Planning to set up your ecommerce store? Here’s what you need to know.
The world is constantly moving online and business owners have to keep up. If you are a small shop owner who had seen foot falls dwindling away recently, especially after COVID pandemic, then you are surely worried. And one of the answer to your worry probably is setting up an online shop.
But setting up an online store is easier said than done for a small business owner. Yes, even with the increasingly supportive ecosystem of consultants, developers, platforms being built out there – for a small retail owner to move online in a day may not be as easy as it is made to sound. But then, you still have to do it, right? Hence it’s best that you understand the basics of setting up an online store so that you can avoid the most common pitfalls and can take an informed decision.
This, however, does not mean that you will learn to set up the shop yourself. For that, you can hire consultants or developers or companies as per your budget. But knowing what you are shopping for not only helps you negotiate and monitor well, it also helps to set your future expectations from the investment. It further helps you know if all your bases are covered when you are set to go.So, here we are with a series of checklist for you to understand and take your decision more confidently.
Why are you setting up an ecommerce store?
The first and most important question to ask yourself is ‘Why’. The answer should be more than making up for lost business. Your online business is a new business. Do not look at it as a replacement of your brick and mortar store alone. Think afresh.
Are you looking to expand your geography in terms of business? Because with e-commerce, you can. Or, are you looking to serving only your existing customers through an online store? That too can be a compelling strategy if you are sure that your clientele belongs to you alone.
The answers to the above questions will help you decide on how to go forward in your ecommerce journey. For example, if you are a local restaurant with a dedicated clientele, maybe you can look at creating your own ecommerce store or list yourself in any of the local food delivery platforms. But, if you are a retail store with a manufacturing set up in the backend, maybe you can consider using a bigger ecommerce marketplace like Amazon to be your solution.
It is not always necessary in today’s world to have your own ecommerce platform. Listing yourself on any of the existing market place, local or global, can also be an option. Consider that. The commission or fees you need to part with in case of listing yourself in an online marketplace can be lesser than what you need to spend to build and maintain a self owned e-commerce platform.
How will you set up an ecommerce store?
Let us assume that you are in a business that doesn’t find much opportunity in an online marketplace. Your target market is very local and yet you do not fit into the local ecommerce marketplace. So, this leaves you with the only option of setting up your own platform. Or, let us assume that you want to have your own ecommerce platform because you are confident that it is the way forward for your business. In that case, let us evaluate how you should start your journey.
Will it increase your cost?
Yes, it will. No matter whatever you are told, be ready to shell out extra money for setting up an ecommerce store. Like many businesses, this is a business expansion and it requires investment. However, increased cost does not necessarily mean extra load on your expenses. Ecommerce has a potential to add to your income also. You will gain new customers or your existing customers will be able to order more frequently thereby offsetting the additional cost incurred in setting up or maintaining the ecommerce platform.
Also, do have a clear allocation for your marketing cost. Irrespective of whether you are setting up an individual platform or registering yourself in a marketplace like Amazon, you will need to have marketing expense budgeted separately. This is important because, you need to make people aware about your store or presence of product in a particular store. It is true that platforms like Amazon already has millions of customers but they also have millions of sellers. Raising your product’s discoverability in that store will require patience and investment.
Talking about Marketing, you will also need to understand the basics of Google Adwords and Facebook Marketing and understand what works best for you. While understanding the exact technicalities can be left to the implementation team but the basic functioning know how will help you gain confidence once you start with it.
What are the other things you need to consider?
Once you got all the strategic decisions taken, you will need to decide on the following things one by one to move forward:
Which Platform are you going to use?
There are multiple options available today in terms of platform choices. Some are do-it-yourself and some are a complete well integrated package. It has its own set of merit. It is necessary to evaluate which one do you need. The decision should also be based on reviews and future maintenance cost. Do not simply choose a technology or platform because someone offered it for free initially or promised to build it for free. Ensure that you will find enough people to maintain it if your current partner falls out ever.
Who will be your Logistics partner?
Your entire business may come crashing down if you do not have a proper logistics partner or delivery persons. If you are operating in a small locality and wish to handle the delivery yourself, understand that it is a human resource heavy model. Plan for situations when your delivery person is on leave. If you are working with a logistics partner to deliver to a larger geography, understand the agreement properly. Understand the policies for lost goods, damaged goods, returns etc.
Who will be your Payment Gateway partner?
The most important factor for ecommerce is that customers can pay online. This will require you to set up a Payment Gateway system. While your technical team will do the integration, what you need to understand in terms of Payment Gateway are following.
The commission charged: Payments Gateways charge commission on the transaction amount. You will need to know that and take a business decision on how to factor the same within your pricing.
The success rate: Different payment gateways have different success rate. If the failure rate is high, you may want to consider an alternative even if the commission charged is low.
Overseas payment: Understand if your payment gateway allows overseas fund acceptance, if it is important for you.
Release of money: When do payment gateways transfer money to your bank. Is there a lock in period? This is crucial for you to know to maintain your cash flow.
What are your return Policy?
Unfortunately, ecommerce stores sell without the feeling of touch-feel. People read product description; they see photos and make buying decisions. And, when the experience doesn’t match expectation, they return. Many of your competitors may also be offering range of offerings like 30-Day return policy. So, it is necessary to study the existing offerings in the market and draft your own return policy. If you sell perishable products that cannot be returned, then explain the same on your website. If different products have different return policies, explain that too. However, at the same time, do budget some freebies for customers who complain about bad experiences. Afterall, you will have to retain them for future.
Terms of Condition, Privacy Policy and Shipping Policy of the site.
Legal is not something to be taken lightly. Unlike your brick and mortar store where customers tend to work from vicinity, may know you or have an emotional connect with you, E-commerce customers do not know you as a person. Their connect with you is very service oriented. If you fail, it will not take them much thought to take you to court. So, ensure that you have written down your policies well. It is a one-time legal expense but unfortunately, most first timers tend to avoid that. Worst still, people tend to blindly copy their competitors’ privacy policy and tweak something to make their own. This is a dangerous way of doing it. Pay a legal fee and get all your policies drafted by a professional to avoid any future issues.
Inventory Management Process
While it feels nice to see orders clocking in, it is crucial to know if you are selling what you have. Selling more than your inventory for a particular product or a particular variant either you will not be able to deliver on time or you will have to call them up to convince them to take a refund or replacement product. In either case, it results into bad experience for your customers. Most ecommerce platforms will allow you to define inventory when you list the products thereby preventing oversell but the same needs to be updated regularly. So, ensure that you put some thoughts to who will be managing the inventory and how.
An ecommerce can open up doors for you in terms of customer count and revenue. But it is necessary that you plan it well at the start of the journey to avoid any future pitfalls.