According to Statista, the worldwide eCommerce industry is set to grow to just shy of $1.6 trillion in 2015. That’s a staggering growth of 47% since 2013.
While Amazon and eBay hold a large portion the eCommerce market, small and medium sized businesses are seeing rapid growth, with around $100 billion in revenue – topping Amazon’s $88.9 Billion revenue for 2014.
And in Q1 2015, Statista reported that 15.4% of eCommerce purchases were also done using a mobile device.
How does this help you? Whether you’re a small, medium or large business owner, these figures give an important indication of change within buying behaviour.
With changes in accessibility, internet speeds, security, mobile devices and even screen sizes, the market is evolving. More people are happy to purchase online, and consequently more of the retail market is eCommerce.
So is it a good time to open an eCommerce store? That really depends, but there’s definitely a shift in the expectations of consumers, posing both an opportunity and threat to retail stores.
As Bill Gross explains in his TED talk, putting yourself in front of the market at the right time is the single most important factor in the success of your business.
With the market in a significant growth phase, having an eCommerce store gives you the ability to tap into market share within the online space, providing an avenue to up-sell products, and make it more convenient for your customers to buy from you.
E-Commerce also allows you to pick up on repeat purchases, through online sales and stay in regular contact with your customers through email marketing and social media (directing your customers to your eCommerce store when appropriate). Of course, you can do this without an eCommerce store, but considering consumers expect easier access and faster gratification, you’ll be missing out on purchases when it’s too much of an effort to visit your store.
The largest benefit of eCommerce however, is getting access to more customers. Rather than relying on the number of customers that walk past your store, or visit you from your marketing efforts offline, you now have access to people in a unique phase, actively searching for your products, as well as the millions of people interested in various niche products.
While certainly competitive in most cases, creating an eCommerce store can help you to scale your business in a more cost-effective way, compared to opening up a second (or additional) store. If done correctly, the startup cost is low, and it can add more stability or growth to your business.
There are threats to both opening an eCommerce store, and not opening one.
With a greater expectation on retailers to provide an eCommerce store, not providing one can mean your customers will shop elsewhere (especially if you’re not the only one to stock a brand).
Along with this, failing to set up an eCommerce store can mean you’re left behind. You can lose market share, and competitors can end up dominating your market with additional revenue generated through online sales.
A classic example of this was the fight between Kogan, Harvey Norman, JB HIFI and Dick Smith Electronics. While Harvey Norman, JB HIFI and Dick Smith were slow to build their online presence, Kogan took advantage of a growing trend (and factory direct parts with company re-branding) selling his electronics online, to which he has now built a $400m company only 9 years later.
The drawback to building an eCommerce store however, can be that your business isn’t quite ready for it. Building an eCommerce store can be an expensive undertaking, and you’ll more than likely sink more time into managing upkeep, shipping and growing the store than you expect.
This becomes a real risk to your business if you become too thinly spread, either leading to your burnout, or ineffective delivery on other tasks due to lack of time.
If your business is new, consider protecting and developing your core business, before venturing into new areas. If you’re ready for growth, consider some low-cost options to get started and test the waters. Some low cost ways to start in eCommerce are:
- WordPress plugins (provided you build your site off WordPress)
Once you have a proven business model and sales flowing, then consider upgrading your website to one that’s self-hosted with custom functionality.
Be wary though, just because you don’t have the set up costs of a retail store, doesn’t mean that your eCommerce business costs won’t roll into the 10’s of thousands. If you don’t plan on building the site yourself, you can expect to start an eCommerce site for around $10,000+, and custom builds can go all the way up to $1mil (obviously we’re talking about major retailers at this stage though).
If your market is already saturated, and competition is tougher, then custom design or functionality may need to be a priority in order to give your business a competitive advantage.
Just be sure that your business can weather the cost, and it’s worth the investment in the first place. In many cases, your brand is more important than the custom features you think you’ll need, and you can get away with a lower cost option.
There’s more than just the setup
It’s not uncommon to forget that your eCommerce store will need to be marketed to both new and existing customers like any other business. Having a “build it and they will come” mentality is a sure way to a stagnant store and poorly allocated investment.
Just like your existing business, you’re going to have to advertise, put effort into PR, SEO and social media to grow your sales. This obviously takes up time or money, and again, your existing commitments need to be taken into consideration.
Of course with all of the opportunities and threats, the most important consideration should be your business model and the buying habits or expectations of your customers.
If you’re a diamond merchant, and only sell high-end diamonds through exceptional customer service in store, setting up an eCommerce store may not be appropriate for your business. Granted, you should have a website, but whether or not customers will buy from you online is debatable.
Plenty of online marketers have touted the ability to purchase cars online, but aside from eBay, the large majority still need to see, hear and feel how the car drives before buying.
Before you start an eCommerce store, think about the market you’re in, the products you’re offering, what customers expect, what they’d be willing to do, and the resources you have available to execute all of the above.
There are plenty of businesses that have innovated the retail experience through eCommerce, but it’s important to weigh up everything strategically, before jumping into the market in hope of a greater opportunity.
All of that being said, here are a few tips to get started:
- Test the market. Before you put any money into a website, ensure you have adequately researched demand and competition. Do you have an offering that’s unique in the market? Will customers buy from you over competitors? Speak to your customers, run an email campaign or test out your ideas on social media to gauge the demand of your product.
- Start small. Once you’ve got an idea of the market and demand, start with your most popular products and grow from there. Constantly test and measure your results and think about the leverage points (getting traffic, converting traffic, increasing sales numbers and lifetime value) to maximise your ROI.
- Offer detailed descriptions. One of the missing aspects to purchasing online is the experience of touching or feeling the product. This can pose a major hurdle for customers, so make it as easy as you can for your customers to get an understanding of what they’re going to buy with clear images, detailed description and videos where possible.
- Ship fast and cost effectively. Shipping is one of the most important considerations for buyers. This is especially important when you don’t have a unique product line, as it only takes a few clicks for customers to purchase the product elsewhere online.
Make sure your shipping costs are competitive, they’re as fast as possible and you inform your customers throughout the delivery process, explaining when the item has been shipped, where it is in transit and when they can expect to receive it.