eCommerce Guide: Start Selling online
Guide: Start Selling Online - ecommerce opportunities for small business in Australia.
Increasingly, Australian shoppers are letting their laptops do the walking, but are our small business owners keeping up? Opening an online shop front could give you a new stream of low-cost sales, writes Bernard Tanner.
CONTENT PROVIDED BY THE COMMONWEALTH BANK OF AUSTRALIA
Can you remember the first time you bought something online? I can’t – just as I can’t remember the first time I ever went into a supermarket. Online shopping has very quickly moved from cutting edge to commonplace.
The statistics tell the story. A 2008 Nielsen survey found that 80% of Australian internet users sometimes shop online. That puts us ahead of the US, where only 66% of shoppers have bought something over the internet, according to research by the Pew Internet Project. So it seems that Aussie consumers have embraced ecommerce with enthusiasm. But have our entrepreneurs kept up?
We put it to the test in the 2008 Commonwealth Bank Investment Trends Business Owners Survey. After quizzing small business owners around the country, we found that 42% had a web site, but only 18% allowed clients to buy online. So less than one fifth of businesses are tapping in to the four fifths of internet users who shop over the web.
Why sell online?
There are many benefits to selling online, but the five most convincing arguments are:
Make it easier for customers to buy. One of the secrets of maximising sales is to make it easy for customers to buy from you. That means giving them every possible purchasing and payment option.
Make money in your sleep. Imagine walking into the office in the morning to discover that you’d made a dozen sales overnight! Today’s time-poor consumers shop at midnight as well as midday, so your 24-hour web shop could capture sales you didn’t even know you were missing out on.
Cut your sales’ costs. Once your systems are in place, the marginal cost of selling online is negligible. Web sales are typically self-service, so your customers create the order, generate an invoice, even update your customer database, simply by filling out a web form. With no customer service staff and no overtime to pay, you can ramp up your sales without ramping up your costs, increasing your overall profitability.
Work your niche. Some of the most successful small businesses carve out a market niche where they don’t have to compete on price alone. But the downside is, your potential customer base is limited. The internet can help you take your specialised product to more customers in Australia and around the world.
Streamline your systems – and your cash flow. Having created your online shop, you can use it to feed information into your back-end systems, automating things like stock control and customer database management. And when customers pay you online with a credit card, the money is usually in your bank account by the next business day.
Getting started with your online shop
The first step is to plan your virtual shop. Here are some of the issues you’ll want to think about:
Sales channels. How will you allow customers to buy: over the phone, by fax, mail order, online or all four? And what payment methods will you offer: cheque, direct funds transfer, credit card, debit card, PayPal or BPAY? These are business decisions, but they have big implications for the kinds of systems you put in place and the technology you use to support them.
Building your site. The next question is, how will you develop your site? The method you choose will depend on your budget, the purchasing and payment methods you want to support and your level of technical expertise. Options range from a low-cost DIY site to a one-off site designed by a digital agency especially for your business – more on that below.
Systems. It isn’t enough just to build your web shop; you also need systems in place to fulfil orders as they come in. If you sell goods, rather than services, shipping is a crucial issue. It’s also the place where many online shops fall down. The appeal of online shopping lies in its speed and convenience; slow or expensive shipping can cancel out those benefits. That’s why it’s essential to make your shipping arrangements as fast and economical as possible.
Pricing. Will you need to adjust your pricing for the online channel? Could you share some of the cost savings with your clients? And will you pass on the costs of shipping as an extra charge, or bundle them into the price of the goods? (Free delivery can be a very effective drawcard.)
Security. There are two important issues here: the security of your customers’ personal and financial data, and the risk to you of fraudulent transactions. Online security is a vital concern for consumers. The Pew Internet Project report I mentioned earlier revealed that, while 78% of American internet users agreed online shopping was more convenient, 75% were concerned about giving out their credit card information online. The conclusion was that security concerns could be a real barrier keeping online customers away.
To reassure your customers, you not only need to do the right thing, you also need to be seen to be doing it. That means making use of the latest technology and security safeguards to keep your customers’ personal details safe and secure.
Fraud is also a concern for online merchants, as it is for any business that takes orders remotely. By definition, an online sale is what the banks call a ‘card not present’ transaction, without the traditional guarantees of a signature or photo ID. If a fraudster places an order with you using stolen card details, and the true owner of the card later disputes the transaction, you could end up out of pocket. Your bank or merchant provider might recoup the money from you via a chargeback, while the goods you’ve shipped are gone forever.
Fortunately, you can reduce the risk and free yourself from liability by using the latest security protocols. That means ensuring your website and payment gateway comply with the Payment Card Industry Data Security Standard (PCI DSS). Even better, you can opt-in to the new 3D Secure protocol, which requires shoppers to confirm payment with a PIN or password attached to their card. Then, if fraud does occur, many banks (including the Commonwealth Bank) will not institute a chargeback, so you’ll still get paid for the goods you shipped.
Putting the pieces together
So, what does it take to create a fully-fledged web shop? Here are the main components you need:
Your website. Naturally enough, the first step is to register a domain name, choose a hosting company and build your website.
The shopping cart. Next, you need shopping cart software. The shopping cart allows customers to browse your products and head for the checkout, and it also does a lot of the back-office work to support your other systems. A good shopping cart includes:
• Marketing tools and information, including cross-selling tools
• Order management tools
• Pricing rules, allowing you to offer things like bulk discounts
• Stock management tools
Payment gateway. The payment gateway is the secure connection between your site and the bank or merchant provider.
Merchant provider. The financial institution that validates the card details and makes the payment.
There was a time when you needed to find all of the components separately and put them together yourself – a major web development project in its own right. But, increasingly, different components come packaged together, so much of the hard work has been done for you. There’s even a new, off-the-shelf solution from the Commonwealth Bank, called eVolve iShop, that has everything you need to create and customise your own online shop, from hosting, to web page and shopping cart templates, to back office systems.
Do it yourself
If you’re comfortable with HTML and you like to tinker, it’s possible to put together a basic web shop at very little cost. Shopping cart software comes free with some hosting services, and with the right cart you can set up a PayPal payment gateway for nothing, although you will pay a fee for each transaction.
Pros: It’s cheap!
Cons: It can be hard work, and you really need to do your homework on data security.
Typical set-up cost: Free (if you don’t count the cost of your time, but hosting costs will apply).
Use an off-the-shelf solution
With eVolve iShop you get web hosting, a shopping cart, a payment gateway and a merchant account, all fully integrated and ready to go. You can also customise your site to suit your own branding, look and feel. (And did I mention that eVolve recently won MasterCard’s’ Innovation in Processing Award?)
Pros: It’s quick, easy, secure and economical.
Cons: May offer less flexibility and control than a purpose-built site.
Typical set-up cost: $299.
Pay a consultant
The traditional path is to hire a consultant or digital agency to create a site for you. There can be real benefits to having an expert on your side – but you need to be very clear upfront on what you want and what you’re getting for your money.
Pros: Develop a site tailored to your business and needs.
Cons: It can cost a little more – or a lot more!
Typical set-up cost: $7000–$20,000.
Hire a developer
If your business sells primarily over the web, you might want to bring the expertise in-house, and hire a webdeveloper for your team. Even then, they’ll need a budget to buy the software and components they need to get your site up and running.
Pros: Expertise on tap.
Cons: All the usual issues of finding and retaining staff.
Typical set-up cost: $5000–$10,000, plus hiring costs.
Monday, 18 May 2009
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