The Cost of an Online Store

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One thing that we encounter often is the dream or future planning involved in building an eCommerce website or online store.  After years in web development and working with clients on different eCommerce projects, we’ve come to one very simple truth:

If It Were Easy, We’d All Do it

Almost instinctively, most of us think that it’s probably easier than opening up a local small business store front.  We tend to think the size and scope of the internet gives an online store a huge leg up.  In some ways that is true, but we want to make certain that everyone understands that if it were easy to make money by selling products online, everyone would be doing it and making very good money doing it.  What the last decade has done has shown us that we still have the same challenges and opportunities despite where you decide to sell your products.  The only thing different is now you have a lot more options at your disposal.

Different Environment, Same Challenges

A concept that we talk about frequently when discussing the long term success of an online store is that the challenges are usually the same.  We tend to think that the internet brings this whole new level of potential business and success.  But what novice eCommerce store owners soon realize is that customers are just as difficult to attract, sell, keep and service as your street corner brick and mortar store.  You do have distinct advantages – such as much lower overhead, but if you are selling physical products, a business owner still has to stock goods to be packaged and shipped.

ECommerce stores require a far more fractured approach to marketing.  Where a physical storefront is working toward creating a local awareness, an eCommerce storefront is looking to show up in a million different places to create a trickle effect from many difference sources to build sales momentum.  Those that enjoy shopping local also tend to be more loyal when they see the person behind the counter they can talk to and get to know.

The Real Threats

Where both local and online storefronts share a common obstacle are the massive juggernauts of Google and Amazon.  We’ve always felt like the threat to many online stores isn’t the big box store, but it’s these massive online conduits that allow the average person to find literally anything they want.  There are plenty of people that simply refuse to shop at Walmart or Target, but there are far less people unwilling to shop on Amazon.

What also makes Amazon so powerful is that they act as a conduit for many small businesses to sell products as a 3rd party vendor.  Amazon attracts the customer base and fulfills the order using many smaller stores.  This does however provide one additional resource as an online retailer: you can also offer your products on Amazon, provided to you can match their regulations, standards and sell competitively with others offering the same products.

Doing Your Homework

Make sure you dedicate a good amount of time to researching who is in your competitive arena.  The very first thing to do is to begin with simple Google searches and find out whose selling what you want to sell.  More important than simply seeing whose out there, pay close attention to what they are selling their products for.  What you need to determine as a baseline is: can you afford to be competitive?  As it’s been stated before, the double edged sword of selling products online is that you can provide it to your customers typically for less than a physical store.  This also means that you’ve got to make sure that you can provide your products competitively in this space.  While you can set yourself apart with customer service and special offers, most shoppers are only interested in the lowest price.

The Groupon Effect

Sell your brand with the value you bring to the table.  The Groupon effect is something that many small businesses fall into where you offer a product or service for a price that you can’t sustain, to a customer base that will never pay you what it’s worth.  What this means is a ton of exciting sales, at a rate that will lead you out of business.

The key here is to figure out exactly who you are as a brand, what value you bring, and what customer base you want to sell it to.  Consider the kind of company Apple is when compared to a company like Microsoft.  Apple has a very clear vision of who they are and what they offer.  They charge a premium for bringing a well known type of hardware and software to the table to a customer base that has come to expect a certain measure of quality.  Their customers are more than willing to pay a premium for what they have to offer.  Whatever area they move into as a company follows that same structure and demands that same premium.  Microsoft however is all about diversification – from software licensing to Office to XBox, they’re sales model is leveraging their products in as many competitive areas as they can get their hands on.

Evolution of Technology

The last area we’ll be looking at is technology.  Don’t assume that all you need is an online store and then you’ll be golden.  This typically isn’t the case.  There are a massive amount of options out there for eCommerce stores to use.  A prebuilt system using templates to an integrated 3rd party system to a completely custom solution.  Each option has different costs, challenges and advantages.  Whatever you choose today will change.  The only question is what makes sense right now and will provide you with the best platform based on your budget, needs and goals.

As time goes on, you’ll learn about different marketing strategies that you want to employ, customer service functionality, shipping and charging methods and much more.  Make sure that you build a partnership with a company that can help you determine what decisions to make and create a successful roadmap that will give you additional functionality over time.  A good strategic web development company will work with you as a consultant as much as a developer to make smart decisions.

Bottom Line

When you’re looking to open a new online store, the most important thing to do is to approach every part of it as carefully as if you were going to spend the money and effort on a local retail store.  Make sure you calculate the difficulty, proper need for technology, investment in marketing and also how you plan to brand your products or services to your audience.