E-commerce is slowly changing the way how business is done. Wholesalers have more confidence in venturing into the retail sector through e-commerce. Retailers are equally confident about bulk orders and achieving economies of scale by tapping the online markets. Not only is this slowly bridging the divide between Wholesalers and Retailers, but it is also cutting across geographic boundaries and allowing access to new markets with a huge potential. Earlier, a silk boutique from New York wouldn’t even imagine buying silk from an Indian vendor in Kashmir. However, with the evolution of technology and the internet, it is quite common for such trade to happen on a regular basis.
We are often asked by our existing clients, who want to push their business online, whether e-commerce is a profitable or feasible venture. The answer depends on a couple of factors. An important point to note is that most online sellers are not the manufacturers of the products that they are selling. They are only online traders who are focused on the logistics and not on the manufacturing. Good examples include Amazon and eBay. If you are into manufacturing and are trying to supplement your channel of distribution, then the odds are against you. Not many manufacturers of goods have been very successful when selling online through their own websites as their focus will and should be quality of the goods and Research and Development of the industry as a whole, not intricacies like whether or not to accept Cash on Delivery or to allow Credit Card payments.
Whats the aim of your e-commerce portal? The first point that you should be asking is what the aim of the website is. Is it to drive online sales or just to show your existing customers that you are capable of having a shopping cart system on your website. Are you trying to automate orders and phase out your traditional distribution? All these points sound trivial but are most important in making your own thoughts clear. Many a times customers who have rushed themselves into an online selling website cannot find any use for it, except as a brochure or catalogue to show existing customers. One of our clients just wanted to show his existing clients how much discount he was giving them, by showing an inflated price for all products on his website. The actual online selling from the website has taken a back seat. No surprise huh?
What platform are you going to use? There are numerous online shopping cart systems which offer same or similar features. Almost all of them support the popular payment gateways and common modules. If you are looking at something specific, then you can be picky. But if you are clueless, then go with the flow and look up review websites. Names like Pinnacle Cart eCommerce Solution, Shopify ,3dcart and Bigcommerce all have a good standing in the market and offer Open Source versions of their systems. They all use a combination of PHP with MySQL which is the standard option with most popular systems and is safest if you are a newbie. If you would like to reinvent the wheel or do something different, you can hire a programming team and spend a fortune of money. If you have that kind of money, you might as well employ the programmers or buy out the firm to work for you. A big mistake which many online businesses make is spending time and money on the look and feel of the website rather than the functionality. Both must progress in a parallel way, else you will never launch your website.
Who will manage the online shop? Managing an online store is a full-time job if you are serious about making it successful online. Just the way a regular store needs employees and a Manager, even a small online store needs at least one dedicated staff member to manage the site. Additional data entry operators, customer support staff and technical support maybe required to ensure smooth running. Not only do products need to be added and updated, but continuous monitoring and corrections need to be made to products over time. Most businesses’ who start an online business, have an established brick and mortar model, which will fund their online venture. The offline business is usually well grounded and has built a name of trust over time. If you don’t have an offline business, then you should study the revenue model accurately for judging the profitability.
How will you “deliver the goods”? In an e-commerce business, “delivering the goods” (no pun intended) is an important aspect. This includes the collection of the payment and the entire logistics from picking up the goods from the vendor right up to the delivery at the doorstep of the customer. Payment gateway fees and bank transaction fees can drastically reduce the profit on goods sold. They cannot be avoided and must be feasible for the seller. The payment gateway service should also provide basic fraud checking and automated verification of the transaction. Basically, if you are outsourcing the payment processing, you should be trouble-free about any aspect of the payment, whether it is related to the actual payer or the money being received in your bank account. Transportation and other logistics must also be factored into the operating costs.
Where do you start from? We always recommend our clients to start small. No matter how big you are as an offline provider, spending millions of dollars and then realizing that you have invested in a failing online business model maybe quite a disappointment. Start with a pilot project: a small test site can be made to start off with. It could be integrated into your existing website or it could be on a separate domain. You could have a backlink to your new venture or advertise it on your website. Some people prefer to isolate it from their existing business to test the market afresh. Either way, start small and slowly scale it up. If it doesn’t work out, you can abandon it quickly without hurting your online business or drawing much attention to your website. Don’t hesitate to call off the project. Even big companies like Google and Amazon have called off projects which were not cost-effective. If it works, then you may have struck a gold mine.
Should I copy the XYZ model? Don’t try to look at other businesses to model your own portal. Everyone has different resources and limits. People often want to know the traffic statistics of an Amazon or Facebook or Competitor’s website page. This makes no sense, since the hard work and efforts behind the scenes will never be visible on the face of it. Don’t bother about having a formal launch or publicizing the website launch. Let the website and products speak for themselves. The online sales will bring more than necessary satisfaction and the money that you spend in launching the website can be used to hire better staff. If you are serious about an e-commerce business, buy the hosting space and setup the e-commerce system at the earliest. Remember, sustainability and not setup is the key to a successful online business.