7 Steps to Start a Handbag Business (1st $1,000 in Sales)

ByNoah Brandt Updated on
Luxury handbags

Handbags never go out of style, and the use of handbags is becoming more prevalent among men, making this a great online store idea.

For the best chance of success when starting a handbag business, choose a niche target audience and market your handbags using online resources, such as influencer marketing and social media.  

  1. Identify a Niche Audience
  2. Find a Niche Product
  3. Define Sales Channels
  4. Identify the Minimum Budget
  5. Form a Legal Entity
  6. Set Up the Shop
  7. Reach First $1,000 in Sales

How to Start a Handbag Business?

1. Identify a Niche Audience

Identifying an audience is the first step in creating any business, including selling handbags. The audience will drive the product you choose and how you market it.

A niche audience is a group of people with specific interests or problems who seek out related products and services. 

People over 50 are not a niche audience. People over 50 who are interested in comic books and seek out clothes and accessories featuring comic book characters are a niche audience.

The more niche you go, the less competition you’ll have and the more specific you can go with your targeting, marketing, and online store layout. 

Here are some examples of niche audiences:

Example niche audience: Millenial women who use organic cosmetics as a means of relaxation and are Instagram influencers.
Example niche audience: Health-conscious small dog owners whose dogs are picky eaters.

1.1 Analyze Handbag Niche Communities 

The first step in finding your niche to get into handbags is analyzing existing handbag communities. You can find these communities on websites such as Reddit and Facebook and on online forums.

By scouring through their posts and comments, you’ll have access to real-world commentary on what they look for in products and the problems they have with existing products. 

You’ll also learn more information about your target audience. If most handbag buyers are also into fashion, for example, this will influence your marketing strategy. This step should not be skipped because analyzing the niche community will give you valuable information going forward. 

Here are some examples of handbag niche communities:

1.2 Find a Problem or a Market Gap

Using your research about niche communities, identify either problems that consumers have or gaps in the market that aren’t currently being filled. A gap in the market refers to the need for an item that isn’t currently being attended to. 

You can find information on problems and gaps in online communities, but also by discussing with handbag lovers in person.

Another easy way to identify problems and market gaps is by searching for the most searched keywords related to handbags.

For example, if you find that millions of people search for ‘I hate it when handbags can’t fit all my items’, you’ll know that’s a common problem. 

Potential Market Gap: Minimalist bags with lots of storage space for people who only take hand luggage on planes. 

Potential Problem: Clutch bags aren’t long enough, so women can’t fit items such as hairbrushes for nights out. 

Potential Market Gap: A handbag with a strap that can be turned into a backpack for easier carrying. 

Potential Problem: Fabric handbags stain easily, so they can be ruined by one drop of liquid or food. 

1.3 Formulate the Niche Audience 

This is the part where you tie everything together to sell handbags online. Bear in mind which audience has which problem, how bad the problem is, and whether any other solutions exist.

If solutions currently exist, research whether there is anything missing from the current solutions or whether the solutions do actually solve consumers’ problems. 

From the gap in the market or the problem, you can define your target audience. The more you can define your target audience, the easier it will be to shape your product and marketing plan.  

Here are some examples of niche audiences and the problems or gap they’re facing. 

  • People looking for large handbags that can fit a laptop + most handbags are too narrow, so people need to buy a separate backpack or laptop bag. 
  • Fashionistas who want handbags with cool colors and patterns + most of the handbags currently on the market only come in one color, which is neutral. 
  • People wanting handbags with multiple pockets to store makeup, cables, and phones, etc + most handbags currently on the market only have a couple of pockets. 
  • People wanting multiple strap options + most handbags only come with one strap, which can sometimes be inconvenient. 

2. Find a Niche Product

Now you’re familiar with the audience and the problem they have, it’s time to find a solution to their problem in the form of a product.

To find a niche product, start by researching your audience in depth to find out what they think is missing from the work of small handbag businesses. 

Once you have sufficient ideas, ask people you know who use handbags (or put together a focus group) to get their opinions of your product ideas. Here are some examples of niche products that could exist within the handbag sector. 

Example niche product: Waterproof handbags that aren’t made from leather for those who don’t like leather but can’t use fabric that gets wet. 

Example niche product: Reversible handbags with different patterns on the inside and outside for fashionistas who like change. 

Example niche product: Personalized handbags featuring a print of items that are important to the recipient of the handbag. 

2.1 Analyze the Competitors

Don’t be put off starting selling handbags online just because there’s already competition. Competition can be a good thing because it means there’s a demand for the product and an existing audience wanting to buy it. 

One of the best ways to cultivate your product and a matching marketing strategy is to analyze what your competitors are already doing.

It’s a bad idea to copy their strategy like-for-like, but there’s nothing wrong with taking inspiration from their website and social media page and putting your own unique twist on it. 

Here are three competitors in the handbag sector:

2.2 Unique Selling Proposition 

A unique selling proposition (commonly known as a USP) is something only your company offers that differentiates you from businesses in the same sector. 

Here are the USPs of five famous brands:

  • Taco Bell: Taco Bell is one of the biggest chains in the world, offering affordable Mexican food that you can find in most city and town centers. 
  • Apple: Apple makes products that even people with little technical knowledge can use easily. 
  • HBO Max: This streaming service is the only service that shows series created by HBO. 
  • Dolmio: Dolmio provides people with authentic Italian sauces without the need for cooking from scratch. 
  • Papa John’s: Papa John’s is affordable, quick, and provides a huge range of options for pizza lovers, including vegan options.

Here are the USPs of the three competitors listed:

  • Michael Kors: Michael Kors handbags are luxury, made with the finest materials as a sign of affluence.
  • Kate Spade: This brand’s handbags come in a huge range of colors and patterns you simply don’t find elsewhere.
  • Danielle Lehavi: These handbags are made especially to go with every outfit, and they come in neutral colors with fashion-forward designs. 

2.3 Choose a Product 

One of the most important decisions you’ll make is which product you plan to sell. To come to the conclusion of your final product, tie together every step you’ve carried out in the process so far.

Establish who your target audience is, what problem the product solves, and how you can solve this product differently from existing competitors. 

Here are a few examples of audiences, the problem they have, and a product that could solve that problem:

  • Women who are into staying active + most handbags aren’t suitable for storing gymwear and exercise equipment + they need large, waterproof handbags with space for a water bottle. 
  • People who want a few handbags that can go with any outfit + most handbags either come in dull, neutral tones, or are too bright, so clash with outfits + they need handbags that come in ‘complementary’ tones, so tones that complement cold colors, and others that complement warm colors, for example. 

2.4 Find Suppliers 

Don’t underestimate how important it is to source handbags to sell from a reliable supplier.

If your suppliers provide poor products or their products are always late, this can cause problems with your customers. Bad customer service means bad reviews, which puts potential future customers off. 

To pick a supplier, research suppliers in your niche online. If you’re unsure how reliable they are, look up reviews and testimonials online.

If you know any business owners in a similar niche, ask them for advice about which suppliers to use, and request any recommendations. 

Here are some suppliers you could consider for your handbag dealer business:

3. Define Sales Channels 

Before opening a handbags shop, it’s crucial to think about how you’ll actually get the sales and through which medium your customers will purchase your products. There are several options, but some may be more suited to your knowledge or experience. 

If you know other small business owners or you’re part of a business owner community, discuss potential sales channels with others for advice.

In the beginning, whichever sales channel you choose, you should promote it to your friends and family for those all-important initial sales. 

Ask friends and family to send your online shop or handbag business on Instagram to people they know for further reach. 

Here are some examples of potential sales channels:

  • Your personal: Facebook friends, Instagram followers, colleagues, schoolmates
  • Paid advertising: Google ads, Facebook ads, Tiktok ads, Twitter ads, Pinterest ads
  • Marketplaces: Amazon, Etsy, Ebay
  • Communities: Facebook groups, Reddit, Quora, forums
  • Other: Blogging, Craigslist, promoting in the real world (e.g. schools, workplaces, malls)

Related: How to Start a Lipgloss Business?

4. Identify the Minimum Budget

The best part about starting a handbag business online is that it doesn’t require a ton of money.

In fact, you can get the majority of your money without even needing to go to the bank, although that can be helpful in the long term. 

The best way to decide on your initial budget for launching the store is to decide how much money you’ll need for $1000 worth of sales.

You’ll have to take into account the amount of stock you’d need to buy, any money you’d need for marketing, fees for eCommerce platforms, and any professionals you choose to hire. 

4.1 FFF and Personal Money 

This is probably the easiest financing method and is great if you have little previous business experience and so are unable to get a loan from the bank.

Starting a handbag business online using your personal money is ideal because you won’t have to pay anyone back. 

If you don’t have adequate savings, this is where FFF comes in – that’s friends, family, and fools. Friends and family are self-explanatory, and fools are people with little previous investment.

If you’re borrowing money from friends and family, establish whether or not they expect a return on investment or they’re willing to give you the money for free. 

4.2 Bank Loans 

Bank loans aren’t necessary for every situation, but they’re a good option when you are launching a huge business or want to grow your existing handbags small business.

Many of the largest commercial banks offer loans for businesses, but they want to offer to people who present as little risk as possible.

To increase your chance of getting accepted for a bank loan, create an extremely detailed business plan that lets the bank know how much money you intend to make and when.

Having previous business experience can help your application, as can having collateral (like a house) that the bank can take if you can’t repay the loan. 

4.3 SBA Guaranteed Loans 

The government wants as many entrepreneurs like yourself to be able to start a business like a handbag shop as possible, so the SBA offers guaranteed loans. 

These loans reduce the risks lenders have to take by offering collateral on your behalf in the instance when you can’t pay. They also set rules which make it easier for lenders to give money to small business owners like yourself. 

You can apply for an SBA-guaranteed loan here by using their ‘Lender Match’ to find a suitable lender in your area. Very occasionally, the SBA makes direct loans, but only in the case of businesses recovering from a declared disaster. 

4.4 Government Grants

If you don’t have adequate savings or can’t get a loan from the bank for your online handbag store, a government grant is another viable financing option.

Grants are payments you don’t have to repay, so unlike a loan, you don’t have to prove that your business isn’t a risk to capital. 

The government offers grants to some small businesses to help them get off the ground.

These grants are usually reserved for businesses that are in some way giving back to the community, either by being nonprofit or conducting research and development.

If you’re unsure whether or not you’re eligible for a government grant, check this site. 

4.5 Crowdfunding 

Crowdfunding involves setting up a website or page where members of the public, colleagues, friends, family, and acquaintances can send you money.

Crowdfunding is typically used to raise money for charitable endeavors, but it’s also a popular financing method for new, small businesses if you can’t get a bank loan and don’t have savings.

To crowdfund money for your handbags business, create a page on a crowdfunding website like ‘Kickstarter’ or ‘GoFundMe’.

Share the page on social media and ask your friends and family to post it on their social media socials. Email the crowdfunding project page to all your contacts and ask them to forward it to everyone they know. 

Making sure your handbag shop online abides by all legal rules and regulations is crucial. Failing to form a legal entity can cause serious issues for your business, so it’s better to be safe than sorry.

The legalities of forming a business may differ depending on which state you’re based in, so check the rules of your state before you go ahead with the legal aspects of the business. 

If you’re worried about taking risks with your business, opt for the LLC business structure. An LLC is a limited liability company, meaning that its owners are protected from personal responsibility for debts and liabilities. 

5.1 Business Name 

Choosing a name for your business is important because it forms the basis of your company’s identity, but some spend too much time worrying about choosing the right one. If you don’t pick a good enough name the first time around, you can always change it later on. 

To select the right name, start by researching handbag business names and take inspiration from competitors.

Select a few handbag shop names, then ask friends and family or a focus group of people who buy handbags which name they prefer. This will help you choose a business name that’s most likely to attract target customers. 

5.2 Choose a Business Structure 

There are multiple business structures you can choose from to sell handbags, each with different regulations and benefits. Here are some of the most common. 

  • Sole proprietor: A sole proprietor owns an unincorporated business by themselves.
  • Partnership: A partnership is when two or more people create a business, they each contribute and share the profits and losses. 
  • Corporation: In a corporation, shareholders can give money or property in exchange for the corporation’s capital stock. 
  • S Corporation: S corporations pass corporate income, losses, credits, and deductions to their shareholders for federal tax purposes.
  • LLC: An LLC protects its owners from personal responsibility for its debts or liabilities.

5.3 Register for Taxes (EIN) 

To make your business legally compliant, you must register to pay your taxes. Depending on where you’re running your business, its size, and other factors, how much tax you pay at the state and federal levels will vary.

If you’re unsure how to do this, you can hire an accountant to support the registration and payment of taxes. Bear in mind, however, that hiring an accountant will incur extra costs. 

Find out more about taxes for small businesses on this link. If you want to reduce the tax burden for selling handbags for a living, opt for a business structure with more flexible taxation, such as an LLC.  

5.4 Bank Account & Credit Card 

Having a proper business bank account and credit card to sell handbags online comes with multiple benefits. Your business will look more legitimate, it makes it easier to keep records, and it ensures that your personal money and the business’s income are kept separate. 

Having a credit card can be useful in times when you need emergency credit. Plus, a business credit card can also make your business seem more legitimate in transactions with customers and other businesses. 

Most major banks offer bank accounts and credit cards for businesses, so shop around for the best interest rates and any perks certain banks offer for joining (like a voucher). 

5.5 Insurance & Accounting 

To open a handbag shop, you’ll need to make sure you’re protected against lawsuits that could threaten your earnings or the continuation of your livelihood.

Insurance can help with this. There are various types of insurance that any business might need, but here are some of the most common. 

  • Business owners policy
  • Product liability insurance
  • Professional liability insurance
  • General liability insurance
  • Home-based business insurance

Most of the largest insurance companies offer insurance for small businesses like yours, so research online to look for the cheapest option. Check online reviews and TrustPilot scores to check that the insurance company is legitimate. 

5.6 Permits & Licenses 

To open a handbag shop, it’s unlikely you’ll need permits or licenses, but the need for these varies from state to state.

In most cases, permits and licenses are only required for items that are regulated by an official body. This includes items such as firearms and alcohol. 

Keep in mind that if you do require a permit, some of the most expensive types can cost hundreds of dollars.

If your business needs one, put sufficient money aside as part of your budget so you won’t be caught short when it’s time to pay.

For more information on whether or not your business requires a permit or license, check this site. 

6. Set Up the Shop

Now it’s time for the fun part – setting up your transaction engine (the website).

If you’re bad with words or don’t have the graphic design experience to create a logo, ask friends, family, and acquaintances with those skills to help you set up your shop. 

The easiest way to set up an eCommerce store is by using a platform like Shopify.

There are plenty of pricing plans available, so if you’re short on cash, opt for the cheapest pricing plan, to begin with.

You can always upgrade for more features and functionality as time goes on. Once your site is live, market it on social media. 

6.1 Define the Pricing 

Defining the pricing might seem scary, but you can always change it later if it doesn’t work immediately. The easiest way to define the pricing is to choose which demographic you’ll be aiming to appeal to and your brand identity. 

If you want to promote your handbag business as a luxury business, you’ll want to set your prices in line with other luxury handbag businesses.

If you want to appeal to a budget market, set your prices lower. Just make sure your prices are always high enough to make a significant profit margin but not too high to make sales. 

6.2 Create an Online Store 

Creating an online store is easier than you think – even for beginners! Even if you intend to open a physical handbag store later down the line, start with an online store for ease and minimal spending. 

You don’t have to create a website from scratch or understand coding. You can use an eCommerce platform such as Shopify. These platforms allow you to create your own website theme, upload products and even customize features such as checkout. 

Shopify even has integrations and apps you can use to add extra functionality and features to your store, such as marketing apps and shipping apps.  

6.3 Order Inventory 

Don’t order too many products for the launch of your handbag company just in case they don’t sell as well or as quickly as you hoped.

Aim for enough stock for between $1000 and $2000 worth of sales. If they do well and sell quickly, you can order more straight away.

Ask your suppliers how long the inventory will take to arrive – avoid promising products to customers before they’ve arrived with you.

Once you’ve sold your first batch, note which items sold quickly and which items didn’t sell as well. This will help you decide how much to order of each product in the future. 

7. Reach the First $1,000 in Sales

Now the concept for your handbag brand is fully realized, you need to focus on getting sales. Don’t worry too much about the long term.

For now, simply focus on getting the first $1000 in sales. Once you’ve reached this milestone, the bank will be more likely to lend you money, and you’ll have a small, existing customer base. 

To get your first $1000 worth of sales, ask your friends and family to buy your products, then post about them on social media and leave an online review.

Email your eCommerce store to everyone you know and ask them to take a look, then forward the link to their contacts.

noah

Noah is the lead editor of Ecommerce Tips and a passionate writer specializing in ecommerce and digital marketing. His writing is based on years of professional experience working in a marketing agency and building and running his third ecommerce store in the pets niche. Noah enjoys making complex ecommerce topics understandable and practical. His hobbies include writing, cooking, and running.

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