Four Questions to Ask Yourself Before Making the Leap into E-Commerce

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When thinking of developing their online presence, a lot of businesses and startups automatically think about e-commerce. However, e-commerce is not as easy an undertaking as one might think. In this article we are going to look into the four main questions any business or startup should answer to find out if e-commerce is the right solution for them.

Four-Questions-to-Ask-Yourself-Before-Going-into-E-Commerce

At Bookwitty, we’ve built an e-commerce platform from scratch, which we now run daily. So we know the effort and work that goes into selling products online. Right off the bat, e-commerce requires a large investment of time and money with no guarantee of success. So entrepreneurs and business owners need to weigh the pros and cons of selling online before they sign up to it.

1. How complex is the product I’m selling?

Before jumping into e-commerce, you need to take a hard look at the product you intend on selling. The complexity of this product will determine whether it is e-commerce ready. Ask yourself, “Does my product need an experienced salesperson to sell it? Or will it simply, sell itself?” If your product does need a salesperson behind it, then an offline store or face to face sales is probably the right way to go. On the other hand, if a simple product description and reviews are the only selling points you need, then e-commerce might be for you. So for example, if you are selling an expensive medical device, you might need the backing of an expert salesperson to close the deal. On the other hand, if you are selling a book, all you need is a short description of the synopsis and a couple of positive reviews.

Another factor to look into is whether your customers are looking to buy similar products to yours online. If they are, then you should seriously start considering e-commerce as an option. To find out whether customers are looking to buy your product online, a simple Google keyword search is enough to reveal the volume of people looking for the product online.

2. Are My Competitors Selling Online?

As you consider e-commerce, take a look at what other businesses around you are doing, especially your competitors. Simply put, if your competition is successfully selling online then so should you.

Whether we like it or not, the online market continues to grow at a rapid pace. So if your competitors already have an e-commerce presence, then they are eyeing a portion of the market that is up for grabs. Unfortunately the longer you wait, the more you risk to miss out on a share of that market. The first brand to venture into e-commerce has a heavy cross to bear, as it takes on the costs of paving the way for others. Nonetheless, it is the one that racks up the most experience points. Whether it be about how to efficiently pack and ship products, or how consumers behave when buying online, your rivals are building more capabilities as a result of this. So as you decide whether e-commerce is right for you, remember to ask yourself, “Are my competitors already successfully selling online?”, and if the answer is “yes” then time is of the essence.

3. Is My Team Ready to Migrate Online with the Business?

Business owners need to determine whether their team is ready to take on e-commerce or not, and how much support and training is needed to get the organization to catch up. This is especially tricky for traditional organizations who have been successfully running offline stores. Traditional business owners might have to convince and train their team to transition from offline to online commerce. This is because, a staff, no matter how experienced they are in running a brick and mortar shop they might get lost in the digital environment. E-commerce requires a whole new set of operations and tasks, such as order fulfillment, and managing the website’s frontend and backend for example. So you need to make sure your staff is ready and well equipped to take all of this on.

A few useful questions to ask yourself are: “Does my team know how to pack and ship a product? Are they tech savvy? Are they ready to handle online customer service? And do they have the right linguistic skills?” For instance, you might have a frozen viennoiserie store in Paris, and through your e-commerce platform you wish to sell in England. Your staff will need to speak English to communicate properly with these potential customers.

4. Will this Digital Undertaking Result in a Positive Return on Investment?

As we have previously stated, segwaying into e-commerce requires a considerable backing of time and money. So before jumping in with both feet, make sure your venture will have a positive return. In other words, will the profit you acquire from e-commerce outweigh the investment you put into it. This can be done through a simple exercise: by taking a look at your projected income, and more importantly at your expected costs. Ask yourself, “What are the different things I will need to pay for in order to run a successful e-commerce enterprise?” There a dozen of cost checklists online that can help you pinpoint these factors. We recently detailed them in a post about Which Costs to Look Out For When Launching an E-Commerce Business.

Keep in mind e-commerce takes a long time to break even. However, most successful e-commerce businesses witness a massive growth in the first five years in order to eventually become cash positive. To determine whether you will have a positive return on investment, you need to draw up a three to five year plan that takes into account your costs, your cost drivers, your expected growth and every other factor that can influence this outcome. It is only by doing so that you will figure out if you are ready for e-commerce.

E-commerce is not an easy venture to take on, and can be quite the expensive affair. So it is important to ask yourself the right questions to determine whether your business is ready for this transition or not. First review the buying experience around your product, do you need the support of a salesperson or will the item sell itself? Second, look at your competition, are they already using e-commerce? Third, make sure your staff is ready to take the leap with you. Finally, draw up the right projections to ensure that your e-commerce undertaking will result in a positive return on investment.

If you feel that owning your own e-commerce platform might not be the best solution for you, make sure to check out our article on Agile Alternatives to Owning an E-Commerce Website.

Marilyn Zakhour

Marilyn is responsible for Bookwitty.com and the Bookwitty Partner Network. Her expertise lies in user experience design, the development and growth of startups and SMEs, and online marketing. Marilyn graduated with an EMBA from INSEAD, and in her spare time, she writes a blog focusing on food culture, which you can follow on permanenthunger.com.