In the fifth edition of his book Retail in Detail, retail business owner and consultant Ronald L. Bond offers small-business owners an updated, no-nonsense guide to the world of retailing. In this edited excerpt, the author discusses the subjects you must address when deciding whether to sell online.
Because shoppers are clearly enamored with the speed and convenience of internet shopping, you should consider the internet as a primary selling venue or, at least, as an adjunct to other retail venues.
The first thing to decide is whether you want to alter or expand your business to accommodate the requirements of ecommerce. Using the internet for selling means you must essentially go into the mail-order business.
One question that must be answered involves logistics and facilities. Do you have storage and shipping space available or can you obtain it at a reasonable cost? Retail space is costly, and it usually doesn't pay to use much of it for storage. One solution is to lease less costly space, but that usually means at a different location, meaning you'll have to hire additional staff to run the shipping operation or burn the candle on both ends to commute between the sites and still get all your work done. Are you willing to work harder, split up your work sites, or hire additional employees who may have to work without your personal supervision? If the answer is yes, let's proceed to the next question.
How do you get on the web? There are many options, ranging from listing a few items on an existing site such as eBay, to establishing your own website to sell the complete line of goods you carry in your own store.
If you opt for the low-end solution of listing with an auction site, the advantages are the lack of front-end costs and the fact that you don't have to get a website or be set up for credit-card payments over the internet. The auction sites handle all the details for you for a small fee. The disadvantages are that you can't market for a fixed price but must settle for the high bid; you still have risk if a high bidder reneges; and you're responsible for packing and shipping. The logistics of getting a large number of items on these sites are considerable and tend to limit your product line and therefore your profits.
The next option is listing with a major dot-com reseller, such as Yahoo, which offers something called "Yahoo Store" that includes all the tools for setting up your own website and handling all the credit-card transactions. The cost for a professional-level store with complete online support and advanced features can cost as little as $35 per month. With this option, you'll have an instant listing on the hosting search engine and the cost will be low.
The most costly option is the development and operation of your own site. Unless you're willing to become an accomplished HTML programmer and website designer, you'll need professional assistance to launch a comprehensive ecommerce site. There are several things you must do:
- Obtain a domain name.
- Design a website.
- Develop and customize your sales.
- Get your credit-card processing system in place.
- Locate your site on the major search engines.
- Open your "virtual store."
Assistance in all these areas is readily available. It comes in varying degrees of comprehensiveness and expense, and can be found by typing "internet retailing" or similar keywords in one of the search engines.
Once you've set up shop, it's critical you be ready to pack and ship orders quickly. Customers who use mail order are accustomed to prompt delivery. To meet these expectations, you'll need to have regular pickups from UPS, FedEx, and perhaps other parcel shippers. Shipping costs can be substantial, especially overnight or two-day air shipping. Of course, you'll also need a supply of shipping materials, which can add significantly to your costs. Since many ecommerce sites offer free shipping as incentives, you might elect to include the shipping charges in the selling price. If you do this, you should monitor shipping costs carefully to ensure that you recover your full costs.
The decision is yours. My suggestion is that you answer the following questions to determine if e-tailing is for you:
- Is your business suffering from internet competition? Have customers asked if you have a web page?
- Are products identical to the ones you sell available readily online?
- Do you have the desire and resources to run a packing and shipping operation?
- Are you turned off by the impersonality of anonymous selling?
- Do you have the space to store merchandise for shipping to customers?
- Can you generate enough revenue to justify hiring employees to run the shipping operation?
- Will the profits generated justify the upfront and continuing costs?
- Are your computer skills good enough to allow you to do most of the work on your ecommerce development?