People love shopping for clothing and accessories online. Nearly 30% of fashion retail sales are through online stores. With online fashion in such high demand, it’s a great idea to start an online boutique in 2023.
Online boutiques can be set up relatively easily and the process avoids many of the hassles of starting a brick-and-mortar store. With a product niche, a well-planned business strategy and a fair estimate of the startup costs, you can start an online boutique in just a few days.
But is owning a boutique profitable? You’ll soon find out, along with how much online boutique owners make and how much it costs to start an online boutique, so you can make informed decisions.
The basics of starting an online boutique
Successfully starting an online boutique follows a few key steps.
First, you’ll need to choose a niche for your online store. Many boutiques deal in clothing such as shirts, pants and skirts. You can expand your range or exclusively sell accessories like shoes, hats or handbags.
Once you’ve chosen your niche, acquire a diverse array of products.
Like any other eCommerce store, online boutique setup involves creating a website, displaying your products and equipping a payment gateway. At this point, you’re technically able to make money.
How do boutiques make money?
In general, boutique owners make money by buying products in bulk and then selling them at a higher price. To attract customers, boutique owners often use marketing campaigns and build social media followings.
Before you start stocking up on products, you’ll need to choose a business model and inventory management style. This will determine how you source products and how much stock you keep.
For example, you can buy merchandise preemptively and set up a shipping method — or choose a safer approach like the dropshipping business model, although it’s less customizable.
Once you’ve chosen your approach, select an eCommerce platform, such as WooCommerce, to implement those decisions within your boutique business website.
You’ll also need to know how much it costs to start an online boutique and where you can cut costs, which we’ll outline later in the guide.
But, like every business owner, one of your main motivations for starting a store is the profit potential.
Is owning a boutique profitable?
Owning an online boutique is profitable. How much do online boutique owners make? In the U.S., online boutique owners earn $3,479 per month on average. In fact, one of the fastest-growing eCommerce businesses in the U.S. is J. Brooks, an online boutique that sells chic clothes for women.
On the other hand, there are over 13.98 million eCommerce stores in the U.S. alone, many of which deal with fashion and apparel. The sheer number makes the market appear saturated. Your best chance is a solid business strategy and financial planning.
To be smart with your strategy and money, you need to be familiar with the factors that affect the cost of starting your online boutique.
How much does it cost to start an online boutique?
Incorporate the following costs into your decisions so that owning an online boutique is profitable for you.
1. Website development
Your website is the face of your online boutique. Customers visit, browse and buy products from your brand through the website. If you want visitors to have a good user experience, you’ll need a website that’s attractive, responsive and navigation-friendly.
Hiring a professional web developer costs between $1,000 and $5,000 for the initial setup, plus another $300 to $500 every month for maintenance. According to GoodFirms, designing a basic website costs around $3,200 on average.
This is an expensive option if you’re just starting out and looking to build a small business on a budget.
Instead, look into Bluehost’s website builder to set up your online presence at minimal cost. The website builder works via WordPress, a free platform with prebuilt design templates and straightforward feature sets you can choose for your website.
Developing a website with WordPress can be absolutely free, but Bluehost’s web builder is a great shortcut for $10 a month.
Potential cost of website development: $10 per month.
2. Domain and hosting
Your domain name is the digital address of your eCommerce website. For simplicity, people typically select the same domain name as their business name.
How do you know whether your preferred domain name idea is available for purchase? Check its availability by using Bluehost’s domain name tool.
Usually, purchasing a domain name costs between $10 to $20 per year. You can choose from various domain name extensions befitting of a clothing store, such as .shop, .biz and .store. Typically, domains with the .com extension cost more than the alternatives.
In addition to a domain, you’ll also need website hosting before you can be found on the internet.
Bluehost offers specialized online store hosting for only $9.95 per month. It comes with store analytics, secure online payments, customer wishlist support and more to make your store professional from the start.
Potential cost of a domain, plus hosting: $10 per month plus an annual $20.
3. Platform fee
Once you have a functioning website, integrating an eCommerce platform like WooCommerce ensures you have all the functionalities required for an online business.
For example, WooCommerce connects your store with payment gateways so customers can pay with almost anything they’re used to, like e-wallets and credit cards.
The cost of an eCommerce platform is usually between $30 to $300 per month. For instance, Shopify starts at $39 per month.
However, compare WooCommerce plans: They’re as low as $24.95. And since WooCommerce pairs seamlessly with Bluehost, you can get help to configure your products, payment gateways, shipping options and order management.
Potential cost of an eCommerce platform: $30 per month.
4. Inventory and storage
Consider a product budget of $2,000 to stock up for the boutique initially. You can raise or lower this baseline once you see your supplier’s prices.
If you have very few products in your catalog or don’t want to start with a ton of stock, store the products yourself to save on expenses.
But while you’re calculating how much it costs to start your online boutique, consider that as the business expands, you’ll need to stock more and more products according to customer demand. Eventually, you’ll need to rent storage.
In the U.S., renting a storage unit costs between $0.50 and $2 per square foot on average. In the first half of 2023, the average storage unit with two hundred square feet cost roughly $160 per month.
As an alternative, compare business models such as dropshipping. In dropshipping, you resell products from a supplier that agrees to handle shipping whenever someone orders through your website.
Dropshipping can be a good starter strategy until you learn eCommerce inventory management. You’ll simply need to maintain your website and advertise a supplier’s products. This makes your inventory expenses zero.
Potential cost of inventory and storage: $2,000 for inventory plus $160 per month for storage.
5. Product fulfillment
Once customers place orders, you’re typically responsible for the packaging, logistics and delivery. These carry added costs for you. While you can fulfill local orders in a personal car, orders from further locations require the support of a delivery partner, like USPS or FedEx.
Calculating your future shipping expenses can be tricky. Most delivery partners have a base rate, but then costs vary as the weight of the package increases.
Packages of up to six pounds can cost less than $15 to ship within the U.S. — for small eCommerce products, you can typically pay as little as $7 to send products.
However, be careful when factoring these costs into the customer’s invoice — 48% of customers abandon their cart due to unexpected shipping costs during checkout.
To avoid this issue, include shipping costs in the product’s selling price, offer free shipping on orders above a certain total and display shipping costs in an upfront and straightforward manner.
Potential cost of product fulfillment: Between $7 and $15 per sale, depending on your products.
6. Marketing
If you want customers to know about your online boutique, you need a good marketing strategy. However, you don’t need to shell out thousands of dollars on paid ads.
Instead, start with free channels like email, SEO and social media to reach potential customers and advertise your products. Consider the following free approaches.
Start by creating a social media page and displaying products from your clothing boutique. Try giving out coupons and incentives to increase interest and encourage people to buy.
Learn the fundamentals of search engine optimization (SEO) and tweak your website to attract traffic from Google and other search engines.
Make sure your website allows customers to input their email addresses so you can start some beginner email marketing campaigns. It’s an opportunity to advertise directly to your established audience and keep your loyal customers happy.
Potential cost of marketing: $0.
7. Accounting and legal fees
There are several legal costs involved in opening a boutique.
You need to register the business as a legal entity. Before you leap, choose the right legal structure for your business registration, such as a sole proprietorship or a limited liability company (LLC). The registration will cost around $100 to $200.
Next, draft legal agreements with your suppliers and employees, get a business license and maintain tax documentation.
It’s easier to outsource these tasks to a lawyer or accountant who specializes in eCommerce businesses. That will cost you between $100 to $300 per hour.
Potential cost of accounting and legal tasks: $100 per hour occasionally, plus a $200 one-time fee.
8. Emergency fund
Set aside some funds for unforeseen circumstances. For example, if your inventory gets damaged or packages get lost in transit, you’ll need enough spare cash to make things right.
Your emergency fund should be approximately the same amount your boutique spends in an average month. That way, you can operate the business smoothly for at least another 30 days while you fix things.
Potential cost of an emergency fund: One month’s worth of business expenses.
To sum up all the expenses, here’s a brief overview of the costs of starting an online boutique:
Tips to make your online boutique cost-effective
Follow these pointers to minimize how much it costs to start an online boutique:
- Choose a budget-friendly web design and hosting provider. An affordable hosting provider like Bluehost will help set up your store by providing additional services — like recommending the best free WordPress themes — so you save money and get started faster.
- Start with a basic website and focus on products. A simple website with fundamental features will cost a lot less to build. Plus, all the attention will land on your products, letting them shine.
- Select multiple product fulfillment methods. Depending on where your customers are, some fulfillment methods will be more cost-effective. For example, hiring a local delivery company will save you more on local orders than having a state-wide delivery partner fulfill an order a few minutes away.
- Invest in only one or two marketing strategies. While it’s tempting to try multiple marketing channels, initially sticking to one or two will keep your marketing budget in check and narrow your focus on your target audience.
- Experiment with business models. Before you default to the traditional business model of ordering inventory and selling at a markup, contemplate other models like affiliate sales and monthly subscription clubs.
Final thoughts: How much does it cost to start an online boutique?
With a few hundred dollars, you can definitely start an online boutique with a solid business plan — and now you know how.
While you curate unique products and cultivate your loyal fanbase, you need a well-known web hosting provider that takes care of the technical aspects of your website.
Bluehost’s hosting for online stores comes with an eCommerce platform preloaded, a free domain name for your first year and free website setup to get your online boutique making money as soon as possible.
