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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.
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.
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