We ran a competition last year where we gave away a €10,000 e-Commerce store with a bunch of Inbound Marketing Services. When I read through the entries to the competition it became apparent that a lot of business owners don’t fully grasp the advantages of e-commerce, and what types of businesses an e-commerce store is suitable for.
In this post I will show you what e-commerce really is, the advantages of e-commerce for your business, and if e-commerce makes sense for your business.
What is e-Commerce?
The “e” stands for electronic and the commerce implies the selling of goods or services. The term is not a new one (Wikipedia claims online shopping was invented in 1979 by Michael Aldrich) and I think the evolution of the “how” of e-commerce can often times confuse the issue.
It could be argued that e-commerce is any website that facilitates the direct purchase of an item. So for example if you had a 5 page website with paypal buttons on 2 of the pages for your company’s various services, it could be argued that you have an e-commerce website, because visitors would be able to make an “electronic” purchase. However, I don’t think that we can think of that kind of website as e-commerce, any more than we can say a vending machine is a supermarket.
For the purposes of our discussion today, I’m going to treat e-commerce as I believe it should be defined these days. Simply put e-commerce is any website that has shopping cart functionality.
A shopping cart is something that allows website visitors to add multiple items to a “shopping cart” (or basket) before checking out. Just like you would do in a supermarket, except you would be online.
The Advantages of e-Commerce
I’m going to start off with the more obvious benefits for your business in having an e-commerce store. Then we will progress to the more advanced, complex things you can do to boost your profits with e-commerce.
Advantages of e-commerce:
- Your business would have a store open 24 hours a day, 7 days a week, 365 days a year. Each page on your web store, a sales person who doesn’t need breaks or holidays!!
- Very low running costs to keep your e-commerce store open for business comparatively to a bricks and mortar shop
- Opportunity to reach new markets. How likely is it that a new customer is going to phone you from Germany and buy something you sell over the phone? Not likely at all. However, with a web store it’s entirely possible that that same person could find you online and order.
- Limitless possibility for
creationof new sales channels. Perhaps your products are handmade and of interest to Interior Designers. With e-commerceyou could potentially approach Interior Designers all over the world more easily.
- Sell a wider range of stock items.
- Make more profit per item sold. The math is different, however your costs to sell each stock item goes down dramatically once your web store becomes established and you start to see decent traffic volumes. By consequence you should be able to make a higher margin, even with the slightly lower sale price you will almost certainly need to offer online.
- Upsells. e-Commerce stores can be setup to offer upsells. For example a customer is looking at your coffee e-commerce store. She is viewing a large bag of Robert&Roberts coffee beans and right below the description she sees an image of a tin of illy coffee and a tin of Lavazza coffee. Above these images reads the text:
Perhaps you would be interested in…Below the images it gives very brief information on the product and the price of each, which is a little bit higher than the product she’s currently viewing. Upsells are designed to increase the sale value of each customer.
- Cross-sells. These are offers of other complimentary products at checkout. Think about when you are in the supermarket and you get to the till. There are always lots of products surrounding you on your wait to pay. Sweets and treats usually. Sometimes special offers. With e-commerce, this can also be the case. In fact you can be even more targeted! Take the last example of the lady buying coffee from you. At checkout you could present her with a French Press or a new Coffee Grinder that you have on special offer.
- Much higher level of intelligence about your customers behaviour, likes, desires etc…
With e-commerce you will have great data about your customers behaviour on your e-commerce store. This data will allow you to adapt your store over time to make it more effective.
- E-mail Marketing. If configured correctly your e-commerce store should be collecting email addresses for you of potential customers in the future and also of existing customers. With email marketing (executed properly) you have an extremely low cost method of continually driving traffic back to your store with special offers, competitions etc.
- Better social media engagement. If you take the time and build a social media strategy, having an ecommerce store should increase the effectiveness of what you can achieve with social media. There are exceptions to every rule but generally speaking for ecommerce the majority of your visitors/customers will be sitting at a laptop/computer when making purchases. It is easier for you to incentivise or ask them for a mention on Twitter or Facebook. It’s also slightly easier for them to do it if you use the right technology so consequently your new customer is more likely to oblige.
- Data. I touched on this in point 9 above but it’s so important it easily deserves 3 or 4 points and maybe a gold star too! With good analytics installed on your e-commerce store you will have a lot of really useful and actionable data about your customer’s behaviour.
The article is titled 11.5 advantages because that last benefit was half explained in point 9!
Does e-Commerce make sense for your business?
Ultimately that’s for you to decide, however below are a few of my opinions that I’d encourage you to keep in mind:
If you are going to do it, do it right. Please don’t do it
If your business sells services, there are better ways your company could spend its money! I have yet to come across a services business where e-commerce really makes sense. It might seem like a nice idea, but the reality is that an e-commerce store is useless unless it actually sells stuff.
In order for people to be able to reach a decision to buy from you, they need to be completely at ease with giving you their credit card information. If they have any uncertainty about what it is they are buying, because its not a clearly defined “product”, then your conversion rate will be murdered.
Same goes for any other doubts, such as the reputation of who they are buying from, or even if they don’t feel completely at ease with the quality of your e-commerce store, then they won’t buy (see point above about doing e-commerce half assed!).
The challenge with services is that often times the service being sold needs to be tailored slightly, or for some reason your customers want to talk to you first. (eg: accountancy services – would you hire an accountant that you hadn’t met?)
If you sell products then your business should consider e-commerce. Get advice from someone who understands it. (hint: ask us in the comments below!)
e-Commerce stores take a good bit of administration and marketing in order to be successful. You are going to need to hire/assign a digital marketing savvy member of staff to run and promote your online store.
e-Commerce implemented correctly is extremely sophisticated and can have all sorts of autonomy built in to manage the processes of payments, fulfilment and even stock control, however you will still need at least one person who can take ownership of all the day to day tasks and more importantly growing the traffic to your site.
It is possible to outsource the marketing piece to a company like Lime Canvas but there will still be on-going administration required: updating products, stock levels, pricing changes, shipping, etc.
In conclusion I hope that this article has cleared up what e-Commerce is specifically, and given you a flavour of how it could help your business or whether it would even be suitable for your business.
So, would e-commerce be suitable for your business? Agree or dis-agree with any of my points? Anything I’ve overlooked?