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Online stores are very popular today and rightfully so: they are considered both as a platform for increasing sales, and for creating a business from scratch. At the same time, it’s difficult to find any valuable information about how to start an online store, how to manage it and increase sales.
Think of the irony of that: on the one hand there are a huge number of articles devoted to online stores, while on the other hand, they provide little information that is truly helpful. I’m not talking about technical articles aimed at professionals; it’s easy for power users to find necessary information. It is the questions of future owners of online stores that remain largely unanswered.
I deal with online stores professionally. My clients, owners of medium and small-sized businesses, are trying to figure out if it is worth their efforts to launch their own online marketplaces. They often ask me different questions, like where to begin, and what they need to do this, and so on.
In this article, I’ll try to give a comprehensible answer on what an online store is, when it can benefit its owner, and when one is better off without it, and I’ll try to offer some useful tips as well.
This article is aimed at non-professionals. I’m going to talk about the basic concepts that are closely connected to managing an online store. The article may be of interest to those who think about starting their own business online or to those who want to understand the general idea.
Before making your first steps as an online entrepreneur, think whether you, in fact, need it.
The concept of the online store is a trend, just like startups. Everyone has heard that startups can be very profitable but few people have an understanding of what a startup really is. In fact, one may not need an actual online store at all, because his or her current website – a corporate promo website – already does all the sales work.
In an even worse scenario, some people would make a decision to create an online store on impulse, or as an investment. They have no experience, no market knowledge, and no sales skills, and thus doom their project from the get-go.
I will try to sum up the most common situations where creating an online store is a time-waster.
1. You should not build an online store if you are a good consumer, but not a seller.
Let’s say, a family with a lot of kids decides to open a children's clothing shop. They do it because they know how to choose quality clothing, and they know where to buy it. They discuss it with other parents and see that the demand in the sphere is quite strong. But all these factors are not enough to run a store successfully. At the very least, one should know this sphere from the seller’s point of view, have a good grasp of the pricing, know one’s competition and have experience building a reliable and profitable supply chain.
Many people have tried to start their online business from scratch without relevant knowledge and experience. Only a few succeeded. That is why my first instinct is to try and talk my clients out of this idea.
Of course, there are exceptions to the rule:
- You are a professional in the sphere, you have sales skills, and you sell the product you are closely familiar with. There are enough successful examples of online marketplaces built by electronics salespeople. They know where to buy quality products, they have good discounts with the providers, and they know what's going on in the regional market.
- You have adequate knowledge about the product, have built your own supply chain and found a vacant or almost vacant niche. For example, I have a friend who has always been fascinated by cheerleading. He collected performance videos, interviews with cheerleaders and later decided to sell the stuff for cheerleaders. He has a good supply chain with the USA and he knows the ins and outs of the sports goods. As the result, his business is flourishing.
If you are not an ordinary consumer, if you have enough knowledge about the product and the business acumen, you should definitely build your online store.
2. You should not build an online store if you only consider it a capital investment.
Selling goods online is just another way of selling. Sales on the internet have their peculiarities, but online store in and of itself is not a competitive advantage anymore.
This is what we can consider competitive advantages:
• Best price,
• Unique product,
• Convenient delivery, or
• Any other unique offer.
An online store is nothing more than a platform. That’s why it’s extremely important to understand what you are going to sell, why people will be buying the products in your store, how you are going to attract customers’ attention, etc.
That is why you should not invest into online stores but invest into profitable business instead.
Building an online store will be a great solution in the following cases.
1. You run a sales business offline. It can be a shop, a wholesale warehouse etc. In this case, an online store will be another distribution channel for your goods. Entrepreneurs often compare building an online store to opening a business unit, only it’s on the Internet. In this case, everything is quite simple, you have your product, delivery or opportunity to organise it. If handled properly, an online store will be a success.
2. You know the product you are going to work with on a professional level, you have trading skills, supply and delivery chain, and you have developed a unique sales proposition. In this instance, an online store will be a comfortable trading platform for you.
You have considered all pros and cons and come to the conclusion that an online store is what you need. What’s next?
Here I’m going to speak about building an online store from scratch. This is what I encounter most often working with small and medium-sized businesses. This approach also helps to examine all necessary definitions, all stages and actions. If you already have some experience, just skip the parts that you are familiar with.
From the point of view of store management, every online store consists of two parts:
Front office. It is the website itself, email and SMS notifications and calls. This is everything that your customers deal with.
Back office. It is the work of the delivery service, pricing, supply, and integration of different systems. This is the part of the job that remains behind the scenes for your customers, but it is very important for flawless operation.
You can create an attractive showcase but to make it work you also need people plus product plus a lot of other stuff.
Before creating an online store you need to know which products you are going to sell and at what prices.
1. Even if you have a history successfully selling things offline, bringing all of your product range online may not be the best idea. Will this stuff sale on the internet? You should be ahead of the game.
2. Consider price formation. Many entrepreneurs have no idea about the rules of internet pricing. That is why you should examine this question closely.
I can give you some advice on pricing based on my experience. If you don’t know what price to put, use the same price as in your brick-and-mortar shop. What’s important now is to have the product represented online; you can adjust the price any time later. Then, track conversion of different goods. Conversion shows you how many site visitors turned into paying customers and it can help you decide on the right price.
In addition, it is very important to collect quality content for your online store. Content means:
• The goods themselves: descriptions, photos, and characteristics.
• Information about you: how you position your business on the internet, what advantages you offer.
• Information about payments and delivery.
You can extract the information from your accounting programme, but you can also create a goods catalogue from scratch. Customers will be receiving all information from a web page, and there won’t be a sales consultant to guide them through the process. That is why it is imperative that you provide quality photos and detailed description to properly showcase all advantages of your product.
This is a frequent question among those who are going to launch an online marketplace. On the one hand, one wants to demonstrate all there is to sell; on the other hand, it’s not clear what to do if there is an order but no goods in the warehouse.
Possible ways of solving this issue:
• Do not display goods that are out of stock. I do not recommend this method though because you might lose a potential customer.
• It would be better to display such goods with an “out of stock” label.
I firmly believe that it's better to get a request for missing goods than to lose a customer. If your employees have a good understanding of the product, they can come up with alternative options. Sometimes customers agree to wait. In any case, this is better than losing a potential client.
You should also pay attention to payments. Customers should not be forced to pay for products that are out of stock. This is how you can solve this issue:
• Disable auto-payments. Customers will only be able to pay right after receiving the order (courier, cash on delivery, or wire transfer) and confirming it with the sales manager.
• Have the system calculate the goods in stock before proceeding to payment. If there are enough goods, a customer will fill out the payment details. If not, she or he will be informed of that and offered alternatives.
Both options are convenient enough. Choose the one that better meets the technical and organisational nuances of your work. The important thing is that you get the customers’ contact details and learn about their needs.
The front office consists of:
2. Products range
We have talked about the products range and pricing earlier. Right now, I would like to attract your attention to the following:
1. Customer’s interest depends on the quality of your site’s product descriptions.
2. The level of trust of potential clients depends on the quality of the information pages.
Let’s talk about feedback in more details. You can collect feedback in a number of ways.
1. Phone. Best of all if you can use a dedicated phone line or a dedicated extension for your online store. At the same time, hire a person for communication with the online clients. You’ll receive the most contacts by phone because this communication channel is more convenient and gives people the opportunity to talk to consultants in real life, just like in an offline store.
2. Email. It’s important to post your email address in a convenient format. Images and copy-protected text fragments are very annoying. It would be better to create a separate mailbox and put up with spam than to lose potential customers who prefer this particular method of communication.
3. Contact form. This is an alternative to the mailbox. There is a contact form where customers can type their contact details (email, phone number) and the message. This message then reaches the site administrator by email.
4. Live chat. This service is designed to help people ask a question and receive a prompt reply. Online chat services usually look like a “Have a question?” pop-up, they are very convenient and popular. Usually, they are provided on a monthly payment basis, and a webmaster can help you select and connect your website to such a service.
Today, this list is considered a necessary minimum for every online store. You can also place additional information on your site: business and legal address, documents, certificates, etc.
I always recommend connecting a phone line to a CRM system. CRM, short for Customer Relationship Management, supports the effective operation of the online shop, especially if you’re going to have a fairly large number of sales. My clients demonstrated growth in performance every time after the introduction of a CRM system.
These are the advantages of using CRM systems for your online business:
1. All contact details of your customers are collected in one place in a convenient form.
2. You can avoid “lost” clients or missed and "forgotten" calls. Properly adjusted CRM system helps to compensate for a human factor.
3. You can record all conversations with the customers and monitor performance indicators of your sales managers.
4. You are secured against illnesses or resignations because there is history about every lead and another manager can pick up the work where a previous manager stopped.
5. You can set and check the quality and timeframes of tasks even not directly related to customers (content updates, reporting, etc.)
Mass texting is an important method of interaction with customers. Today it is considered a good form to notify customers via text about the status of their orders, delivery, etc. Ask your customers to give you their phone number during checkout. In the future, you’ll be able to use this database of phone numbers to solve marketing issues, for example, notify customers about promotions and discounts, new products, and so on.
You should be very careful with mass texting though to avoid being blacklisted as spam. Study the applicable laws in your area and follow the rules.
Another important marketing tool is a database of your customers’ email addresses. It is a good idea to notify customers about payment status and to send order numbers by e-mail. In your message, you can specify the tracking number of a parcel or approximate delivery time and other necessary details. In the future, you will also be able to use the email addresses to create a mailing list.
Mass mailing will help you:
• Inform your customers about new goods, promo offers, and discounts.
• Measure how much your customers are interested in your offer, your product. All mass mailing systems will let you track open rate, click-through-rate, and so on.
And another popular means of interacting with your customers is SMM, which is short for Social Media Marketing. It proves to be so effective that some online stores base their customer management solely on social media. You can follow their lead too. Create a business page on Facebook, sign up on Twitter and Instagram. Post special offers, interesting and useful content, talk to your customers, answer their questions and do the pre-sales work there.
It is important to understand that the CMS (engine), design and content are different components of the online marketplace. Let’s clear it up.
• Content is the foundation, this is what your site will be filled with. Your customers are not interested in the under-the-hood components of your website. They are interested in your product, attractive price, clear information about payment and delivery.
• Design is the appearance of your website. Photos of your products alone are not part of the design – they are part of the content. Design means the look and feel of your online store, with its header, colours, fonts, all sorts of menus and buttons, etc.
• CMS is the software part, the platform or “engine” that powers your website.
Content is the most important part of your site, although you should pay enough attention to the other components as well. Don’t spend too much time on the technical part though.
Go for the popular solutions. There are standalone solutions (hosted on your server) and SAAS solutions (software as a service, hosted elsewhere). So it’s either use your own copy of the software product or work in the cloud with monthly usage payments.
Which type of CMS you select is not really important for your online store to be a success. I know successfully working solutions on the self-written engines, as well as very poorly working systems on widely advertised CMS. It depends on the people who maintain the store.
I would like to give you some recommendations on choosing the best CMS for your online marketplace.
1. Do not think that free CMS are worse than paid ones. In fact, many free engines work just as well as their expensive counterparts. It is also possible that you will not need all the extra extended features offered by the paid systems.
2. Limit your desires. Some of my clients want to have their cake and eat it too. They want a connection with accounting systems, integration with various payment systems, callback tracking, integration with social networks, and many others things. What you need at the beginning is to simply show off your goods on the internet. Try to make it work. And then, after you gain some experience and collect some stats, you will be able to understand what exactly you should add to you site, what features to implement, and what to remove.
Here you have a choice of using a ready-made template or creating your own design. If you have money to spare, having a unique theme designed for your site is the best option, but there is nothing wrong with using a template.
Let’s talk about pros and cons of both options.
Pros of a template:
• It is really quick. A ready-made design template can be installed immediately after purchase or download.
• It has been tested. As a rule, the template has several versions already, some improvements have been made, and bugs have been fixed.
• It is not expensive. You can purchase it for a small price or even download it for free.
Cons of a template:
• The complexity of customisations. If you want to change anything in a template, you will either need to acquire coding skills or hire a web programmer.
• It is usually linked to a specific platform, for example, WordPress. So you are either confined to using this platform for your online store, or you need to employ a web designer to adjust the template to your CMS.
Pros of design from scratch:
• No limitations are imposed by the template because your design has been developed according to your needs and then adjusted to the CMS of your choice.
• The absence of superfluous code, and as a consequence, the simplicity of customisations in the future.
Cons of design from scratch:
• High price. Hiring a web designer may cost 10 times as much as buying a ready template, and more.
• Longer time frames. The work could take several days to weeks.
The easiest solution is to copy the design of an online store that you like with your specific modifications, respecting the copyright.
I’ve tried to cover all aspects that one should take into account before launching an online store.
I’ve also tried to describe the front office work. What’s most important here is to ensure stable performance and accurate and attractive content; design plays a supporting role.