How to Start an Online Clothing Business In 5 Simple Steps

Do you have a passion for fashion and an entrepreneurial streak? Great news: there has never been a better time to start a clothing business than right now.

You no longer need a storefront in a great location with a backroom full of stock. With the rise of eCommerce, establishing and operating your own clothing store is now cheaper and easier than it has ever been before. And with the global fashion ecommerce industry expected to double in size between 2018 and 2024, it’s fair to say that there’s quite a bit of business to go around!

But while it’s true that starting an online clothing store is (relatively) simple, building a truly successful business is a more challenging affair. It’s a highly competitive space, and you’ll need to combine clever strategy with absolute commitment if you are to find and fill a niche within it.

It’s not enough to understand how to start an online clothing store. You also need to understand how to set a business up for success.

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The benefits of starting an online clothing store

Why should an entrepreneur choose to set up an online fashion business?

  • Online fashion is a fast-growing industry: In 2020, the Fashion & Apparel category captured 25.9% of the eCommerce market, with a category growth YoY 45.5%. That’s a monumental shift, and one that doesn’t seem to be slowing down any time soon.

  • There’s a low barrier to entry: It’s been estimated that you need approximately $50,000 to $150,000 in capital to start a brick-and-mortar clothing boutique. But by trading a storefront for a simple URL, and with clever ecommerce strategies like drop shipping removing the need to hold any inventory whatsoever, you can start an online clothing business at a relatively low cost.

  • It’s a fun space to be in: ‘If you do what you love, you’ll never work a day in your life’. For those with a passion for fashion, an online clothing store is a unique opportunity to turn that interest into money.

Ready to turn those dreams into reality? Let’s look at how to start an online fashion business.

1. Find your niche

Work clothes, surfwear, haute couture; fashion is a broad and far-reaching term. Even the biggest players work within a particular niche, and you’ll be no different.

The more specific your niche, the greater your chances of success will usually be. By focusing on a specific area of fashion, you’ll find it easier to get in front of the right audience, stand out from the crowd, and offer the best quality and most in-demand products.

  • Stand out by being unique: There are a lot of online clothing stores. The more unique your offering, the easier it will be to stand out. What is your unique point of difference?

  • Follow your passions: The best way to find your niche? Choose something that you’re passionate about or knowledgeable in. This will increase your likelihood of success, motivate you, and make marketing far simpler, as you’ll be talking to people just like you.

  • Test the size of the opportunity: Some niches are more competitive than others. Once you feel like you’ve found your niche, Google your future competition and ask yourself: ‘will I be able to compete?’

So, what’s your niche? Will you exclusively sell Australian-made items? Will you focus on sport, music or pop culture? Will you push back against fast fashion, and offer environmentally friendly clothing? While the available niches are endless, the right niche takes time to find.

2. Choose your products

Once you’ve settled on your niche, it’s time to think about specific products. While you might think that offering a bigger range will give you more chances of success, the truth is quite the opposite.

Like finding a specific niche, the best strategy is to focus your energies on a small product range and slowly build it out. While not exactly catwalk fashion, inspiration can be taken from Crocs, which began by making one product, built an ugly yet comfortable empire, and gradually added more items to its range.

  • Focus your offering: Ensure that your initial range is small and focused, whether a handful of products or just the one. Over time you can let the market guide future additions to your range.

  • Keep your finger on the pulse: Fashion is forever changing. Success in this industry is often defined by an ability to identify trends, so as a clothing store owner you need to devote time to keeping your finger on the pulse, and offering the exact items that your customers want at any given time.

  • Beware inventory: If you choose a niche that is prone to changing tastes, you need to guard against being stuck with outdated stock. Drop shipping and print on demand business models see you ordering from a supplier only when you receive an order from a customer, which can guard against this risk. If you do choose to hold inventory, be sure to check the return policy of your suppliers.

3. Choose your business model

Now that you have an idea of the niche you want to target and the products you want to sell, it’s time to get into the nitty gritty of business.

There are four main business models in eCommerce fashion, each of which operates in a slightly different way:

1.[Drop shipping](

Perhaps the simplest of fashion business models, drop shipping sees you act as a fashion middleman. You take an order from a customer then send it to a third party to be fulfilled. No inventory or upfront investment is needed, although the trade-off is that you have less control over the process.

2. Print on demand
This option sees you printing unique designs on pre-made, label-free clothing. A low overhead option, a number of suppliers offer a complete print on demand service, providing the apparel, printing the design and even sending the product direct to your customer.

3. Label
Want to start your own fashion label? It might be easier than you think. Simply order blank clothing from a supplier, add your brand, and sell it. This option gives you more control than drop-shipping and better margins than print on demand, although it will mean you have to hold inventory.

4. Cut-and-sew

For those with a true passion for fashion, the dream might be to design your own line from the ground up. While offering the greatest levels of freedom and control, this is also the most costly and risky option, as it demands a far larger upfront investment.

Once you’ve chosen your route to fashion dominance, it’s time to get to work. Let’s find out exactly how to start an online clothing store.

How to set up an online store

1. Create your brand
Choose a name and design a logo that is eye-catching, punchy, and an accurate reflection of your business. Ensure the web domain is available before locking your choice in.

2. Build your website
The simplest and most effective way to build your website is through a user-friendly and ecommerce-specific platform like Square. Paint yourself in the best possible light by taking high-quality photos of your range and telling a compelling story on your About Us page.

3. Set up payments
The easiest way to get paid in ecommerce is to partner with a payment provider. Square Online Payments makes payments instant and 100% secure, and you can be connected to your site in minutes.

__4. Formalise your policie__s
Guard yourself against legal and regulatory trouble by clearly outlining your shipping and return policies.

5. Test your systems out
Once the above steps are completed, test your systems out by putting through an order. If everything runs smoothly, you’re ready to go live.

Looking to take a deeper dive into starting an online fashion business, or any other online business? Check out our complete guide here!

Promote your online store

Once your website goes live, your aim switches from setup to growth, and in the online game, success is dependent on smart digital marketing.

  • Get social: Set up profiles on all major social media platforms, and commit to posting regularly. As a fashion business you shouldn’t find it hard to create content!

  • Set yourself up on Google: Create Google My Business, Google Analytics and Google Ads accounts to attract, track and market to your audience.

  • Grow your database: Create an inbound marketing funnel to capture information from website visitors, gradually building out a database for email marketing.

In truth, the ongoing marketing and promotion of your online fashion business is a complex and far-reaching subject, so at this point in the process it’s wise to check out our complete small business marketing guide. That said, the three steps above do represent the foundation upon which a successful ecommerce marketing strategy is built.

Many people dream of creating a fashion business, and there’s no better time to do it than right now. If you’re ready to make the most of the opportunity, creating an awesome business in the process, Square is ready to help you make your fashion dreams come true.