How important is ecommerce to your business?
According to reports from comScore, online sales hit $38 billion in the first quarter of 2011, up 12 percent from the same period in 2010; by the third quarter, sales had already risen to $48 billion. And the notoriously big-spending holiday season broke records this past November/December. On Cyber Monday in 2011, online shoppers spent a record-breaking $1.25 billion. By 2015, annual ecommerce sales are projected to hit $278.9 billion.
The ecommerce barrier to entry continues to get lower as more tools pop up to help even the most tech-aversive entrepreneurs go digital. “Almost anybody can set up an online store,” says Mark Hayes, head of marketing and public relations at Shopify, which helps business owners establish their own online stores. “You don’t need to raise capital or hire expensive designers and programmers. You can literally go from concept to commerce in just a few minutes for almost no money and with no technical background. It’s called the ‘democratization of ecommerce,’ whereby what used to cost thousands of dollars and take months of preparation is now more of an afterthought to the development of a product or service. This allows entrepreneurs to focus on doing what they do best and not worry about the complications of ecommerce.”
Hayes says that business owners can no longer afford to ignore the myriad benefits of selling online. “With an ecommerce store, your business is open 24 hours a day, seven days a week, 365 days a year. You don’t pay rent or the salaries of sales associates. You don’t have any geographical limitations that restrict your customer base, which means you can sell to any country in the world, any time zone and in any language. Also, with shipping companies like ShipWire and Amazon Fulfillment you don’t need to worry about storing or shipping your product. You can automate nearly every aspect of the business.”
So now that you’re convinced, what’s the best way to get started in the ecommerce world? Here are five things you need to know.
1. Understand that ecommerce transcends “products.”
If you’re running a business based on services rather than physical products, you may not think folding ecommerce into your business is relevant. While the concept of ecommerce started with physical goods such as books, CDs, DVDs, software, apps, games and other goods, it can now be used to sell all types of professional services too. “Small businesses offering yoga classes, graphic design packages or game tickets are using ecommerce as a payment collection channel for services that may never ship, but will be consumed in a separate physical location,” Joe White, co-founder, COO and CFO of Moonfruit, a company that helps entrepreneurs set up and maintain their business websites, says. “This opens up ecommerce to all businesses. So, if you don’t think it’s for your business, think again!”
Dave Radparvar, founder of Holstee, a clothing and accessories company that curates rotating collections of products founded in 2009, feels that small-business owners also need to go beyond just peddling products and sell their company’s values as part of the ecommerce experience, particularly when communicating through their social media channels. “We rarely post our own products on Twitter, Facebook or our blog,” he says. “Our customers can see those on our site. We use social channels to have conversations about videos, books or photos that represent our values. It all comes down to recreating the in-person sales experience and packing all our values, loves and goofiness into our online presence.”
2. Embrace the shift.
2011 was a particularly explosive year for social and ecommerce, with huge numbers of entrepreneurs relying on websites, mobile devices and Facebook shops to sell products and services. As online sales continue to grow, the market share of sales by the top 25 online stores fell to 67.7 percent this past year, which means opportunities are opening up for smaller retailers. Additionally, U.S. mobile commerce grew to $6.7 billion in 2011, up 91 percent from 2010. “In 2011, the priorities of small businesses progressed from controlling their presence and managing brand identity to boosting their sales,” White says. “Ask yourself how you would like your business to make money on the Web. Online platforms use a number of methods to focus on money-making: traditional ecommerce, where people can buy products or services online using electronic payment; ad-supported platforms, which offer a service or content funded by commercial advertising; paywalls and micropayments, which allow sites to monetize individual units of content.”
Craig Dalton, president of DODOcase, a company that makes iPad cases using traditional bookbinding techniques, adds that combining an online ecommerce solution with personalized offline manufacturing, marketing and sales techniques is also critical to seizing opportunities for growth. “One way to maintain an advantage includes thinking about building local and using resources in your community that may be underutilized in a shifting economy,” he says. “The net result can be quicker time to market, superior quality and a story with legs.” Still, he warns business owners against trying to follow every trend that comes along. “Focus on a manageable number of initiatives in any given time period,” he says. “It is easy to see the 100 things you could be doing to improve your business. What is hard is picking the five things to tackle first and doing them well.”
3. Retain the bargain hunter, but avoid the cheapskate.
Historically, consumers have proven themselves to be bargain hunters. While focusing solely on price when marketing products — and particularly, on offering the cheapest, most rock-bottom prices around — can cheapen small-business owners’ products and services and attract disloyal customers that will abandon ship the second they see a lower price tag elsewhere, they still need to be aware of consumers’ tendencies to look for a “deal.” “Consumers focused on finding the best deals in 2011 and 2012 will continue on the same bargain-hunting path,” White says. “Buyers browse in stores to see and touch the physical goods, then search and purchase them online looking for the best price available. Small businesses need to take charge and be sure to retain customers by being accessible via mobile, social and Web channels and by ensuring their customers know the correct URL to visit in extending their physical store experience online. Don’t become a showroom for someone else’s sales!” But how, as a small-business owner, can you weed out the flighty cheapskates? According to Radparvar, it’s about being authentic and rewarding the best customers. “Find your most passionate and dedicated customers and fans and celebrate what they do as much as they celebrate what you do,” he says. “However, above all, be authentic. It is important to have an authentic voice and personality that your customers can connect with, and to be continuously fostering and keeping your finger on the pulse of those connections.”
Patrick Buckley, “chief DODO” at DODOcase, points out that in order to attract and keep customers and clients who will stay true to you, you also need to pay close attention to the different signals of client retention. “There are some amazingly powerful tools like Google Analytics that are imperative to learn how to use,” he says. “It’s easy to get overwhelmed by how much information these create, so hone in on the important signals. ‘Bounce rate’ is a great indicator of the interest level of your visitors. A high bounce rate can mean you aren’t attracting the right customers to your site or that you need to make some changes or updates to products or services to make the offering more interesting. ‘Conversion rate’ shows the amount of friction your customer is experiencing. If you have a low conversion rate, it can be helpful to walk through your check-out flow and see what can be removed to make it easier for customers to complete their purchase. And ‘average $ per visitor’ is a good ballpark figure that helps you understand how much you can afford to spend on driving a customer to your site and can be useful as a guide to making marketing decisions.”
4. Get social.
Social media outlets are an essential supplement to ecommerce because they add interactivity and share-ability to the traditional buy/sell structure. Studies from Nielsen and other professional research firms continue to show that people trust the recommendations their friends make them online more than they do other promotional strategies. To White, this makes sense. “Why would you trust an advert or even a third-party endorsement when you can access unbiased advice from the people you know in real life?” he asks. “Research found that more than 50 percent of Facebook fans and 67 percent of Twitter users are more likely to make a purchase from the brands they follow than from another brand. Data from our customers shows sales via Facebook stores at 5 percent of all sales versus 2 percent on mobile, so we’ve already seen it making progress.”
Chris Peters, founder of Opena Case, a company that designs cases for the iPhone with built-in bottle openers, says that he started building a social community through Facebook and Twitter before the product even launched, which gave the first customers a public venue to immediately start buzzing about the product and recommending it to friends. “Giving customers the chance to share with their friends that they ‘just bought the World’s coolest iPhone Bottle Opener case’ on Facebook or Twitter has 10 times the value of us placing a paid advert saying the same thing,” he says. “When a referral comes from a trusted source such as a friend or family, you’re way more likely to check it out and potentially purchase it. Before social networks you used to rely on friends recommending products and services by word of mouth. Let’s say you’re in the market for a new pair of shoes and a friend recommends a particular brand or model. When you finally make it to the shoe store, you will be more inclined to search for that brand — if you can remember the name of it. Social networks allow you to do the same, but with a wider reach and instant response.”
5. Go mobile.
Thanks to the explosion in popularity of smartphones and apps, mobile is becoming another valuable tool for business owners. Almost half of mobile subscribers in the United States own a smartphone, and savvy companies are reaching consumers wherever they go. “The popularity of mobile should not be taken lightly by small businesses, as 2012 is predicted to include an increase of device proliferation –- more mobile apps, more tablets and more Internet-connected devices,” White says. “Make sure you have a site that can publish to different devices or even develop an app of your own.”
But Radparvar stresses that keeping mobile and social media interactions as personal as possible instead of getting too caught up in the excitement of the technology is critical. “As an online shop, connecting with our community through social media has been paramount to everything we do at Holstee,” he says. “Since we do not have the ability to interact with our customers face-to-face in a physical location, social media has been an essential tool to recreate that interaction online. It is important for us that our customers can get the full scope of the Holstee experience and our personality through our social channels. For us, a significant part of building a brand and solid community support has come from these connections.”