How to Start an Online Boutique in 2023

An online boutique is an e-commerce business that sells clothes, jewelry or other fashion products online. To start one, you’ll have to define your niche, figure out how to source products and build a website. You’ll also need to jump through all the other hoops required to start a business, like getting licenses and permits and opening a business bank account.

Here’s a step-by-step guide to starting your own online boutique.

Shaping your online business idea is the first step toward launching your company. When shoppers visit your online boutique, what do you want them to see?

Questions like these might help you develop your idea:

• What kinds of products will you sell?

• Who is your typical customer? 

• What sets your business apart?

Starting a business may also be a big lifestyle change for you. It’s important to understand how the company will fit into your life right away, as well as where you want it to go in the future. Will it start out as a side hustle or home-based business? If so, think about how you’ll make the space — in your calendar and in your home — to take this on.

A business plan builds on your idea and explains how your online boutique will operate on a day-to-day basis. It can serve as a road map as you set up your business. You can also share your business plan with investors who want to understand your company’s growth potential.

A business plan includes elements like:

• Executive summary and company overview: In broad strokes, what does your store sell and to whom? 

• Market analysis: Who are your competitors and how do they operate? How will you differentiate your business? 

• Financial plan and projections: How much will it cost to operate your business? How much revenue do you think you can generate? Will you need to invest your own money as startup funding? 

Business plan software may help guide you through this process.

What costs are involved in starting an online boutique?

Online boutiques likely come with fewer startup costs than brick-and-mortar ones. But you’ll still need an e-commerce website and merchandise, plus funds to cover expenses like shipping and online marketing.

Items your online boutique will need to pay for include:

• Website: These costs might include web hosting, a custom domain name and a subscription to an e-commerce platform.

• Inventory: You’ll most likely need to keep inventory in stock so you can ship it out when customers order. Inventory costs will vary depending on how many different products you sell, how much stock you keep on hand and how much they cost to source.

• Shipping: Many online sellers pass shipping costs onto their customers, but high shipping costs can turn shoppers away. Finding a prudent way to ship goods can help you save money in the long run. 

• Marketing and promotion: You’ll need to get your business in front of customers somehow, whether that’s through search engine optimization, listing your products on other e-commerce marketplaces or other types of marketing.

Next, you’ll need to find products to sell in your online boutique. You can do this in a few different ways, including:

• Make products yourself: You may have the skills, space and equipment necessary to manufacture your goods yourself. You’ll still need to source materials, though.

• Wholesaling: Wholesalers buy large quantities of goods from third-party retailers, then sell individual items at a markup. 

• Direct sourcing: These businesses buy products directly from manufacturers, cutting out the middleman. 

• Dropshipping: This type of e-commerce doesn’t require you to keep inventory in stock. Instead, dropshippers list products that are made by other manufacturers or wholesalers. When a customer places an order, the dropshipper passes that order along to the manufacturer or wholesaler, which ships the order directly to the customer. 

Make sure you buy samples before listing items in your online store. That way, you can make sure products are up to your boutique’s standards.

The more your business grows, the more inventory you may need to keep in stock. Inventory management software can help you monitor what you have and notify you when you need to order more. You may also need to seek out warehouse or storage space.

» MORE: How to find products to sell on Amazon

After you've decided what you're going to sell and ordered your first few products, it’s time to set up your website.

Choosing the right e-commerce website builder will shape more than the way your website looks. These platforms often come with order management tools, shipping features, business performance reports and more. Shop around and take advantage of free trials to find one that will support your business in its current and future states.

These questions may help guide your search for an online store builder.

Does it fit your budget and skill level?

• How much are you willing to pay for a subscription? 

• What about transaction and payment processing fees? 

• How comfortable are you using the website builder, given your digital skills? 

Will it support your inventory and product strategy?

• How many products will you be able to list on the platform?

• Can you list multiple variations of each product, like different sizes and colors? 

• How many photos can you list with each product?

How does it let you engage with customers?

• Can you offer customers promo or discount codes? 

• Can you send emails to customers who leave your site with items still in their carts? 

• Does the platform integrate with other shopping platforms like Instagram, YouTube and Etsy? 

Does it offer other useful store management features?

• Does the platform offer a mobile app so you can keep tabs on your online boutique on the go? 

• Will the platform automatically calculate sales tax for customers in different states? What about tariffs for shoppers in other countries? 

• How will you ship goods to customers? Can your platform help with that? 

Starting an online boutique on a marketplace or social media platform

If creating an entire website from scratch seems overwhelming, you might consider starting your store on a marketplace. Many online sellers choose this method when they're first starting out, as it requires less of an upfront investment in website management and marketing.

If you make your own products, consider opening an Etsy shop. If you’re scouring thrift stores for great finds, look into selling on Poshmark. Wherever you’d go to shop for the type of product you sell, that might be a good place to start.

» MORE: How to start an online store

Now that you've selected an e-commerce platform to start your online boutique, you're ready to actually set up your store.

You’ll need to make decisions about:

• Your store name: You might want to check federal and state trademark registrations to ensure your business name doesn’t infringe on another business's intellectual property. 

• Design: Many e-commerce platforms will let you choose from a library of free and paid themes to help you design your store. Choose a design that fits your brand identity while being easy for customers to navigate. 

• Branding: You may need to create logos, banners or other assets to create a consistent brand story across your website. 

• Product listings: List and organize your products in a way that appeals to customers in order to increase your chances of making a sale. Give as many details as possible in product descriptions, along with product photography and videos. And be sure to include keywords that will help online searchers find your listings. 

• Shopping cart: Your online shopping cart is the part of the website that handles the checkout process. Customers can add items to their cart, enter discount codes and see shipping rates and estimated sales taxes. It also includes your payment gateway or payment processor, which takes credit or debit card or other online payment methods from your customers. 

• Shipping: Some e-commerce platforms include shipping label printing and discounts if you ship with certain carriers, like the U.S. Postal Service, FedEx and UPS. If you’re selling a large number of products, you may want to learn more about e-commerce fulfillment centers or shipping rate comparison software like Shippo.

Next, you’ll need to take some steps common to all business owners.

Choose your business structure

Your business structure determines whether your business is an entity of its own and if so, what kind. Common options include:

• Sole proprietorship: This is the easiest entity to set up, as you don’t actually have to register your boutique with the state where you’ll be operating. With a sole proprietorship, either you or you and your spouse can be the sole owner, and you’ll report your business income and losses on your personal tax return. You will also be personally responsible for your online boutique’s debts and legal obligations.

• LLC: A limited liability company, or LLC, is a flexible business structure that separates your business’s liabilities from your personal assets.

• Corporation: If you plan to issue stock or want the option in the future, you may decide to form a corporation. Although corporations are also registered business entities and offer limited liability protections, like LLCs, they differ in their tax and ownership structures. 

Search your state’s online business database to ensure the name you want for your company is available.

If you’re unsure which business entity to choose, this is a good time to consult a business attorney or tax professional who specializes in small business finances.

Register your business and get an EIN

If you choose a business entity that does not need to be registered with the state, like a sole proprietorship, your business name will default to your name. If you don’t want to publicly operate under your own name, you should file a DBA, or “doing business as,” to register a different name for your online boutique.

Next, visit your secretary of state’s website to find out whether you need to register your business with the state.

This is also a good time to apply for an employer identification number, or EIN. This is a tax ID number for your business. Having an EIN makes it easier to keep your business finances separate from your personal ones, from applying for a business bank account and credit card to filing your taxes.

Get any necessary licenses or permits

Like registering your business, whether or not you need a federal or state business license will vary depending on what you’re selling and where you’re based. This state-by-state guide can help you determine how to get a business license for your online boutique.

Research business licenses that are required to sell online, too. Depending on your business and location, you might need a seller's permit, sales tax license or home occupation permit.

Again, talking to a lawyer may be helpful at this stage.

Keeping your business and personal finances separate is a best practice for all business owners. Many financial institutions let you open a business checking account online for free. Then, you can use that account to collect revenue and pay expenses. You can also link that account directly to your accounting software, which can make it easier to understand your overall business financial picture.

You may want to get a business credit card as well. This can help you cover your startup expenses and stay on top of uneven cash flow while getting your business up and running.

Opening these accounts and using them responsibly can also help boost your business credit score, which can be useful if you seek funding down the road.

Now it’s time to open for business. Publish or open your online boutique and list your first set of products.

Online sales can be competitive, so you may need to invest time and money in online marketing right away. That may involve advertising on platforms like Google, Instagram or Facebook, optimizing your website and product listings for search engines and collecting customer email addresses so you can target them for repeat sales. You can also experiment with discount codes, loyalty programs and more.

As you start to run your online boutique day to day, you'll find out what works and what doesn't and you can adjust your strategy accordingly.