The benefits of eCommerce – selling your product or service online – are huge. No longer restricted to your local market, you now have the opportunity to easily put your business in the eyes of a national or even an international audience.
Selling online, however, is not always an extension of what you’re currently doing offline – in your shop for example. Sure, eCommerce presents you with lots of opportunities, but there are also risks.
1. Too much, too fast.
If you are currently making 100 sales per day in store then online might provide you with another 100. You could even hit 1000 sales – it’s possible if you have a good product. So imagine your business grows by 500% – that means you’ll need more staff to cover the workload.
Solution. You could use temporary staff to start with to test the water or you could outsource your web fulfilment to another company. Outsourcing means that you can keep the core of your business under control whilst having the flexibility of a specialist company handling your online orders.
2. Managing your Stock
If your website shows you have 1 product left and somebody orders it online at the same time as somebody buys it in store then you’re going to either have to get more stock quickly to fulfil your order, or you’re going to have to let the online customer down which is not good for business – the online customer can easily go elsewhere.
Solution – You could allocate stock for online and offline or could integrate your offline and online stock systems so the chances of this happening are slim. You could also ensure that once your product reached 5 in your online store then you would get a reminder to replenish the stock.
3. Shipping your product
Before, you sold your product exclusivley in store. You may have wrapped it up or put it in a box but then it’s the customer’s responsability to get it home. Now you’re selling online, you need to work out the best method of delivery and you need to think about covering the costs, either by charging the customer or by offsetting it against the fact you’ll have more orders.
Solution – If you know you’re going to be shipping 1000 orders a month you may be able to get a deal with a shipping company. It’s worth shopping around as there is big variation from the services/price that each of companies offer.
4. Online/Offline propositions
One day you are competiting with a few shops in your local area, the next you’re dealing with market leaders on a global scale. The proposition therefore is different online to offline and you’re going to have to reflect this, otherwise you will fail in at least one of your channels.
Solution – Doing your homework is important with other online competitors. If you can’t offer anything close to what they are then maybe you need to refine your offline business before you proceed with your online ventures.
5. Payment
Normally you may take cash or credit card but now the customer is going to be able to have to deposit money into your account without the use of physically handing over the cash/credit.
Solution – Set up an eMerchant. There are plenty available. Some charge per transaction and some charge a flat fee. Take a look through some such as PayPal or SagePay and see what’s best for you.
6. Customer service
A customer would normally bring your product back into the shop but the process is not the same online. You’re going to have to first discuss over e-mail or the phone and then you’re going to have to replace/refund the customer by the same method they paid with originally.
Solution – Learn to use the computer and get involved in how your online shop works. This way you can answer support questions straight away. You’ll also need to think about your returns policy and any other terms and conditions when selling online.
Do you have any experience of selling online? What were the biggest risks for you? Comments below, please.
Posted on June 14, 2011 in eCommerce
Great article Steve. One of the most important points for companies to consider is on outsourcing. A lot of retailers don’t quite understand the tipping point. 100 orders a day seems like a lot for an in-house operation to handle, yet it’s not enough to outsource. Most fulfilment companies have very few fixed charges, but those fixed charges that do exist can cripple a business financially if the order volumes aren’t there to back up things like storage and account management fees.
Alan – thanks for your comments. You’re right and I to add to that, you need to first of all establish if selling online is possible for you and your business.
I think a lot of the points I have mentioned need to be researched BEFORE you wish to go ahead with taking your business online to minimise risk. Leaving any of the above hanging could be a big risk.
One of the first questions, which you’ll know Alan, that I ask my clients are “How are you going to collect money from your web sales”. I ask this as soon as possible as it can take up to 8 weeks to setup an payment gateway (such as Paypal)!.
The actual eCommerce software used for a website needs to be scalable enough to cope with a growing company – otherwise a business owner is going to have the overhead of buying another website when their business grows.
Some eCommerce software is targeted towards selling a small selection of products – trying to run a large online shop with this software could turn into a complete nightmare, so it’s important to plan for the future as well as the present.
Lee – I agree with you to an extent – you have to have ability to scale however going for a ‘full’ solution costing you lots of money may be overkill especially for individuals and small business owners. Big eCommerce solutions can easily creep into the tens of 1000s.
If you have a small eCommerce platform that costs a 10th and that’s good to go then there’s always an opportunity to switch over at a certain point, you just have to be pro-active in doing so and not leave it until it’s too late.
I think also clarifying that by scalable you don’t mean the amount of products do you? You mean the amount of flexibility that the eCommerce tool provides? In which case you will need to ensure that your requirements are correct and you have a product that fits your needs (and some, not all, of your potential needs).
A lot of good points covered here and it’s always good to see someone offer solutions to those problems.
There is so much involved in e-commerce that it really can become a minefield, especially if you’re looking to grow your business. The internet really does offer a window to the world. I print and sell t shirts online and to be honest most of my sales come from outside of the UK, so you need to sort out your postage rates for starters.
You definitely need to give thought to payment solutions. I’ve used Paypal and also Sage Pay with a merchant account through Barclays which allows you to take credit card payments online – this method will cost you a lot more per month than a standard Paypal account but it can inspire trust in your customers eyes.
The use of social media sites such as Facebook and Twitter is now becoming an important part of your online business as you can build up a community of people who will buy into the ethos of what you’re doing, interaction in this way has become key to sites like Threadless in building their brand and audience.
E-commerce can involve much more than just listing products and selling them, for instance you may want to think about HTML Email Newsletter campaign where people can sign up via your site and then once a month you can put a newsletter out to your list letting them know about new products or sale items etc.
Customer service is a key part of a successful business as you want people to come back time and time again. It can also spread your business through word of mouth if your customer is happy. I personally always respond to emails with 1 working day and always sort out problems like items going missing in the post or exchanges.
For every person who starts an online e-commerce business I think it’s vitally important that they do a lot of homework before approaching a designer. Check put competitors sites and see what you like and dislike, think about how you want your site to function as much as how you want it to look. The more info you can give to a designer / developer, the better the job they will do for you.