The internet enables you to sell 24 hours a day to customers anywhere in the world. Sales processes can be fully automated and can connect you with billions of people. An online shop can help you attract new customers and provide a better and faster service to existing ones.
While there are incredible opportunities, competition for customers is high. Successful businesses have clear marketing goals and understand the practical, technical and regulatory challenges of selling online.
1. The business advantage
An ecommerce site enables shoppers from across the world to visit your site and buy your products
- Your online shop is open 24 hours a day (if you want it to be).
- New customers can find your online shop when using search engines to look for products or information.
- They can visit your site or buy products through Google Shopping services.
- Customers can order products directly through you, which can increase product margin.
- Selling online reduces barriers to selling, massively increasing your customer base.
- You can sell products across the world, although there are restrictions and regulations that you must be aware of.
Once you have built an ecommerce website, it can be an efficient way of selling to customers
- With no rent or employees needed to operate shop premises, running costs are typically lower.
- If your suppliers deliver direct to your customers (known as drop-shipping), you do not need to hold any stock at all.
- Effective stock management in real-time means you can minimise the stock you hold, in some cases removing the need for a warehouse or large premises.
- You can use website analytics and specialist software to monitor customers' buying habits.
- You can increase customers satisfaction by making it easier for them to re-order their favourite products or shop for 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 is available in real-time through web analytics and sales figures.
- If your online shop isn't turning a profit you can refocus it to sell alternative products.
2. What you can sell
You can find customers in the market for almost anything online. From niche hobbies to household essentials, there are customers online – but competition can be fierce, and margins stretched.
Online buyers for general goods are price-sensitive and will search for the best deals
- Shopping online enables customer to quickly view product ranges and compare prices.
- Use online marketplaces such as Amazon and Google's Shopping feed to set your prices.
- Margins on many products are low, but sales volumes can be high. Be confident in your pricing but be prepared to change regularly as the market does.
- Customer service and the buying experience still matter to online customers, so try to offer something unique.
- Online reviews provide validation for customers, so deliver exceptional service every time to build your brand.
The internet also suits specialist products that would normally be difficult to find
- For example, 'collectors' items, niche products or specialist foods.
- Successful online businesses compete on service and cost. Aim to be the best at what you do, not necessarily the cheapest.
- Provide information, advice, and insights to customers to support the purchase process.
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 ecommerce site
You should purchase your own domain name
- A domain name such as www.yourcompany.com gives your business a professional appearance.
- There is a whole range of new domain extensions (such as .health). They are cheap to buy but are not commonly used and may confuse some customers.
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.
- As you scale-up you'll want to move to a purpose-built site and purchase process.
You can use shopping cart software for a customisable site
- This creates a virtual shopping basket that 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 need to hire a designer to build an ecommerce site that delivers a simple user experience.
- Using a shopping cart package will give you more flexibility than a turnkey solution but will cost more and take longer to build.
- Common ecommerce solutions include Woo Commerce and Shopify.
- You'll need to pay a subscription charge every year to use ecommerce software, so factor this into your plans.
Launching and running an online 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.
- You will manage personal data, so must comply with regulations such as GDRP.
- If you are processing payments, you will need strong security processes in place to protect information from hackers and other digital threats.
The investment you make in marketing your site is a key success factor
- You will need to advertise and publicise your site everywhere you can, both online and in the real world.
- Small online retailers typically build a customer base using social media.
- Link building can help to build authority for your site and improve your performance in search engines.
- Most ecommerce sites lose money for the first few years as they build up their customer base and develop processes. Be prepared to be in it for the long-haul.
You will need to ensure that you can fulfil online orders efficiently
- Put appropriate systems in place to ensure you can 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.
- Train and support your employees to provide a high quality online customer experience.
- Customer service is key - disappointed customers are unlikely to buy from you again.
Don't get caught out
Customers are protected when shopping online. You will need to understand the distance selling rules that apply in the UK and any other territory that you sell to.
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 cancel.
- You should display all fees and charges, including VAT.
Contractual agreements created online are as binding as those made in person
- 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. This can be done in a shopping cart (if you are selling a product).
- Make sure that terms and conditions are clear and agreed before you accept an order.
You will quickly build up a database of customers for your business. Email marketing can be effective, but you must follow the rules
- You must not send emails without the recipient's prior consent.
- You must make it clear what the purpose of the email is and who it is coming from.
- Any offers contained in your messages must be obvious.
- If an email is sent (or forwarded) to an international recipient, that country's laws will apply to its content.
- Every recipient should be given the option to opt-out of future correspondence and unsubscribe from any mailing list. They can also request that you delete all personal information you hold about them, and you must comply.
Collecting or handling personal data falls under the Data Protection Act and GDPR
- 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.
- It's important that you and anyone else who deals with personal data understands and complies with GDPR rules and regulations.
4. Setting up a successful site
The most successful online stores focus on one type of product and provide plenty of related information.
Design the site so that it is easy to look around and easy to purchase from
- Customers expect to find the products they want to buy quickly and easily. Creating a quick and logical buyer journey is critical.
- Don't overload your customers with information up front, but ensure the site contains everything they need to know. Focus on building trust with your customers.
- Websites that are simple and easy to navigate will load quicker, which is important for both users and website performance.
- Most customers will visit your site on a mobile device, so ensure it operates effectively on every device and thoroughly test before launch.
- If you have the opportunity, invite others to test your site. Friends, family members and colleagues can all help you to refine the customer journey and identify any issues.
Give visitors reasons to return to your site
- Make visiting your site an experience. Creating compelling content on a blog, regularly adding new products, and rewarding visitors with discounts are strategies to keep users coming back.
- Experts believe that most customers will visit your store three or four times before buying.
- Customers will need to have confidence in your business, so adding testimonials, reviews and case studies are all ways to reassure them.
- Update your site frequently so it feels fresh. Promote new products and regularly refresh images to keep it looking new.
Provide support pages that help users get the most from your product or service
- Include plenty of background information. Provide case studies, frequently asked questions, product specs, parts lists, and user guides.
- Publish news about product revisions, awards, and recommendations on your blog.
- It's important to regularly add new pieces of content to your site.
- Focus on writing and publishing long pieces of content (over 1,000 words) rather than short pieces.
- Over time users will start to view your site as a major information source for your product type.
Links to and from other websites can help improve your search engine ranking. Target relevant sites, organisations, blogs and publications in your industry
- Publishing content can be a powerful way to build links. Organisations will want to link to high-quality content from a source they can trust.
- You can buy links to your website but purchasing links from untrustworthy sources can damage search engine ranking.
- Sharing content on social media can help you to establish authority and build links.
Let people know your shop is there and open for business
- Use targeted email to persuade new people to visit your site.
- Use social media such as Twitter, Instagram and Facebook to engage with potential customers and promote offers.
- Consider using pay-per-click advertising through search engines to target people who search for specific products online.
- Consider working with an online specialist to help you create an online store, manage pay-per-click (PPC) advertising and help you optimise the return on your investment.
- Costs can quickly mount if you're advertising online through PPC, so set a budget cap and stick to it.
5. How do I receive payments?
Most customers will pay by debit or credit card, or PayPal. Some sellers may work with credit providers enabling customers to spread the cost of products over a set period.
You can accept credit and debit card payments on your ecommerce website
- 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 provide 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 will be charged a percentage of each transaction to process it.
- PayPal is an alternative way for customers to pay for their purchases. They will need an account to process transactions.
6. How much will it cost to set up an online business?
Setting up an online store is much cheaper than a bricks and mortar shop. Running costs will also be much lower, but will creep up as your business begins to scale.
You will need to ensure you have the capital to maintain your website
- You will need to pay for hosting, any plugins used on your site, an SSL certificate, and the payment processing provider you have chosen.
- If you are not technically proficient, you will have to pay someone to manage the site, update pages and ensure it stays online.
You will wish to spend money on marketing and advertising
- Search engine optimisation (SEO) can help you to rank well in search engines and reach customers searching for your product or service.
- PPC advertising provides the simplest, but most competitive, route to customers.
- Social media can offer a free route to engage potential customers, but competition is high, and you will need to regularly create engaging content.
You will be charged a processing fee for credit card transactions
- Most 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 is 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.
"Setting up an online business is simple, but you'll need to create a something unique to compete. Invest in your brand, carefully select your products and create a compelling user-experience can help you get ahead of the competition" – Ian Spencer, Marketing Manager, Stronger Bones.