The internet enables you to sell 24 hours a day to customers anywhere in the world through a fully automated sales process. Having an online shop can attract new customers and enable you to provide a broader service to existing ones.
Successful ecommerce relies on having clear marketing goals and understanding the practical, technical and regulatory issues involved.
1. The business advantage
An ecommerce site gives you a new outlet for your products or services
- Your online shop is open 24 hours a day.
- You can attract new customers who discover your online shop when using search engines to look for products or information.
- You can improve support and after-sales service for your existing customers.
- Customers can order your products direct.
- You can reach overseas customers who can order when it suits them.
- If you sell niche items to a widely-dispersed market, the web is ideal to reach those interested in your products.
Once you have set up your shop, it can provide an efficient selling operation
- With no rent or employees needed to man the shop, running costs are low.
- If your suppliers deliver direct to your customers, you do not need to hold stock.
- If you hold stock yourself, you may be able to operate with a relatively low stock level.
- You can monitor customers' buying habits to make it easier for them to re-order favourites or see and buy related items.
- If you sell information, software, music or images, buyers may be able to download purchases direct from your website.
You can try out new ideas, adapt them, and scale them up quickly and cheaply
- Success can come rapidly, if you identify the right market and make the right offer.
- Feedback comes on a daily or hourly basis through web statistics and sales figures.
- If your idea for an internet shop is not working, you can easily pull out without the worry of making staff redundant, getting out of a lease, or writing off shopfitting costs.
2. What you can sell
Internet use in the UK has reached such a level that you can find customers for almost anything online.
Many internet users are young (18 to 40) and technically minded
- They tend to have relatively high disposable incomes.
- Consumer leisure products, such as music and travel, are good sellers.
- Software and computer equipment also appeal to this group.
The internet also suits specialist products that would normally be difficult to find
- For example, collectors' items, niche products or specialist foods.
Buyers are attracted by good deals on commodity items
- Benefits to the customer include wide product ranges, easy price comparison, convenience and low prices.
- For example, some supermarkets allow customers to order using the internet, for convenient home delivery.
- Products such as books or CDs do not vary in quality, so people are keen to pick them up cheaply through the internet.
The internet offers a ready-made distribution channel for selling information
- The internet provides a new market for real-time information, such as share prices or auction results.
- People are accustomed to receiving information online for free. You must offer something with real value which is unavailable elsewhere.
3. What you need to set up
If you are trading on the internet for the first time, it is advisable to start small so you can see what works before you scale up.
Your web-hosting company can provide the web space for your internet shop
You should purchase your own domain name
- A domain name such as www.yourcompany.com gives your business a professional appearance.
The easiest way to set up an ecommerce shop is to use a 'turnkey' package
- These solutions give you everything you need to start trading.
- Packages include a design template which you can insert your products and information into, plus payment facilities.
- You do not generally need any additional technical expertise.
- Most web-hosting companies offer packages which include everything.
You can use 'shopping-cart' software for a customisable site
- This creates a virtual shopping basket which holds the customer's provisional purchases until the shopper confirms the order and pays at a checkout page. You can build your site around this functionality.
- You will probably want to hire a designer to build an ecommerce site which is driven by the shopping-cart.
- Using a shopping-cart package will give you more flexibility than a turnkey solution, but will also generally cost more and take longer to set up.
- Most web-hosting companies offer shopping-cart software for a modest cost.
Launching and running an internet shop will require some expert input
- You will need legal help in adapting contracts and terms of trade for the online environment and to ensure you comply with the regulations controlling distance selling, data protection and electronic communications. See Don't get caught out.
- You will need someone with technical knowledge to keep the system running.
The investment you make in marketing your site is a key success factor
- If you have a limited marketing budget, you will need to make up for this with time, effort and energy.
- You will need to advertise and publicise your site everywhere you can, both online and in the real world.
- Many small online retailers have built a customer base through Twitter, Facebook and other free social media.
You will need to check that you can fulfil online orders efficiently
- Put appropriate systems in place to ensure you meet orders and consider the impact on the rest of your business.
- If you sell a physical product, choose a shipping company you can trust to be sure items are delivered when promised.
- Offer customers a choice of delivery options and enable them to track their delivery online.
- Ensure you have your employees' backing.
- Disappointed customers are unlikely to buy from you again.
Don't get caught out
The international nature of trading online and regulations designed to protect consumers mean that you will need the help of an expert to ensure you stay on the right side of the law.
Consumers are protected by the Consumer Contracts Regulations
- You must provide customers with written confirmation of their order, including your name, description of goods and their right to cancellation.
Contractual agreements created online are as binding as any other
- Make it clear at what point during the transaction the contract is formed.
- Ensure that customers have the chance to check an order (and amend it if necessary) before they place an order.
- Ensure that your terms and conditions are clear and agreed before you accept an order.
Commercial emails can be a particularly tricky area
- You must not send emails without the recipient's prior consent - unless their email address was gathered in the course of a previous transaction.
- You must make it clear what the purpose of the email is, who it is coming from and any offers contained in your messages must be obvious.
- If an email is sent (or forwarded) to an international recipient, that country's laws may apply to its content.
Collecting or handling personal data falls under the Data Protection Act
- You may be required to register with the Information Commissioner.
- You must not use an individual's details for direct marketing or share their details with others if they ask you not to.
4. Setting up a successful site
The most successful online shops concentrate on one type of product and provide plenty of related information.
Design the shop so that it is easy to look around and easy to purchase from
- A simple design, without large pictures or complex graphics, will load quickly and save customers time. Visitors swiftly move on if a site is slow.
- Test your site thoroughly, placing trial orders and acting out different scenarios.
- Do not overload customers with too much information at any one time, but make it easy for them to check details if they wish.
Give visitors reasons to return to your site
- Get them involved as much as possible. Experts believe that your best chance of a sale is when a person returns for the third or fourth time.
- Make people who visit your shop feel like part of a community. Consider providing news, discussion forums, and reviews.
- Update your site frequently so it is always new. Try to change promotions and add new products regularly.
Provide support pages that help users get the most from your product or service
- Include plenty of background information. For example, case studies, answers to frequently asked questions, product specs, parts lists, and user guides.
- Publish news about product revisions, awards, and recommendations on the site.
- Provide clear information about customer rights, delivery times, warranties, and exchange policies.
Include links to other relevant sites, organisations and manufacturers
- Users will start to view your site as a major information source for your product type.
Let people know your shop is there and open for business
- Publicise your shop on related sites, either by paying for advertising space or by negotiating reciprocal links with companies selling related products.
- Use targeted email to persuade new people to visit your site.
- Use social media such as Twitter and Facebook to engage with potential customers and promote offers.
- Include the details of your online shop in your stationery, your marketing literature, and any advertising you do.
- Consider using pay-per-click advertising through search engines to target people who search for particular things online.
5. How do I receive payments?
Payment by credit card is now firmly established as the usual way to complete internet consumer sales.
You can accept credit and debit card payments in your internet shop
- You can also allow your customers to send you money using online cash transfer services like PayPal.
- You will need to apply for 'merchant status' with your bank or use a specialist company that can process online credit card payments as a bureau service. Turnkey packages and shopping-cart software often include payment processing services.
- Customers may be unwilling to send card details unless they are sure your website is secure. You should set up a secure area for payment processing and advertise your security credentials.
You can give internet buyers the option to phone through their card details
- It may be advisable to offer this option alongside other payment methods, to capture customers who are unwilling to enter their card details online.
- Business-to-business transactions usually take place on the basis of a monthly invoice for payment in 30 days, or a customer account.
- Carry out your normal credit checking procedures before setting up an account for a new customer.
- If appropriate, offer discounts to customers who place orders and make payments via the internet. This automation reduces your costs.
- You can use online invoicing services to manage customer accounts and payments.
6. How much will it cost?
Set-up costs can be limited to hundreds, rather than thousands, of pounds. Running costs can also be much lower than for even the smallest traditional shop.
Set-up costs include any shopping-cart software and payment processing software
- Small shops selling a limited range of items can sometimes be set up for a nominal fee. For example, turnkey ecommerce packages start from around £10 a month.
- Most shopping-cart products are available to buy or lease. Some are free, but these are often more complex to install and configure.
Your may wish to spend money on marketing and advertising
- Social media can offer a free route to customers.
The main running expense will be wages for whoever keeps the site up to date
- You may also pay a basic charge - up to £50 a month, depending on the space required - to your web-hosting company to cover space for your website. This charge is usually included with turnkey packages.
You will be charged a processing fee for credit card transactions
- Most of the internet banks and payment processing companies charge a set-up or annual fee plus a percentage of the value of each transaction.
- However, if your average transaction value will be in excess of £12 or so, it will make more financial sense for you to find a provider that charges a flat rate per transaction with a low monthly fee.
- If you require instant online credit card authorisation, the charges are higher. You will need to use a specialist online processing company and have special shopping-cart software.
- The more sophisticated and complicated your website and payment system are, the more it will cost.
- Compare payment processors using PaymentBrain.
"The message is clear; you'll need an effective web strategy or you'll probably not be around in ten years time, no matter what you sell or offer." - Sean McPheat, Managing Director, MTD Sales Training