Whether you have an existing retail operation, or are considering selling online, the key objective (as it is in any business) is to operate the business successfully and profitably.
Fundamentally – business principles apply.
If you are currently operating a retail venture, then most (if not all) of the business processes and procedures you currently apply, will also apply to an online shop. From purchasing stock, to finally getting items to the customers once they’ve paid for it, the general principles of online selling are the same as traditional ones.
Selling online is therefore (in its most basis sense) another “channel” to invite people to buy stuff, enable them to pay for it, and then to deliver it to them efficiently and safely.
Step One: Market Research
You may have found a “gap in the market”, but more importantly – is there a “market in the gap”?
Today, unless you are manufacturing unique, highly customised products, the chances are that someone else is already doing what you do (or intend to do). If you feel that your produt/service idea(s) have merit, and there is a very good chance of people buying them, you need to determine whether your ideas are commercially viable BEFORE you invest heavily in infrastructure, materials and processes to make and distribute the product(s).
Additionally, trying to sell something “totally new” is often far more difficult and risky than selling items that are already well-established and have a proven market “acceptance” (ie: customers are happy to buy them).
But popular and well-established products are probably being sold by hundreds – if not thousands – or other retailers, so the challenge here is… how to get a share of the established market?
Either way, it is vital that you make decisions based on good market research, and that the research points to a business opportunity that is potentially viable and (most importantly) PROFITABLE.
Step Two: The Business Plan
Don’t skip this step… a business plan is essential.
A business plan is the FRAMEWORK on which you will operate the business, and has a lot of detail relating to processes and procedures, marketing and advertising strategies, logistics and management, accounting and financial management, competitor analysis, revenue and earnings projections, expected costs and out-goings, and what PROFIT you are aiming for in any given time-frame.
A business plan is not “cast in stone” – it can be adapted and changed according to both internal and external influences.
But the MOST IMPORTANT parts of your business plan will relate to how you intend to earn money, and to make sure you (ultimately) earn more than you have to spend.
In short, your entire business plan will be focused on everything that both enables the business’s PROFITABILITY, and recognises the factors which threaten it.
- (You will see me refer to PROFITABILITY again and again… The reason why you want to be in business is (surely?) to be PROFITABLE.)
Step Three: Testing the water
This is the only time (ever) that I will suggest you sell items on large portal sites like eBay and Amazon. For reasons I will outline (in a lot of detail) later, selling on eBay and Amazon is not a way to operate an online eCommerce venture – simply because it is difficult (and in most cases) impossible to sell on these websites PROFITABLY.
Sure… you may achieve sales.
BUT… you are unlikely to do so PROFITABLY.
Large “portal” websites are however, a good testing ground for whether people are willing to buy what you have to sell. These site enable you to test online selling without having to invest in the complex and sophisticated technology associated with eCommerce. They have good market exposure and are very popular with consumers, so you will attract potential buyers and (with a bit of careful planning) you will achieve some sales.
When you are ready to take orders (and that includes being able to quickly deliver the finished articles to customers), set up an eBay or Amazon “shop” and see what happens… Setting up shop on these portals is relatively easy and quick. It should take no more than a couple of hours.
You may need to make many “adjustments” to your offers to achieve some sales – and because most consumers use these portals to find the lowest price, you may even have to sell items at very low prices. At this stage, the PROFITABILITY of your venture is not as important as whether it is actually VIABLE… If you make no sales – even at stupidly low prices – then you may not have items people wish to buy and you need to re-think the whole idea.
If you have a variety of producs, sell some at very low prices, and others at higher prices.
Again… analysing the PERFORMANCE of any sales activity will help you determine what people are after. If you sell NO higher-priced items, but lots of lower-priced items, it may be that people are only after really cheap stuff, and you then need to determine whether there is good profit potential if you have to continue to price your goods very low.
After a couple of weeks (and you need to set a cut-off point in these “tests”), you should have sufficient results to help you determine the potential viability of your idea(s). At this point, STOP selling on the portal site(s), and begin planning your own eCommerce infractructure.
In very rare cases (possibly fewer than 1 in 100,000) portal shops are “profitable”. A tiny handful of online retailers do sell profitably on portal sites, and if you are lucky enough to be in this group, then it may be sound business practice to keep the portal shop active, as it can help fund the activities required to achieve your desired goal of independence.
Ultimately, your eCommerce venture should be done on platforms, processes and systems that are independent from portal sites, and which are under your total control.
Setting up an online shop
There are scores (if not hundreds) of ways one can set up an independent online shop. In recent years, we have seen the arrival of “cloud-based” eCommerce structures that enable people to set up an “independent” web shop, skin it with a “theme and logo” and load up their products and start selling. These cloud-based systems are reasonably good – if you choose a reliable one – and certainly enable you to sell on an “independent” site relatively easily.
Even so, despite some “superficial” customisation options these systems have, they remain a “one-size-fits-all” offering and in a lot of cases – where a retailer needs certain bespoke functions – these systems are no good.
And the possibility that you will NEED or WANT unique, or customised functions is actually very high.
So… BEFORE you leap into one or other eCommerce platforms, do a FULL ANALYSIS and assessment of what that platform offers, and whether all of its functions and features meet your requirements.
FUNCTIONS are generally more important than FEATURES.
It’s what the platform is capable of DOING, more than what it is capable of looking like.
Your chosen platform MUST be capable of meeting all of your functional requirements. And I mean 100%. If it does not meet your requirements, then it will invariably be very expensive later on to get it to function the way you need it to, or you may have to migrate your whole operation to a system that does meet your functional requirements.
What is meant by “functions” ?
The best way to illustrate this is to use an example. Let’s say you are running a website selling clothing… Shirts, shoes, dresses, coats…
Garments usually come in various STYLES, COLOURS, SIZES and SHAPES. Often, a single STYLE will have several colour options, and a range of sizes. The website must be capable of showcasing each STYLE, then offering a customer a set of SELECTIONS for colour and/or size. In other words, the site must be capable of allowing you to configure product attributes without restriction. When you upload product data to your online shop, you should be able to configure whatever attributes are needed.
These “attributes”, and the ability to configure them, are an element of a platform’s FUNCTIONAL CAPABILITY.
And… in many retail environments, there are literally hundreds of important FUNCTIONS (attributes are just one) that online retailers need in order to make their sites user-friendly, and operationally efficient.
Types of eCommerce Platforms
In addition to the many “one-size-fits-all” offerings that are now available, there are numerous “stand-alone” platforms that one can use.
Stand-alone platforms are independent of the control or influence of collective platforms (such as cloud-based offerings).
The advantage of configuring a stand-alone platform is that you will have a lot more control over how the site operates, and how it looks.
But stand-alone platforms require that YOU – or your appointed technical expert – set up and manage the website on an internet server, and that you maintain its programming, code, database and other important technical issues.
Many stand-alone platforms are available – including many FREE “Open-Source” programs that are just as good as (and often better than) their commercial counter-parts. These include:-