To Sell or Not to Sell

 

This section is “To Sell or not to Sell”. In my opinion, a lot of people assume that just because they sell products, they need to be selling those products online. I want to discuss a few of the issues around selling online and further considerations, so that you can make an educated decision around whether to have an e-Commerce website. It’s not just as easy as “you should” or “you shouldn’t”, so let’s go through some of those things. I want to say from at the top of this particular section that I’m not against e-Commerce websites; there are in fact a lot of websites online with e-Commerce that are highly effective. I just want you to consider every part of owning an e-Commerce website, before you go ahead and spend out on this functionality. First of all, what about fulfilment? Are you geared up for the logistics of storing, packing and despatching your products through mail-order? That’s going to be one of the biggest challenges when you have an online store. If you think that you can just fit that into your existing business, then how big are you really expecting your online sales to become? I say this because online sales have the power to significantly increase your sales, but customers expect a quick turn-around. If you can’t manage the logistics, your company will quickly get a bad reputation. Firstly, do you have a secure, dry space suitable for storing goods in bulk, so they are easily accessible as orders come in? A local self-storage facility may provide a viable option, but this obviously comes at a cost. You need a suitable environment that ensures the goods can be stored in optimum condition and you minimise the risk of damaged stock. If you think that you’re going to be building your online shop and it’s not really going to affect the number of employees that you need in your physical shop in order to send out these products, then clearly that’s not a big vision for your e-Commerce. It is going to cost you a lot to have built and run, so it NEEDS to affect your offline business in order for it to be successful. Let’s say that you do decide that you’re going to have a lot of online sales, what sort of things do you need in order to resource that? Remember we’re going to be using mail order now, so you’re going to need to find out where you can dispatch goods from. You are also going to probably need to have somebody employed as the Web Shop Manager. So who is that in your current business? If they take on the role of the Web shop Manager, then what task or role are they going to be leaving behind? Somebody else needs to pick that up, so you are going to need a new employee to run your online shop. I suggest there are also a few changes you’ll need to make to your offline business to make it successful online. Step one, your payment system; typically when you are a retailer, you’ll be taking payments by Debit and Credit Card through what’s called a Merchant Account. So if you’re already selling, the chances are you’re familiar with the Merchant Account. If you’re looking at starting a new Business where you will be selling, then you’re going need to become familiar with Merchant Accounts. This allows you the facility to take Debit and Credit Card payments. There are different types of Merchant Accounts and for an Online Shop you need the e-Commerce or the Electronic Merchant Account and your bank can set that up for you. It’s not automatic, so don’t assume that because you have a Bank Account that your bank will want to give you a Merchant Account, I think we all know it’s not always that simple. Now Step Two is you need a Payment Gateway. On your website, you’ve got a catalogue of products, you’ve got a facility for people to add those products into a basket and they then go through to a Check-Out. However at that point, they’re looking to pay for the goods. A website doesn’t connect directly to a Merchant Account; it connects to a Payment Gateway, which then connects to the Merchant Account. For a Payment Gateway, a few brands that you may be familiar with include; Sage Pay, WorldPay and Sec Pay. Remember these are Payment Gateways, and they just take the money from your Customer and send it to your Merchant Account. The Merchant Account then connects directly with your Bank Account. We need to think here about whether doing the full Payment Gateway, Merchant Account, direct to your Bank Account route is relevant to you. If you want a really professional e-Commerce System whereby you’re capturing all the Payment History, Purchase History and Customer Details to run promotions such as Up-Sell and Cross-Sell, then you need the full, professional Payment Gateway and Merchant Account System. However, if you’re looking at a small number of transactions, such as an Online Shop that you will be able to easily connect with your existing business, then PayPal presents an alternative option. PayPal combines the Payment Gateway and the Merchant Account in one. It’s very well recognized and people can easily pay with PayPal Accounts. However, I would advise you, that whilst it’s a fantastic system and it’s very easy to set up, it is really geared to a small number of transactions. For big sites think in terms of proper Payment Gateways and Merchant Accounts, for small sites think about PayPal as a far easier way to set up and a less expensive route to achieve the similar kind of functionality. Now that we’ve thought about Payment, what about delivery charges? What is it that you are selling online or wanting to sell online? If you’re talking about bulk items or heavy items, you face more difficult challenges for delivery. Is your product being dispatched within the UK? Is it going across America? Where are you looking to sell your product? Who can do the shipping for you? There is a lot of research in working out how much the delivery payment should be. Of course you can build that full matrix into your website, but it’s going to cost you! So you need to work out what the potential losses or gains you would make by having the full Payment System within your website. If you aim to charge a standard mid-range cost, then it’s much easier to manage and for your customers to understand. You need to base this on the fact that you are going to win with some transactions, and with others you are going to lose, but overall you know that you’re in the right ballpark for postage and the packing. Be upfront with postage and packing charges on your e-Commerce Site. Nobody likes it when they get to the Checkout, only to find that everything has significantly jumped up in price because of VAT and Delivery. It’s not a good way to impress new customers. I would definitely say keep it as open as you possibly can, and consider building the Price of Delivery into the Product. Not only does that make it cheaper for you to build your e-Commerce System, but it’s also a really good selling point if you can say “Free Delivery on all items”. So, let’s recap. First of all, do you really need to be selling online? You need to consider that question, before you pay out for an e-Commerce Site. If you do, is there a viable solution for storage and what about the payment system? How are you going to take payments for your products online? What’s the delivery cost and what are the best delivery solutions for your product? There are three key components there that you should seriously consider. Really focus on this, and maybe ask your existing customers whether they would like to buy from you online.