I started my CD business with $100 worth of Fuzzi Bunz, a pretty bad PayPal website that I built and absolutely no expectations. Within 3 months, I was turning a profit, had added oodles of new products and carried a pretty decent inventory. I attribute a lot of my "success" (if you can call it that - luck is probably more appropriate) to serious customer service, ebay, and my husband the techie.
Seriously - I didn't have to pay for hosting, for web design, for programming - it made developing a quality site (the key, really) very accessible. I always received so many comments about how easy my site was to navigate - that is sooo critical. Give your site the time and energy it deserves.
Ebay - while not appropriate for many CD items with MSRPs, etc., was a great place to sell prefolds and proraps. The cool thing about Ebay is that Ebay bids on keywords FOR YOU! So if you have a CD store on Ebay, the traffic you can generate is really tremendous. Even if I sold the prefolds and proraps at a low margin, it was less than paying for keyword bidding myself. So I really leveraged Ebay as a traffic builder...and a low cost way of marketing my website...
Of course, I couldn't link to the site from Ebay - but it wasn't hard for folks to figure out "Look for Us on the Web".
My efforts, however, created too much work for one mama of a rather high need infant and I sold the store after only 9 months. Overall, I made a very nice return on my investment.
My story is obviously, not typical. But my suggestions are: be creative, keep your costs LOW! (will that widget, gidget, gadget make you more money?), professional! professional! professional!, find products that others don't carry, always watch your margin - 30% is toooo low...try to keep it closer to 40/50 - heck, even 60%. Did I say be creative?