Guest Column: Should your business sell products online?
Guest Column by Dean Swanson
During these drastically challenging times for small businesses, I have been asked by several CEOs, who are trying to survive, “Should I try to sell my products/services online?”
I recently completed a series of columns based on one of SCORE’s projects that was developed with the help of and in partnership with FedEx. This project is called “Startup Roadmap” and outlines every step in starting a business. I suggest that you ask your mentor about this great resource. I will share some content here to answer this question.
If you’re not sure about doing online selling, consider these factors, using your business plan for reference:
• How do you best reach your target customers who like to shop? Does your product benefit from the in-store experience of touching, feeling and discovery? If you are opening an antique shop, for instance, customers may prefer to explore in person to find gems rather than searching online.
• Where do your target customers live? If you want to target a market outside your local area, you’ll need to sell online to reach those customers.
• How easy are your products to ship? Some products are difficult to ship, such as furniture or manufacturing equipment. Others, such as food or alcoholic beverages, may be regulated by interstate laws that make shipping them across state lines very complex.
• What is your startup budget? Selling online can be much cheaper than renting and equipping a physical storefront. If you’re running into challenges with your budget, starting online could allow you to explore the demand for your product.
Once you’ve decided you want to sell online, the next question is, “Where online?” There are three primary ways to sell products online: on your website, on an online marketplace such as Etsy, and on your business’ social media pages. Some companies use all of these methods. In this column and the next, I will provide some suggestions to consider to help assess the pros and cons of each to decide which is right for you.
First, consider the online marketplaces that are sort of like shopping malls — only with thousands or even millions of sellers. A major advantage of an online marketplace is exposure to a large audience of shoppers. For example, many consumers use sites such as eBay and Bonanza when they’re shopping online.
An online marketplace can be a good way to test how well e-commerce works for you.
You can also use an online marketplace as a secondary sales channel to complement your brick-and-mortar store. If you’re starting your own e-commerce website, you can use an online marketplace to attract new customers, then build a relationship with those customers and drive them to your e-commerce website.
To help you decide, consider these pros and cons of online marketplaces:
• An online marketplace exposes you to a large audience of shoppers. Because marketplaces offer such a large selection of products, many consumers go to an online marketplace first when they’re shopping online.
• Selling on an online marketplace can also build trust. Consumers may be wary of an independent e-commerce website, but they know that to be on a marketplace, you have to meet certain standards for customer satisfaction. In addition, online marketplaces may offer assistance with fulfillment issues that can be challenging for small businesses.
• Online marketplaces make it easy to accept a variety of payments securely. Most also have their own proprietary payment processing services, which can reduce payment processing costs.
• Just because millions of people go to an online marketplace every day doesn’t mean millions of people will see your products. You’ll have to do some hard work and use the SEO and advertising tools each marketplace provides to help your products stand out from all the other sellers with similar products.
• Building brand awareness in an online marketplace can be difficult. For example, the major emphasis on Amazon is Amazon — not your small corner of it.
• You have to follow the rules of the online marketplace, which may limit what items you can sell or how you can promote your products. You’ll have to pay fees, which may include fees for listing, promoting and selling items. This can cut into your profits compared to selling products on your own website.
• You don’t own your own online store — the online marketplace does. If they change their rules or increase fees, your business may suffer.
Before deciding to sell on an online marketplace, weigh all the pros and cons. Pay special attention to the fees of the marketplace you’re considering; be sure your profit margins will be high enough to make using this sales channel worthwhile.
If you plan to set up an e-commerce website and use an online marketplace as an additional sales channel, you should choose an e-commerce website builder that integrates with your chosen online marketplaces. This way, you only have to post your product data once (on your e-commerce website) rather than doing it by hand on each site.
Dean Swanson is a certified SCORE mentor.