By Adam Gore, managing director of www.find-me-a-gift.co.uk
The Interactive Media in Retail Group (IMRG), which is the voice of e-retailing, reported that Britons spent an estimated £4.9bn shopping online during April 2011.*
The evidence is plain to see: last week ASOS reported a 41% increase in sales, just one of the many online retailers flying in the face of the recession. In fact, the total spend online for both January and February 2011 reached a massive £10bn, compared to £8.3bn in the same period last year, and recent reports suggest that, in contrast, the high street has seen its lowest sales growth in two years. With figures like this in the current climate, who wouldn’t want to start up their own online business?
So, you’ve got an idea, you’ve researched it and you know it’s viable. You’ve got the passion to make it succeed and you’re not afraid to take a risk or two along the way. The competitor analysis is done, you have a company name and brand, and you have a unique proposition which is going to take the market by storm. What’s next?
Below are just some of the top tips that I can share – of course there’s a lot more to it, but get the basics right below and you’ll have a strong platform on which to build. Good Luck!
•Business Plan – a business plan is essential for so many reasons. Fundamentally it shows whether the business is viable and it gives you a guide of what income and expenditure is required to make the business succeed. It can also be used to attract investment or support from the bank. Crucially it provides a plan to work towards. Be sure to review it every month to see how the business is doing compared to the plan, as it’s very easy for each month’s income to be below target and expenses above, which could add up to a significant loss over 12 months.
Also, it’s possible to get dragged off on a tangent and attracted by the latest proposition that someone dangles in front of you, so planning and reviewing for this reason is crucial too. That’s not to say you can’t amend or tweak the business plan; the best ones are flexible and do change as new opportunities present themselves.
•Find a good accountant – this will ensure you focus your time on developing the business and not worrying about book keeping, expenses and receipts. Do make sure you work with them to understand what they are doing and why they are doing it, and ensure monthly or quarterly management accounts are produced so you understand how your business is doing. These also allow you to forecast and budget.
•Funding – depending on what you’ll be retailing, you will need varying levels of investment. One of the main benefits of retailing online is that you can run the business from your own home; you don’t need an office or shop, or in fact any rented storage space at all. This keeps costs to a minimum and means a simple bank loan may be enough to start your business.
The Face of your Company: the Site Itself
•Revenue – consider how you will make revenue from the website. Will your model be a transactional website selling products or services online, like www.find-me-a-gift.co.uk, or will you be looking to increase revenue further through selling advertising space to suppliers (or to unrelated companies)? Consider your main routes to revenue before you map out your website.
•Control – ensure you have 100% control of your site. Each day when you wake up, the first thing you will do is check your orders. If your orders are lower than expected, check that your website is functioning correctly, from ensuring the images load properly to checking people can put items in the basket and pay. To be able to manage this properly, it is crucial that you can edit text and images immediately. You can’t afford – either time-wise or cost-wise – to rely on a third party to do this for you. It still surprises me when I find out people haven’t thought of this, as a good web designer should advise on this immediately.
•Design – for an online retailer, navigation and functionality is everything – you want the consumer to take the smallest amount of clicks possible to reach the information they need and buy. In addition to considering if the site is easy to use, does it look professional and is it aesthetically pleasing – do people enjoy spending time on the site? Test on focus groups and get their feedback, and then actually make the changes they’re suggesting. Don’t disregard their opinions; if they have trouble it’s likely that others will to. Then test again and make more changes if necessary.
•Payment options – consider how people will pay. Ideally this will be by credit card, but some products or services you sell may appeal to people who typically don’t have credit cards, so consider how you would then take payment (and consider if you want to revise your offering). Security and reassurance must be the first issue you address, so recognised logos on the checkout page can help to ease a customer’s mind.
•Promotion– it’s not enough to have the best website in the world, if no-one knows it’s there. Consider how you can promote the site cost effectively. This could be a mixture of pay per click (PPC) eg google adwords and search engine optimisation (SEO), combined with PR. Would social media work? If so, use Twitter, Facebook and put videos of your product or service on You Tube. There’s no hard and fast marketing mix rule, and every retailer is different in their approach. Take time to set up Google Alerts for your key competitors and see what they are doing online – it can’t hurt to take a closer look!
Some Final Words
•Start slowly and take your time - www.find-me-a-gift.co.uk started off ten years ago, based at my house. With a full time job, I worked on the site out of hours and at weekends. I gradually built the business up to a level which meant I could afford to leave my regular employment. Some people would consider this a risk, but the confidence gained in establishing the site while knowing I had a secure job which paid the bills meant when the time was right, it wasn’t actually as big a risk as it seemed, although it still felt like a massive decision! Take your time and get it right – the nature of being an online retailer means that when there’s a mistake, customers will turn immediately to a competitor and could choose not buy from you again.
•Fulfil the orders - what will happen if you go on holiday or you need to take a day off if you’re sick? Who will ensure the online orders are posted out to recipients? Orders must be fulfilled as quickly as possible and this should be a major contingency that all new online retailers consider as a priority.
•Advice – get a mentor. This doesn’t need to be someone directly involved with internet retailing; it could even be a stranger. It’s important to have that third eye watching out for the business, and it provides you with someone to bounce ideas off. It can be more valuable than you’ll ever realise.