We attend a lot of eCommerce events, conferences, and seminars. At each and every event, there are typically hundreds of vendors, offering services from web design to live chat, and order fulfilment to SEO and PPC. Many of the attendees of such events are new to the industry, and are just in the early stages of their ecommerce journey. This blog is for the newbies. Those who enter the conference hall and feel a little overwhelmed at the range of services available to them.
We’ll point out the essentials, the building blocks of eCommerce. There are many, many services which will bring more site visitors, conversions, and improve site usability, however for those just starting out, they’re nice to have, rather than essential, and as our infographic shows, there are just a few essentials. Get those right and you have a solid foundation on which to grow.
If you’re at the stage of setting up an eCommerce business, it’s likely you’ve already chosen which products you’re going to sell. Options are endless. You can manufacture your own products, under your own brand name, or manufacture your own products under a licence from a third party brand, common in the toy and gift markets.
Alternatively, source products directly from wholesalers or brands to sell directly via your own eCommerce store. This is the most common method of sourcing products in eCommerce.
The product range you choose to sell will impact on the type of ecommerce store you build. If you’re selling high end or luxury fashion or homewares, the site needs to reflect the high end nature. Customers will expect a very user friendly experience, a nice clean design which exudes exclusivity, and secure checkout processes. If you’re stocking low cost items, customers may accept a more complex navigation, and a less exclusive design style.
The products you stock will also affect the direct costs your business will incur when selling online. If you’re selling posters or birthday cards for example, the storage space required to stock the products in a warehouse (or a spare room at first) will be minimal. The delivery costs will also be low. If your eCommerce store is selling furniture, or heavy, large items, you’ll require a much larger space to stock these products. In this case, you may well need to rent a warehouse, and suffer the storage cost before you’ve even begun selling. Alternatively, appoint an order fulfilment company to provide warehousing and storage, together with fulfilment, and even packaging. Again, heavy items also cost more to ship, and less delivery options may be available, so keep this in mind from the beginning.
The type of product will also affect ongoing marketing and communications. If the eCommerce store sells TV’s or vacuum cleaners, keep in mind that customers may only buy once every 5-10 years.
Alternatively, groceries or fast fashion should encourage regular, repeat purchases, making regular email communication very important, and worth extra investment.
“Which eCommerce platform should I choose?” is one of the biggest decisions any founder will take. Get it wrong and there will be a huge amount of time and effort wasted. Get it right and the foundations have been set for ongoing growth. As with any start up business, the eCommerce platform you choose should be flexible, and scalable, allowing you to add features, widgets, and new functionality as you grow. The eCommerce site you launch with is unlikely to function and even look the same in two years, so choose a platform which gives agility in design and technology, allowing you to keep up with trends and competitors.
Some of the more popular eCommerce platforms include:
Shopify is one of the most complete all in one eCommerce platforms, allowing store owners to create great looking and user friendly eCommerce stores, with little or no technical ability. With over 100,000 successful stores in current use, it’s easy to see why so many stores are built on the platform. Key features such as 24/7 support, integrated shopping carts, easily customisable designs and mobile ready versions included, this really is a one stop shop for eCommerce.
Bigcommerce is another complete eCommerce platform comparable to Shopify. With 50,000 sites built, and an app store allowing store owners to upgrade functionality freely, without any design or technical knowledge, Bigcommerce is another serious consideration. Bigcommerce comes with over 100 features as standard.
Magento is possibly the most widely used open source eCommerce software on the market today. Unlike Shopify or Bigcommerce, Magento does require store owners to custom build and design their stores. Of course there are hundreds of specialist eCommerce developers with Magento experience available to hire. Magento is arguably the most flexible and scalable eCommerce software, typically used by large or growing retailers.
OSCommerce is another widely used open source eCommerce platform which requires technical design and build knowledge, but with over 7000 apps available to download from their community of developers, there are many features readily available. Spark eCommerce Group’s own stores, Ethical Superstore and Natural Collection are built on OSCommerce, with a custom design.
Finally, you’ve taken delivery of your stock, built your eCommerce store, and you’re ready to begin selling. Just one more thing, your eCommerce store needs a payment gateway to process transactions securely. You’ll also need a merchant account to receive funds. If your eCommerce store is built on Shopify or Bigcommerce, you may well have opted for their built in payment gateway. But if you’ve built your store via Magento or OSCommerce, you may also need to find and integrate an external payment gateway search as Sage Pay, or World Pay. There is also a strong argument for adding a widely used payment option such as PayPal, giving customers an additional option when purchasing.
Despite the ongoing growth of social media, and digital advertising, good old email marketing still remains the number one driver of sales for most businesses, not just eCommerce. With that in mind, email marketing is of paramount importance, and in the early stages, may well be free. With email marketing platforms such as Mailchimp offering free email management to a limited subscriber database, easy and simple design and build of HTML templates, and mobile compatibility, it’s a great tool to begin with. Mailchimp is also scalable and integrates with many third party CRM’s and other software, meaning it’s a great tool to grow with.
If you’d like some additional features in your email campaigns, such as marketing automation or enhanced social integration, you’d be wise to look at email providers such as Communicator Corp, or Pure 360, which both have their own merits over platforms such as MailChimp.
To begin with, its unlikely any eCommerce store owner will have a customer database, meaning there may be little need for email. However, there are ways to quickly build a database via third party data providers, who can provide relevant customer databases at a relatively small cost either on a pay per use basis or ownership basis.
5. Order Fulfilment
Let’s recap. You’ve ordered stock from the supplier or manufacturer, built your eCommerce store, integrated a payment gateway to receive funds, set up an email marketing program and even bought data to mail. You’ve even got your first customer order. Great news!
Now, how are you going to get this order to the customer? Lets take a step back…
Where are you going to store that stock you’ve ordered from the manufacturer? If its greetings cards, you may well be able to store these in a box in a spare room at home. If it’s TV’s, bikes, tables or chairs, you’re going to need somewhere much larger to stock these goods before they’re sold, unless you own a very large home! You have 3 options:
Option 1. Use a spare room at home
This is most eCommerce store owners first choice, and may even be suitable for the very early days. Its cheap, there’s no storage to pay, and you can control how quickly you take the items to the post office to ship. Don’t forget though, you’ll also need space to store packaging, labels, and the ability to take these items to the post office. So if they’re heavy, this might require two people. Once orders grow, how feasible will this be? How many products can you fit in your car once they’re boxed and ready to ship? You may find yourself driving back and forwards to the post office 3 or 4 times per day. Time you could be spending elsewhere, such as product sourcing, sales, and marketing.
Option 2. Hire a storage unit or rent a warehouse for your own use
Once you’ve outgrown the spare room at home, you’ll need additional storage space. Many small eCommerce businesses utilise self storage units, or find themselves a warehouse to rent or even buy. Both options will then incur a fixed cost, most likely on a monthly basis. This charge will occur regardless of whether your stock is selling or not, and can affect cash flow. If you’re using a self storage unit, bear in mind you’ll likely have double the trips to make back and forth from the post office or delivery office. Once to take stock to be stored, another to remove stock and take to the post office, again, this is time that can best spent elsewhere.
If you’re planning on renting a warehouse to manage order fulfilment, there are additional considerations to take such as security, insurance, rent and rates, accessibility, shelving or racking, and technology to include above the cost of the warehouse itself.. You may even be required to employ staff if order volumes continue to grow, which brings the added pressures of additional insurance, salaries, and employment costs.
Other costs to be factored into managing your own order fulfilment operation include packaging and carrier costs, and general shipping options, which can be expensive if you’re shipping in small volumes.
Option 3. Appoint an order fulfilment company to handle the whole fulfilment process from start to finish
This may seem like a big step, handing your stock over to an external company to manage. And it is. But often, it’s the step that really allows a business to grow.
Lets take a step back again. Remember that stock which was shipped from the supplier to your home? When it arrived, you had to sort the stock, find suitable storage places for it, and likely ensure it’s all arrived ok with no damages. If you’re using a warehouse or self storage area, you’ll probably need to be there when the stock arrives to sign it off – valuable time wasted especially when the delivery takes longer than planned.
By appointing an order fulfilment company to handle the whole process, that same stock from the supplier can be shipped straight into the order fulfilment company’s warehouse, received by their staff, sorted, and placed into picking locations ready for sale – all without you being there.
Lets move forward a step. You’ve sold 20 products today. Great news! How long is it going to take you to package, wrap, print shipping labels, and get these products to the delivery office or post office ready to ship to the customer. Does the customer want next day delivery? All of this time takes you away from sourcing new products, or speaking with customers, or producing those emails to prompt new sales.
Now, how long do you think it would take for an order fulfilment company to process those same transactions, certainly a lot less time than it would take to do yourself, meaning the customer receives their order quicker, and you’ve saved that valuable time to focus on your core business.
Ok, so an order fulfilment company can save you time and effort. But they also cost money to employ, so is that saving worth it?
Most order fulfilment providers aim to reduce the amount of fixed costs eCommerce store owners face. Yes, there will be fixed storage costs per pallet or equivalent, on either a weekly or monthly basis, but often, that’s it. There may some fixed costs such as account management or IT support if required, but a good fulfilment company will work with you to find a model which works for both parties. All other costs can be activity related, meaning you only pay per order shipped, or per stock received from the supplier. This makes outsourcing eCommerce order fulfilment quite appealing in the early days, and well into the future as the business grows, as ultimately, an order fulfilment company will offer flexibility in cost and service, and the scalability in space and resource as your business grows.
There are often additional advantages of outsourcing order fulfilment. Delivery charges can often be reduced, as eCommerce store owners can take advantage of a fulfilment company’s volume discounts for shipping large quantities. This applies to both UK and worldwide deliveries. Economies of scale can also be achieved through packaging. Again, any fulfilment company is likely to buy in huge volumes, meaning that saving is passed onto the eCommerce store owner.
Then there’s their relationships with various carrier companies such as DPD, Hermes, DX and more. Its likely that the fulfilment company will have various delivery options you can offer to customers, such as next day, named day, 3-5 day, Saturday, or even Sunday deliveries, again, possibly at lower rates you can achieve yourself.
On top of all that, don’t forget the added expertise, and experience a fulfilment company can offer to help as your business grows. Simple things like laying out stock in an efficient manor to minimise the time it takes to pick, pack and despatch. Many order fulfilment providers such as Spark Response will also offer additional services such as product kitting, quality checking goods on arrival, and even product assembly or engraving. All things which can add a huge amount of time to your own day.
So, that’s it. Hopefully you’re ready to make those decisions on every step of your eCommerce journey. Just remember, stay agile, and make sure each vendor you choose offers the flexibility required to grow in the short term, and the scalability you require in the long term.
Notes. Spark eCommerce Group is a truly unique business at the heart of eCommerce. Combining Spark Response, of the UK’s leading providers of order fulfilment services, together with Spark Etail, owner and operator of several eCommerce stores, we’re ideally placed to drive growth in eCommerce. If you’d like more information, please contact us.