Do you really need an online store?
A question many businesses ask themselves, particularly if they have their own website already. Why not try to take an order from people visiting our website?
It sounds like a good idea but there are many things that need to be considered when justifying the cost. Searching the internet will come up with many companies offering a store or shopping cart for just a few £s each month but they don’t usually mention all the hidden costs involved.
Estimating your income
It is important to take a realistic view. Simply because you have a shop on line doesn’t automatically mean you will receive lots of orders.
First, how much traffic do you get to your website? Is your website working for you? If the answer is “I don’t know” or “very little” then this is the first place to consider for improvement. Adding Website Analytics will monitor traffic for you. If you get, say, 100 new visitors each day you would be doing well to get one order. How long does it take, at that rate to cover your costs? A very simple initial solution may be to have an online order form and invite people to send a cheque or offer to phone back to take credit card details.
To increase traffic will require a good deal of Search Engine Optimisation (SEO) and incoming link generation. This can be costly so, unless you’re doing it yourself, a good SEO company needs to be found.
Second, How many products do you plan to sell on line and what profit will be made? If you have a whole store of items then your chances of getting an order are increased. If you have low cost products with only a modest profit of perhaps £1 per item it could take many months to recover your initial investment.
The true cost
There are two ways of adding ecommerce to your site; do it yourself or pay a specialist web design company. Unless you are well versed and knowledgeable in websites it could be a very long task to get right so employing a specialist is probably the better solution. Depending on how many products you have this could take from days to weeks of a professional’s time so it is important to pick the right one as time can be costly. Ask about previous sites they have worked on and check the page rankings. It is straight forward for a professional to add a shopping cart and populate the store but have they done the SEO to ensure you are on the front page of search engines?
I mentioned populating the store with product. Of course, this is something you can usually do yourself but it is worth confirming you really do have access to do this. However, don’t forget this will also have a cost to you since your time has a value. In addition to populating your store you will need to manage everything else, process orders and payments. This brings us to the payment gateway.
You have more choices here. Use a third party like Paypal or one of the many card gateway companies such as Protx. Both of these have charges per transaction which, depending on volume, can be several percent of the order value. Not all Internet shoppers like using Paypal since you need to set up an account with them. A full payment gateway would normally be the better solution but this has a cost to set up of around £400 and minimum monthly charges. If you need to ship products to an address other than the card holder (gifts, for example) you will probably need to set up the full gateway and check what their fraud prevention is like.
In order to process money securely you will need a Secure Certificate which adds another cost starting at around £100. This provides a higher level of encryption making it unlikely card details can be stolen. You will also need a Merchant Bank account (e.g. Streamline) for trading on line. Another cost, this is also around £400 and again has minimum ongoing monthly charges. If you wish to take telephone orders in addition to your online business this requires a second merchant account.
To summarise
Simply adding up the unavoidable costs you will need to spend a minimum of around £1200-£1400 and, if you get a professional to set you up and do full SEO it will be considerably more. So, whilst it sounds good to be able to sell on line it does have quite serious costs involved. This is definitely the modern way to trade but getting the timing right for your business and having a good grasp of the costs and pitfalls, as well as the benefits, is very important.
Simon
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