Jonathan Clark

Director of Marketing

Three Things to Consider Before Opening an E-Commerce Business

Posted on January 22, 2010

Even with the recent economic downturn, people are still shopping online. A recent survey by Opinion Research Corporation showed that 36 percent of shoppers surveyed said they made more online purchases than last year. And, 22 percent indicated they would be increasing the amount of online purchases this year.

Many companies are looking to capitalize on this trend by starting an e-commerce venture. For those businesses that already have an established brick-and-mortar location, adding e-commerce often makes more sense than adding another physical location. For start-ups, there are many things to consider. Decisions made in regards to domain name, shopping cart, payment processing, and website hosting are vital to establishing a solid IT infrastructure, but the logistics and marketing of an online store are often overlooked.

Below is a list of three things to consider even before you purchase the domain name.

Number One: Marketing
How are your potential customers going to find your online store? While it’s true that search engines will provide some traffic, to be successful requires advertising your online business just as if it were a physical location. Building awareness for your product, brand, or store takes time and money. It will often take as much or more than the website development costs. Some key components of a good Internet marketing plan include search engine marketing, website advertising, social media, and offline advertising.

Number Two: Logistics
An e-commerce website is your storefront. So, where is your warehouse? Where will you store and fulfill the inventory? Who will manage this process? I talk with a lot of start-ups and it never fails to amaze me that most haven’t even pondered this question. Anyone with retail experience will tell you that inventory control (or the lack thereof) will make or break your business. The other logistical challenge that can have a huge impact is shipping. The shipping carriers you utilize and your shipping charges should be determined based on the type of products and your target market. Depending on the products, shipping charges can sometimes be more than your product cost. That’s a tough pill for some customers to swallow. The last part of your logistical triangle is accounting for everything. The proper accounting system can vastly reduce labor hours through the elimination of double entry and reducing human errors. This is accomplished by allowing your website to “talk” with your accounting software.

Number Three: Customer Service

Many would argue that customer services should be the number one item, but I would argue that it really is a “chicken and egg” scenario. With so many online businesses vying for customers, it often comes down to trust and service. If you look at the current online retailers that are recognized for outstanding customer service, it’s not hard to see what it takes; focus. Companies like Amazon and Zappos (which is now owned by Amazon) focus on customer service through every aspect of their business. They are continually tweaking their processes to eliminate pain points and make it easy for customers to interact. This starts with the website design, making sure that it is simple and intuitive from the purchase to the support and returns processes. Vitally important is testing each step of your customer’s transaction by someone outside your organization so that you can get unbiased feedback. Shipping and return policies should be easy to find and understand. And, you should have a means for your customers to quickly communicate with your company. Whether it’s through an online chat feature or a phone number, it should be clear and easy for your customers to find.

Obviously, there is much more to consider when starting your e-commerce operation. But, these three items will provide the foundation for building a business plan for success.

Comments
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Robert Hood 10/18/2010 8:24:39 AM
Pretty good post. I just stumbled upon your blog and wanted to say that I have really enjoyed reading your blog posts. Any way I'll be subscribing to your feed and I hope you post again soon.

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