WHY CREATE AN ONLINE BUSINESS?

Create an online shop

Introduction

Selling products and services online can have major advantages for businesses, leading to increased profitability and lower costs.
This guide tells you about the advantages of selling online, what you need to consider when creating an online shop and the consequences of getting it wrong. If you choose to work with a third party to build your online shop, this guide will help ensure you ask them the right questions.
The guide also explains some legal requirements and the pitfalls that you should be aware of, as well as how to make sure that customers can find your shop on the web.

 

Benefits of selling online

Selling online has a number of advantages over selling by conventional methods, including:

• Making savings in set-up and operational costs. You don't need to rent high street premises, pay shop assistants or answer a lot of pre-sales queries.
• Reducing order processing costs - customer orders can automatically come straight into your orders database from the website.
• Reaching a global audience, thereby increasing sales opportunities.
• Competing with larger businesses by being able to open 24 hours a day, seven days a week.
• Being able to receive payment more quickly from online transactions.
• Attracting customers who would not normally have investigated your type of high street outlet.
• Improving your offerings using the data gathered by tracking customer purchases.
• Using your online shop as a catalogue for existing customers.

Online selling will work best if you have:

• well-defined products or services that can be sold without human involvement in the sales process
• fixed prices for all types of potential customers
• products or services that can be delivered within a predictable lead time

Many businesses can run pilot e-commerce sites without significant investment. However, creating a fully automated online shop tailored to meet your precise requirements could be expensive.
Whatever form of online shop you choose, it's important to take a strategic view. If you launch a website that disappoints your customers or is overwhelmed by traffic, you risk damaging your reputation and losing sales.

A basic online shop

The requirements for building a basic online shop are fairly straightforward. A simple setup allows you to sell a small range of products, providing photos, descriptions and prices as well as accept orders online.
The equipment and facilities you'll need include a computer, internet access, email, a website and hosting services. Using a broadband connection as opposed to dial-up will ensure fast connection to the internet. However, the 'always-on' connection means you may be susceptible to unauthorised access. Having a firewall will prevent this occurring. A firewall is sometimes included as part of your operating system.
See our guide on IT security.
You will also need a hosting package for your shop. There are many e-commerce web-hosting specialists and it's worth shopping around for the best deal. While this service is not necessarily expensive, you tend to get what you pay for. It's important to study the service level agreement and the type of technical support on offer. You should be looking for round-the-clock support.
Most customers shopping online will want to pay by debit or credit card. You can create electronic mail-order forms, using one of the various web authoring software packages on the market.
These order forms let customers email their orders to be processed offline. If you already have a website, software can add e-commerce functionality. Some companies offer this free, on the condition that they receive a cut of future transactions.
A basic site is low cost and easy to create for a limited product range. However, be aware that the design and functionality may be restricted and it may be less secure than other more sophisticated options. 
If you want to accept card payments online, you will need to invest in a more sophisticated online shop. See the page in this guide on how to create an intermediate online shop.

An intermediate online shop

To create an intermediate level online shop you will need an e-commerce package. Facilities vary, but broadly you can expect catalogue management, enhanced order processing and a broader range of design templates.
Crucially, you can also expect encryption for secure ordering. Making sure checkout procedures are secure and user friendly are essential if customers are going to feel confident about ordering a product or service. Many people will abandon purchases at the checkout stage if the process is not quick and easy. Using Secure Socket Layer technology to collect card details (denoted by the 'golden padlock' symbol in your browser's status bar) is key to encouraging online sales.
Some e-commerce packages offer a degree of back end systems integration, ie they connect to your product database and accounts systems, streamlining the order process and keeping the website up to date. If you update your site content regularly, you will encourage customers to come back to you rather than switch to a competitor.
If you use a broadband connection, you can also receive orders in real time and update your website automatically. Be aware that some internet service providers offer combined web hosting and software packages, so it's worth doing some research.
An intermediate-level site can provide you with a professional looking design, full e-commerce and payment functionality and value-added features, eg account information, customer references and customer alerts. However, you should be aware that it may not suit you if you wish to offer more complex products and services.

A sophisticated online shop

A sophisticated online shop offers a huge range of options, including cutting-edge design and functionality, personalised pages and product news. As such, it can provide your customers with a rich, interactive shopping experience.
However, customers should not have to navigate their way past distracting graphics and animations. If they do not find it quick and easy to buy your products and services, they will shop elsewhere. It's important not to ask for personal details too soon - most customers will not be prepared to fill in forms until they are ready to buy.
Having a sophisticated online shop can also make the running of the business smoother. Software can be integrated to trigger order confirmations and automatically dispatch goods and replenish stocks.
You should be aware that you may need the help of a design and development company to define your technical requirements and integrate the website with your existing systems. This could take longer to create, lock you into one service provider and be very expensive.
Alternatively you may want to look at free, open source shopping cart software packages such as Zen Cart, OXID eShop Community Edition, osCommerce, OpenCart and PrestaShop. These programs enable you to set up a sophisticated e-commerce website that has a wide range of options, features and support - even if you have only basic computer skills. See our guide on open source software.

Planning your online shop

Before building your website, you must create the right processes and procedures to support it and put in place the resources to deal with orders.
You need to work out how to:

• deliver your products or services to fulfil customer orders - see our guide on fulfilling online orders
• collect payments
• maintain security and demonstrate this to the customer
• let customers contact you
• comply with relevant regulations

See our guide on trading online - understanding e-commerce contracts.
You'll need to deliver goods or services in a reasonable time. You should be ready to deal with calls, emails and queries about delivery - consider whether you need extra staff. Find delivery methods that keep charges low. See our guide on how to manage your customer care.
Test your website and processes thoroughly. A soft launch allows you to test it before giving it stronger marketing support.
Customers may be wary of paying online. Reassure them by providing a secure area on your website for placing orders and giving debit and credit card details. This can prevent late payment problems and helps to safeguard your cashflow. See our guides on accepting online payments and cashflow management: the basics.
You may also wish to offer other payment methods such as invoicing, or paying card over the telephone.
With the use of encryption technology, virus-scanning software and a 'firewall', e-commerce transactions can be as secure as offline ones. It's important to create confidence in your shop. A professional-looking website with an explanation of your security precautions will help.
Consider how to:

• handle debit and credit card details safely
• ensure key online information cannot be defaced or altered fraudulently
• preserve the confidentiality of customer data

Customers should be provided with contact details in case something goes wrong including:

• your business name, address, phone and fax numbers
• an email address for enquiries or orders
• the name of the person to contact in the first instance

For further advice on the information you must provide to customers, see our guide on distance selling and online

The law and selling online

If you are selling online, there are a number of pieces of legislation you need to be familiar with. These are designed to ensure customers' personal data is kept secure, goods and services meet quality and suitability standards and online contracts are legally binding.
The Data Protection Act regulates how you use and protect personal information held about living people, eg in customer records. The Act affects information that you have on computer as well as some paper-based records. To comply with the rules you need to follow the eight data protection principles. You can download information on the Data Protection Act 1998 from the Information Commissioner's Office (ICO) website (PDF, 515K) - Opens in a new window. See our guide on how to comply with data protection legislation.
The Consumer Protection (Distance Selling) Regulations require you to give your customers specified information before they place an order. You are also required to send the buyer an order confirmation and give them a 'cooling off period' in which they can cancel their purchase if they wish. See our guide on distance selling and online trading.
The E-commerce Regulations are designed to ensure online contracts are legally binding. They specify what information about your business and contract you must share with online customers and sets out guidelines for advertising and promotions. See our guide on e-commerce and the law.
If your business is a limited company or limited liability partnership (LLP), under the terms of the Companies Act 2006, your website must show:

• the full name of the company or LLP
• the registered office address of the company or LLP
• the registered number of the company or LLP
• the place of registration of the company or LLP
• if the company is being wound up
• the VAT number (if VAT registered)
• membership details of any trade or professional association

  Helping customers find your website

  For your online shop to be effective, customers must be able to find it easily.
  There are a number of things you can do to steer customers towards your website, including:
  

  • Improving your website listing in search engine results. See our guide on search engine optimization.
  • Getting your website listed prominently in web directories or through internet advertising. See our guide on pay per click advertising.
  • Using social media and online communities to engage with your customers, build a community around your brand and help improve online visibility for your product or service. If contributing to social media sites remember to link back to your website when appropriate. See our guide on Web 2.0: a guide for business.
  • Publicizing your site through related websites - many individuals go to sites after seeing a link, an advertisement or a mention on another site.
  • Adding your website address to all emails, letterheads, stationery and business vehicles.
  • Mailing or emailing your customers with a newsletter. See our guide on email marketing.
  • Getting into local online business directories, such as those produced by local Chambers of Commerce - find Chambers of Commerce in your area on the British Chambers of Commerce website - Opens in a new window

  When choosing your internet address (URL) or domain name, make it simple and easy to remember.
  If you want to build your audience, it is essential you are listed in web directories and search engines. This can be a time-consuming process but you can get your website listed or improve your search ranking by:
  

  • Thinking about how people will look for your site - pick key words and include them in your page title and content. Seek objective feedback.
  • Establish reciprocal links - many search engines rank sites according to how many other websites link to them. However, there are risks involved with this, see our guide on search engine optimisation.
  • Writing a description of your site and the services it offers and placing it prominently on your home page.

  Find information about search engine optimisation (SEO) on the Search Engine Watch website - Opens in a new window and see our guide on search engine optimisation.
  An alternative is to use an SEO agency - there are many to choose from. Find an SEO agency on the SEMPO website - Opens in a new window.
  

  Avoid online pitfalls

  Many e-commerce websites fail because of basic mistakes that are easily rectified.
  Customers will be put off by:
  

  • out-of-date or incorrect information
  • difficult site navigation and purchasing processes
  • poor customer fulfillment and late delivery
  • lack of customer support
  • lack of business information
  • poor visual design

  So it is essential to:
  

  • Make sure all information on your website, especially on prices, is up to date.
  • Monitor the information you provide on a regular basis.
  • Make it easy to find and purchase products.
  • Make sure that resources and procedures are in place to support your website. This will ensure that orders can be processed promptly, emails can be responded to quickly and helplines are manned by the appropriate staff at reasonable times.
  • Have your website professionally designed.

  Remember - when selling through an online shop, you don't normally have any personal contact with your customers, so you need to try harder to find and keep them.
  There are further steps you can take to increase the chances of visitors placing an order and to make them feel more secure about buying from your site. These include:
  

  • making your site easy to navigate and user friendly
  • giving a 100 per cent no-quibble money-back guarantee if they don't like or want the product
  • making sure photographic images on your site are accurate and show products in their best light
  • hiring a customer service representative who can give advice on the phone to customers on more complex or expensive products
  • making ordering procedures straightforward and quick
  • confirming orders immediately by email
  • being honest - eg, telling the customer if you can't deliver on time
  • providing a way for customers to track down the progress and availability of their order
     
    TRY THESE TIPS AND SEE YOUR MONEY INCREASE.