E-commerce sounds great in theory, but many small businesses get bogged down in the practicalities. Angus Kidman talks to three business owners who have taken the plunge, and learns from their experiences.
In previous features, we've considered a range of approaches to e-commerce, from creating a simple marketing-oriented site to shifting your entire operations to internet-only mode. Regardless of scale, you're going to have to spend some time grappling with the practical realities of online operation. Even if you decide to outsource most of the hands-on work, it still pays to have some knowledge of the area so you can vet their proposals and charges.
To help speed you on your way, we’re going to explore three scenarios: using a website purely to promote your existing bricks-and-mortar business (sometimes referred to as 'brochureware'), combining a marketing-oriented site with limited online transactions, or creating a purely online business. For each, we’ll discuss some of the key issues you'll need to address, based on advice from businesses who have already been down that path.
Cyber Signs
Building a basic website is no longer the exclusive preserve of a technical elite. Creating a site requires little more than the ability to use a word processing program, and getting the site online is also fairly straightforward (you should readily be able to source assistance from your internet service provider, or your computer reseller, or from any number of web-based providers).
A bigger challenge for many companies is getting the site noticed in the first place. How can you make yourself stand out among millions of competing sites? Elanex (www.elanex.com), a specialised provider of translation services for businesses looking to expand offshore, faced that problem when opening up in Australia last year. "The main challenge is trying to find as many potential customers as possible in Australia," says Mathew Ward, Australian regional manager. "It's a competitive business and a very fragmented industry. Our services are well suited to large companies with regular needs for translation. The issue in Australia is that the number of companies with that kind of need is small, but the number with one-off jobs is a lot larger."
Getting noticed was a key issue. "Yellow Pages is an obvious option, but every man and his dog is in it and it's very expensive," Ward says. Elanex attracts customers via its site, but then deals with them directly and contracts the work out to freelance translators. One issue with setting up a general translation focused site is that it might get noticed by people seeking free, machine-based translation rather than a genuine business service. "When people go to a website, they need to understand what you do as soon as possible," Ward says.
Elanex solved the problem by placing targeted advertisements, using search engine marketing provider Overture. Ward paid $200 for Overture's Fast Track option, where the company advises on the most relevant search terms for a business. Customers who search for those terms using an Overture partner site will see advertisements for relevant services. Elanex then pays for each customer who clicks on its advertisement.
"It's been absolutely great for us," says Ward, citing the ability to get qualified leads at minimal cost as a major benefit. "Our budget is very limited, but for what we spend, it pays for itself ten-fold."
Elanex paid $100 for click-throughs in its first two months of advertising, but scored $12,000 worth of business. Ward points out that sending customers direct from an advertisement to a full corporate site may put them off. Elanex link adverts to special 'splash screens', which provide a brief description of the company and contact details, as well as a link to its main site.
Dual System
Melbourne-based ugg boot retailer Jumbo Ugg (www.jumbougg.com.au) is a prime example of a company operating both online and offline.
"With limited resources we needed a solution that is easy to use but is good value for money," explains IT manager, Lana Kaper. "Our biggest issue was to come up with a technology that will let us update our website content and our 102 products, including images, on a regular basis without taking much time and disrupting business operations."
Jumbo Ugg simplified its planning by purchasing a complete shopping cart solution from SmartyHost, which included web space, e-commerce and security systems. "Their plug and play model allowed us to get online very quickly, plus we had SmartyHost technical support to assist us," Kaper says. "The product has an inventory management, currency management, payment gateway options, and a back-end database for managing both products and customers, but very little technical knowledge was needed to use the solution. This allows us to test the waters and build our online brand and start selling immediately without high overhead costs."
Another key choice was handling online payments. Jumbo Ugg offers a choice of direct debit, PayPal or credit cards, but decided not to automate that last process as the expense was not justified. "As we currently process around 10 orders a week, we process credit cards manually via VirtualPOS, a merchant recommended by our bank," Kaper says.
So far, Jumbo Ugg has processed more than 600 transactions with the system, and the company is now looking at expanding the process. "We are looking at installing a live support feature to enable our customers to ask us questions while browsing the site without having to send emails back and forward," Kaper says.
And what has the company learnt from the experience? "People say that the best way to learn is from your mistakes, but I say that the better way to learn is from others’ mistakes!" Kaper comments. "Do your research, read forums, and ask questions. The internet is the best resource you can use to seek out your competition and see what others are doing, what works and what doesn't."
Choosing a supportive hosting company is also critical. "Ultimately, you want a provider who is willing to work with you as a partner and is able to take the time to support you. Also, you need it to be easy—the website should earn you money, not waste your time."
Online Only
Establishing an online-only business can be extremely rewarding, but the challenges are formidable. One critical element is being sure that you are offering a viable proposition, either by selling a unique product or being able to offer a level of product or service that others can't match.
PropertyLook (www.propertylook.com.au), now Australia's largest online storefront for commercial real estate, recognised competitors could be a key challenge when it was established in 2001 as a partnership between the four main commercial listing agents (CB Richard Ellis, Colliers International, Jones Lang LaSalle and Knight Frank).
"The reason it was set up initially was purely defensive," says general manager, Wally Scales. The realtors were worried that someone else would grab the online commercial market, although they recognised that rivals might have trouble getting enough listings to attract traffic. "Even though anyone can set up a website, there are some real barriers to entry," Scales says.
Being purely online creates a unique operating environment, he argues. "We suffer all the challenges any other business would suffer, but in a web-based business it's more dynamic. You can't stand still with the technology because you'll get swamped. And the site's got to be idiot proof."
Despite running the entire business online, PropertyLook has a shoestring technical team. Just two of its seven staff work full time on maintaining the site. One advantage of having internal staff is that they can cope more readily with rapid alterations, which is a necessary requirem
ent for an online environment. "We're in a constant state of development," Scales says, though he adds that the company tries to avoid using untested technologies and techniques.
PropertyLook hosts its main site externally with WebCentral, largely eliminating the need to maintain backup servers and complex disaster recovery plans. The other key element in its planning is tight integration between its site and the Salesforce.com customer relationship management (CRM) system used by the business. Scales says this integration is critical to the company's smooth operation, and advises other businesses to carefully check this aspect when setting up. "A lot of people claim they integrate but they actually don't," he notes.
While technology is central to PropertyLook, Scales argues that businesses should not lose track of other core issues. "Staff churn is a major risk for our business. In a small business, staff are the key," he says. "Get the right staff and make sure they work properly together."
