IS E-COMMERCE RIGHT FOR YOU

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1 IS E-COMMERCE RIGHT FOR YOU Introduction Electronic Commerce, commonly referred to as e-commerce, involves the buying and selling of products or services over the Internet, mobile devices, or other forms of electronic or computer network. Moving your home business online does not mean you must enter the world of e-commerce. There are many options available to you when using the Internet to sell goods and services, ranging from: Using contact forms to answer questions and arrange face to face sales Using online marketing to help people find your website, place an order, and then use bank transfers to pay you Using third party online marketplaces, such as ebay, Etsy, etc Using your website to sell goods directly through simple Buy Now buttons Using your website to sell goods through a complete shopping cart systems Each of these alternatives have pros and cons. Shipping and Logistics No matter which e-commerce alternative you choose, you will need to make a number of decisions before you start selling goods online. These include: shipping costs and logistics, including insurance refund policies payment systems decisions about selling within Australia, worldwide or into selected overseas markets Step 1 Market selection It can be risky selling fragile or expensive items online, especially into overseas markets, due to them being damaged or stolen in transit. Other considerations of where you will sell your items, involve import laws and postal regulations within Australia and the country you are sending to. Australia Post offers a helpful summary on its website ( international-post-guide.html). You will see that most restrictions relate to: parcel size/weight restrictions prohibition or restriction regarding product type, eg, you cannot post coffee to the USA A further complication when sending overseas is that items often take longer to arrive than your customers expect, especially when standard postage is used. This can be bad for your business if you are selling through marketplace websites like ebay because customers on these sites leave public feedback for you and if they give you negative feedback it can harm your reputation. It is also important to understand that some countries will charge import duties on your items. While you should be clear on your website or product listing that the customer will be responsible for duties, many customers will use this as an excuse for rejecting your shipment. In some cases, this means your products will be destroyed by customs offices. Before you start selling to customers in different countries, it is best to research each country s regulations for importing your products and start by only selling to those countries where there are no obstacles or heavy duties. You might also find some restrictions on selling things interstate here in Australia, especially if you sell food items because many states and territories have particular restrictions on items crossing borders. Check with an industry body or Consumer Affairs or Trade department if in doubt.

2 Step 2 Shipping costs Where possible, covering your shipping costs within the price of your items, at least for the Australian market, so you can promote free shipping, will provide you with powerful selling messages online. But whether or not you can offer free shipping, make sure you have researched shipping and packaging costs thoroughly. The three most common approaches are: Using fixed price satchels via Australia Post for domestic deliveries Calculating postage per order (some selling systems allow you to connect to an Australia Post calculator so your customer can see exact postage costs per item) Opening an account with a freight or courier company If your business is successful, you will be shipping regularly, so the shipping and packing system you choose needs keep your prices competitive and cover the cost of your time. For example, if you take too long packing and addressing the goods you sell, an increase in sales will make you late with your packing and cause delays for your customers.. Some of your items will get damaged in transit or go missing. You must decide whether to wear this expense or plan for it by: insuring items using registered post where customers have to sign at delivery to prove the items arrived Registered post offers you security but can be inconvenient for consumers if they miss the delivery. It usually means they have to go to the post office later to collect it in person. Step 3 Refund policies There will be times when some customers ask you for a refund. A popular trend online is to offer generous refund policies to encourage consumers to trust buying from a virtual store. Your decision should consider: What conditions most competitors offer What costs you can absorb within your products/services What steps you need to take to ensure you can claim for damaged or not as described goods with your supplier (if you have one) As a general rule, many e-commerce merchants give customers 7 or 14 days to inspect their goods and make a claim. If an item is to be returned, some sellers pay the postage, others don t. As a merchant, you can offer to replace items or refund money. While it is important to meet standard refund criteria under the Trade Practices Act, many e-commerce sellers take a no questions asked approach to refunds to make sure their customers have a positive experience and talk highly of them among their friends. Step 4 Payment systems When arranging face-to-face transactions, you can offer cash and cheque, but when transactions occur online, you will need to decide on a payment gateway. A payment gateway is the service that allows funds to travel from customer to seller. In the case of bank transfers, you give the buyer your account name, account number and BSB number, and they deposit money into your account. Money transfer protocols between your bank and your customer s bank provide a very basic payment gateway in this instance. There are a number of examples of payment gateways that are a available for example PayPal, PayMate, Skrill, eway, etc.

3 As an example of these services, PayPal transfers credit from your customer s PayPal account to your PayPal account. The service has no monthly fees but levies a charge per transaction. You are responsible for downloading funds from your PayPal account to you bank account. See the guide to Opening A PayPal Account for more details. Merchant accounts with your business bank can be another form of payment gateway. Your bank provides you with an online system for accepting payments from customers, with money deposited into your account directly. Typically, monthly fees and transaction fees apply. Using online marketing to arrange face to face transactions This is the simplest of the e- commerce alternatives to use when selling your goods and services online. You simply use your website, blog, or social network presence, to promote your items for sale, answer queries and direct any contact from interested consumers to a physical meeting place. There are no extra technical overheads with this approach to e- commerce, other than a simple website, blog or social media profile You do not risk sending goods via the postal system Meeting strangers face to face always carries some risk. Be sure to meet in a public place, such as a market (if you are a stallholder) or business venue. You can t be in two places at once. If you start selling lots of items you will find it harder to meet all your customers at times and places that suit them, which might lose you some sales. Using online marketing to arrange bank transfers This approach to e-commerce uses your online marketing to capture order details online. You then send your customer the amount to pay and your banking details to pay into via your phone or . While you don t need a shopping cart facility, this method can involve use of a feedback form on your website, which can be pre-filled with goods/ services you have for sale. All your customer has to do then is tick boxes next to items they want to order and submit their contact details to you online. You then follow up via phone or to arrange payment and logistics. There are few extra technical overheads with this approach to e- commerce, other than adding an optional form on your website. You can conduct the transaction virtually. Handing out banking details to strangers does carry some risk of identity fraud. It is prudent to use a dedicated business bank account. This will make sure transaction amounts are kept within the limits of the account and that your personal details are a little more hidden. Many customers prefer using credit cards online, because banks tend to protect customers against fraud (making them safe to use) and most cards give users reward points when they spend.

4 Using third party online marketplaces There are a number of third party online marketplaces available, for example ebay, Etsy, QuickSales, Gumtree, etc. These sites let you list and sell your items in an existing marketplace that is promoted and protected by established corporate systems. While most marketplaces are free to join, typically fees are charged for: Listing items for sale Selling an item Promoting an item within the site Enhancing your profile with various subscription levels and promotional elements Established sale item formats make it easy for you to list and display your items in an appealing manner. Established third party marketplaces promote traffic to their sites, providing you with a greater chance of being found by buyers than relying on you to publicise and promote your own website Internal reputation systems help keep sellers and buyers honest these systems are not fool proof You can easily view competitor listings and adjust yours as needed You are operating on someone else s turf where rules and fees can change overnight. This means profit margins need to be able to absorb changes and a contingency plan should be in place should you need to leave, or get locked out of, a marketplace Buyers can easily compare your goods/services with competitors, often leading to downward pressure on prices in some categories Reputation systems often favour buyers, forcing you to be more flexible with consumer demands than might be viable, in the interest of protecting your reputation in the site Using your website to sell goods directly through simple buy now buttons This method of e-commerce involves using a payment gateway such as PayPal, allows you to configure unique buy now or add to cart buttons for each product or service you wish to sell. The payment service generates some web code which is placed on your website, making a buy now or add to cart button to appear. When a buyer clicks the button, they are taken from your website to a checkout page on the payment provider s website, where they can fill in their details and make payment. You and the buyer both receive a confirmation . You can provide online transactions without the expense of establishing a shopping cart or paying monthly fees to hosted shopping carts You do not need to collect credit card information because that is handled by the Payment Gateway provider, ie, PayPal or similar This method of copying and pasting buy now or add to cart web code for each item gets tedious when you have more than 30 or so products to list. In these cases, an automated shopping cart might be a better choice It is easy to corrupt the web code when copying and pasting, especially if your website admin screen can switch between a pure code view and a more user-friendly view. See our topic on How to set up a PayPal account and load your inventory.

5 Using your website to sell goods through a complete shopping cart system A shopping cart facility lets buyers browse your online store, add items to their cart, review and change how many items they have in their cart, and then pay for them on your site. This is the most involved of the e- commerce methods but one that can grow with you as your product/ service range expands.when using a shopping cart you will find that taking a standard approach to item listings will give your site a more trustworthy and consistent feel. Apart from the general e-commerce considerations mentioned earlier, a shopping cart performs best when you: set categories around product/ service type, brand, and/or usage occasion set sizes for product/service images a feature image for each and a thumbnail (smaller) version so that your site can display a small image in an index-style listing but a large image when a potential buyer has clicked into a specific product s listing on your site have decided how inventory levels will be tracked manually or within the shopping cart Buyers benefit from the convenience of being able to add items to a shopping cart, review them and process a transaction without leaving your site You can still connect a Payment Gateway (such as PayPal, etc) to your your shopping cart, instead of you having to handle credit card security directly Shopping carts can grow as your inventory grows, with many able to handle thousands or tens of thousands of items Establishing and/or maintaining a shopping cart can be expensive Even simplified shopping carts can be demanding to establish and benefit from site owners having a sound understanding of website content management systems What else can you do? Other topics related to this one include: accounts and online security developing a website building an online presence Your shopping cart will be: hosted on your website hosted on a third party site and embedded within your own site linked to from your site Setting up a shopping cart can be demanding and is best done by someone with experience, so many home business owners tend to start with a simpler method, as detailed previously, before committing to the expense of establishing a shopping cart.