Many head into ecommerce with no plan and after about 2 years leave disappointed. If you plan you can tell very early on before you build your ecommerce site if you can make a profit to cover your costs and return a salary.  If you are a retail store then some of these assets are already in place and ecommerce is an additional selling channel to your existing channels. If you are a pure online channel  then you have to take into consideration all the items below.

Some good pointers for your business plan.

  • every 100 orders per day requires another staff member
  • your product should have a 35% + margin, unless your product is a downloadable or virtual product with no shipping.
  • the cost of sale is
    • Credit card fees 2%-6%
    • Exchange rate fees 200+ points
    • Shipping charges
    • Packaging materials, ( boxes, bubble wrap, scotch tape, labels, packing notes, shipping manifest )
    • The time cost to pick and pack the product.
    • Advertising ( google, social media, print, radio, television ) you must advertise.
    • Insurance on shipping if shipping high value items.
    • Amazon / Ebay fees
  • Insurance costs on your building, stock, machinery and staff.
  • Rent and rates
  • Office costs, paper, toner etc.
  • Salaries including your own and state taxes
  • Hosting and Site update fees ( dont skimp on hosting its the backbone of your site. )
  • Stock, if you are planning to hold stock of items then you have to factor in your capital being tied up in un-sold stock. Generally you try to stock as little as possible and operate JIT or drop shipping.
  • Stock Starage rates if you are storing stock in a logistics company warehouse.

For pure online ecommerce you will need to turn more than €700k per anum to make it worth your while presuming you have a 35% margin on your product before tax. This will support 2 staff, some advertising and general overheads. Make sure your business plan holds up for at least 3 years projections.

We have built and installed since 2002 so we know what works and if your site is going to make money for you.  If you need help in creating an ecommerce business plan get in contact with us.

 

There are 4 main types of ecommerce platform. 

1. opensource ( E.G. opencart, prestashop, magento( requires vps or dedicated hosting ),   virtuemart, zencart, oscommerce )

2. licensed and hosted by the store owner ( paid magento, actinic, shopify )

3. Saas ( volusion, shopify )

4. Pass ( platform as a service , e.g b2b selling platforms with API )

It depends how much control you want over your store and how you see your store growing as to what product you choose. You have to think into the future, as a short cut now maybe expensive later. Think of the international dimension, high volume, mobile commerce, and hosting requirements. 

If you want to control absolutely everything then go opensource. You get the source, you provide the hosting and you can change it to do anything you wish. Moving to another platform will require a migration of data. These can be linked to in-house account systems. Opensource systems tend to develop with trends quicker.

If you want the support of an organisation and their management of your site then a licensed product is the way to go. Moving to another platform will require a rebuild. Some vendors on gaining a critical mass of customers stop developing their products and rest on the license fees. If the product stagnates then the competition passes you by and you are trapped until you decide to rebuild.

Saas products are pay as you go, they are the same as the license product except they are paid for monthly and include the hosting. Exporting data out for migration to another platform is usually not an option. Moving platform requires a rebuild. The advantage is that its quick setup but the downside are the hidden monthly fees that are usually linked to transaction volumes. So the more you turn the higher your saas fees. There are many saas platforms and many different billing methods.

Paas is Platform as a service : this is for B2B where you are looking to link your ecommerce into other systems that your customers have like SAP, Ariba, Punchout2Go. It allows B2B clients to link their purchasing systems directly into your B2B ecommerce platform. This is vital if you are selling into large corporates who have complex procurement systems that they process their purchase orders through. With a Pass ecommerce you are looking for flexible apis that can interface with other systems.

Our advice for control, flexibility and future proofing is an opensource solution. Always think of the next step can I scale to 20,000 sales per month with this system, without blowing up and or costing me a fortune in sales comissions.

This is possibly the single point where most ecommerce projects fail to make it to market or function. It is the stress point of business, as they are investing money and not getting any revenue until the site goes live.

The way you define the product on the outset determines the response and the type of partners you will attract. 

A specification that consists of a phone call "all I want is a stand shop no frills just all the regular things for about 30 items ". If this happens to be your specification, you are not serious or prepared. We would see this as the owner does not have enough interest in the project to think long enough to write a specification ! That said some people know so little about the channel that they cannot write the specification, in this case you are well advised to employ a company to write this specification for you so as to ensure there is nothing left out and you get the best possible start.

When you specify a project for ecommerce you need to have the following titles. 

  • what are you selling online
  • what market is it aimed at, demographic, demographic
  • how many products you hope to stock
  • are there options on the products like colour and size
  • can the products be grouped
  • are you selling to the public
  • what account package do you have, do you want the ecommerce to communicate with your accounts
  • what are your sales targets
  • what are your sales territories
  • what payment types do you want
  • who are your competition, include some URLS.
  • do you have a product you would prefer to implement the site in and why 
  • what kind of functionality do you want on the:
    • front page
    • category listing page
    • detail product page ( images, descriptions, options, supporting documents like manuals ) 
    • checkout page
    • account creation page
  • what payment types you require
  • what time-scale you are planning
  • multi-channel is to be considered
  • multi-lingual ?
  • hosting required

When looking for a development partner you need to be able to ask the following and get straight answers, note them down and get them in an email if possible. 

  • where is the physical location of the offices ( good to see the environment they operate from, sloppy office=sloppy work ) 
  • how many live customers are they supporting
  • names of other clients they deal with and contacts for references
  • questions to ask other customers
    • are tasks carried out on time
    • is there tracking and auditing of works carried out
    • is there outsourcing if so, where to and by whom
    • is there a support desk, is it efficient
    • is there a Service Level Agreement on support
    • has there been any errors and if so how were they handled
    • if you were starting out again, would you use them again
  • has the company professional indemnity insurance
  • if they claim to have won awards check the awarding website, lots of people showing awards logos but they have won nothing. Bare in mind some awards are achieved by buying 2 tables at the awards dinner ! 

Now it comes down to price. Be careful of going for the cheapest. Many companies are champions at their own sales but perform badly after the initial sale. You need your partner close to you so that if there is a crises you can call around or you know the call is always returned fast.

Lastly make sure that the product your new ecommerce partner is delivering your new site on is well supported internationally. If you fall out with your current development partner you will need to be able to have a choice of other partners you can move to. 

 

You are now setup and selling a modest amount of product. Well done you have reached the you first ecommerce milestone. 

The next milestone is to get you site and all the product names and descriptions translated professionally for your target market.

We have seen examples where clients on translating their site to Russian have seen an immediate 30% increase in orders. ( they will have advertised in russian too on all the russian social and search networks. ) 

The next milestone is only done when you have are satisfied you have a market to ship sufficient quantities to.  Many business owners see this as an impossible step as they do not think out side of the confines of their existing business.  Shipping into other countries is a simple task now. You appoint a local local drop shipper to manage the country specific shipping and distribution of your product.  Your deliveries now go to the drop shipper who manages the all the shipping and returns for the product.  You will have to link your website into their systems so as to make the sales as smooth as possible. This is another item you should check when selecting a provider, do they have experience of linking systems into shipping systems. 

When targeting other markets you may come across different preferences for paying online. For example in Germany there is allot of online direct debit. In the US there is alot of Paypal, in emerging markets there are other payment preferences that have to be considered.

Your next milestone is to consider multi-channel shopping. This involves opening ebay, amazon and affiliate stores so as to expand the locations from where your product can be sourced. Handling the uploading of stock on all these market places manually is not to be even contemplated.  There are many software packages that will allow you to manage multi market listings from one location. 

You may also consider adding an option for affiliate shopping. This allows an affiliate to register on your site. They link to product on your site and when a sale happens from one of the affiliates links, the affiliate receive commission from you. 

 

When you are planning your online store you need to put aside a large budget for advertising and promotion.

Getting your first 1000 customers is expensive and in most cases you will not make money doing this.

Know where your market lives on the internet. 

They can live in Social Media, Google Search, News, Business Media and or interest groups. 

In Google you advertise using  adwords. Keywords are setup so as to trigger your ads. Everytime your ad is clicked it deducts money from your adwords account. Your can have plain text ads, mobile ads and graphic ads on google.  We would advise you do not start out creating ads yourself as it is easy to waste alot of money on badly setup and targeted ads. There are specialists who tune adwords campaigns.  Be careful when employing these agencies as some over promise and under deliver and in the end of the day it is your money they are playing with. Get references and follow them up. Set targets and if they are not met, move on. Always remember to include negative keywords in your campaign so as to cut down on the number of mis-placed ads.

Social media advertising typically takes the format of facebook, or twitter ads. These are targets as accurate demographic groups and locations. 

After your site is running a few months see where the display ads traffic is coming from. You may see a site where you are getting alot of traffic and decide to advertising with them directly is more cost effective than a google ad. Most sites will charge per month the ad is in place regardless of the clicks. 

Advertising online has the advantage that the results can be measured. The results should affect the next advertising decision you make. 

Online advertising is like any other advertising it must be done constantly, planned out well and key performance targets have to be set for each campaign. 

All print, marketing materials should reference your website at all touch points. Signage on vans, stores, directional signage should have your domain listed. 

Do not discount print adertising or TV advertising as this is still very effective for certain products. Home and Garden is one product set that benefits from mini magazine print. 

So keep you mind open to the channels that work for your sector. Keep a close eye on your competitor see what is working for them. 

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