Multi-channel retailing is becoming increasingly crucial for businesses to survive in an online age – Rebecca Spicer explores the options and steps required to build a successful e-store.
Thanks to the spread of broadband and wireless services at home, online business are growing rapidly, urged on by confidence in online brands such as eBay and Amazon.
The global ACNielsen Online Consumer Opinion Survey conducted last October found the vast majority of Australian internet users (87 percent) made a purchase over the internet. “Our ongoing e-commerce research clearly demonstrates an upward trend in Australian and global online shopping,” says Richard Sandlant, ACNielsen’s director of customised research.
So, how can your business tap into this growing market? While businesses may already
have websites to promote their business and provide additional information, it may be worth considering actually selling online as well.
David Lammey, general manager of business and consumer at web and application hosting company WebCentral, believes the decision for a business to expand online will be based on increasing its turnover and making the business more profitable. “What businesses are trying to do is sell more with less effort, and an online store can do that,” he says.
However, before embarking on developing your e-store, Lammey suggests asking yourself the following questions:
1. Is my product really going to sell; is it applicable; are people going to buy it on the internet? Anna Carosa started her accessory business, msAnna, just over two years ago. After successfully selling via mail-order catalogue she decided to launch online a year later. Selling mainly handbags and jewellery, she knew these were viable products to sell online. “I find with handbags, it’s more of a visual thing,” she says. “People know roughly what their style and taste is so most can buy jewellery and fashion accessories online relatively easily.”
2. How do you want to brand and structure the shop; do you want it to be a link off your main business website or a separate entity?
3. How am I going to do it? Analyse your current financial position—resources, costs, and so on—then ask yourself, can I afford this additional distribution channel? You’ll need to consider the extra resources needed to fulfil online sales and maintain the website, as well as set-up charges, ongoing maintenance and trouble-shooting costs.
4. Will you build and maintain the site in-house, outsource the job or use a combination of both? Deciding which way to go will depend on your time and resources, and how much risk you’re willing to take.
If you’re planning to sell online, the best research starting point would be to shop online yourself. Have a look at how other e-stores function and you’ll get an understanding of what consumers expect in terms of usability and security.
Creating a Website
A crucial first step is registering a domain. If you don’t already have a corporate website or you want the e-store to be a stand-alone entity, you’ll need to register the relevant domain names. While Carosa chooses to promote her website www.msanna.com she has also purchased www.msanna.com.au which diverts to the ‘.com’ site. “We do want to become global in terms of being able to export our products and the ‘.com’ was the best avenue to do that,” she says. “I’d recommend businesses register ‘.com’, ‘.com.au’, ‘.net’ and ‘.net.au’ wherever they can, to make sure no-one else registers those names as well.”
Then decide on your website hosting solution. While it’s possible for individuals with an always-on broadband connection to host their own website, this can be quite technical, complex and risky for those unsure of what they’re doing. Shared hosting is the most popular and affordable option for SMEs and involves having your website hosted on another company’s server (a web hosting company) for a monthly fee of around $30 to $40.
You should then choose an online shop application. Many hosting companies such as WebCentral, IntaServe and Webcity Australia offer complete end-to-end e-commerce solutions, or you can purchase shopping cart software to load onto your site, such as Ashop Commerce and gate13. Lammey says it’s important your e-store application can integrate with your accounting system. This will streamline inventory management and invoicing functions from the e-store right through to the back-office.
When selecting your payment solution, there are two options for credit card payments online. The first is through merchant accounts and payment gateways. This involves applying for a merchant account through your chosen bank, which will give you the ability to receive credit card payments and deliver the money into your account. The payment gateway will authorise and validate credit card payments while the consumer is still online. If you are setting up your own e-store, you will still need to outsource this gateway process to a payment solutions company such as DirectOne or VeriSign. Costs include set-up, ongoing monthly rental and transaction fees from the gateway and, as applicable, merchant fees.
There are also third-party payment processors. This option involves an independent company, such as PayPal, processing your credit card payments and it eliminates the need to deal with a bank. You will save money on monthly fees from both a merchant account and gateway but your transaction fees may be higher, depending on the company you choose. Many outsourced e-commerce packages will provide the option to choose between the two solutions.
The final step to consider is security. Operating a secure website where all your customers’ credit card and personal details are kept safe from the prying eyes of web users is crucial. Purchasing and maintaining digital certificates or SSL (secure sockets layer) security servers can be very expensive. Using the SSL encryption offered through your web hosting or e-commerce application company could be a better option for SMEs.
Online Store Options
The technology and range of options for businesses to build and grow their own online store is a lot more user-friendly these days. It’s easy enough to contact the relevant domain name authorities and register your own domain (or URL), just as there’s a range of off-the-shelf website building products (such as Macromedia Dreamweaver or Microsoft FrontPage) and shopping cart software available. But you must have the relevant payment services and security before you get started, and you have to have the resources to continually maintain the website.
Some SMEs may choose to build and maintain their own e-store in order to reduce security risk and stay in control of their online business. Lammey argues, however, that businesses trying to do it themselves who aren’t experts on the data and infrastructure may open themselves up to more risk.
Carosa, on the other hand, did have IT experience, having set up an IT company with her brother 12 years ago. She also runs a web development company and so was able to develop her website and maintain it in-house. However, she has the website hosted by her IT company, Destra, and uses their e-commerce application and their encryption services to operate the e-store. “I think it makes it a lot easier just working with the one company,” she says.
While using a combination of in-house and outsourced services to operate her e-store suits Carosa, there are many business owners who
are keen to tap into the online market but want little to do with IT. While admitting his bias, Lammey recommends most businesses—particularly small ones—outsource this job to a proven, reputable company if it’s not their own core business or expertise. “It doesn’t have to be a public company,” he says. “But they’ve got to be big enough to have a good number of customers to show the application is good.”
There are many companies offering end-to-end hosting and e-commerce solutions, so it’s worth shopping around to see which package best suits your company and the type of online store you want.
Setting up shop and simply waiting for customers to stumble across your site is wishful thinking. You’re competing with billions of websites out there for the attention of online customers, and so, just like your bricks-and-mortar store, you’ll have to market it.
The biggest—and least expensive—marketing tool available is word-of-mouth, so make sure your site is easy to use. As Lammey says, if it’s clunky and hard to use, you won’t get repeat customers. “The quality of your site will be the biggest thing to generate word-of-mouth.” It will also need to be fresh and regularly updated. Carosa updates her website in-house at least once a week, then does a complete re-design each season to keep up with new colours and trends.
Lammey says marketing your e-store via email to your existing customer base is another effective promotional tool for driving traffic to your shop. “You might be promoting a sale on new stock or a clearance. It’s important to put links in your email back to the e-store.” Carosa sends out a regular e-newsletter to her database of clients, which she says is effective when those people pass it onto their friends. “That viral type of marketing is very effective,” she says.
And you should leverage existing collateral, Lammey adds. “So, on company brochures, ads, business cards—everything—make sure you publish the link to your online shop.”
Online marketing—online advertising, search engine marketing and optimisation—is another option to drive traffic to your site, as is forming joint ventures with other companies online. For example, msAnna is currently running a promotion with American Express through their website which is helping to direct traffic.
But don’t forget, operating an e-store isn’t just about selling product. You need to constantly evaluate what’s working on the site through online reporting. Carosa has found the transparency and measurability that online systems offer means she can easily track certain marketing campaigns. “We’re able to see what’s working, what’s not, and maybe change the campaign if we need to.”