In this four-part series, we'll examine where to sell your products or services online, how to set up a sales window, which e-money transfer services to use and how to build up your data history.
Part Four: Setting up a one-stop-shopping online storefront
Tobias Lütke has diagnosed many clients with what he calls "Post-Traumatic E-commerce Disorder:" the fear of selling online - having already been burned by bad experience, bad tools, or the misery of having tried to set up an online shop earlier in the century - when there was far more excitement about online retail than actual customers looking to shop there.
"There's a lot of scar tissue," says Mr. Lütke, the founder and CEO of Shopify, a fast-growing Ottawa startup that's looking to corner the market on turnkey, one-stop-shopping online storefront.
Today, the market for providing online stores to small business is bewilderingly fragmented. There are several different approaches to taking retail online, which we've explored in earlier parts of this series: You can put your goods up for sale in online auction and marketplace sites; good for reaching a global market, less so for building a brand and developing your business. You can keep your existing website and add a PayPal payment option; good for simplicity and ease, bad for flexibility and growth. Alternately, you can integrate a shopping cart from a third-party provider, usually by way of hiring a Web-development firm to build your website for you and set up the merchant banking services you need; pricey, but (fingers crossed) professional.
But for small businesses who are looking for a solution that's quick and professional, one more option is emerging: services like Shopify that provide automatic, start-to-finish online stores.
Shopify and competitors like Yahoo Small Business and Big Commerce take all the components that go into an online store - the website, the shopping cart, the payment mechanism - and package it as an user-friendly package.
Instead of a blank page, the service model offers merchants a choice of pre-made templates to choose from so they can get their store off the ground quickly. At Shopify, merchants also have the option of purchasing other pre-made templates for around $100 apiece. But the service also offers in-depth customization for those with the technical know-how to engage with its system, or the budget to hire someone who will.
This flexibility, says Mr. Lütke, has helped his firm attract more than 10,000 clients, ranging from starter businesses to Rovio, the company behind the wildly popular Angry Birds game franchise. Rovio was looking to sell plush toys that tied in with their video game characters. After two days of development, their site went live, and, according to Mr. Lütke, sold out in 14 minutes.
One of the upsides to using an all-in-one service is that merchants don't need to worry about integrating the sales element with their website, because the website and online store are one and the same, though this could complicate life for firms that already have well-established online presences. They offer the advantage of not requiring merchants to maintain a web presence consisting of multiple parts coming from multiple vendors. The website, shopping cart, and payment gateway are all managed centrally.
Like other professional online services, sites charge a monthly subscription fee, as well as a transaction fee that's a percentage of sales. Typically, starter packages can be had for $25 a month, with more expensive plans offering more sales and features. Transaction fees slide downward as monthly costs rise: Shopify charges 2 per cent for starters, down to 0.5 per cent for pricier accounts.
On the accounts-receivable side of things, all-in-ones can work with merchant accounts that larger e-commerce merchants require for vendors who want to accept credit cards. However, for starter accounts, Shopify recommends working with PayPal as a payment option, since it doesn't require a merchant account - the money is deposited directly into the merchant's existing bank account.
Big Commerce is a hosted version of Interspire, a shopping-cart application; it boasts a 9,000-strong customer list and mobile integration. Shopify, meanwhile, started life as Mr. Lütke's online snowboard-equipment store. Ultimately, he realized that the software he'd developed to run the store was worth selling in its own right. Now he employs a staff of 35 and runs one of Ottawa's fastest-growing tech firms.
One key consideration is data portability. Retailers looking to sell their wares through an all-in-one solution should make sure that the sales information they feed into these systems can be retrieved again should they decide to switch providers. Mr. Lütke says that, while Shopify handles clients who do tens of millions of dollars in sales, he expects that large clients will eventually want to bring their e-commerce operations in-house, and that Shopify will provide clients with their data.
Similarly, most all-in-one providers will offer to register a domain name for you as part of their setup process. It's best to register the name on your own, facilitating the process of moving later. The all-in-one online-storefront market is a newer entrant to the e-commerce field, but for the small business whose focus is sales, and not technology, it offers a proposition that's well worth considering.
For more series, go to the Web Strategy section of Your Business.