With coronavirus blocking many traditional firms from operating as they would otherwise, now could be a good time to consider starting up an online venture. Christian Doherty outlines how to make an ecommerce offering succeed.
National Statistics published its most recent figures for the size of the UK’s ecommerce sector. Sales from online businesses reached £688 billion, rising from £582 billion in 2017 – an 18 per cent increase, representing the largest annual growth seen since comparable records began in 2014.
By comparison, research by Visit Britain finds the UK’s tourism sector generates £106 billion, while the automotive market accounts for £82 billion turnover and adds £18.6 billion value to the economy, according to the Society of Motor Manufacturers and Traders.
The current situation with coronavirus has seen demand for online products grow still further, particularly when compared to traditional sales channels. Figures for May 2020 were 27 per cent higher than they were from the same time a year before, according to research by software firm Bloomreach.
“There’s a huge sector here and small businesses should really be a part of it,” says Peter Mowforth, who runs a consultancy called Indez and has been instrumental in setting up the Institute for E-Commerce in Scotland.
“During the pandemic, ecommerce has grown further. Added to that, in the UK the average person spends twice online what the average American does. We’re leading the world here.” For many, the journey will begin on a marketplace such as eBay or Amazon. “It’s cheap and easy to set up, and you don’t face a steep learning curve,” explains Mr Mowforth. “It’s a great proving ground, because if your products don’t sell on those markets, the likelihood that your own site will do well is pretty low.” “Marketplaces really do offer a lot for the first-time retailer,” says Neil Warwick, FSB’s policy chair for EU and International Affairs.
In 2019, FSB published the report Destination Digital, which focuses on how small businesses are harnessing the internet to grow. “They get you in front of customers straight away and they can provide a range of services that might otherwise be difficult and expensive for a smaller firm,” says Mr Warwick. Those services might include anything from customer matchmaking to logistics, software and even hardware sales.
“For Europe in particular, they allow businesses to easily deal with country specific legislation: from VAT and invoicing requirements to the particularities of national contract law,” says Mr Warwick. “As a result they are an attractive option for small firms looking to access or test products in new markets.” Marketplaces have downsides, however: firstly they will take a cut, in some cases up to 30 per cent of the price.
The second, Mr Mowford points out, centres on customer ownership.
“If Amazon sells your product, the customers aren’t yours – they are Amazon’s,” he explains. “Any small business should want to own that relationship – it means you’re in control of pricing and the proposition. So handing everything over to a market place really needs thought.”
Carving out a niche
That issue was central to Gillian Crawford’s decision to launch her bespoke jewellery business Lily Blanche in 2014.Having sensed a demographic shift taking place, with bricks-and-mortar outlets showing flat growth as shoppers increasingly moved online, she felt going online created a real opportunity to find, engage with and upsell to new customers.
“We want to have a direct relationship with our customers and that’s really hard on the high street – we could see that both small boutiques and larger stockists weren’t the future,” she says. Having decided that ecommerce could be a way to grow the business quicker in 2016, Ms Crawford made the crucial decision to narrow her offering down to a smaller set of products delivered under the Lily Blanche brand.
“It really helps to have a niche of a niche,” she says. “Go specific: that way you can dominate your keywords. I knew that my customer experience was good, and I knew I wanted to automate and to sell in different ways. I also knew I wanted a scalable brand that competed on customer service and not price. I wanted to sell something with real resonance.”
However, while she was happy with her branding and product, the gaps in her own technical knowledge were soon apparent, prompting a series of realisations. “Primarily, we had to understand the power of Google, and to understand Facebook and other social media: they are powerful tools but you need to use them properly. Now, we’re an ecommerce business rather than a jewellery business,” she says, pointing out that any ecommerce business will generate results where it puts its focus.
“So go deep, not wide.” Once she had carved out her niche –lockets that can be customised to include precious family photos – Ms Crawford took care to time the promotion of her business correctly: “I didn’t begin to promote the business until we started to garner consistently excellent five-star reviews,” she says. “Reviews are hugely important. They are social proof.”
But how can a relatively unknown business generate enough good word of mouth to stand out from the crowd?
“First off, ask for them nicely,” she says.
“People often forget to ask or they ask at the wrong time or too aggressively. We try to respond to every single review. And say ‘thank you’ for the reviews: people have gone out of their way to leave feedback, so acknowledge it.” In addition to providing great marketing material, the words your customers use in reviews can help define the things you should be concentrating on in your Google ads and so on. “They are telling you what is important to them, so use it to refine your products and service,” Ms Crawford advises.
Making an impression
Claire Ransom’s online plant delivery business Lazy Flora, a subscription service delivering curated plants to urban professionals, also relies on good feedback and customer recognition.
“I knew I had to come up with a really good name that was easy to remember and told people what we did,” she explains. “Part of the research process involved checking what domains were free, and I was especially keen to get the .com domain that carries more weight in Google.”
Ms Ransom is clear, though: marketing a new product or service is a tough ask no matter what the channel.
“It’s the hardest thing to stand out from the crowd, especially if you haven’t got a marketing background,” she says. “Finding customers is hard and I did struggle for a while – we made mistakes trying to get traction. I knew it was a great product but it didn’t get anywhere for six months.”
So what changed? “It’s about consistency, being present on social media with content that people will engage with and share,” she says. “The tools of the trade are so different from the corporate packages I was familiar with. I was used to working in Word and Excel, and all of a sudden it became WhatsApp and Facebook Messenger. That takes some getting used to.”
In tandem with generating buzz and elevating the business up the search rankings, Ms Ransom prioritised finding the right ecommerce platform to help her grow the business and enable her to manage customer relationships, fulfil orders, take payments and liaise with suppliers.
Platforms like Shopify and Big Commerce form the underpinnings for most ecommerce businesses, combining a range of functions – from taking, compiling and tracking orders through an online store to taking payments and managing queries.
Dashboards and analytic tools are also really important, ranging from basic, free tools such as Google Search Console to more sophisticated modules embedded in Amazon, Facebook and other ecommerce platforms.
“They can tell you almost everything about your business – what’s selling, what margin you’re making, what’s not working, where your suppliers are,” says Ms Mowforth. “The key thing is to try, accept you’ll make mistakes, learn from them and keep going.”