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According to eMarketer, global ecommerce is predicted to increase by 19% in 2020, to a total of 16% of all sales globally. The 16% might seem a surprisingly small contribution when you consider the scale of online consumption and behaviour, but one thing is certain, ecommerce is growing at an unprecedented rate. With this sort of growth expectation, it’s important to understand how ecommerce works and how an ecommerce business can be used to your advantage.
Ecommerce or electronic commerce is the buying or selling of goods or services over the internet or email. Ecommerce became available to the public in 1991, when the internet was first opened. However, electronic data interchanges and teleshopping actually dates back to the 70s.
One of the first ever ecommerce sites was Amazon.com – a business that is now worth a staggering $113.7 billion (August 2019). Initially Amazon.com was an online bookstore; the advantage of this over physical book shops was the volume of titles it could sell. This greatly improved accessibility and led to the company branching out into different product markets. It is now the largest online retailer in the world.
While competing with Amazon is out of the question for most businesses, that doesn’t mean they haven’t embraced this revolutionary way to sell their products. There is currently an estimated 42,000 ecommerce websites in the UK, selling everything from online tickets to health and beauty products.
Home products were responsible for some of the biggest sales in 2018.
Jumping back to the 90s, as the volume of ecommerce companies increased, so too did the need for more secure transactions and communications. This led to the creation of PCI – the Payment Card Industry Security Standards, which made it mandatory for all ecommerce companies to be compliant with a set of expectations.
We have become so used to using the internet that we now heavily rely on it to do an array of things such as socialising, searching for information and buying.
It has become ingrained in our daily lives, so much so that we would be lost without it. The internet has revolutionised our day-to-day functions and businesses continue to spring up in order to take advantage of this modern-day behaviour.
Ecommerce is an important revenue driver for many businesses. Essentially, they can generate revenue in two different ways – one is to charge a fee for companies to host or advertise a product or a service, the other is to directly sell a service and take the total fee or a percentage of its financial value.
There are a plethora of benefits to having an ecommerce site to sell your goods. Here are some of the most significant ones:
1. Convenience
The user can search for products and make purchases without even leaving the comfort of their sofa. Statistically this is worse for our health than the traditional way of ‘going shopping’ but to be able to locate and buy a desired item in a 5th of the time it would take to visit several shops for the same result, the pull is just too great.
From the perspective of the business owner, if you only operate online then you save yourself the cost of rent for premises and staffing.
2. Accessibility
You can literally shop online anywhere at any time – at work, at home, abroad, on public transport, by day, by night, on bank holidays, you name it. As long as you have a network, you can shop.
The rise of smartphones and the development of apps have made online shopping even more accessible. Shopping ‘on-the-go’ no longer means a lively jaunt around the mall – it literally means you can shop whilst you are on-the-move doing something totally different. This is multitasking at its finest.
3. Speed
The thing with the creation of the internet is that it made everything instantaneous. Technology is designed to make life simpler and more efficient. Ecommerce does exactly that, making it possible for people to buy things at the click of a button.
As consumers, we want immediate results, instant gratification and answers in real-time. We don’t like to wait. Ecommerce business owners strive to meet evolving digital demands and the insights prove that it’s working.
4. User Experience
For one, the user does not have to engage with shop assistants, ask for different sizes, queue or have to get the product home. All of this is taken care of by a user experience that is designed to be fast, simple and effective. As long as your UX doesn’t make purchases complicated (e.g. having to specify product information like size/colour after purchase), it should work successfully.
Keep your ecommerce site user-friendly and ensure you have a secure payment gateway and the guarantee that data will be stored safely.
5. Cost
Often consumers are able to find the product they want at a much lower cost online than in the physical shops. That’s not to say that online prices are always lower, it’s just far easier and less time-consuming finding offers online than it is trawling around the high street stores. Essentially, with ecommerce you are a few searches away from finding the product you desire, at the price you want.
Ecommerce business owners should seek to make their products and offers as clear as possible, with dedicated pages that are optimised for search.
Embracing an ecommerce website if you are an existing ‘offline brand’ is far easier than starting an ecommerce business from scratch. If you are an established company going digital, then you will already know what you are selling and how competitive you are in the marketplace.
If you are an ecommerce start up, then you need to do the legwork before you go live online. Consider what you are selling, how you want to sell it and who you are selling to.
1. Register your business
You may have already chosen a business name, but if not, now is the time to decide on one. You will need this in order to register your business and trade legally. You can register your company on GOV.UK which will automatically register with Companies House if you are a limited company.
2. Get a domain name
Your website name does not need to match your registered business name but it will be the name that users are familiar with seeing so it’s recommended that you stick to it once chosen. If you can, try and choose a dot.com or dot.co.uk address. You may need to get a little creative if the domain is not available or is more than your budget will allow. Once you have bought your domain name, you’ll need to register it.
3. Sort your branding
If you haven’t already done so, get your branding designed ready to go on your website. You will need to decide on your colour scheme, your logo and your font as well as any key messaging and content to help maximise conversion on your site. Branding is how your users will recognise you going forward so ensure you are happy before you publish this. Do your research to see the best colours/designs that work in your industry.
4. Get a website
Whether you decide to build your website yourself or use a web design agency, you need to ensure it meets your business needs as an ecommerce site. There are a number of services that enable you to design your own site, but ecommerce tends to be much more complex to set up, so if in doubt, rope in a professional who can set you up an ecommerce platform such as Shopify, with a secure payment gateway.
5. Set up an IMA
An IMA is an internet merchant account. You will need this to start selling online. With ecommerce you can’t just use your bank account – you need a specific account for online trading. In order to get an IMA, you need to pass a few criteria. You will need to show a business plan, provide identification, decide how you will receive payments and prove that you are PCI compliant.
With UK ecommerce sites growing 14% year-on-year and the rise in frustrated office workers turning to online start-up ventures, it’s clear that this is not an industry that is going away any time soon. As we embrace emerging technologies such as augmented reality and more sophisticated voice search, online shopping is heading for some exciting growth. If you’ve thought about setting up an ecommerce site, the time is now!
To find out how your business can take it's baby steps into the world of Ecommerce, contact Opayo now!