What is e-commerce?

E-commerce or ecommerce is the shortened form of Electronic Commerce. To simplify what has become a very complex subject is to define e-commerce as the buying and selling of products or services over electronic systems such as the Internet and other computer networks.

The Worldwide Web or Internet has opened up a new way for businesses to interact and trade with customers and clients. Showing my age, I remember being visited by a forward thinking American business contact who showed me a new way he was using to communicate with a few people. I say a few people as only a few people had the technology. Yes, it was that thing that we cannot do without today, email. The system he demonstrated to me was not that easy to use and, as I say, there were only a few people outside the higher educational facilities who were using it. For that reason at the time I dismissed it. How wrong can you be! Within a year or so I was selling the benefits of email run by Compuserve and more importantly the information that could be accessed on their databases. That thirst for knowledge by corporations, journalists and then the public quickly drove the growth of more online databases so it should not come as any great surprise that someone should think of adding payment facilities so that ch arges could be made for products and services.

Does your business need to have an e-commerce offering?

There was a time when you could start up an enterprise in your town, become successful and attract custom from the surrounding locality. That success led to many sitting and dreaming about the possibilities should they be able to transfer the business model to other locations. While imagining the millions pouring in, reality kicked in and the prospect of having to finance the expansion became a daunting and frightening thought. Maybe it was better to make a good living without having to take the big risk on board.

If you have a thriving "bricks and mortar" shop why not expand with one single shop? That single shop is not made of bricks and mortar but sits on a big motorway with passing traffic counted in millions. You still have to attract those customers to come inside and sell them your product but it is possible as Amazon has proved.

A company may decide just to have a website instead of a full blown shop. Is this e-commerce? Well yes, the website is being used as a sales and marketing tool to entice possible customers to email or telephone for a brochure or price and maybe to place an order over the telephone following a conversation with the sales person.

The Internet has just not benefited the largest corporations but technology now makes it possible for work at home people to be involved in e-commerce and to compete in their specialised niches.

It has to be said that it is a distinct disadvantage for a company not to have at least a website these days. Before making a purchase, so many of us have taken to "checking out" the company on the Internet.

Identify your business opportunity

If there is one golden rule when starting to sell on the Internet it is to sell something that you understand and feel comfortable with. Selling on the Internet involves a lot of marketing. Customers do not just appear out of the ether to batter down your door and beg to be allowed to buy your goods or services. What you write and how you present your offerings becomes very important. You must sound convincing in your sales pitch as if a potential customer reads your pitch and has more knowledge than you do, you are doomed to failure.

You can have the best website or Internet shop in the world but if no one is looking to buy the products you are offering the enterprise will falter. The Information is there on the Worldwide Web. One good tip is to look at eBay and Amazon. You don't have to copy the individual products but look through the categories of product they have on offer. You can even look through statistics which tell you how popular the sectors are.

Do a search on Google or Yahoo for the products you have an idea to sell. Chances are that at first look you will see hundreds selling the same or similar product. Don't be put off, look closer at the search results and you will see that many are just advertising the main retailers shop and are looking to make commission. Find those main retailers and look at their site, do you think you can do a better job of presenting and selling product?

Having decided that your business could benefit from e-commerce what are the key issues?

The following is not an exhaustive list but covers many of the key issues that should be considered:

From a technology point of view it is very easy to start up an e-commerce operation. However, technology may be important but it is only a small part of the business. It is a tool to help you and is not the magic potion that will make your business a roaring success.
Start by thinking as if you were starting a shop from scratch.
You need to buy or rent premises to host your shop. This applies to bricks and mortar or hosting a shop or website somewhere.
It is important that you have a way for your customers to pay you. What do you need in place that enables your customers to pay you safely and securely by credit card?
What do you need to do that convinces potential customers that it is safe to trade with you?
What are you going to sell? If you already own a shop you may be thinking along the lines of all you currently offer in your shop. It is not quite that easy. Selling over the Internet means you have delivery costs. There may be items you sell where it will cost your customer just as much in carriage as it does to purchase.
Think about how you will deliver. Will you be selling enough to make it worthwhile having a contract with a courier? If not, do you give customers the option of first class, second class, parcel post, recorded delivery etc? What about international carriage and customs requirements? Yes, by selling over the Internet you now have an international customer base.
How will you charge for postage and packing? Based on weight, number of items or a flat fee?
The logistics of packing orders and ensuring all items and the correct items are despatched.
What is the best packaging method for the goods you are selling?
Will you part ship an order or wait until you have all required in stock?
Don't underestimate the space required for stocking and packing goods.
How will you handle returns?
What measures will you put in place to stop Internet fraud? Get this wrong and it will cost you a lot of money.
Your shop is open 24 hours a day, 7 days a week, and 52 weeks a year. Will you offer a telephone help and order line? If so, what hours will it be manned taking into account international trade?
E-commerce opens up a much larger customer base but at the same time increases your potential competition.

Solutions to consider

Once you have identified your niche, decided upon the products to service that niche and made the decisions listed above about the way you will service your customers, the next very big decision is the best technology solution for your business. It is possible to build a website and add a payments facility that does not require a shopping cart. If you are selling just a few perhaps expensive items where your customer is only likely to buy one of something this solution is very acceptable. But do think about the future, be clear in your mind that you will not be growing well beyond this and adding items that perhaps are necessary to complement the main sale. It can prove expensive to build one solution only to find it will not cope with expansion.

If you have a number of diverse items to sell and customers are likely to buy several items then a shopping cart solution is required. This can be plugged into your website and linked to your payments provider or you can "rent" a shop that all you have to do is add your product.

Examples of these two solutions can be seen at Candle Powerwhich does not use a shopping cart and JC Regaliwhich sells nearly 500 items both to The UK and internationally. Avondale Consultancy Limited were involved in the decision making process for setting up these e-commerce enterprises.