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The advantages of selling online 28/04/2008

There are many advantages of selling online, notably the significant difference in the set up costs.

Online selling reduces the need to find, furnish and lease premises.  The shop front can be designed for a fraction of the design and sign writing/ sign manufacturing costs that a building demands.

• You can manage your stock levels without worrying about shrink (unknown loss/ shoplifters) and customers can shop 24 hours a day.

• You have the potential of reaching more clients than you ever hope to in a conventional shop, including international sales.

• You can buy goods from your supplier after having received an order, meaning that you don’t have to hold items in stock, or you could even resell direct from the supplier without ever handling the goods yourself, these are cash flow advantages that small or new businesses can get a significant competitive advantage over conventional shops.

• Each product can be sold with a sales pitch or description that is often not afforded to products sitting on a shelf.

Running a successful online business is exactly the same principle as running a successful offline business. You should still look at your market place, your competition, your USP (unique selling point) etc.

If you are starting your own business for the first time, it can be highly beneficial to talk to organisations such as business link that will offer free information on advice on starting a business and help you to formulate a business plan.

Online shops have opened up a market place that has previously been restricted to large corporations and whilst the market place offers a level playing field, the typical shopping habits of the online shopper, does lean towards making comparisons in a fraction of the time it would take in off line shopping. 

Whilst price is always a factor any shoppers decision making process, much of the decision is based on other factors such as simplicity to order, security and general appearance/perception of the website.  Online shoppers need to be able to navigate around your shop seamlessly and intuitively, it’s a known fact that a bad ecommerce website will have many abandoned shopping carts.

In short intuitive simplicity is likely to result in repeat business.

When compiling your business plan it is important to establish the size of the market place and the accessibility of your targeted consumer.  In 2006 the declared value of internet sales was over £130 billion, which accounts for 6.5% of the total UK non financial sales (excludes banks and banking income) whilst 6.5% seems modest it was an impressive rise of over 29% on the previous year. 

The number of households with internet access has risen year on year and is currently estimated at 61% (15 million) which is a 7% (1 million) increase on 2006.  Even more significantly, over the last five years there has been an increase of 36% (4million).

These figures only account for households internet access it doesn't take into account employees having internet access at work, where reliance on the internet has made it increasingly difficult to restrict employee access to all but named websites.

It is apparent that the increase in internet access is actually less significant than the change in the speed and capabilities of the access through the widespread adoption of broadband.  Broadband access accounts for a significant 84% of the 15 million households that have internet access. That is a rise of around 3 million on the previous year.

This increase of internet users with fast surfing access is shaping the future of consumer spending habits, more significantly in this time precious lifestyle people are drawn towards indulging in simple hassle free shopping.

Perhaps another significant factor for expected future growth is widespread dependence on online activities for the younger generation, who have fewer reservations about the security of online transactions.

This younger generation is already utilising simple online purchasing and as a consequence the market will continue to experience steep growth trends.