How to start up an E-business

Ecommerce sales continue to increase in value each year as more and more people shop online, attracted by the convenience and the chance of a bargain. Our guide covers the key issues for starting and running your own ecommerce business.

Research your target market

There are three main aspects to consider when doing your market research for your new project:

  • whether there is enough demand for the goods or services you plan to offer
  • how much competition there is - depending on the nature of your business this could include shop-based retailers and mail-order specialists as well as other online retailers
  • how successfully you will be able to convert visitors to your website into customers

Estimating demand

You'll need to find out whether there will be room in the market for your proposed e-business. Bear in mind that although the value of e-commerce sales continues to grow each year, it's a very crowded marketplace and you're likely to be competing against a number of very large and well-established businesses. Nevertheless, you might be confident that you'll be able to take market share away from existing online businesses, for example by offering lower prices, cheaper postage or exclusive products.

As a first step, check out the online competition. Visit competitors' sites, note the range of goods or services they offer and whether goods are in stock, the prices they charge, the time they say they will take to make a delivery, how much they charge for delivery, details of their returns policy and so on. You could even make a few test purchases and look critically at the service you receive. Think about how you could improve on this.

Try using several of the major search engines and experimenting to see how well your competitors show up in searches. You will aim to get your own website appearing towards the top of the results list when people search for certain key words.

If you're not sure whether there will be enough demand for your business, you could think about dipping your toe in the water and start out by selling through an online marketplace like eBay.

Once you have launched your own website it's a very good idea to keep track of web 'metrics' and learn what they can tell you about how your online business is performing.

Converting visitors into customers

For ecommerce businesses, the 'conversion rate' is extremely important. This is the percentage of visitors to your site that actually make a purchase. There are many ways to improve conversion rates, for example by:

  • making sure the site is accessible and works well on a large selection of browsers and different screen sizes
  • building trust by including customer testimonials or participating in a trustmark scheme
  • making sure the transaction process is as streamlined as possible
  • setting out a clear returns policy
  • offering different payment options - for example if you're selling high value products, it might be a good idea to offer a monthly payment option. Also think about offering options like PayPal alongside the more common debit and credit card payment option
  • using 'up-selling' and 'cross-selling' techniques

Conversion rates aren't just important to ecommerce businesses though. They apply equally to e-businesses where the website has a 'goal', whether that's the visitor reading a particular page or signing up to a mailing list.

There are lots of articles available online giving tips on how conversion rates can be improved.

Research current trends, plus legal and tax issues

Ecommerce

'ecommerce' means using your website (or another online channel like eBay or Amazon) as an online shop to sell products and services to customers - who may be members of the public or other businesses. (This also includes 'm-commerce' - people using mobile devices like smartphones to shop online.)

Visitors to your site usually browse through images of your product lines or select products from a list or catalogue. Your prices, returns policy and your terms and conditions should be clearly visible.

Ecommerce websites typically provide a 'shopping cart' into which goods are automatically placed once the customer has clicked on the 'Add to cart' (or similar) button. When they've finished browsing, their order is summarised and the cost of the goods in the shopping trolley is totalled. The vast majority of sites allow customers to pay online using a credit or debit card or another payment option like PayPal. Very good online security systems are required for this. Customers are sometimes given the option of phoning a customer services number to give their card number over the phone during office hours.

If you are going into ecommerce, there are a number of things to consider:

  • will you use an online marketplace like eBay as well as - or instead of - your own ecommerce enabled website?
  • how will would-be customers find your website? You'll need to think about things like search engine optimisation, and possibly paid for click-through advertising and affiliate schemes
  • will you use social networking websites like Facebook and Twitter to promote your business?
  • will you make sure that your website renders perfectly on small screen devices like smartphones and tablets as well as on large screens? With more and more people using these devices for general web browsing, social media and online shopping it makes a lot of sense to ensure that your site is optimised for all screen sizes right from the start. You may even decide to have your own 'app' written
  • how will you deliver the goods to your customers? There are now lots of different options to choose from including the Post Office, dealing direct with a courier firm or by using one of the growing number of parcel consolidators. It's a good idea to monitor your couriers' performance and consider switching if there's a lot of negative feedback from customers
  • how will you set your delivery charges? Free or subsidised delivery can be very attractive to customers but you need to make sure you can afford to offer it
  • where will you store the goods?
  • will you offer customers an online tracking facility so that they can check how their order is progressing?
  • will you be able to meet demand if this proves to be unexpectedly high
  • how reliable are your suppliers? Are there any alternatives?
  • will your stock control systems link into your order-taking software so that customers know whether or not items are in stock when they place an order?
  • will you offer extras such as gift wrapping or personalisation?
  • what will your returns policy be?
  • have you set up efficient back-office systems so that you will be able to process orders within your advertised delivery times?

To make sure that you build up a good reputation and get repeat business, it is very important that your order-taking and processing goes smoothly and efficiently and that people are impressed with the service they receive. The quality of your goods must also live up to your customers' expectations.

Building your website

Unless you possess the necessary web design skills to design your own site, you'll either commission a specialist web developer to build it or use one of the many hosted 'turn-key' solutions like Shopify. These let non-specialists create an ecommerce website using pre-existing templates, which can also be customised if required. There are pros and cons to both methods and it's a good idea to find out as much as possible about the costs involved with both so you can make an informed decision.

If you decide to use a specialist you should obtain quotes from several web developers and look critically at examples of work they have already done. The UK Web Design Association operates a 'Find a Web Designer' service through which you fill out a short online form and receive up to four quotes from UK-based web designers. Draw up a contract which clearly sets out the rights, duties and roles of each of the contracting parties. Make sure it is clear who owns the copyright in the codes. You may need specialist legal help with this. You should also make sure that you comply with the provisions of distance selling regulations, consumer law (including the wording of 'Buy now' buttons), e-commerce regulations and privacy rules (including requirements for handling 'cookies').

Hosting the site

Your website will need to be professionally hosted on an internet server. Hosting services are available from internet service providers (ISPs), who also provide internet access and email services, and from specialist hosting companies. Although cheap and even free hosting packages are available, as a serious e-business you will almost certainly need to purchase a more sophisticated and robust hosting package.

There are very many ISPs and hosting specialists to choose from and both prices and service levels vary considerably. Shop around to find the package that best suits your needs and budget - matters to consider include:

  • what level of technical support is offered
  • uptime, connectivity and reliability. You don't want your site to be unavailable for lengthy periods
  • can the ISP cope if you have large numbers of people accessing your site. Will you have to pay a surcharge if this happens
  • will you be able to enlarge or alter your site in the future
  • what other services are offered such as shopping cart software, secure financial transaction facilities, site traffic analysis and email forwarding
  • what level of security is provided
  • does the ISP support mobile enabled websites

If you use a hosted solution like Shopify, you don't need to arrange for separate hosting as this is included in the package.

Your domain name

You will need to think of and then register a domain name for your website. This is the address at which visitors will find your site. You can register as many domain names as you like, as long as they are acceptable to the registrant and no one has registered them before you. Recently, there have been lots of new generic Top Level Domains created, which mean that instead of your website address ending in .co.uk or .com you can choose something like .london or .bargains. The cost of registering a new domain varies from a few pounds a year to several hundreds, depending on how desirable it is.

Hosted solutions typically allow you to purchase a new domain name, use a domain name that you have already registered or use the free domain name that comes as part of the package (for example www.mybusiness.myshopify.com).

Online payment

If you plan to accept credit and debit card payments online you will need to enter into an internet merchant agreement with a bank or with a specialist organisation known as a payment solution provider (PSP), such as WorldPay. PSPs process online transactions for you, in return for a percentage of the value of the transaction. Some PSPs can process transactions in several different currencies. You may also decide to add the PayPal and Amazon Payments facilities to your website as these are now very popular methods of making online payments.

UK or global

If you plan to target customers worldwide then it's a very good idea to provide details of your goods or services in several different languages and in different currencies. You should also make sure that you will be able to understand and respond to people who contact you from abroad in their own language.

You should also give overseas customers an indication of how much shipping will cost and how long it will take for the goods to get to them.

Don't forget that there are different VAT and export rules depending on whether you're selling to countries that are inside or outside the EU and that if you're selling digital products and services to non-business customers outside of the UK the VAT 'place of supply' rules changed from the start of 2015, potentially causing some problems for e-businesses.

Consumer confidence

Some consumers are still wary about doing business on the internet so to reassure them you might consider applying for membership of a trustmark assurance scheme. Your site will be monitored and you will have to comply with a code of practice. If authorised you will be entitled to display the scheme logo on your site and in advertising literature. This can help to increase consumer confidence in your e-business. Reproducing testimonials from previous customers can also help to build trust.

Feedback

Make sure that you provide an email facility on your site so that customers can contact you with queries, comments, complaints or even compliments! Put in place procedures to make sure customers are replied to quickly - by their nature websites are 'faceless' and many customers will want to be reassured that there are human beings behind the scenes, particularly if you have installed highly automated ordering and payment procedures.

Search engine submission

Some customers may visit your website because they already know about it - these could include previous customers and people who have seen an advertisement somewhere. But many people look for things online by using a search engine like Google. So it's very important that your site is registered with all the main search engines and designed to show up well in searches for certain key words. This is known as site submission and site optimisation and there are plenty of specialists who will do this for you. However, some may make exaggerated claims and charge a lot of money for little real result - so it pays to shop around. Your website designer should be able to help you with optimisation and possibly submission to major search engines.

Getting help

There are many websites devoted to providing information and services to those wishing to set up an internet business and an online search should yield a good number of results.

Services offered

There are various 'add-ons' that you could think about providing on your website. These can be useful in building a community feel that will hopefully help you to retain customers and include:

  • adding a facility for customers to review individual products or to comment on particular written articles
  • enabling customers to leave testimonials and other feedback
  • having an 'ask a question' facility so that people can find out more about a product
  • running regular 'private sales' or 'members sales' that are only available to customers that have registered their details with you
  • sending out a regular email newsletter to people who have signed up to it, detailing special offers, new products and so on
  • adding a blog and/or a chatroom
  • including product demonstration videos
  • providing live web chat with a sales adviser, alongside the more commonly offered telephone and email support

Advertising your website

Some premises-based businesses never do anything to advertise and promote their business and still seem to get by, but this really isn't an option for an e-business that operates exclusively online. You could design and build the best website on the internet, but without a regular stream of visitors you'd be lucky to sell anything at all.

To be successful, an e-business website needs to have a strong online presence and be visible to would-be customers. The number of visitors to the website, known as 'site traffic', is very important - the more people that visit your website the higher the chances of making a sale.

There are many different strategies for publicising a website and attracting site traffic. Some are very expensive to implement and others don't cost anything other than your time. Some examples are listed below:

  • optimising the website for the major search engines and submitting it to them for a listing - you may need to engage the services of an SEO (search engine optimisation) professional
  • paying some search engines for a favourable ranking in their search results
  • using 'banners', 'pop-ups' and other 'pay per click' adverts on high profile websites
  • getting listed in online directories and databases
  • using email marketing and 'viral' marketing techniques (but not 'spam')
  • also selling on eBay and Amazon. This will potentially boost sales volumes and also raise the profile of your main business website
  • using websites like Youtube, Facebook and Twitter, as well as special interest forums, to keep customers up to date with your business
  • asking other related websites to link to your own, perhaps in exchange for a reciprocal link or commission on each sale (an 'affiliate scheme')
  • including your web address on all of your business stationery and non-internet advertising material
  • displaying your web address prominently at your premises and even on your vehicles if you have any

You will need to look at your advertising and marketing budget and decide which strategies are best for you. Review your marketing strategy on a regular basis to make sure they're still getting effective results and giving good value for money.

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