Is eCommerce right for your business?

Even post 'dot.com crash' eCommerce is still often heralded as the answer-all solution to modern business. Costs can be kept to a minimum, potential markets are huge and the setup costs are relatively small compared to a more traditional business.

However it's not all sunshine and roses. From experience we have found that it should be considered more carefully. Sure, it's relatively straight forward to setup an eCommerce shop, but you really need to consider a few more factors before making the leap....

Know your market

How many competitors are in the market already and how well established are they? If you are entering into a mature market that has many competitors you are obviously going to find it harder than an emerging market with a relatively small number of competitors. Market saturation is going to really influence how quickly your business can obtain a market share - unless of course, you are bringing something completely new to the market. This is where you have to be very firm with yourself - if the market is over-saturated with many well established players you will need a large budget to just to get on a level playing field - can you genuinely afford it? If you do it in a half-hearted way, you'll find you don't reach the standards required and your site will not perform to it's full potential. Under these circumstances it's all or nothing I'm afraid.

In less saturated markets it's much easier to establish yourself quickly, niche products tend to have fewer suppliers and as a result have less competition. So securing a market share in these markets should ultimately be easier. Obviously this is based on all things being equal - if your competitors offer a better service, or better product you will find it harder to obtain a share of the market.

Don't forget your marketing budget

Quite often people have the misconception that by developing an eCommerce web site that they are going to sell 1000 widgets in their first weeks trading - you won't. You are going to have to market the web site like any other business does using more traditional methods and some modern methods too. How you do this depends on your business, but quite a proportion of this is going to be online through Search Engines, directories, forums and any other mediums where you can get a link from other web sites to your web site.

'If there are no paths leading to your door, how do you expect people to find you?'

So for new domains you are going to have to consider pay-per-click advertising with tools such as Google Ad-Words - this is basically what it says on the tin - you pay every time someone clicks on a link to your web site. This should only highlight to you the importance of having a well setup and optimized web site that can perform well on the search engines without the need for the pay-per-click advertising.

No two ways about it, you will need to save some of your budget for marketing costs - be that Search Engine Optimization and link building or pay per click advertising - or indeed both. This is often overlooked and can result in a shell of a web site that gets no traffic.

Horses for courses

The first port of call for anyone looking to setup an eCommerce web site should be to decide what they want to sell and how they want to sell it. In other words, how are you going to break down your products? by categories and sub-categories etc. This is all simple stuff; What complicates things is when you start putting a product into more than one category, linking products for cross selling or wanting to show complicated tables of product information - this is where you will find the off-the-shelf packages start to fall short and a bespoke solution is the only way to go.

Obviously a bespoke system is more complicated and ultimately more expensive to develop, however the rewards in terms of functionality and integrating the site into your existing businesses systems can be huge. It's possible to seamlessly dove-tail the orders placed with your web site into your in-house ordering systems, stock control levels can be managed in real-time and customers can maintain their own account information. All of these man-power savings will quickly recover the initial cost of investment.

So it's really worth considering your business and the business model before you make any decision on which route to take.

In Conclusion 

So to summarize, if you're considering setting up an eCommerce web site it would be worthwhile asking yourself the following questions:

Q1. is eCommerce really the right option for your business? if so, why?

Q2. How many competitors are in the market and how well established are they?

Q3. What do you need the web site to do? i.e. are they straightforward categories and sub-categories or do you need additional functionality?

Q4. What is the total budget and how does this breakdown into development and marketing budgets?

Q5. Can your existing businesses systems be integrated into the web site or visa-versa?

Q6. Do you have enough money saved to carry you through the first few weeks and months - the first few sales could take a while to arrive.

Q7. Are you going to commit 100% to the success of the business? half-hearted efforts often fail.

By answering all of these honestly you should have a clearer picture of whether or not an eCommerce web site is the correct path for you and your business.