Archive for the Ecommerce 101
E-Commerce Fundamentals and Fulfillment
October 18th, 2016
E-commerce or electronic commerce can be defined as the buying and selling of goods and services on the Internet. E-Commerce can be VERY complex. To offer a world class customer experience, retailers must incorporate technologies and functionality that exceeds rising customer expectations.
On the flip side however, site fundamentals still play a very large role in converting visitors into customers. Many retailers surprisingly lose sight of these site basics and leave significant sales on the table.
For proper implementation of e-commerce it is of immense importance to have an e-commerce site where one can get involved with the buying and selling of goods and services. To be successful, E-commerce site should contain a shopping cart system and a payment processing system.
Once your website has secured an order, you have to fulfill it. While the fulfillment of digital goods is usually handled online, the delivery of physical goods is handled in a “brick-and-mortar” world. When choosing a fulfillment company for your e-commerce operation, you need to evaluate both fulfillment services and e-commerce services for order processing.
Evaluating Fulfillment Services
Fulfillment services includes receiving, inventorying, warehousing, delivery, record-keeping and customer inquiries. You have options to outsource part of or all of fulfillment services to a third party.
Receiving – This is the process that fulfillment vendors acquire goods from suppliers and the accuracy of services starts at the receiving.
Inventorying – The skills of inventory management directly impact the quality and cost of fulfillment. If inventory is out of stock, you may lose customers. If inventory level is too high, it may increase the cost of inventory.
Warehousing – Physical goods are stored in a warehouse and valuable items are usually stored in secure storage. While fulfillment companies have their warehouses and distribution centers, small businesses can store goods in their garages or basements.
Shipping – For order fulfillment, goods are delivered to customers in various shipping methods – ground, overnight, etc. at fulfillment centers. Customers specify shipping methods when they place their orders and the fulfillment companies may adjust the shipping methods of the delivery.
Return and Order Inquiry – Customer Service Reps at fulfillment companies can handle return and refund for their clients. Most ecommerce sites allow customers to view their orders and status of fulfillment online.
Timely delivery is one aspect that requires careful attention. In fact, timely delivery is one of the three main dimensions of competitiveness, the others being quality and cost. Timely delivery is also dependent, like quality and cost, on productivity, managerial effectiveness and infrastructural support.
For e-commerce fulfillment, the use of high-class communication technologies is vital.
Abandonment – Why Visitors Don’t Turn Into Customers
November 22nd, 2015
Every good eCommerce business should understand the value of conversions versus hits received. Far too often, businesses become fixated on the hits they are receiving instead of monitoring their hit to sale conversion rate. This misguided focus is the road to ruin because it fails to take in the issue of abandonment.
Abandonment
“Abandonment” is one of those terms that has a unique meaning when applied to the Internet. The term refers to reasons why a user abandons a site before taking the action the site owner desires, typically purchasing a product or making an inquiry.
There are a number of beautiful sites on the Internet with unique innovations. Unfortunately, these sites rarely turn a profit or unnecessarily limit their profit potential. Website owners should focus on only one thing when building a site – converting visitors to customers. To avoid abandonment issues, you should focus on the following:
- The site should always load as quickly as possible to accommodate visitors that are using slower internet connections.
- The site should be designed for ease of use, not just “what looks good.”
- All advertisements should click through directly to the items that are being searched, not the home page of the site.
- Site pages should be kept short to improve load times.
- Either offer a mobile version or make sure the site loads properly on a mobile device.
- Signing up for a newsletter or other info should be made as easy as possible.
- Customers should be required to fill out the minimum of information to make a purchase.
- All images should be compressed for quick loading.
- If the customer has left the shopping cart with items in it, think about sending them a discount code to complete the order.
- Offer free shipping on all items if possible.
The list is fairly endless, but you should always view site designs and advertising from the perspective of the customer. The universal question for each project is, “How could we make this easier for customers?” By emphasizing this approach, you will bypass many of the problems you see on the net and avoid wasting your advertising dollars.
Analyzing Traffic – Visitors V. Hits
April 22nd, 2015
A key component to every web site is traffic analysis. When analyzing traffic, it is important to understand the difference between hits and visitors…and why both are important.
Be One With The Log
To analyze traffic on a website, you should be looking at your server logs or Google Analytics (recommended). Server logs come in very raw data, but most hosting companies have interpreting programs that summarize the information into readable form. From these programs, you should be able to analyze who is sending you traffic, the number of hits and visitors among other information.
Hits v. Visitors – The Game Is On…
Many people are lazy when it comes to discussing traffic results. We tend to use “hits” as a catch phrase for traffic hitting a web site. This isn’t entirely true. Traffic should always be analyzed in two categories, hits and visitors.
A “visitor” is a click from someplace on the net to your site. In your analytics, a visitor will be credited with visiting the site one time regardless of the number of pages the visitor views. For example, a person entering a brick n’ mortar bookstore is only one potential customer regardless of the number of books the person looks at.
A “hit” is a click on any page of the site and represents a multiple of the visitors. When you review the data, the hits represent how many times visitors clicked site pages. Going back to our bookstore example, every book viewed by the person in the bookstore would be a hit. So, which information is more important?
Hits v. Visitors – An The Winner Is…
The simple fact is both visitors and hits are important statistics to analyze in your logs. Obviously, the information on the number of visitors is important because you want to know how many potential customers are coming to your site. That being said, you should never focus on visitors without contemplating hits as well.
Hits are important because the number of hits tells you very important information about your site. Since hits represent the total number of pages viewed by all visitors, you can use the information to determine the effectiveness of your site. I call this by the very original and sophisticated name “hits to visitors ratio.” Let’s go back to our bookstore example.
Assume a person walks into a bookstore and only looks at one book. This may mean the person knew what they wanted, found it and bought it. Obviously, this is an ideal result. But what if a thousand people walk into the bookstore and only look at one book each? The bookstore would have a problem and start trying to figure out what it is. The hits statistics in your data tell you the same thing.
If your site has multiple pages, you need to find out if visitors are clicking into the internal pages. This is generally known as determining the depth of your site. The simplest way to do this is to divide the number of hits by the number of visitors for a particular time period. This figure will tell you if people are seeing one “book” or taking a look around.
Analyzing your website stats can be a real eye-opening experience. The information can be good or bad, but at minimum you will know if any corrective steps need to be taken.
eCommerce Website Building: Where Do I Start?
February 10th, 2014
Building an eCommerce website isn’t something that is really cut and dry. There’s a huge variety of products and services that can either help you get your website where you want it or simply confuse you. It’s also important that you make the right choices upfront so that you don’t end up having to restructure your whole website because of some problem in your design layout. The level of time investment necessary for mastery in many software packages can range from little to a VERY significant amount.
Where you should start greatly depends on what you plan on attempting to do and how deep you’re going to dive in. For a moderately professional, clean looking website without a lot of automation or intensive graphics you can probably get by with some basic knowledge of HTML, ability with a good WYSIWYG editor and an image editing program. On the other hand, if you’re someone that’s looking to build something that will really wow your audience then you might consider spending some major time learning HTML, CSS and PHP or similar languages.
What is a “WYSIWYG” editor?
A WYSIWYG (What You See Is What You Get) HTML editor is what allows you to get by with minimal knowledge of HTML. Yes, that means you don’t have to know EVERYTHING about HTML to have a decent looking website. When you use a WYSIWYG editor it interprets what you’re doing (inserting an image for example) as being a certain series of HTML tags with attributes and does it for you… Thus, what you see on your screen is what you get. Instead of seeing a bunch of HTML code in text format, you’ll mostly see what will actually show up in your browser once your website is live.
Image editing? What do I need that for?
Okay, let’s be realistic here: If you’re going to make a professional *appearing* website it’s important that you can make some basic, decent looking graphics. There’s a lot of graphics programs that can truly get the job done, but as far as power and flexibility goes I recommend Adobe Photoshop or GIMP (which is free). Both programs are great and if you’re going to learn ANY image editing software I recommend you start with GIMP because of it’s ease of use plus it’s FREE! You can also have your images created by low cost sites such as 99Designs or Fiverr.
There are some SaaS (Software as a Service) solutions for eCommerce out there as well. Some have WYSIWYG editors but most require some programming knowledge. Depending on your needs and skills, a TurnkeyShop eCommerce store can be a great way to easily get started.
Starting A Small Online Ecommerce Business
February 20th, 2013
With a little knowledge, skills, and determination, anyone can start an ecommerce business. In this article, I’ll go over a few of the basic components that you’ll need when starting your ecommerce business.
1 – Product or service
If you don’t have your own product or service to market, you can market other people’s products, either via affiliate programs, dropshippers, or network marketing programs. Once you’ve found a top quality product or service to market, you’re ready to get started!
2 – Shopping Cart software
To sell products online, you will need some kind of shopping cart software, to facilitate online ordering and order processing.
3 – Online Payments
To sell online, you’ll need a way to accept online payments. The easiest way to do this is via Paypal. For a full featured merchant account, 2Checkout is a good choice. These are just a couple of many payment services out there.
4 – Communications
Even in ecommerce, communication with your customers is very important. At the bare minimum, you should have an email address and physical address for your customers to contact you at.
5 – Marketing
Many small business owners fail at one of the most important points – marketing. If you don’t properly market your website, you won’t make any sales, and your business will fail. The key is to utilize marketing methods which are effective and profitable for your business. Experiment to find what works best, but here are a few tried and true methods to start with: pay per click marketing, search engine optimization, article marketing, shopping comparison websites, email marketing, and joint ventures.
Business Setup Overview – United States
March 9th, 2012
This is an overview of the basic steps that will help assure that you are working within the US legal boundaries so you don’t get any surprises later. This is for informational purposes only and in no way constitutes legal advice. You should always consult with your lawyer or your accountant to decide what best fits your needs.
Sole Proprietor or LLC?
Choosing the structure of your business depends on a couple of factors, the first being, what the limits are in your state. Most small business begin as a sole proprietor, because it is the least expensive route to starting your own company. For those who work as a sole proprietor, all that needs to be done tax-wise is a Schedule C on a personal return. The reported business income goes into your personal taxes instead of a separate entity as a corporation.
While it may be less expensive to start as a sole proprietor, there is a legal aspect to consider. Those who work solo have no legal protection over personal assets. This translates to you being liable from a personal standpoint for actions that occur within your work – so if someone wants to sue you, your assets (home, car, savings, etc) are at risk. Even though a LLC or corporation may be a little more expensive to start, they do give you the protection over personal assets.
Here is a comparison between a Sole Proprietorship (DBA) and a LLC (Limited Liability Company):
Advantages of a Sole Proprietorship
Lower start up costs
No annual compliance
Ease of accounting
Ease of tax preparation
Disadvantages of a Sole Proprietorship
Personal liability exposure
It may limit ability to raise future capital
It may limit the transferability of business assets
Advantages of a LLC
No double taxation
Can have multiple members
Personal liability insulation
Can be broken into shares
Disadvantages of a LLC
Subject to self-employment tax
Lack of uniformity among limited liability company statutes
Do You Need A Business License Or Permit?
You should check with your local city or county government to make sure you are in compliance. Some home businesses are exempt, but most businesses do need a license. This helps with planning for tax reasons and the county growth. Permits are required for certain occupations or businesses.
What Corporate Forms Should You Use?
There are three primary forms used for businesses. You should consult with your lawyer or your business accountant to decide which form is best for your business. Most small businesses choose either a “S” corporation or LLC (Limited Liability Company) since these two forms put a limit on your personal liability, yet still allow the profit and loss statements to be filed under the individual returns. There is also the “C” corporation form.
Special Tax Numbers
Having a special tax number is safer for sole proprietors than giving out your social security number, so even with the smallest business it is advisable. To get your EIN or employer ID number, all you have to do is call the business line with the IRS and you can have it assigned over the phone or you can visit the their website IRS.gov to apply for it as well.
If you are a corporation or have employees that are on your payroll, you will need an Federal Employer ID number. This number is assigned and puts your business on the IRS’s books. State ID numbers may be assigned, depending on the laws in your own state. The best way to figure out if you need a state number is to visit StateLocalGov.net for a quick reference and further directions on what to do.
Other License/Permits
Depending on your business, if you are going to be reselling goods purchased, you will need to sign a resale license or statement of intent. This states that the end consumer will be paying the sales tax and you will be exempt as the “middleman”.
If you are not using your name for your business you will need to file a DBA so people will know who owns the business. You can also often open a separate checking account under the DBA name, which will allow you to write checks with your business name printed on it.
Starting a business takes a lot of planning and hard work, but with the right steps planned ahead, you can avoid a lot of tax and legal issues at the end of the year. Make sure you are working with a good accountant and remember it’s fine to start small.
Helpful Links
Small Business Administration USA
Legal Forms
Dropship, Wholesale Or Import?
March 6th, 2012
There are basically three different types of suppliers: dropshippers, wholesalers and manufactures. If you don’t already have products to sell then using a dropshipper is probably the best place to start to test out the waters.
Drop Shippers
To begin with it may be best to try and find a drop shipper as this involves little risk on your part and means you won’t be storing any stock yourself. The idea behind dropshipping is quite simple. You accept orders and payment from customers for goods that you advertise on your website. You don’t hold any stock of these goods. Instead you place an order with the dropshipper who delivers the goods directly to your customer’s address. The paperwork accompanying the delivery will make it appear that the goods were delivered directly from your business. Your customer pays the retail prices fixed by you, while you pay the wholesale price from the supplier, thereby making a profit.
This said, do remember that you will always pay a little more for a product when buying from a dropshipper as they do most of the hard work, such as packing and shipping.
Its also worth noting that you can always use a dropshipper in the beginning even with a small profit margin or even no profit just to test whether the products sell. Once you know they do, you can source them cheaper from a wholesaler and start making better profit margins – by using this method you eliminate the risk of buying a load of stock from a wholesaler only to find that it doesn’t sell!
Wholesalers
Wholesalers typically have a minimum order value which can be a problem when you first start out as you don’t really want to spend a $1000 on stock you are not certain you will sell.
However sometimes it is possible to get them to reduce this amount if you explain you are just starting out etc.
Many wholesalers use the minimum order to filter out the people trying to make a few bucks selling their products cheap from the house and in a way it can be beneficial to you too. Some people are happy to make just a few hundred extra dollars a week selling products online with a tiny profit margin but unfortunately that kills it for anyone with a business that has overheads.
In order to make a decent living selling online you need to pick products with a decent profit margin so make sure you check that the wholesalers are giving you true trade prices and be sure to appear as though you are a proper established business.
Sometimes even the wholesalers will deliver straight to your customer too if you ask, particularly when the item is large so always ask.
The trick is with wholesalers to buy from them what you need and don’t get sucked in to buying a wide variety of products with first proving that they sell. You can even sell the products on your website and THEN order them in from your wholesaler removing any risk of being stuck with slow selling stock.
Just be sure that your shipping times displayed on your website allow enough time for you to order in the product from your wholesaler and then re-ship it out to the customer.
Try to make sure you have multiple wholesale suppliers for your products as often they will be out of stock when you need it, so if one’s out hopefully the other will have it in stock.
Importing
The time to consider importing is when you have a successful ecommerce store and not before. Importing products can get you them cheaper but it does have pitfalls. I would recommend using an experienced import agent at least for the first few times you import goods. You will be expected to buy in large quantities direct from the manufacturer usually either a 20ft or 40ft container load of products.
What Should I Sell Online?
February 29th, 2012
This can typically be overwhelming as there may be thousands of products to choose from, but what I would advocate in the beginning is to pick something you will know a little about.
It’s possible you have a hobby such as decorating, horse riding or you are a keen gardener. For those who have a genuine interest in something, it will always be more pleasurable to run a business related to it and you’re able to use your understanding and expertise.
All the same, this inevitably is to do with selling products online and if your particular interest has small amount of followers it may not be suitable to set up a business around it. It’s all about supply and demand and if there is little demand for your products or service then you really can’t expect to be really successful.
Here are several informative things to consider when thinking of what you would like to sell online:
- Could it be easily shipped by mail?
- If it can be shipped, is it most likely to arrive in one piece?
- How much space does the product take to store it?
- Would you buy this product online?
- Will there be a good assortment of related products you can also sell?
- Is the product liable to generate repeat sales or is it a one time deal?
- Will the product often change and need to always be updated?
All these things are worth contemplating prior to you go building an online store.
Presuming you don’t really have any particular hobbies or interests and therefore are entirely stuck for ideas of what to sell, then take a look at what exactly is selling the best on eBay or Amazon.
To summarize, the ideal items, simple to send, unlikely to break during shipping and not too size-able if you don’t have much room at home or in your office to store them.
The items are in a niche, because it’s quicker to setup a website that targets a niche rather than large wide range market place. Mainly because they’ll probably be some big players within the big markets already. However should you select a niche, then you have a high potential for being in position to dominate.
But you also need related products. And again, the merchandise that generates repeat customers are ideal. Still that’s not to say that you can’t generate a lot of money selling one-time deal merchandise either.
