always talk to a financial advisor specializing in helping business owners.

Digital Marketing Skills

If you start an online jewelry boutique but don’t get the message out, you’ll struggle to get customers. Because of the sheer level of competition out there, it is incredibly challenging to get noticed unless you have a marketing strategy ready to go. 

The trick here is to learn as much as you can about digital marketing, how it works, and how you can use it to your advantage. Multiple outlets offer courses and certifications that teach you the basics, including DigitalMarketer, LinkedIn Learning, and HubSpot Academy. 

Passion

Lastly, if you’re planning on setting up an online shoe boutique or something similar, you need to have a passion for what you do. You must be comfortable spending your weekends and evenings scouring trade shows and vintage stores to find the perfect products to insert into your inventory. 

When looking for a niche, choose something that excites you. Don’t just set up a high fashion dress boutique because somebody told you it was profitable. Instead, focus on an area you genuinely love and can share with your clients.

You’ll also need the courage and motivation to keep going, even when things get demanding or dull. Taxes, paperwork, and administration tasks will consume a large chunk of your week, so knowing (and feeling) your “why” is critical.

Step 2: Look For Gaps In The Market

Once you’ve evaluated your skills, traits, and mindset, the next step is to identify gaps in the market. Filling an as-yet unserved niche can quickly get your boutique startup off the ground. 

For instance, you might notice that existing businesses ignore the niche needs of pet hamster owners. While there are a lot of products out there, including wheels, hammocks, and wooden dens, nobody is selling them all in one place. 

Other examples might include boutiques that sell dresses for people living with disabilities, action figurines, medals, or hand-crafted jade necklaces. It doesn’t matter how obscure the niche is, as long as there is demand. The more niche you can make your boutique (without narrowing the market too much), the more successful it will be. 

As a side note, you can prosper by setting up a more generic store, but beware of market saturation. If you do something mainstream, like set up a regular online dress boutique, make sure you offer a unique angle. Otherwise, customers won’t know why they should come to you instead of your better-established rivals.

Step 3: Create Your Business Plan And Choose Your Business Model

Writing down a business plan might sound like a chore (particularly if you don’t plan on borrowing from anyone), but it helps focus your mind. Once you put everything down on paper, you can see more clearly what you are trying to achieve and how you might get there. 

Take time to identify the following: 

• The capital resources you’ll need
• The obstacles that might get in the way
• Market competitors
• Your core business idea and what you hope to achieve
• How you will prepare before the launch
• The marketing channels you will use
• Business development timeline

You don’t have to write down how much profit you expect to make every month for the first five years. However, it can be helpful to add up all your predicted costs and then figure out how many sales you’ll need to break even. This way, you can get an idea of whether your enterprise is feasible or not. 

Costs

In terms of costs, you’ll want to consider: 

• Shipping costs: For many boutique online stores, shipping costs are a major component of the consumers’ price. You’ll need to balance the cost of shipping against the expense involved in procuring items – and how much you will ultimately charge customers.
• Marketing and promotional costs: Digital marketing isn’t cheap either. Many online boutique entrepreneurs are surprised to find out just how expensive it can be. When calculating marketing costs, you’ll need to determine how much companies in your industry typically pay for SEO, PPC, and offline marketing methods. Don’t be surprised by figures over $10,000 per month. 
• Website costs: Websites are essential for online boutiques. They are your digital storefront. Their expenses include eCommerce platform subscription fees, domain name fees, web hosting fees, merchant services fees, and paid plug-ins. 
• Inventory costs: Lastly, you’ll need to consider inventory costs – the highest expenses you are likely to face. Naturally, customers will pay you back for the inventory you buy; however, it will still tie up your capital. Work out the value of inventory that you will need to keep at hand at any given moment. 

Business Model

You’ll also need to choose the type of online boutique business model you want to operate. Remember, not all firms make money the same way. 

Here are your options: 

• White label: If you set up a white label (also called “private label”) enterprise, you partner with an existing company that will manufacture products on your behalf. You are then responsible for branding and selling items to your customers.
• Dropshipping: If you’re looking to start an online boutique with little to no money, dropshipping is a good idea. Here you partner with a wholesale distributor who takes care of everything for you, including warehousing, distribution, and logistics. All you need to do is make sales via your online storefront. 
• Bespoke: Truly unique boutiques are sometimes bespoke or “custom cut and sew.” These are the most labor-intensive because you make your products yourself. However, they can also be the most profitable since you are crafting goods that buyers can’t get anywhere else on the market. 
• Print-on-demand: Lastly, the print-on-demand model involves simply printing your logo or design onto existing clothing. You can either do this in your print shop or forward goods to a printing house to do it for you. 

Marketing

Marketing is another item you’ll want to include in your business plan. While you can outsource essential marketing to third parties, it’s still a good idea to think creatively about the best outreach strategy for your boutique. 

For instance, if you’re a new brand, it might make more sense to focus on influencer marketing instead of dumping your budget into generic Google PPC. Alternatively, if you’re offering something completely new, working with journalists and issuing press releases might be a better strategy.

Because there are so many ways of marketing an online boutique, your imagination is often the real limiting factor. Don’t thrash out a marketing plan in an afternoon. Instead, mull it over for several days or weeks to see if you have any breakthrough ideas.

Step 4: Choose Your Company Type And Legal Entity

After you write your online boutique business plan, the next step is to consider the name and legal entity type.

You’ll want the name to be: 

• Distinctive – so that customers can remember it easily
• Enduring – something that won’t fall out of fashion or become dated in the future
• Defensible – a name that isn’t too similar to another existing brand name, even one from a different industry
• Authentic – something that speaks to the character, mission, and values of your firm
• Easy to say – so you don’t wind up confusing your audience

As for business entity types, you have three main choices: 

Sole Proprietorship

Sole proprietorships are probably the easiest business entities to set up. You don’t have to register them with the state where you will operate, and either you or your spouse can be the owner.

Once you set up a sole proprietorship boutique, you (and anyone working on the project with you) will need to report any income on personal tax returns. You usually won’t have to pay taxes if you make a loss. However, you’ll be personally financially responsible for any debts you incur or legal penalties. 

LLC

Limited liability companies (LLCs) work differently from sole proprietorships. Instead of being personally on the hook for any business-related liabilities, it all goes through the company. This way, you can separate your assets, such as your savings and home, from your enterprise’s. 

By default, the IRS treats LLC boutiques as pass-through entities. However, you can choose other tax structures, too. 

Corporation

If you want to be able to issue stock in the future, then you might want to consider setting up a corporation. Corporations offer all-important limited liability protection like LLCs, but they have different ownership and tax structures. 

When setting up a corporation, you’ll need to choose between S and C corps. S corporations don’t pay the tax directly from the business entity. Instead, owners report company revenues as their income and pay tax. C corps, on the other hand, pay tax on their income, and then owners pay additional taxes on the dividends they receive. 

Before you choose any of these legal entities, speak to your accountant. They will be able to tell you which is best for your business model, the size of your company, and the industry in which you want to operate.

Step 5: Find Quality Suppliers And Vet Them

Finding reliable suppliers is essential. Even if you plan on making all your products yourself, you’ll still need to work with partners to procure raw ingredients. 

But how do you find great suppliers? The trick is to evaluate them across various dimensions. 

Do They Offer Quality?

The first question is whether the supplier offers quality products that meet the standards that your customers expect. Ask them to supply you with a sample to see if it suits your target market. 

Can You Have A Good Relationship With The Supplier?

You also need to have a good relationship with your suppliers, particularly if you plan on working with them for any length of time. You want a punctual firm committed to meeting your needs. 

Do They Offer A High Level Of Support? 

Occasionally, supply chains break down, and things go wrong. When this happens, you need suppliers to get to the bottom of the problem and solve it.

Because of this, it’s a good idea to give suppliers a call and talk to them before you start collaborating. Find out how much support they are willing to offer and take note of their communication style.

Are There Any Reviews Of The Supplier?

Lastly, look around for supplier reviews. Check what other people have been saying about them online. Find out which types of boutiques benefited most from their services, if that information is available. 

Step 6: Create Your Website

Once you’ve decided on your legal structure, niche and suppliers, the next stage is to build your website – your brand’s digital storefront. 

Here you have two choices: build your own system (similar to what Amazon did), or use an existing eCommerce platform. 

The vast majority of people starting a boutique with no money choose to go with an existing platform since they are easy to use and provide all the tools you need to get started. 

Choose The Right ECommerce Platform

Today, there are multiple eCommerce platforms, all offering quality services. Popular options include Shopify, WooCommerce, BigCommerce, Magento, Wix, Squarespace, and Sellfy. 

When looking for an eCommerce platform, consider the following: 

• The level of support that the platform offers
• The degree of customization the website builder allows
• The mobile responsiveness of the platform and the ease with which you can convert desktop designs into those suitable for smartphones and tablets
• The subscription cost
• The security of the platform, including whether it offers end-to-end encryption
• The platform’s hosting environment (and whether it offers sufficient bandwidth to accommodate all your website visitors)
• The level of dedication that the platform offers to eCommerce users. (Some platforms are generic website builders first, with eCommerce functionality bolted as an afterthought)

You should be looking to pay between $30 and $80 a month for a solid eCommerce platform if you’re just starting. As your business scales, subscription costs will rise.

Start From Scratch

Alternatively, if you don’t want to use an eCommerce platform, you don’t necessarily have to build everything yourself. You can start an online boutique store via social media pages like Instagram or TikTok or popular marketplaces like Amazon and Etsy. This way, you can become established first and then build your online store to cement your brand. 

Build Your Online Store

If you decide to set up a store on a domain you own, the next step is to build it. Trying to do everything all at once can be overwhelming, so you’ll want to break it down into bite-sized chunks.

Design 

The first place to start is the design. Most eCommerce platforms do a lot of the legwork for you, offering themes that instantly apply to all your web pages, giving your site a cohesive look. 

Naturally, you’ll want to choose a design that fits your brand. Most boutiques go for a clean and modern style, but it depends almost entirely on how you sell yourself. Traditional designs are also an option. 

Branding

You’ll also want the look of your website to reflect your boutique’s character and mission. Visual cues should reveal more of what you’re about, what you stand for, and the type of attitude you want to convey. 

Product Pages

At the core of any effective online boutique are product pages. You’ll need to set prices and write accompanying copy that sells on these. 

Checkout Services

Customers need to be able to buy products through your website so you will need a robust checkout process. Here, you’ll want to include account options (so that your system can remember customers when they return), payment processing facilities, various payment methods (such as Apple Pay or PayPal), and shipping options (such as “next day”). 

You’ll also want to include a fully functional shopping cart that allows users to see what items they’ve already chosen. 

Step 7: Get An EIN

To operate your business legally, you will need to do two things: 

• Register your online boutique with the authorities, which is something that you can do once you choose an entity type
• Get an EIN

An EIN is a business tax identification number. It tells the authorities who you are when you pay tax. You might not be required to get an EIN in some cases, but it can still help to have one anyway because it keeps business and personal finances separate. 

Step 8: Obtain The Necessary Licenses

You may also need to obtain licenses to operate legally in some states. How you need to proceed depends on local law. Here’s a directory you can use to find license requirements for your particular state. You may need a license to operate and specific licenses to sell online or charge sales taxes.

Step 9: Open Your Business Bank Account

A company bank account is essential for opening an online boutique or any other business. This facility lets you separate your private and business finances, making it easier to track expenses and avoid accounting problems at the end of the tax year.

As you search for suitable business bank accounts, look for those that offer features that you want. Generally speaking, you won’t be handling any physical cash, so you won’t have to worry about a nearby local branch when using an online provider. If you need things like cash and checkbooks, the bank can send them to you in the post. 

You may also want to take out a business credit card. These can be helpful when you have limited cash flow and need a little extra money to tide you over. With a good issuer, you may be able to get 0 percent APR for a limited time on purchases.

Step 10: Source Funding 

Even with some capital for your online boutique, you’ll often need to source more, depending on your business model. For instance, if you adopt a direct source model, you may need to order goods from manufacturers at a minimum volume, which could be prohibitively expensive. You will also need to cover substantial startup costs, as discussed above.

Fortunately, various channels can provide you with the funds you need: 

• Startup business loans: They are specifically designed to support businesses younger than six months. Often government or corporately-backed, these provide initial cash flow to allow for a fuller business model evaluation.
• Purchase order financing: You may also be able to raise money for your online boutique using purchase order financing. Here, customers place an order, and then a third-party financial institution pays the manufacturer on your behalf to cover the order, taking a small cut for themselves. Customers then pay the lender back directly, and you take a small margin later on.
• A business line of credit: Business lines of credit are similar to credit cards but don’t usually require you to have such a great credit score. 

Of course, you can go down the traditional bank loan route, but you’ll need to carefully write down your business plan and create pitch decks to impress investors. Usually, you’ll only attract venture capital if you offer a new type of business model that VCs believe offers something substantively different from what’s already out there.

Step 11: Open And Market Your Online Boutique

Once all the legal and technical aspects are out of the way, it’s time to finally publish your website and start selling. 

Traffic to your site will be minimal at first. Therefore, you’ll need to put your marketing plan into action.

How you do this is very much up to you. In most cases, you will need to dedicate the lion’s share of your budget to it and, perhaps, hire professionals who can get the word out on your behalf. 

Most eCommerce platforms are quite good at providing basic assistance, too. For instance, they might offer tools that help you identify suitable keywords or provide buttons that allow you to link your social media accounts. They might not provide the same level of support as third-party agencies, particularly for non-SEO or off-site activities, such as PPC or influencer marketing. 

If you have funds ready to go, a good idea is to invest them in Facebook or Google ads. Remember, it will take several months for your SEO efforts to bear fruit, so these methods can immediately get your brand in front of users. 

For the first few months, expect high costs and low revenues. Work with a mentor who can tell you whether you should continue with your enterprise or cut your losses if things aren’t working out. 

Wrapping Up

Learning how to start an online boutique can be a lot of fun, but what counts is making it happen. Thanks to modern technology, setting up your online store is significantly easier than before. That being said, lower barriers to entry mean more competition. 

Ultimately, you need to be passionate about your online store and niche to be successful. Success can take several years, but it can lead to a more fulfilling life once it arrives.