Showing posts with label Online retailing. Show all posts

Pros and cons of online retailing

Pros

Online retail has many advantages for both the retailer and customer. For consumers, buying online has great advantages in terms of convenience and increased product availability. For cash strapped entrepreneurs ‘online’ has the advantage that the barriers to entry are much lower than traditional retail. In addition, the mechanisms and channels required to sell online, such as online marketplaces, are well established and so there is a wealth of experience and advice to draw upon.

1. Easy to start using online marketplaces
Sites such as eBay and Amazon make it easy to start selling online. These marketplaces have huge, international user bases which allow entrepreneurs to get selling quickly. Very limited technical knowledge is required, although a basic understanding of HTML can help to make listings more visually attractive. There are also very low set up costs to sell on eBay or Amazon, with the marketplaces charging a small fixed charge plus a commission (around 10-15%) if the item sells.

For people with more technical know-how, setting up a transactional website is nothing like as difficult as it used to be and there are lots of solutions available off the shelf at a very low cost or even for free. OS commerce and Magento are popular open source solutions for creating an online shop.

2. Start small on a limited budget
By avoiding an expensive high street location, an online retailing business can be started on a very limited budget. All that is required is some stock and an online presence on eBay, Amazon or your own website. This is all easily achievable for around £2000-5000. It is also perfectly possibly to start selling from home, especially if the product chosen can be easily stored, for example beads or jewellery.

3. Sales 24-7, worldwide
Unlike a high street shop, sales on the Internet can be made 24-7. The Internet also opens up a business to an international audience. Around 20% of eBay sales are international and the current strength of the Euro makes UK prices attractive to people in the Eurozone, even when additional postage is considered.

Cons:

Although online retail has many perks, we must also be aware of the pitfalls.

1. Admin intensive
Running an online shop is hard work. Creating product listings are time consuming and maintaining the product catalogue is a never ending job. The recent VAT increase, for example, meant that retailers had to reprice all their products. In addition all sales should be packed and dispatched on a daily basis.

2. Customer service
There is no getting away from it, customers can be a pain. Being a retailer involves dealing with the general public and so it is important to be patient.

3. It can be solitary
Running an online retailing business involves very little face to face customer contact and so can be a little lonely.

4. High competition, low margins
Let’s face it, the web is where people go to get bargains and consequently competition is fierce. Margins in online retail tend of be lower than on the high street and so retailers need to compensate by selling more.

Reduced overheads – in general, an online store costs less to set up and run than a physical shop, although it’s important to recognise that making e-commerce work requires continuing investment.
Lower marketing costs with better targeting: online promotion can be more precisely aimed at potential customers than using conventional media. It’s also much cheaper, for example, to send a marketing message by e-mail to 1,000 customers than it is to send 1,000 newsletters by post.
Expanded geographical reach: a local business can become nationwide or, depending on the product, international, just through having an effective e-commerce strategy. Bear in mind that if you do sell outside the UK, you’ll need to comply with regulations and understand tax and import/export issues. Find out more at the Open to Export website.
Being open for business 24/7: with automated order and payment processing, sales can be made at any time, and customers can buy when it suits them. Research* shows that the most popular time for online shopping is 12pm to 2pm weekdays, and on Sunday evenings.
Greater flexibility: an online store can be updated instantly and as often as you like – for example, to promote a ‘deal of the day’ on your front page, without the need for expensive printed display material.
Broader potential customer base: an e-commerce business is an additional buying channel, capable of attracting customers who have not bought before.
Improved customer profiling, with the opportunity to target products and services at specific groups based on buying data.
Increased visibility for your business: with investment in search engine optimisation and online promotion, an online shop becomes more accessible to customers searching for your products.
The ability to tell people about your business: this is particularly valuable when an online store operates alongside a conventional high-street outlet, providing information about opening hours, contact details and answers to Frequently Asked Questions.
Another marketing channel: your online store can support your digital marketing efforts by including customer reviews and testimonials.

Brick-and-mortar stores still matter!

Moms love the convenience of online shopping – she can make a purchase in seconds from the comfort of her home. It means no more long lines with the kids in tow, and one less thing to add to her to-do list. However, there are certain in-store experiences that moms cannot get online. For instance, clothing can’t be tried on prior to purchase and toys can’t be felt for durability.

On the other hand, brick-and-mortar stores may not offer the seemingly endless selection that online retailers do. Additionally, their reliance on foot traffic and word-of-mouth to drum up business may put them at a disadvantage. Despite these benefits and drawbacks, both types of store are valued by moms and chosen for different reasons. Who will win the battle over moms’ spending power? Brands must keep the pros and cons of each in mind as they market to moms.

Here is a quick overview of the benefits of each retail approach, and how it affects moms:

Why Brick-and-Mortar Stores Still Matter:

61% of consumers shop in-store, compared to only 31% who turn to the internet. This is good news for brick-and-mortar businesses. One of the largest drivers for in-store shopping is the ability for customers to receive the product immediately. Until eCommerce can find a less expensive solution for same-day or 1-day delivery, in-store shopping will continue to win on this point. Also, moms often shop as a social activity – whether it’s to look for new clothes (and get a second opinion) or as a day to browse with friends. This experience simply cannot be replicated online.

A major benefit for brands that operate brick-and-mortar stores is the way in which consumers spend their money while shopping. 40% of shoppers spend more than they had planned to while shopping in stores, while only 25% of shoppers do so when shopping online. Beautiful storefronts and point-of-purchase displays can strongly influence moms to make an impulse purchase, and are much harder to ignore than online ads.

Moms may also enjoy the personal connection with store employees, a well-executed store atmosphere, and the ability to touch and hold products before purchase. All of these aspects can lead to higher in-store purchases. Apple, Whole Foods, and Nordstrom’s are a few companies that have done an excellent job of training employees to be knowledgeable about their products and services. This is important more than ever, as consumers don’t get this immediate assistance when they shop online. They may read review after review, but it’s not always as helpful as in-person assistance. Brands must remember how crucial this is as they control how their store is operated. Keep moms in mind, and you may see an increase in sales.

The Many Benefits of Online Retailers:

For brands, the eCommerce route can have many benefits over a brick-and-mortar store. They don’t require expensive storefronts; instead, more cost-effective warehouses are used to hold inventory. With multiple warehouses, brands can ship products quicker via online orders, and moms can receive products faster than ever before. The convenience of shopping online is arguably the greatest benefit, as consumers can select a product and purchase it within minutes. Moms can shop after her kids are already in bed, or on a smartphone as she’s out doing errands. This has opened up countless opportunities for brands, as advertisers discover new ways to target moms where ever they are, in order to encourage immediate purchases.

Moms also love to shop online because it allows them to find the best price for products. Whether they follow the brand on social media for exclusive deals or search for online coupons, moms can find a product they want and save money at the same time. In fact, 38% of moms visit manufacturer websites in search of coupons. They can also more efficiently find the best price across many different websites, instead of having to visit many different stores.

Which Will Moms Choose?

For moms, both brick-and-mortar stores and online retailers have their advantages, but which one will she continue to shop? Ecommerce is a rapidly growing industry, but until the Internet can provide all the benefits of in the in-store experience, physical stores will continue to be in demand.

However, in-store experiences will need to grow and evolove in order to continue to compete with the convenience of online shopping. Brands need to go above and beyond expectations and provide an enjoyable, convenient shopping experience. This can be done as brands incorporate new technologies into stores to make the shopping experience more efficient, and continue to offer helpful resources for customers. The biggest challenge for brands is to create one flawless and integrated system to incorporate online and in-store shopping together. The brands that can discover a seamless way to make shopping both online and offline connect will be the most successful.

Moms expect a high level of service and dedication from all brands, whether they are shopping online or in-store. Both methods have opportunities to grow and improve as technology continues to advance. To learn more about moms’ online habits, download our free white paper.

Benefits to retailers of e-commerce

7 Benefits of Ecommerce for Retailers

Friday, 10 July 2015

Sahra Ashton

We’re halfway through the year, and it’s apparent that ecommerce won’t be slowing down anytime soon. Not only are more businesses looking to establish online stores but also they are looking to develop their stores. According to Invesp, ecommerce sales is growing at 10% each year in the U.S. alone and 19% worldwide.

For shoppers, the benefits are plentiful. Shopping online saves time, offers a greater product selection and allows for cost savings in terms of taxes, the price of the product and money saved on gas. For retailers, the benefits are equally abundant. Let’s take a look.

1. Establish an Online Presence

More than 80% of the online population has used the Internet to purchase something. Your customers expect you to be available, and this presence allows you to keep up with the competition. Otherwise, your audience will be flocking toward your competitors to make an online purchase.

2. Attract New Customers

As a business owner, you want to grow your business and attract new audiences. Physical retail relies on branding and customer relationships, but online retail has the added benefit of driving traffic from the search engines. If a customer is doing a search for photo editing software, for instance, they may land on your company even though they’ve never heard of you before.

3. Save on Operational Costs

Running an ecommerce store can actually save you money. How? With a web-based management system, you can automate inventory management and decrease the costs associated with it. Also, running an ecommerce store doesn’t come with the same overhead costs as a physical store. The additional profit that is made from reaching more customers will offset any initial setup costs.

4. Better Understand Your Customers

It’s difficult to build a customer persona when you’re running a mom-and-pop shop. You can get a rough idea of who your customers are, but it’s based on your perception rather than actual data. With an ecommerce store, you have the ability to track your customers’ buying habits. What products are they most interested in? When are they likely to buy? What motivates them? All of this information can be used to sell more efficiently to your customers.

5. Boost Brand Awareness

Ecommerce will help your brand get more awareness in the online landscape. As you develop more web pages, the search engines can index them and boost your placement. It’s important to use good keywords in your content that are optimized for your audience, as this is what will drive traffic to your site. As your site gets more visibility, people will become familiar with your brand and reputation.

6. Equip Customers with Information

When you have an ecommerce site, you can provide as much information as you want, which customers appreciate. From the product description to customer reviews to shipping charges, you can arm shoppers with the information they need to make informed buying choices, and you don’t need to provide the staff to answer these questions. This leaves you with more time for other tasks around the workplace.

7. Drive Conversions and Sales

When you open up your business globally without any geographical or time constraints, you capture new audiences that you wouldn’t be able to reach otherwise. With a well-designed ecommerce site and a quality product, you can drive conversions and sales and experience a new level of growth. Analytics also helps you fine tune your marketing strategies so that you’re reaching the right audience.

Online Retailing

Businesses with an interest in online retailing can go any one of several routes. Some businesses, such as Amazon and Netflix, dispense with the cost and staffing requirements of a brick-and-mortar store and exist only on the Internet. Other companies, such as Barnes & Noble, use their store and their website as two separate sales channels. In addition to conventional retail, online sales also include business-to-business transactions and consumer to consumer sales, such as eBay offers.

Online Advantages

Using the Internet as your primary sales channel offers multiple advantages. Building a website is cheaper than opening a store, and you can reach customers online anywhere in the world. Shopping is easy and comfortable for customers, and you can customize their experience based on past sales and preferences. Some businesses still work better offline, however: Clothes shopping, where there's no way to confirm the fit until the customer tries the outfit on, doesn't adapt as well to e-commerce as selling books or ordering flowers.

Multiple Channels

Instead of adding a second sales channel to your brick-and-mortar operation, online retailing may be able to add several. The TWO Chemical Logistics firm, for example, has set up a web portal that chemical producers and other companies in the industry can use to sell their services or products. Users can use TWO's portal rather than set up their own online sales site or they can use it as a second channel.

Considerations

Even if your brick-and-mortar store is your major sales channel, there are still advantages to having an online presence. Consumers who don't want to shop online may still do research, looking up product specs, studying dress designs and comparing your prices to those of your competition. If you decide to move into e-commerce with your own website, you'll have to do it right: An attractive site that's easy to use and to navigate is essential if you want visitors to return.

Read more

Online retailing

Advantages and disadvantages of online retail

Online retailing is growing at an astonishing rate, with online sales now accounting for around one quarter of the total retail market. Retailers who ignore e-commerce may see their trade lessening as customers continue to shift to ordering products online. However you need to think carefully and weigh all the advantages and disadvantages - backed by good market research - before deciding on whether or not to trade online.

Advantages of online retail

The benefits of retailing online include:

Easy access to market - in many ways the access to market for entrepreneurs has never been easier. Online marketplaces such as eBay and Amazon allow anyone to set up a simple online shop and sell products within minutes. See selling through online marketplaces.
Reduced overheads - selling online can remove the need for expensive retail premises and customer-facing staff, allowing you to invest in better marketing and customer experience on your e-commerce site.
Potential for rapid growth - selling on the internet means traditional constraints to retail growth - eg finding and paying for larger - are not major factors. With a good digital marketing strategy and a plan a scale up order fulfilment systems, you can respond and boost growing sales. See planning for e-commerce.
Widen your market / export - one major advantage over premises-based retailers is the ability expand your market beyond local customers very quickly. You may discover a strong demand for your products in other countries which you can respond to by targeted marketing, offering your website in a different language, or perhaps partnering with an overseas company. See exporting - an overview.
Customer intelligence - ability to use online marketing tools to target new customers and website analysis tools to gain insight into your customers’ needs. For more information on driving sales through online advertising see how to develop an e-marketing plan, and for advice on improving your customer’s on-site experience see measuring your online marketing.

Disadvantages of online retail

Some negetives of online retail include:

Website costs - planning, designing, creating, hosting, securing and maintaining a professional e-commerce website isn’t cheap, especially if you expect large and growing sales volumes. See common e-commerce pitfalls.
Infrastructure costs - even if you aren’t paying the cost of customer-facing premises, you’ll need to think about the costs of physical space for order fulfilment, warehousing goods, dealing with returns and staffing for these tasks. See fulfilling online orders.
Security and fraud - the growth of online retail market has attracted the attention of sophisticated criminal elements. The reputation of your business could be fatally damaged if you don’t invest in the latest security systems to protect your website and transaction processes. See security weaknesses.
Legal issues - getting to grips with e-commerce and the law can be a challenge and you’ll need to be aware of, and plan to cope with, the additional customer rights which are attached to online sales. See the law and selling online.
Advertising costs - while online marketing can be a very efficient way of getting the right customers to your products, it demands a generous budget. This is especially true if you are competing in a crowded sector or for popular keywords. See generate business from your e-marketing plan.
Customer trust - it can be difficult to establish a trusted brand name, especially without a physical business with a track record and face-to-face interaction between customers and sales staff. You need to consider the costs or setting up a good customer service system as part of your online offering. See manage your customer care.

For detailed guidance on the problems you might encounter selling online see common e-commerce pitfalls.

Source: here