Create an online shop

Selling products and services online can have major advantages for businesses, leading to increased profitability and lower costs.

This guide tells you about the advantages of selling online, what you need to consider when creating an online shop and the pitfalls of getting it wrong. If you choose to work with a third party to build your online shop, this guide will help ensure you ask them the right questions.

The guide also explains some legal requirements and the traps that you should be aware of, as well as how to make sure that customers can find your shop on the web.

Benefits of selling online

Selling online has a number of advantages over selling by conventional methods, including:

• Making savings in set-up and operational costs. You don't need to pay shop assistants, rent high-street premises, or answer a lot of pre-sales queries.
• Reducing order-processing costs - customer orders can automatically come straight into your orders database from the website.
• Reaching a global audience, thereby increasing sales opportunities.
• Competing with larger businesses by being able to open 24 hours a day, seven days a week.
• Being able to receive payment more quickly from online transactions.
• Attracting customers who would not normally have investigated your type of high-street outlet.
• Improving your offerings using the data gathered by tracking customer purchases.
• Using your online shop as a catalogue for existing customers.

Online selling will work best for you if you have:

• well-defined products or services that can be sold without human intervention in the sales process
• fixed prices for all types of potential customers
• products or services that can be delivered with a predictable lead time

Many businesses can run pilot e-commerce sites without significant investment. However, a fully automated online shop tailored to meet your precise requirements could be expensive.

Whatever form of online shop you choose, take a strategic view. If you launch a website that disappoints your customers or is overwhelmed by traffic, you risk damaging your reputation and losing sales.

A basic online shop

The requirements for building a basic online shop are fairly straightforward. A simple setup allows you to sell a small range of products, providing photos, descriptions and prices as well as accept orders online.

The equipment and facilities you will need are a computer, Internet access, email, a website and hosting services. Using a broadband connection as opposed to dial-up will ensure fast connection to the Internet. However, the "always-on" connection means you may be susceptible to unauthorised access. Having a firewall will prevent this occurring. A firewall is sometimes included as part of your operating system.

You will also need a hosting package for your shop. There are many e-commerce web hosting specialists and it's worth shopping around for the best deal. While this service is not necessarily expensive, you tend to get what you pay for. It's important to study the service level guarantee and the type of technical support on offer. You should be looking for round-the-clock support.

Most customers shopping online will want to pay by debit or credit card. You can create electronic mail order forms, using various web authoring software available on the market.

These order forms let customers email their orders to be processed offline. If you already have a website, software can add e-commerce functionality. Some companies offer this free, on the condition that they receive a cut of future transactions.

A basic site is low cost and easy to create for a limited product range. However, be aware that the design and functionality may be restricted and it may be less secure than other more sophisticated options.

An intermediate online shop

To create an intermediate-level online shop you will need an e-commerce package. Facilities vary, but broadly you can expect catalogue management, enhanced order processing and a broader range of design templates.

Crucially, you can also expect encryption for secure ordering. Making sure checkout procedures are secure and user friendly are essential if customers are going to feel confident about ordering your product. Many people will abandon purchases at the checkout stage if the process is not quick and easy. Using Secure Socket Layer technology to collect card details (denoted by the "golden padlock" symbol in your browser's status bar) is key to encouraging online sales.

Some e-commerce packages offer a degree of back-end systems integration, ie they connect to your product database and accounts systems, streamlining the order process and keeping the website up to date. Update your site content regularly and you will encourage customers to come back to you rather than switch to a competitor.

If you use a broadband connection, you can also receive orders in real time and update your website automatically. Be aware that some Internet service providers offer combined web hosting and software packages, so it's worth doing some research.

An intermediate-level site can provide you with a professional looking design, full e-commerce and payment functionality and value-added features, eg account information, customer references and customer alerts. However, you should be aware that it may not suit you if you wish to offer more complex products and services.

A sophisticated online shop

A sophisticated online shop offers a huge range of options, including cutting-edge design and functionality. It can provide your customers with a rich, interactive shopping experience, including personalised pages and product news.

However, customers should not have to navigate their way past distracting graphics and animations. If they do not find it quick and easy to buy your products and services, they will shop elsewhere. Don't ask for personal details too soon. Most customers will not be prepared to fill in forms until they are ready to buy.

Having a sophisticated online shop can also make the running of the business smoother. Software can be integrated to trigger order confirmations and automatically dispatch goods and replenish stocks.

However, you should be aware that you may need the help of a design and development company to define your technical requirements and integrate the website with your existing systems. This could take longer to create, lock you into one service provider, and be very expensive.

Planning your online shop

Before building your website, you must create the right processes and procedures to support it, and put in place the resources to deal with orders.

You need to work out how to:

• deliver your products or services to fulfil customer orders
• collect payments
• maintain security and demonstrate this to the customer
• let customers contact you
• comply with regulations

You need to ensure that you can deliver goods or services in a reasonable time, ideally the next day. Your business should be ready to deal with calls, emails and queries about delivery - you may need extra staff. Test your website and processes thoroughly. Start with a soft launch - perhaps just to existing customers - before giving it stronger marketing support. Find delivery methods that keep charges low.

Customers may be wary of paying online. However, you can encourage them by providing a secure area on your website for placing orders and giving debit and credit card details. This can prevent late payment problems and helps to safeguard your cashflow.

You may wish to offer more than one payment method to customers, such as invoicing, particularly if you're selling to businesses, or paying by debit or credit card over the telephone.

With the use of encryption technology, virus-scanning software and a "firewall", e-commerce transactions can be as secure as offline ones. It's important to create confidence in your shop. A professional-looking website with an explanation of your security precautions will help.

Consider how to:

• handle debit and credit card details safely
• ensure that key information on your website cannot be defaced or altered fraudulently
• preserve the confidentiality of customer data such as telephone numbers, addresses etc

Customers will want to know that they can speak to a person if something goes wrong. Your website will need a contacts page including:

• your business name, address, phone and fax numbers
• an email address for enquiries or orders
• the name of the person to contact in the first instance

Regulations and selling online

If you are selling online there are a number of regulations and legislation that you need to be familiar with. These are in place to ensure that personal data customers provide is kept secure, goods and services meet quality and suitability standards, and online contracts are legally binding.

The Data Protection Act 1998 regulates how you deal with personal information held about living people, eg in customer records. The Act affects information that you have on computer as well as some paper-based records. In practice, it means that you need to be open about how you use information and follow the eight data protection principles.

The Consumer Protection (Distance Selling) Regulations 2000 require you to give your customers specified information before they place an order, eg your full company name and address and a description of the goods or services. You are also required to send the buyer order confirmation and give them a "cooling off period" in which they can cancel their purchase if they wish.

The Electronic Commerce Regulations 2002 specify what information about your business you must share with online customers, and how you should go about advertising and promoting your goods or services. If you set up a contract online, you must make sure that the customer can print and keep a copy of the terms and conditions. Furthermore, any commercial communications sent to customers must be clearly identifiable as such.

If your business is a limited company or limited liability partnership (LLP), under the terms of the 2006 Companies Act your website must show:

• the full name of the company or LLP
• the registered office address of the company or LLP
• the registered number of the company or LLP
• the place of registration of the company or LLP
• if the company is being wound up
• the VAT number (if VAT registered)
• membership details of any trade or professional association

Helping customers find your website

For your online shop to be effective, customers must be able to find it.

There are a number of things you can do to steer customers towards your website, including:

• notifying search engines - there are four major ones (Google, Ask, Yahoo and Microsoft's MSN/Windows Live)
• publicising your site through related websites - many individuals go to sites after seeing a link, an advertisement or a mention on another site
• negotiating joint ventures with other sites
• word of mouth
• advertising in traditional media
• adding your website address to all emails, letterheads and other stationery and to your business vehicles
• mailing or emailing your customers with a newsletter
• adding an email this to a friend button on your site

When you choose your Internet address (URL) or domain name, try to make it simple and easy to remember so that customers will be more likely to go to your site rather than those of your competitors.

If you want to build your audience it is essential that you are listed in web directories and search engines. But this can be a difficult and time-consuming process.

You can get your website listed or improve your search ranking using the following steps:

• Think about how people are going to find your site - pick key words and make sure they are in your page title and repeated further down the page. Ask friends and family to get involved with this for some objective feedback.
• Get as many websites as possible to link to your site - many search engines rank sites according to how many other websites link to them.
• Write a description of your site and the services it offers, and place it prominently on your home page.
• Be patient - it can take several months to get listed by search engines.

Avoid online pitfalls

Many e-commerce websites fail because of basic mistakes that are easily rectified. Customers will be put off by:

• out-of-date or incorrect information
• difficult site navigation and purchasing processes
• poor customer fulfilment and late delivery
• lack of customer support
• lack of business information
• poor visual design

So it is essential to:

• Make sure all information on your website, especially on prices, is up-to-date.
• Monitor the information you provide on a regular basis.
• Make it easy to find and purchase products.
• Make sure that resources and procedures are in place to support your website. This will ensure that orders can be processed quickly, emails can be responded to quickly, and helplines are manned by appropriate staff at reasonable times.
• Have your website professionally designed.

Remember - when selling through an online shop, you don't normally have any personal contact with your customers, so you need to try harder to find and keep them.

There are further steps you can take to increase the chances of visitors placing an order, and to make them feel more secure about buying from your site. These include:

• making your site easy to navigate and user-friendly
• giving a 100 per cent no-quibble money-back guarantee if they don't like or want the product
• making sure photographic images on your site are accurate and show products in their best light
• hiring a customer service representative who can give advice on the phone to customers on more complex or expensive products
• making ordering procedures straightforward and quick
• confirming orders immediately by email
• being honest - telling the customer if you can't deliver on time
• providing a way for customers to track down the progress and availability of their order

Here's how an online shop helped my business

David Madams
Commercial Lamp Supplies - Opens in a new window

David's top tips:

• "Contact your local Technology Means Business adviser on Tel 0845 600 9 006 - they can help you implement the right e-commerce solution for your business."

Commercial Lamp Supplies, an Exeter-based lighting consumables and fittings supplier, was enjoying modest success, but owner-manager David Madams wanted to raise sales without embarking on an expensive marketing push. Since launching its online shop the business has started exporting and boosted turnover by 20 per cent.

What I did

Define how the business will develop

"Before setting up our online shop we used to sell our products direct to other businesses through catalogues and sales representatives. In order to get the most out of our new sales channel we drew up a brief covering what we wanted to achieve.

"We decided that raising turnover and opening up new sales channels were the key objectives. But we also wanted the website to help us convert more enquiries into sales. We got so many enquiries by phone and email, which took up a lot of our time to process. We found that we were losing out as we did not have an automated process to capture these potential customers.

"Having identified these areas the online shop has really helped us to refocus our business plan. Turnover is up by several hundred thousand pounds a year and we've opened up new sales channels - we got a £70,000 order from South Korea just a week after the site's launch."

Integrate business processes

"Launching the website forced us to review and change how the business operates. Overall this has benefited the business enormously. By automating our processes we can track buying habits and use this data to improve our offerings. We've also overhauled our buying patterns, increased our warehousing capability and improved our delivery activities - saving us money. Customer orders now come straight into our database from the website, reducing our processing costs. More importantly the website has improved our cashflow. Since we've started accepting payments online we've been receiving them far sooner than before."

Use the website to raise the business' profile

"No matter how good your online shop is, if you don't update it people don't come back. So we've worked hard to ensure the website has a fresh look. By doing this and by using our company name as the URL, www.commercial-lamps.co.uk, we've been able to reach a much wider audience, giving us the ability to increase sales.

"We now sell across the UK and into parts of Europe and Asia. And because our business is effectively open 24 hours a day, seven days a week we can compete with much larger businesses. In order to maintain this performance we've registered the website on several search engines, which in turn is generating lots of enquiries."

What I'd do differently

Get full product listing on the website from day one

"When we launched the website we didn't put our full product range on the website - we didn't appreciate how big demand would be. This meant we couldn't fulfil all the order requests we were getting on some lines, while the others on the website weren't selling in comparable quantities."

Make the most of the help available

"Perhaps if I'd known more about the help available from Technology Means Business I could have used my resources even better. I now know that they can offer practical help with the whole process of setting up and managing an online presence for my business."

Reproduced courtesy of Business Link