With the ever-increasing popularity of e-commerce, it’s unsurprising that there are many platforms where people can buy and sell. Originally, most people chose to do business through a platform, such as eBay or Amazon, if they wanted to reach customers. Running a website once required a lot of work and technical expertise. For small-time sellers, it often wasn’t worth the work.

While platforms are still relevant and likely will be long into the future, people who want to sell online have more options. Nowadays, potential sellers can choose from different content management systems that make e-commerce sites easy to build and operate. For people who want to operate a completely independent site, Shopify is among—if not the best—option.

What is Shopify?

As I mentioned above, Shopify is a content management system, or CMS, that focuses on e-commerce. This type of software holds the content of each website, keeps it organized, and makes retrieval easy for owners and visitors alike. You can’t have a functioning website without one.

Shopify was founded in 2006 by shop owners. The developers were concerned about the lack of quality options for e-commerce sites, so they built something new based on existing programming languages. Over time, the bare-bones CMS became more sophisticated. Site owners can add many widgets with various functions based on their needs.

Nowadays, you can run an entire site with plugins and an API, or even sell things on other websites like Amazon using your Shopify account. Payment processor Shop Pay is a subsidiary, and added to most Shopify sites. With inventory, shipping, and payment capabilities baked in, it’s a comprehensive site-building solution.

Ultimately, Shopify is a great choice for site owners who want to run their businesses without a lot of hassle. The platform also grows with the shop, letting users add features or change settings as needed. Even people with little technical knowledge can run a shop with this CMS.

How Does Shopify Work?

Shopify works by helping you display and manage your site and its contents. Optional features include a payment platform, inventory management, tax tools, marketing functions, and more. Many people use it for small websites that sell a few products or services, while others have a relatively large storefront.

While Shopify has many options to help start and run your e-commerce business, there are several key features. You can host your domain with them, which reduces the number of tech vendors you need to deal with and allows for some advanced features.  It has drag-and-drop themes to which you can add widgets as needed. And, of course, no e-commerce site is complete without payment processing.

Overall, Shopify is beneficial for business owners because it facilitates an online presence. Depending on the features you choose, this platform can make your life easier by helping you do everything related to sales. That can include printing shipping labels, tracking inventory, and even marketing. Best of all, you’ll get to do this using fewer interfaces, which can save you a lot of time and money.

Setting Up Your Online Store

Even with all the automation, you’ll still need to set up the store. Shop owners have many options, from basic to advanced. Some involve back-end functionality, while others influence how people view the website. Ideally, you should pick the plans and features that work well with anything else you use to run your business. If you aren’t sure what you need yet, you can always add or subtract functions later.

Choosing a plan: Shopify Starter, Basic Plan, Shopify, Advanced Shopify, and Shopify Plus

Depending on the features you need and the size of your business, there are several plan options. All of them offer access to payment processing, for which they charge fees.

• Shopify Starter is perfect if you just want to sell on social media. It adds a shopping card and payment platform to any social media account. You’ll also get a link in your bio, analytics, order management, and chat-based support. $5 per month.
• Basic is the entry-level for users with an independent website. Recommended for solopreneurs and other micro businesses, you’ll get POS support, shipping discounts, and inventory support. You can even get some global selling capacity. $29 per month.
• Shopify works well for businesses with a handful of employees. For instance, a restaurant or small business that sells merch online could benefit from the Shopify plan since it can handle inventory. You’ll get a deeper discount on shipping and be able to buy insurance for your goods. In addition, you get five extra user accounts so employees can help you manage the store. $79 per month.
• Advanced is best for growing businesses and people who want more features. Importantly, Advanced users get access to analytics and third-party shipping rates. Fifteen extra user accounts pave the way for medium-sized e-commerce operations, and you can purchase extra global selling capacity. Your checkout capacity is 10x bigger, allowing for higher volume sales. Finally, you get better chat support. $299 per month.
• Shopify Plus prepares your e-commerce site for the big leagues. Some relatively large sites use Shopify, and they likely are on the Plus plan. With it, you get 200 inventory locations, phone-based tech support, and the capacity to sell in 40 global markets. Even better, you’ll get customized checkout features with a massive capacity. If your company has brick-and-mortar stores, you can get up to 200 POS pro locations. And finally, you’ll get the ability to sell B2B/wholesale with unlimited staff accounts. $2300 per month.

As you can see, Shopify has a plan to power the smallest businesses. But you can also scale your plan as the business grows and your needs increase. As you decide when to upgrade or downgrade, think about ways to boost your overall ROI. For instance, if your analytics game is weak, consider whether it’s better to get a Shopify Advanced plan or spend money on better analytics software. On the other hand, you don’t want to overspend on features you don’t need.

Custom domain and premium themes

With Shopify, you have different domain names and theme options. I always recommend that you buy a custom domain name. This helps build your brand identity, reduces the risk you’ll lose access to your site (such as if the host company goes out of business), and gives greater flexibility. One thing I love about Shopify is that they can help you buy a domain name.

Furthermore, Shopify includes hosting in their subscription rates, letting you keep things simple. You won’t have to juggle as many subscriptions as you would with other hosting options or platforms, since the basics are included.

Once you have a domain name, it’s time to choose a theme. On websites, the theme influences what your site looks like to the end user. Themes have different features depending on what you want or need. For instance, Shopify themes might have support for color swatches, which are essential if your business sells items with multiple color options. You might also want multilingual support, countdown timers, or other extras.

While many Shopify themes are free, others are available for one-time purchase. Premium themes have more advanced features and may feature support for more sophisticated graphics. No matter what you choose, though, you can always add customizations. Your brand colors, logos, and other content can fit on any theme.

Shopify’s app store for additional features

While Shopify themes provide basic features for creating your website, you’ll still need to add extra features. Here, you’ll add items to your website’s code so it has extra functions.

For your Shopify site, the App Store has everything you need. Some of these items are basic, while others add advanced features or facilitate other parts of your business. To use the store, you’ll search for the app name or desired functionality. Then, you’ll click on it and indicate you want the item added to your site.

There are many popular apps available. For instance, most people want Shopify Payments, email, and search. Businesses can also benefit from the native translation apps, social media integrations, search function, and analytics tools. Other popular options include a Google and YouTube integration, which is useful for displaying user-generated content.

Further Reading: Shopify Apps: The Definitive 25 You Need to Know

Adding Products to Your Store

For most e-commerce sites, products are the star of the show. For starters, you need to make each product appealing. From there, it’s much easier to create content and promotions that help sell the right items to the customers who will benefit the most. Ultimately, marketing efforts only get you so far; your products need to be well-displayed, too.

Here’s how to add products to your Shopify store.

Physical products and digital products

Before you start creating product pages, you need to understand what kind of product you’re selling. Part of how does Shopify work touches on order fulfillment. The process is much different depending on whether you’re selling physical projects, digital products, or a mixture of both.

Most of us think of physical products first when e-commerce comes into play. Such products need to be shipped to customers or picked up at your location. Similarly, you need to keep track of inventory and your cost of goods.

Similarly, digital products are intangible and can be delivered by download links, email, or similar methods. Popular examples of digital products are e-books, song downloads, premium videos, and hobby patterns. Unless your digital items are limited in distribution, you don’t need to take inventory. Instead, you simply let Shopify keep track of how many you’ve sold for your records.

Adding products to your store is simple with Shopify. First, go to the admin section of your account. This is a page on the desktop or the “products” tab on mobile apps. From there, follow the steps. You’ll first add a title (“Organic Cotton T-Shirt”), then add attributes (men’s or women’s, color, etc.), product description, and price.

Importantly, you’ll need to mention a product category. For instance, your store might sell men’s and women’s clothing, shoes, and accessories. Visitors to your site should be able to filter out what they don’t want: The average woman doesn’t care about men’s shoes, for example. If people spend too much time sifting through irrelevant items, they might give up and leave your store.

Categories are also important for site organization, such as a drop-down menu to help people go directly to what they want.

Product descriptions, images, and weights

Once you have a title and category for your product, it’s time to add some details. Product descriptions tell a customer what you’re offering them. Ideally, the description should be detailed enough for customers to decide if the product is what they want or need.

For example, if you sell electronic parts, you should indicate what the item does and is compatible with. Clothing sellers should include the sizes available, distinguishing features, and so forth. With this information, customers can select the right product, which reduces the chance they’ll ultimately return the product.

Don’t forget images

Similarly, images are vital for any product and are essentially part of the description. Often, text doesn’t do the item justice, even for technology-related products. Think about it: even software companies display a picture of the box or a similar graphic.

On Shopify, not every picture will work well or display properly. A detailed guide contains recommendations for size based on picture type. For instance, a background or hero image should be much larger than product thumbnails. Likewise, you can choose different dimensions based on mobile friendliness, ad platform, and more.

However, there are some hard limits: uploaded photos must be no more than 5000×5000 pixels, and the files no more than 20 MB each. Most pictures should be much smaller, however.

No matter what dimensions you choose for a photo, make sure it adequately represents your products and your brand. Product photos should showcase various product features, such as size and texture. They might also demonstrate the use of an item to show people the possibilities. Similarly, large pictures for blog posts or headings need to set the stage for what your brand has to offer.

Further Reading: 19 Best Ways How to Promote Your Shopify Store on Instagram

Know item weights

One of the great features of Shopify is the ability to purchase postage and print shipping labels from your dashboard. However, unless you want to use flat-rate envelopes exclusively, you’ll need to know the weight of each item. This way, you can accurately calculate the shipping cost for each order.

Using product and package weights, you can calculate shipping costs directly through Shopify. There’s a dedicated calculator under the Admin section on both web and mobile versions of the site. Shopify users have access to discounted rates depending on their plan, so it makes sense to buy postage through them. Of course, this practice also helps track how much you’ve spent over time.

Managing inventory

One of the more tedious jobs in retail is inventory management. Traditionally, the process involves tracking down every unit of each item and entering them into charts or a computer system. However, Shopify has features to streamline the process.

As you add items to your store, you’ll include the quantity available in your backend (customers won’t see this unless you want them to). Then, as each item is sold, Shopify subtracts it from the available inventory. You can keep track of all variations this way. Additionally, some Shopify plans allow you to include multiple warehouse locations, which is valuable as your business grows. You can also set up alerts to tell you if stock is running low.

Besides real-time inventory tracking, Shopify provides inventory reports. For instance, they can tell you how many of an item you sold that month, what percentage of stock is remaining, and similar metrics. This information helps you minimize stockouts and backorders. Similarly, you can plan ahead if an item has high demand or seasonal spikes in orders.

Payment Options and Transaction Fees

No matter what you sell, getting paid is critical for any business. And for e-commerce sites, payments must happen electronically. Furthermore, business owners and customers alike have different preferences for payment methods. Customers like convenience, while e-commerce sites want to control costs and keep accounting simple.

Shopify Payments and third-party payment gateways

Luckily, Shopify has some solutions. The default option is Shopify Payments. All you need to do is log into your administrator section and activate the service. When a customer places an order, Shopify Payments charges them and pays you a few days later.

If you don’t want to use Shopify Payments, there are some other options. First, there’s Shop Pay, which is an alternative offered by Shopify and acts more like PayPal. Customers can choose between major credit or debit cards, PayPal, Amazon Pay, Google Pay, and more. Shopify Payments even lets business owners process transactions in any currency, then pay out in their own.

Finally, you can use third-party payment gateways or processors. One feature of Shop Pay is that it lets you process payments through whatever processor you want. This is useful if you’re an established business that’s moving into e-commerce or if you have a deal with more competitive rates. Of course, you can leverage Stripe, PayPal Checkout, and other tools as well. Some integrations even allow electronic checks or cryptocurrency transactions.

Transaction fees and credit card rates

If you use Shopify Payments, there’s a reasonably simple rate structure. The percentage you’ll pay for credit card transactions is based on your service tier and whether or not you take the payment in person.

These are the fees for US merchants:

• Online credit cards: 2.5-2.9% of each transaction, plus 30 cents
• In-person (POS) credit cards: 2.4-2.6%, plus 10 cents
• Currency exchange: 1.5% of the amount in dollars
• Chargebacks: $15
• Unspecified amount if the money comes through a third-party processor.

There are a few exceptions. Most notably, if your business is considered high-risk for chargebacks or fraud, you might pay more. Similarly, if Shopify determines your base of operations is outside the US, they might change your rate structure to match. However, even in these situations, Shopify Payments has a relatively simple and competitive fee structure.

Further Reading: Shopify Blogging: 17 Tips to Drive Traffic to Your Shopify Store

Shipping and Fulfillment

Congratulations, you just got paid for products or services. Now, you have to send the items out to your customer. Email and other delivery of virtual products requires little effort, but shipping can be reasonably complex. Factors like the size and weight of your package and the distance it must go significantly influence how much it costs.

Shopify Shipping

Since Shopify is an all-in-one e-commerce solution, it has fulfillment tools. Shopify Shipping is available to everyone with a Shopify store, and it’s designed to save you money. Remember the differences between Shopify subscriptions above? One of them is the discount rate for shipping – the more expensive your subscription is, the larger your discount from retail rates.

Shipping through Shopify is relatively easy. For businesses in the US, you can choose between USPS, UPS, DHL, and FedEx by Shippo. The last option requires that Shippo be added to your site through the App Store. Canadian stores choose from Canada Post or UPS. Other options exist for international businesses.

Shipping rates and labels

Buying labels is easy. Buy it by choosing the desired carrier during the fulfillment workflow on Shopify. This lets you bill the shipping cost to your Shopify account.

Calculating your shipping rate is easy with the Shipping Calculator. First, navigate to the calculator using the directions for your device type. Tell the calculator where the package is going and where you’ll send it from. Next, either choose a standard package size (for example, a small padded envelope), or select custom. With the custom option, you’ll need the dimensions of your package. Either way, use a postal scale to determine weight, then enter the results.

From here, review the different shipping rates. Your customer might ask for standard shipping, which gives you the freedom to pick whatever is most cost-effective. Or, they might request expedited shipping. Select what’s most appropriate, and continue to print the shipping label.

Third-party calculated shipping rates

Despite the discounts offered through Shopify Shipping, there may be situations where it’s better to check third-party shipping rates. This option is available for Advanced and Plus plans at no charge. If you have the Shopify plan, you can add the service for a fee.

Why would you want to do this? Occasionally, you might need to use an alternative carrier due to the product you’re selling or the buyer’s location. Or, you might find that another shipper is more efficient or cost-effective in certain situations. As the saying goes, one size doesn’t (always) fit all.

If you have the right plan, then it’s easy to access these rates. Connect your alternate-shipper account to your Shopify site through the Admin tab, and those rates will show up easily. For shop owners without existing shipper accounts, third-party rates are available through any shipping add-on through the App Store.

Common examples of third-party shippers include Amazon Logistics and Pitney Bowes. The former is great if you also sell through Amazon and use their lockers for inventory. And if your business sends a lot of non-package mail, Pitney Bowes can be a great all-in-one shipping payment option.

Reporting and Analytics

No discussion of how does Shopify work would be complete without describing its analytics features and available reports. These help business owners manage stock, fine-tune sales, and even plan marketing campaigns. As your business grows, these items will become more complex, and Shopify is up to the challenge of helping you keep track of everything.

Professional reports and custom reports

There are many types of reports available. Many of them are built into all Shopify accounts, including inventory, fraud, sales, marketing, and profits. Each of these helps you determine how much money you’ve made on your business and how to make more money. If needed, those with a Basic plan and higher can filter results to zero in on the most important information.

Further Reading: How to Ace Shopify Marketing in 2024: 5 Best Strategies to Try

Customized Reports

Customized reports are available for customers with Advanced and Plus plans. These let you make changes to the default reports so that you only get the desired information. This way, you won’t have to filter out metrics every time you view or print a report. You can also make multiple customizations to suit your business needs.

Analyzing Data

Once you have the reports, you need to analyze the data. With each metric, you should know what’s good for your industry and what’s good for your business. For example, you might know that one conversion rate is the average in your industry. Compare that number with how well you’re doing, and determine if you’re above or below average.

Comparing your metrics with average benchmarks is the beginning. Look at other statistics to see where you’re doing well and how you can improve. If a product isn’t selling well and pulls down your conversion rate, consider discontinuing it. Likewise, if something in your shop sells out constantly, it might be worth buying in larger quantities.

Another way Shopify reports can help is through marketing data. It could be that customers respond to one pitch better than another, giving you an opportunity to double down on success. Of course, an effective marketing strategy is one of the most effective ingredients to business growth. Over time, you’ll learn what works best for your consumer base.

Further Reading: Shopify SEO Checklist: 11+ SEO Tasks to Increase Store Sales without Paid Ads

Next Steps

Clearly, Shopify is a comprehensive tool for starting and growing your e-commerce business. From basic site setup to fulfillment, accounting, and strategic planning, this platform makes your job as a business owner much easier. As your business grows, you can scale your account to accommodate and add needed features.

With all these features, it’s unsurprising that some large companies use Shopify for their e-commerce site. Nonetheless, all businesses start small and grow over time. Are you ready to start selling online? If so, take advantage of Shopify’s free trial. You get 3 days to experiment with the platform with no credit card required. Then, if you like the platform, you can start with a plan that’s priced right for your business.

Hero Photo by hookle.app on Unsplash